Military Operations
Fiscal Year 2003 Obligations Are Substantial, but May Result in Less Obligations Than Expected Gao ID: GAO-03-1088 September 17, 2003The Global War on Terrorism (GWOT)--principally involving operations in Afghanistan and Iraq--is being funded in fiscal year 2003 by Congress's appropriation of almost $69 billion, including almost $16 billion in a transfer fund called the Iraqi Freedom Fund. To assist Congress in its oversight of funding for GWOT, GAO examined the obligation of GWOT funds and the implications for additional funding in fiscal year 2003 and the President's request for fiscal year 2004 funds for several operations in Southwest Asia that were canceled after the budget was submitted.
While funds obligated by DOD for GWOT, including the war with Iraq, in fiscal year 2003 are substantial--about $39 billion through June 2003--the funds appropriated by Congress appear to be sufficient for fiscal year 2003, and some of the services may not obligate all of the funds they were appropriated for fiscal year 2003. For example, at the end of June 2003, with 75 percent of the fiscal year completed, the services' percentage of GWOT operation and maintenance funds that had been obligated ranged from a low of 65 percent for the Army to a high of 78 percent for the Marine Corps. In contrast, the percentage of military personnel funds obligated by the three-fourths of-the-fiscal-year mark by the services ranged from 72 to 75 percent of GWOT appropriations. The military services believe they will obligate all the fiscal year 2003 funds appropriated to them. In addition, the services have received billions of dollars more in transfers from the Iraqi Freedom Fund. But GAO's analysis suggests that they may not need all the funds transferred as well as further transfers in fiscal year 2003 for operation and maintenance, since considerable unobligated fiscal year 2003 funds remain in their direct appropriations. Since DOD terminated Operations Desert Spring and Northern and Southern Watch in Southwest Asia in March 2003, the funds ($1.4 billion) that were included in the President's fiscal year 2004 budget to support those operations next year may no longer be necessary.
RecommendationsOur 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.
Director: Team: Phone:GAO-03-1088, Military Operations: Fiscal Year 2003 Obligations Are Substantial, but May Result in Less Obligations Than Expected
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Report to Congressional Committees:
United States General Accounting Office:
GAO:
September 2003:
Military Operations:
Fiscal Year 2003 Obligations Are Substantial, but May Result in Less
Obligations Than Expected:
GAO-03-1088:
GAO Highlights:
Highlights of GAO-03-1088, a report to congressional committees
Why GAO Did This Study:
The Global War on Terrorism (GWOT)”principally involving operations in
Afghanistan and Iraq”is being funded in fiscal year 2003 by Congress‘s
appropriation of almost $69 billion, including almost $16 billion in a
transfer fund called the Iraqi Freedom Fund. To assist Congress in its
oversight of funding for GWOT, GAO examined the obligation of GWOT
funds and the implications for additional funding in fiscal year 2003
and the President‘s request for fiscal year 2004 funds for several
operations in Southwest Asia that were canceled after the budget was
submitted.
What GAO Found:
While funds obligated by DOD for GWOT, including the war with Iraq, in
fiscal year 2003 are substantial”about $39 billion through June 2003”
the funds appropriated by Congress appear to be sufficient for fiscal
year 2003, and some of the services may not obligate all of the funds
they were appropriated for fiscal year 2003. For example, at the end
of June 2003, with 75 percent of the fiscal year completed, the
services‘ percentage of GWOT operation and maintenance funds that had
been obligated ranged from a low of 65 percent for the Army to a high
of 78 percent for the Marine Corps (see chart below). In contrast, the
percentage of military personnel funds obligated by the three-fourths
of-the-fiscal-year mark by the services ranged from 72 to 75 percent
of GWOT appropriations.
The military services believe they will obligate all the fiscal year
2003 funds appropriated to them. In addition, the services have
received billions of dollars more in transfers from the Iraqi Freedom
Fund. But GAO‘s analysis suggests that they may not need all the funds
transferred as well as further transfers in fiscal year 2003 for
operation and maintenance, since considerable unobligated fiscal year
2003 funds remain in their direct appropriations.
Since DOD terminated Operations Desert Spring and Northern and
Southern Watch in Southwest Asia in March 2003, the funds ($1.4
billion) that were included in the President‘s fiscal year 2004 budget
to support those operations next year may no longer be necessary.
