Defense Budget

The Defense Department estimates that all ongoing contingency operations in fiscal year 2000 will cost $4.7 billion, with operations in the Balkans and Southwest Asia accounting for more than 99 percent of that amount. GAO has two concerns about how the military identifies incremental costs in support of contingency operations. First, the Air Force and the Navy's Atlantic and Pacific Fleets use different methodologies to calculate their costs for flying hours in support of contingencies. DOD's regulation on costs for contingency operations permits different methodologies, but this practice results in different reimbursement rates for similar levels of activities. Second, the Air Force is seeking $47.2 million in the supplemental appropriation request to repair or restore the infrastructure used during contingency operations in Kosovo. No other military service is asking for similar reimbursement in its budget request.

GAO noted that: (1) DOD estimates all ongoing contingency operations in FY 2000 will cost $4.7 billion, with operations in the Balkans and Southwest Asia accounting for over 99 percent of that total; (2) to date, DOD has received about $2.65 billion for FY 2000 contingency operations; (3) Congress appropriated $396 million directly to the services' military personnel accounts; (4) the remaining $2.3 billion came from the Overseas Contingency Operations Transfer Fund, which Congress created to provide funding to DOD components for contingency costs; (5) in February 2000, the President submitted a request for an emergency supplemental appropriation of about $2.05 billion for contingency operations in Kosovo and East Timor for FY 2000; (6) the supplemental request is pending; (7) nevertheless, if the supplemental is not enacted, Army officials report that they will have to reduce overall operation and maintenance spending in late July to cover the shortfall in contingency operations costs; (8) the Air Force and the Navy's Atlantic and Pacific Fleets use different methodologies to calculate their costs for flying hours in support of contingencies; (9) the DOD regulation on contingency operations costs permits different methodologies, but this practice results in different rates of reimbursement for similar levels of activity; (10) the Air Force is seeking $47.2 million in the supplemental appropriation request to repair or restore infrastructure used during contingency operations in Kosovo; (11) no other service is seeking similar reimbursement in the budget request; (12) DOD's regulation does not provide for whether maintenance of home station infrastructure can be an allowable incremental cost; (13) however, DOD officials believe that some home station costs may be attributable to contingency operations and plan to revise the regulation; and (14) exercise costs, which average about $9-$15 million are offset against the costs that would have been incurred for other exercises or training that the units had scheduled before deployment was tasked but which were cancelled or modified due to the deployment.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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