DOD Bulk Fuel

Services' Fuel Requirements Could Be Reduced and Funds Used for Other Purposes Gao ID: NSIAD-96-96 March 28, 1996

For fiscal year 1996, bulk fuels requests by the Army, the Navy, and the Air Force totaled $4.12 billion. The three services planned to spend $107 million of this amount, or 2.6 percent, on fuel from commercial sources. The rest was used to buy fuel from the Defense Fuel Supply Center, which buys fuel from commercial sources and sells it to the military services. On the basis of historical usage data, the Center estimates that the services' fuel purchases in fiscal year 1996 would total $3.57 billion, or about $440 million less than the amount the services had requested in their budgets. This estimate is lower than the estimate made when the services submitted their budget requests in January 1995. At the time, the Center projected that the services would buy $3.68 billion worth of fuel in fiscal year 1996, or about $330 million less than the amount requested. Because the services' bulk fuel budgets are still overstated by about $440 million--$440 million less than the $100 million congressional reduction--GAO suggests that Congress rescind the $340 million and apply it to other unfunded needs.

GAO found that: (1) for FY 1996, the services requested $4.01 billion to purchase 126.7 million barrels of bulk fuel from DFSC, but DFSC estimated that the services' budget request is overstated by $440 million; (2) the services' actual FY 1996 requirements will total about $3.57 billion; (3) Department of Defense and service officials believe that the fuel estimates are not overstated, since requirements change constantly and reducing their budget requests would hamper their flexibility in meeting emerging requirements; (4) the services' data trends show that they do not use all of their budgeted fuel funds and use unspent funds and fuel credits for other purposes; (5) the services also do not recognize the amounts of fuel they return to DFSC for credit when making their fuel use estimates; and (6) Congress reduced the Navy's fuel budget request by $100 million, but did not adjust the other services' budget requests.

Recommendations

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