What GAO Recommends:
GAO recommends that the Department of Defense (DOD) take several
actions to ensure that the fiscal year 2003 funds appropriated for
GWOT are fully utilized, including that the Secretary of Defense
review the services‘ spending plans before transferring additional
funds from the Iraqi Freedom Fund to ensure the funds will be
obligated as planned. GAO also suggests that, given the results of
this review, Congress not provide the $1.4 billion requested by the
President for DOD in fiscal year 2004 for continued support of
Operations Desert Spring and Northern and Southern Watch since DOD
canceled them. GAO made changes to its recommendations based on DOD‘s
comments on a draft of this report and DOD now agrees with the revised
recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-1088.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Neal Curtin at (757)
552-8100 or curtinn@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Unobligated Balances Late in the Fiscal Year Raise Doubts about
Services' Ability to Fully Obligate Their Fiscal Year 2003 GWOT Funds
and Justification for Iraqi Freedom Fund Transfers:
The Termination of Operations Northern Watch, Southern Watch, and
Desert Spring Obviates the Need for Requested Fiscal Year 2004 Funds
for These Operations:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Tables:
Table 1: Operation and Maintenance Funds Provided to the Services for
the Global War on Terrorism:
Table 2: Military Personnel Funds Provided to the Services for the
Global War on Terrorism:
Figures:
Figure 1: Location of DOD's Fiscal Year 2003 Contingency Operations:
Figure 2: Obligations of GWOT Operation and Maintenance Funds through
June 2003:
Figure 3: Obligations of GWOT Military Personnel Funds through
June 2003:
Abbreviations:
DOD: Department of Defense:
GWOT: Global War on Terrorism:
United States General Accounting Office:
Washington, DC 20548:
September 17, 2003:
Congressional Committees:
Following the terrorist attacks of September 11, 2001, the United
States began military operations to combat terrorism both in the United
States and overseas. Military operations to defend the United States
from terrorist attacks are known as Operation Noble Eagle. Overseas
operations to combat terrorism are known as Operation Enduring Freedom
and have taken place principally in Afghanistan. In March 2003, the
United States began Operation Iraqi Freedom to change the government in
Iraq. Together, these three operations are known as the Global War on
Terrorism (GWOT). To support GWOT in fiscal year 2003, Congress
appropriated $68.7 billion to the Department of Defense (DOD) in the
Consolidated Appropriations Resolution, 2003, and Emergency Wartime
Supplemental Appropriations Act, 2003.[Footnote 1] Of the $68.7 billion
appropriated, almost $16 billion was appropriated in the Wartime
Supplemental for a transfer account called the Iraqi Freedom
Fund.[Footnote 2]
To assist Congress in its oversight role, we reviewed the fiscal year
2003 funding for the GWOT. Specifically, we reviewed the services'
obligation rates for GWOT-related activities and what those obligation
rates suggest about the services' needs to draw from the Iraqi Freedom
Fund during fiscal year 2003. We also reviewed the President's request
for fiscal year 2004 funds for Operations Northern Watch, Southern
Watch, and Desert Spring,[Footnote 3] which DOD subsequently terminated
in March 2003. We provided briefings to the House and Senate
Appropriations Committee staff and House and Senate Armed Services
Committee staff as well as the House and Senate Budget Committee staff
in June and July 2003. This report updates the information we provided
during the briefings.
To accomplish this review, we obtained the most recently available
DOD data on the services' obligation of fiscal year 2003 GWOT funds. We
interviewed DOD and service officials responsible for preparing budgets
and estimating costs and force levels. We also interviewed resource
management officials from most of the major commands involved in
Operation Iraqi Freedom. We focused our work on the obligation of funds
appropriated for operation and maintenance and military personnel
because they represented the large majority of funds obligated in
fiscal year 2003 through June 2003. A detailed discussion of our scope
and methodology is contained in appendix I.
Results in Brief:
While funds obligated for the Global War on Terrorism (GWOT) in
fiscal year 2003 are substantial--about $39 billion through June 2003,
our analysis of the services' obligation rates suggests that the funds
appropriated by Congress for fiscal year 2003 GWOT operation and
maintenance and military personnel, excluding transfers from the Iraqi
Freedom Fund, are sufficient because some of the services may not be
able to obligate, before the end of fiscal year 2003, the funds they
were appropriated. For example, at the end of June 2003, with three-
fourths of the fiscal year complete, the percentage of the services'
GWOT operation and maintenance appropriations that had been obligated
ranged from a low of 65 percent for the Army to a high of about
78 percent for the Marine Corps. While some costs are higher than
expected, other costs are lower, and on balance considerable operation
and maintenance funds remain unobligated relatively late in the fiscal
year for each of the services except the Marine Corps. Costs are
higher, for example, because force levels in Iraq have not decreased as
quickly as expected; one of the reasons for lower costs, on the other
hand, is that not all forces deployed as planned. The percentage of the
GWOT military personnel funds that had been obligated by the three-
fourths of the fiscal-year mark by the services ranged from 72 percent
for the Air Force to 75 percent for the Army and the Marine Corps.
The military services believe that they will be able to obligate their
entire fiscal year 2003 GWOT-appropriated funds, including an
additional $2.4 billion in transfers to their operation and maintenance
accounts received in August 2003 from the Iraqi Freedom Fund. Based on
our analysis of the services' obligation data, we identified
considerable unobligated balances in the services' fiscal year 2003
operation and maintenance appropriations that can be used for GWOT.
Therefore, we believe the services may have sufficient funds in these
accounts for fiscal year 2003, that not all of the transferred funds
may be obligated, and that the services should not require any further
transfers from the Iraqi Freedom Fund this fiscal year.
In March 2003, DOD terminated Operations Northern Watch, Southern
Watch, and Desert Spring. Therefore, the funds requested for these
operations in the President's fiscal year 2004 budget request for DOD
may no longer be necessary as requested.
We are making recommendations to ensure that (1) funds provided to the
services for GWOT are fully utilized and (2) any funds transferred from
the Iraqi Freedom Fund that are not obligated by the end of fiscal year
2003 are identified and returned to the Fund. We also identified a
matter for congressional consideration regarding the President's fiscal
year 2004 budget request for certain Southwest Asia operations that DOD
canceled in March 2003 following the President's budget submission.
In official oral comments on a draft of this report, DOD agreed with
one of our recommendations and had concerns with two others. We revised
our recommendations to reflect DOD's concerns, and DOD now concurs with
the revised recommendations.
Background:
From the end of the Persian Gulf War in February 1991 through June
2003, the DOD reported that it had obligated over $86.203 billion for
incremental costs[Footnote 4] it had incurred for its overseas
contingency operations. These operations included the enforcement of
no-fly zones, humanitarian assistance, and peace enforcement
operations, as well as operations to combat terrorism. In fiscal year
2003, these costs were incurred preparing for and undertaking GWOT,
including the 2003 war against Iraq. In addition, U.S. military forces
are continuing to participate in contingency operations in the Balkans.
Figure 1 shows the location of DOD's contingency operations for fiscal
year 2003.
Figure 1: Location of DOD's Fiscal Year 2003 Contingency Operations:
[See PDF for image]
[End of figure]
Most of the costs associated with GWOT fall into two accounts--
operation and maintenance and military personnel. Operation and
maintenance account funds obligated in support of GWOT are used for a
variety of purposes, including transportation of personnel, goods, and
equipment; unit operating support costs; and intelligence,
communications, and logistics support. Military personnel funds
obligated in support of GWOT cover the pay and allowances of mobilized
reservists as well as special payments or allowances for all qualifying
military personnel both active and reserve, such as imminent danger pay
and family separation allowance.
Unobligated Balances Late in the Fiscal Year Raise Doubts about
Services' Ability to Fully Obligate Their Fiscal Year 2003 GWOT Funds
and Justification for Iraqi Freedom Fund Transfers:
The services were appropriated about $34 billion to their operation and
maintenance accounts and about $15 billion to their military personnel
accounts for fiscal year 2003[Footnote 5] to support the war in Iraq
and Operations Enduring Freedom and Noble Eagle. It appears that while
the funds obligated for these operations--about $39 billion as of the
end of June 2003--are substantial,[Footnote 6] the proportion of
appropriated funds that have been obligated as of that date is lower
than the proportion of the fiscal year elapsed as of that same date
except for the Marine Corps. In this regard, through June 2003, which
represents three-fourths of the fiscal year, three of the four services
had not obligated more than 68 percent of the operation and maintenance
funds appropriated for GWOT, while the Marine Corps had obligated
78 percent.
Fiscal Year 2003 Funding for the Global War on Terrorism:
To support GWOT in fiscal year 2003, Congress appropriated
$68.7 billion to DOD in the Consolidated Appropriations Resolution,
2003, and Emergency Wartime Supplemental Appropriations Act, 2003.
According to the conference report that accompanied the legislation,
Congress included $6.1 billion for Operations Noble Eagle and Enduring
Freedom in the Consolidated Appropriations Resolution of February
2003.[Footnote 7] In March 2003, the President requested that Congress
appropriate $74.8 billion for GWOT, including the conduct of military
operations in Iraq and reconstruction and relief there. Of this amount,
$62.6 billion was identified in the President's budget for DOD's GWOT
military operations. In developing the President's request, DOD
assumed, among other things, that the war with Iraq would be a short
conflict, would involve a two-front war using Turkey as a staging area,
and there would be a rapid redeployment and demobilization of Reserve
and National Guard troops following the cessation of combat operations.
In April 2003, Congress appropriated $79.2 billion, including
$62.6 billion for DOD to cover all GWOT, including the war with Iraq,
in the Emergency Wartime Supplemental Appropriations Act of April
2003.[Footnote 8] Although the services received their Consolidated
Appropriations Resolution, 2003, funds for fiscal year 2003 in February
2003, they did not receive their first allocation of funds from the
Emergency Supplemental until May 2003 and their second allocation until
July 2003. Before receiving these monies, the services used funds from
the Consolidated Appropriations and their base programs, obligating
$25.9 billion for GWOT. DOD's statement of its requirements for the
supplemental appropriation included reimbursing the services' accounts
for costs incurred and financing the costs associated with military
operations against Iraq.
Neither the President's request for funds nor the appropriations act
allocated the funds to specific operations. Of the funds appropriated
to DOD by the Emergency Wartime Supplemental, $46.699 billion was
appropriated directly to the services' and other defense agencies'
appropriations accounts and $15.679 billion to a transfer fund called
the Iraqi Freedom Fund. Tables 1 and 2 show the operation and
maintenance and the military personnel appropriations provided to the
services for GWOT.
Table 1: Operation and Maintenance Funds Provided to the Services for
the Global War on Terrorism:
Dollars in millions.
Consolidated Appropriations Resolution; Army: $1.340; Navy: $0.436; Air
Force: $1.767; Marine Corps: $0.202; All services: $3.745.
Emergency Wartime Supplemental Appropriations; Army: $16.078; Navy:
$5.107; Air Force: $7.120; Marine Corps: $1.670; All services: $29.975.
Total; Army: $17. 418; Navy: $5.543; Air Force: $8.887; Marine Corps:
$1.872; All services: $33.720.
Source: Department of Defense Fiscal Year 2003 Appropriations Report.
Note: The dollar figures cited above include appropriations received by
both the active and the reserve components for each service.
[End of table]
Table 2: Military Personnel Funds Provided to the Services for the
Global War on Terrorism:
Dollars in millions.
Consolidated Appropriations Resolution; Army: $0.771; Navy: $0.214; Air
Force: $0.563; Marine Corps: $0.069; All services: $1.617.
Emergency Wartime Supplemental Appropriations; Army: $7.803; Navy:
$1.600; Air Force: $2.800; Marine Corps: $1.200; All services: $13.403.
Total; Army: $8.574; Navy: $1.814; Air Force: $ 3.363; Marine Corps:
$1.269; All services: $15.020.
Source: Department of Defense Fiscal Year 2003 Appropriations Report.
Note: The dollar figures cited above include appropriations received by
both the active and the reserve components for each service.
[End of table]
To assess the extent to which funds appropriated for GWOT have been
obligated, we compared the latest available obligation reports for
GWOT with the funds appropriated to each of the services' operation and
maintenance and military personnel accounts. We then compared the
proportion of the funds obligated to the proportion of the fiscal year
that had elapsed to ascertain if funds were obligated at a level
commensurate with that point in the fiscal year. We recognize that
funds are not obligated equally each month throughout the fiscal year
but believe that the further into the fiscal year the closer to
100 percent obligations should be relative to appropriations if all
appropriated funds are likely to be obligated. The results of this
analysis are discussed in the following sections of this report. We
discussed our analysis with DOD representatives at the Office of the
Secretary of Defense (Comptroller) and each of the services' budget
offices, who disagreed with our methodology. These representatives
believed that the analysis should take into account the fact that the
supplemental appropriation was not available until mid-April 2003 and
that funds were not provided to the services until the beginning of May
2003.
We recognize that the supplemental funding was not provided to the
services until May 2003. At the same time, DOD had to conduct
Operations Noble Eagle and Enduring Freedom from the first day of
fiscal year 2003 and subsequently prepare for war in Iraq, deploy over
100,000 military personnel to the Persian Gulf, and conduct major
combat operations, all before receiving supplemental funding. As
discussed earlier, to fund these operations in advance of receiving
supplemental funding, the services used funds from the Consolidated
Appropriations and their base programs. In doing so, DOD reported that
it had obligated $25.9 billion for GWOT in fiscal year 2003 through
April 2003. Therefore, we believe that assessing how much of the
services' direct GWOT appropriations have been obligated relatively
late in the fiscal year provides a reasonable measure of how quickly
the services are obligating their GWOT appropriations and the
likelihood that they will obligate all the funds appropriated to them.
Our analysis suggests that the services have no need for further
transfers from the Iraqi Freedom Fund in fiscal year 2003, that all the
funds transferred to their operation and maintenance accounts may not
be obligated, and that any transferred funds unobligated at the end of
the fiscal year should be transferred back to the Iraqi Freedom Fund.
Proportion of Operation and Maintenance Funds Obligated Is Lower Than
Proportion of Fiscal Year Elapsed Except for the Marines Corps:
Our analysis of the percentage of fiscal year 2003 GWOT operation
and maintenance funds obligated by the services compared with the
proportion of the fiscal year elapsed (i.e., October 1, 2002, through
June 2003, the latest month for which obligation data are available for
all the services) shows that the proportion of available appropriations
that have been obligated as of a particular date is lower than the
proportion of the fiscal year elapsed as of that same date for three of
the four military services, notwithstanding that funds obligated to
date include those required to cover the preparation of military forces
for the war with Iraq and the expense of transporting them and their
equipment from the United States and elsewhere to the Persian Gulf.
Therefore, we believe the actual operation and maintenance obligations
made in fiscal year 2003 could be less than the funds available for
obligation in fiscal year 2003. By the end of June 2003, only one of
the services, the Marine Corps, had obligated more than 75 percent of
the funds appropriated for operation and maintenance, while the other
three services had obligated between 65 and 68 percent, although three-
fourths of the fiscal year had already elapsed, raising doubts about
whether all the services will be able to obligate their entire fiscal
year 2003 GWOT operation and maintenance funds in the remaining
3 months of fiscal year 2003. For example, the Army, by the end of June
2003, had obligated 65 percent of its directly appropriated funds for
GWOT. Figure 2 displays the obligations through June 2003 for each of
the military services.
As can be seen in figure 2, the percentage of directly appropriated
operation and maintenance funds that were obligated as of June 30,
2003, ranged from a low of 65 percent for the Army to a high of
78 percent for the Marine Corps.
Figure 2: Obligations of GWOT Operation and Maintenance Funds through
June 2003:
[See PDF for image]
Note: Total obligations include obligations from both the active and
the reserve components.
[End of figure]
Based on our analysis, we believe that in fiscal year 2003 the
services, with the possible exception of the Marine Corps, may not
obligate all operation and maintenance funds appropriated to them for
GWOT. The services, however, believe that they will obligate all or
almost all of these funds. This may in fact be the case, but except for
the Marine Corps, if the services do obligate all these funds it will
require a faster rate of obligation of funds--greater than the rate at
which they have been obligating funds in recent months. We recognize
that estimating the costs of ongoing military operations is difficult
because operational requirements can differ substantially from what was
assumed in developing budget estimates. This has been the case in Iraq,
where actual operations have differed from some of the assumptions. For
example, a second front using Turkey as a staging area never
materialized, there has not been a rapid redeployment and
demobilization of Reserve and National Guard troops, one major Army
division expected to deploy did not, and transportation costs were
lower than predicted. Some of these differences, such as the lack of a
rapid redeployment and demobilization, are resulting in higher than
expected costs, while other differences, for example, the decision to
not deploy one of the Army's divisions, are resulting in lower than
expected costs. However, in light of the rate of obligations made
through June and the information presented below, we continue to
believe that actual obligations of GWOT operation and maintenance funds
for fiscal year 2003 may be less than the total GWOT operation and
maintenance appropriations available for obligation in fiscal year
2003.
* According to the Army's obligation plan, the Army expects to obligate
$6 billion during the last 3 months of fiscal year 2003. Through June
2003, the Army had obligated $11.315 billion. Combining the funds
obligated through June and the Army's estimate for the balance of
fiscal year 2003 indicates that the Army will obligate a total of
$17.315 billion--$98 million less than the $17.413 billion it received
in direct operation and maintenance appropriations for GWOT. It should
be noted, however, that the Army's actual June obligations of
$2.38 billion are higher than the $2.2 billion it planned to obligate
in June. Whether the Army will obligate all its fiscal year 2003 GWOT
operation and maintenance funds depends on whether its obligations for
the last 3 months of the fiscal year continue at or near the June 2003
rate or fall to the levels expected in its obligation plan. In
discussing the results of our analysis with the Army, Army officials
told us that preliminary reports indicate that their July obligations
will be about $3 billion. However, their preliminary June obligation
estimate was higher than their actual June obligations, which
underscores the difficulty in projecting costs and the need to closely
monitor the obligation of GWOT funds.
* The Marine Corps expects to obligate approximately $591 million for
force reconstitution (the repair of damaged equipment and the
replacement of munitions, spare parts or equipment lost in war) during
the last 3 months of the fiscal year. However, in discussing our
analysis with the Marine Corps, Marine Corps officials involved with
budgeting for ongoing military operations told us that constraints in
depot and contractor capacity could lead the Marine Corps to obligate
fewer funds in fiscal year 2003 than planned for depot maintenance,
which accounts for $50 million to $70 million of its $591 million
reconstitution estimate.
* Through June 2003, which is the first 9 months of fiscal year 2003,
the Air Force had obligated $6.0 billion, or 68 percent, of its direct
GWOT operation and maintenance appropriation. Most of the Air Force's
aircraft have redeployed from Operation Iraqi Freedom, and the Air
Force's role in that operation has been reduced. According to Air Force
officials, in March 2003, the Air Force had 1,000 aircraft deployed in
support of the war in Iraq and by late June the number had been reduced
to 276. The Air Force's June 2003 obligation of its GWOT operation and
maintenance appropriation was $76 million less than its May 2003
obligation of that appropriation.
* The Navy had obligated $3.7 billion, or 67 percent, of its direct
GWOT appropriation through June 2003. According to Navy officials, all
Navy ships that deployed to support Operation Iraqi Freedom have been
redeployed, and Navy activity is back to pre-Operation Iraqi Freedom
levels. Furthermore, Navy officials with the Pacific Fleet (the Navy's
major force provider for Operation Iraqi Freedom) told us that their
GWOT obligations were lower than they had estimated, due in part to
lower fuel and airlift costs. In discussing our analysis with Navy
headquarters officials, they said that while a shorter duration of
combat operations resulted in certain costs not accruing or accruing at
the estimated levels, other operational factors and costs occurred that
were substituted and more than offset estimated fuel and airlift
savings. Based on obligations through June 2003, we believe the Navy
may not be able to obligate its entire fiscal year 2003 GWOT operation
and maintenance appropriation by the end of fiscal year 2003.
Military Personnel Funds Are Being Obligated at a Faster Rate Than
Operation and Maintenance Funds:
The services have been obligating their funds for military personnel at
a faster rate than that for their operation and maintenance funds. As
figure 3 shows, with three-fourths of the fiscal year gone, the Army
and the Marine Corps had each obligated about three-fourths of their
GWOT appropriations for military personnel costs while the Navy and Air
Force had each obligated slightly less than three-fourths of their
respective GWOT appropriation.
Figure 3: Obligations of GWOT Military Personnel Funds through
June 2003:
[See PDF for image]
Note: Total obligations include obligations from both the active and
the reserve components.
[End of figure]
According to DOD's July 2, 2003, report on fiscal year 2003
appropriations, the services will obligate their entire fiscal year
2003 GWOT military personnel appropriations. Service officials told us
that they believe they will use their entire GWOT military personnel
appropriation because the planned demobilization of reserve component
personnel has not occurred. In addition, the Army has not been able to
redeploy its troops from Iraq as originally planned, which increased
the Army's costs for the special pays and allowances, such as imminent
danger pay and family separation allowance, which some deployed
military personnel are entitled to receive.
DOD is Transferring Additional Funds to the Military Services:
In addition to the direct appropriations included in the Emergency
Wartime Supplemental Appropriations Act, Congress also established the
Iraqi Freedom Fund, which provides the services with additional funds
to cover their GWOT costs. Congress appropriated almost
$15.7 billion[Footnote 9] to this Fund and made it available to DOD
through September 30, 2004. DOD must notify Congress at least 5 days in
advance of such transfers, but congressional approval to make the
transfers is not required. Once DOD transfers funds to the services'
operation and maintenance or military personnel accounts during fiscal
year 2003, the funds must be obligated by September 30, 2003, or they
should be transferred back to the Iraqi Freedom Fund.[Footnote 10]
On August 11, 2003, DOD notified the Congressional Defense Committees
of its intention to make an initial transfer of $4.8 billion from the
Iraqi Freedom Fund to various service and DOD agency accounts. Of the
$4.8 billion, about half ($2.4 billion) would be transferred to the
services' operation and maintenance accounts; the balance would be
transferred to defensewide operation and maintenance and to a variety
of procurement and research, development, test, and evaluation
accounts. The August 11, 2003, notification did not include any
transfers to the services' military personnel accounts. Of the amount
to be transferred to the services' operation and maintenance accounts,
* $1,097.3 million would be transferred to the Army,
* $683.7 million would be transferred to the Navy,
* $285.9 million would be transferred to the Marine Corps, and:
* $377.5 million would be transferred to the Air Force.
These transfers will increase the amount of funds in the services'
fiscal year 2003 operation and maintenance accounts available for GWOT.
The Termination of Operations Northern Watch, Southern Watch, and
Desert Spring Obviates the Need for Requested Fiscal Year 2004 Funds
for These Operations:
Since the 1991 war with Iraq, the United States has been conducting
operations in Southwest Asia to monitor Iraq's compliance with various
United Nations resolutions. Operations Northern and Southern Watch
enforced the no-fly zones over Iraq. Operation Desert Spring, an Army
operation, rotated forces in and out of Kuwait to train with the
Kuwaiti military. From the inception of operations through June
2003,[Footnote 11] costs for these operations have totaled
$11.4 billion. Since fiscal year 2002, funds for these operations have
been included in the services' base programs.
In March 2003, DOD terminated Operations Northern and Southern Watch
and Operation Desert Spring. The President's fiscal year 2004 budget
request, which was submitted in February 2003, before the termination
of these operations, included approximately $1.4 billion for these
operations. We briefed the Senate and House Committees on
Appropriations on the termination of these operations in early June
2003 and suggested that since the operations have ended there was no
need to provide funds for them in fiscal year 2004, although there
could be further costs associated with shutting them down in fiscal
year 2003 between the time they were terminated in March 2003 and
September 2003.
The Army agreed that it would not require any funding in fiscal year
2004 for Operation Desert Spring, and the Air Force agreed that it
would not require funding for Northern Watch, but it disagreed with
congressional action to eliminate funding for Operation Southern Watch.
The Air Force asked that the funds for Operation Southern Watch be
restored because it believed it needed these funds to maintain the
bases that were previously used for Operation Southern Watch and that
now support the ongoing operations.
Conclusions:
Our analysis of the obligation of funds to support GWOT in fiscal year
2003 suggests that the funds appropriated to the services for that
purpose, particularly for operation and maintenance, could be
sufficient to cover their fiscal year 2003 costs. On August 11, 2003,
DOD notified Congress of its intent to initially transfer $2.4 billion
from the Iraqi Freedom Fund to the services' operation and maintenance
accounts. Collectively, with the funds DOD has transferred from the
Iraqi Freedom Fund to the military services and the large amount of
unobligated funds remaining in the services' fiscal year 2003 GWOT
operation and maintenance appropriations except for the Marine Corps as
of the end of June 2003, obligating these funds between July and
September 30, 2003, could be challenging.
In March 2003, DOD terminated Operations Northern Watch, Southern
Watch, and Desert Spring. Therefore, the funds requested for these
Operations in the President's fiscal year 2004 budget request for DOD
may no longer be necessary as requested.
Recommendations for Executive Action:
To ensure that funds already appropriated, including funds transferred
from the Iraqi Freedom Fund, to the military services for GWOT are
fully utilized and that additional funds are not transferred to the
military services' operation and maintenance and military personnel
accounts from the Iraqi Freedom Fund until they are needed, we
recommend that the Secretary of Defense (1) monitor the obligation of
funds in the services' operation and maintenance accounts, including
the GWOT funds, (2) ensure that all funds transferred to the services'
operation and maintenance accounts that are not likely to be obligated
by the end of fiscal year 2003 are transferred back to the Fund as
allowed by the Wartime Supplemental Appropriation, and (3) closely
review the executability of further funding transfers from the Iraqi
Freedom Fund to ensure the funds will be obligated as planned.
Matter for Congressional Consideration:
Because Operations Northern Watch, Southern Watch, and Desert Spring
were canceled in March 2003, after the President's fiscal year 2004
budget submission, Congress may wish to delete the funds requested for
this purpose from the fiscal year 2004 DOD appropriations.
Agency Comments and Our Evaluation:
In official oral comments on a draft of this report, DOD agreed with
our recommendation to ensure that all funds transferred to the
services' operation and maintenance accounts that are not likely to be
obligated by the end of fiscal year 2003 are transferred back to the
Iraqi Freedom Fund. DOD had concerns with our other two recommendations
dealing with (1) monitoring the obligation of GWOT funds and (2)
prohibiting the transfer of funds from the Iraqi Freedom Fund until the
services provide obligation reports showing that a large percentage of
their current GWOT appropriations, such as 90 percent, have been
obligated and suggested some revisions. Based on DOD's comments we have
revised our recommendations as discussed below. DOD agrees with our
revised recommendations.
With respect to our recommendation that the Secretary of Defense
monitor the obligation of GWOT funds in the services' operation and
maintenance accounts, including those transferred from the Iraqi
Freedom Fund, DOD noted that when the supplemental funds are released
to the components those funds become part of the appropriation and are
not separately identified as GWOT funds. DOD further noted that it
could not separately monitor GWOT funds because they are not identified
separately in the accounting systems. As a result, we revised our
recommendation to state that the Secretary of Defense monitor the
obligation of funds in the services' operation and maintenance
accounts, including the GWOT funds.
DOD did not agree with our recommendation that the Secretary of Defense
prohibit further transfers until the services provide obligation
reports showing that a large percentage of their current GWOT
appropriations, such as 90 percent, have been obligated. DOD noted that
our recommendation ignores the funding pipeline issues; specifically
that it takes time for the funds to be released, received by the
services, and obligated. DOD said that to arbitrarily suggest that 90
percent of an account must be obligated before additional funds could
be transferred into the account would create an unnecessary burden on
the services, lead to "stop-go" funding decisions, and have a negative
impact on normal operating procedures. We did not cite a specific
figure in our draft recommendation; rather we suggested that a large
percentage of the services' current GWOT appropriations, such as 90
percent, be obligated before making further transfers. However, in
light of DOD's concerns we revised our recommendation to state that the
Secretary of Defense closely review the executability of further
funding transfers from the Iraqi Freedom Fund to ensure the funds will
be obligated as planned.
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Under Secretary of Defense
(Comptroller); and the Director, Office of Management and Budget.
Copies of this report will also be made available to others upon
request. In addition, this report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you have any questions regarding this report, please call me on
(757) 552-8100. Principal contributors to this report were Steve
Sternlieb, Carole Coffey, George Duncan, Matt Ullengren, and James
Reynolds.
Neal P. Curtin
Director, Defense Capabilities and Management:
Signed by Neal P. Curtin:
List of Congressional Committees:
The Honorable Ted Stevens
Chairman
The Honorable Daniel K. Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:
The Honorable Jerry Lewis
Chairman
The Honorable John Murtha
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives:
The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To examine the adequacy of funding for the Global War on Terrorism
(GWOT), we reviewed (1) the President's fiscal year 2003 budget request
for supplemental appropriations, (2) applicable laws and accompanying
reports appropriating funds for GWOT, and (3) DOD reports on the
obligation of funds. We also obtained budget estimates from the
services and their key elements involved in GWOT operations. We also
met with service officials to discuss world events that may have had an
impact on their budget estimates and their obligation patterns. We
compared the latest available obligation reports against total
available appropriated funds. We then compared the proportion of
appropriated funds obligated with the proportion of the fiscal year
that had elapsed to ascertain how rapidly funds were being obligated.
We recognized that funds are not obligated equally each month
throughout the fiscal year but believe that the further into the fiscal
year the closer to 100 percent obligations should be relative to
appropriations if all appropriated funds are likely to be obligated. We
focused our work on the obligation of funds appropriated for operation
and maintenance and military personnel because they represented the
large majority of funds obligated in fiscal year 2003 through June
2003. During that period $866 million of the $38.9 billion in reported
obligations was obligated for what the Department of Defense
categorized as investment.
To determine if there is a continued need for fiscal year 2004 funds
for Operations Southern Watch, Northern Watch, and Desert Spring, we
met with service officials and reviewed documents to determine the
status of the three operations. We reviewed the President's fiscal year
2004 budget request for the Department of Defense to determine the
total requested for the three operations.
We visited the following locations during our review:
* Office of the Secretary of Defense (Comptroller), Washington, D.C.
* Office of the Secretary of Defense (Reserve Affairs), Washington,
D.C.
* Department of the Army, Headquarters, Washington, D.C.
* U.S. Army Reserve Command, Fort McPherson, Ga.
* U.S. Army Forces Command, Fort McPherson, Ga.
* U.S. Army National Guard, Arlington, Va.
* U.S. Army Europe, Heidelberg, Germany.
* U.S. Army Pacific Command, Fort Shafter, Hawaii:
* Department of the Air Force, Headquarters, Washington, D.C.
* U.S. Air National Guard, Arlington, Va.
* U. S. Air Force Europe, Ramstein Air Base, Germany.
* Pacific Air Force, Hickham Air Base, Hawaii:
* Department of the Navy, Headquarters, Washington, D.C.
* United States Marine Corps, Headquarters, Washington, D.C.
* Naval Reserve Forces Command, New Orleans, La.
* United States Marine Corps Reserve Forces, New Orleans, La.
* Marine Forces, Pacific, Camp Smith, Hawaii:
* Pacific Fleet, Pearl Harbor, Hawaii:
We also obtained information from the Army Material Command,
Alexandria, Virginia.
We performed our work from February through September 2003 in
accordance with generally accepted government auditing standards.
FOOTNOTES
[1] P.L. 108-7 (Feb. 20, 2003) and P.L. 108-11 (Apr.16, 2003).
[2] The Iraqi Freedom Fund is a special account providing funds for
additional expenses for ongoing military operations in Iraq, and those
operations authorized by P.L. 107-40 (Sept. 13, 2001), Authorization
for Use of Military Force, and other operations and related activities
in support of the global war on terrorism.
[3] Operations Northern and Southern Watch enforced the no-fly zones
over Iraq. Operation Desert Spring, an Army operation, rotated forces
in and out of Kuwait to train with the Kuwaiti military.
[4] The term "incremental costs" means those directly attributable
costs that would not have been incurred if it were not for the
operation. Sections 230406 and 230902 of Department of Defense
Financial Management Regulation 7000.14R, Volume 12, Chapter 23,
Contingency Operations (Feb. 2001) provide additional information on
incremental costs. We further note that DOD's financial systems only
capture total obligations and the services use various management
information systems to identify incremental obligations and to estimate
costs. Although we use the term costs throughout this report as a
convenience, we are actually referring to DOD's obligation of funds.
[5] This amount excludes almost $16 billion provided in the Iraqi
Freedom Fund, which is available until the end of fiscal year 2004.
[6] Of this amount, we estimate that almost $28 billion was for the war
with Iraq based on the Office of the Secretary of Defense
(Comptroller)'s estimate through May 2003 and our analysis of the June
2003 obligations data.
[7] Conference Report (H.R. Conf. Rep. No. 108-10), Feb. 13, 2003,
accompanying H.J. Res. 2, Consolidated Appropriations Resolution, 2003
(P.L. 108-7) Feb. 20, 2003.
[8] P.L. 108-11 (Apr. 16, 2003).
[9] Of the $15.7 billion, as much as $5.2 billion was earmarked for
particular programs or activities such as the Coast Guard, fighting oil
well fires, and repairing Iraq's oil fields, as well as payments to
reimburse cooperating nations. The remaining $10.4 billion is available
to meet the requirements of the services and defensewide programs.
[10] Although Iraqi Freedom Fund budget authority remains available for
transfer until September 30, 2004, funds transferred under this Fund
shall be merged with and shall be available for the same purposes and
for the same time period, as the appropriation to which transferred,
but can be transferred back to the Fund if unobligated by the end of
the fiscal year.
[11] While the programs were terminated in March 2003, after the
President's fiscal year 2004 budget request submission, some costs
continue to be obligated as the services complete the process of
shutting down the operations.
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