Global War on Terrorism
Reported Obligations for the Department of Defense Gao ID: GAO-07-783R May 18, 2007Since 2001, Congress has provided the Department of Defense (DOD) with hundreds of billions of dollars in supplemental and annual appropriations for military operations in support of the Global War on Terrorism (GWOT). DOD's reported annual costs for GWOT have shown a steady increase from about $0.2 billion in fiscal year 2001 to about $98.4 billion in fiscal year 2006. So far in fiscal year 2007, Congress has provided DOD with $70 billion in annual appropriations for GWOT. To continue its GWOT operations, DOD has requested an additional $93.4 billion in supplemental appropriations for fiscal year 2007 and $141.7 billion in appropriations for fiscal year 2008. The United States' commitments to GWOT will likely involve the continued investment of significant resources, requiring decision makers to consider difficult trade-offs as the nation faces an increasing long-range fiscal challenge. The magnitude of future costs will depend on several direct and indirect cost variables and, in some cases, decisions that have not yet been made. DOD's future costs will likely be affected by the pace and duration of operations, the types of facilities needed to support troops overseas, redeployment plans, and the amount of equipment to be repaired or replaced. DOD compiles and reports monthly and cumulative incremental obligations incurred to support GWOT in a monthly Supplemental and Cost of War Execution Report. DOD leadership uses this report, along with other information, to advise Congress on the costs of the war and to formulate future GWOT budget requests. DOD reports these obligations by appropriation, contingency operation, and military service or defense agency. The monthly cost reports are typically compiled in the 45 days after the end of the reporting month in which the obligations are incurred. DOD has prepared monthly reports on the obligations incurred for its involvement in GWOT since fiscal year 2001. Section 1221 of the National Defense Authorization Act for Fiscal Year 2006 requires us to submit quarterly updates to Congress on the costs of Operation Iraqi Freedom and Operation Enduring Freedom based on DOD's monthly Supplemental and Cost of War Execution Reports. This report, which responds to this requirement, contains our analysis of DOD's reported obligations for military operations in support of GWOT through February 2007. Specifically, we assessed (1) DOD's appropriations and reported obligations for military operations in support of GWOT to date and (2) DOD's fiscal year 2007 reported obligations for GWOT by military service and appropriation account.
From fiscal year 2001 through April 2007, Congress has provided DOD with about $454 billion for its efforts in support of GWOT. DOD has reported obligations of about $407.1 billion for military operations in support of the war from fiscal years 2001 through 2006 and from the beginning of fiscal year 2007 through February 2007, the latest available data. The $46.9 billion difference between DOD's GWOT appropriations and reported obligations can generally be attributed to certain fiscal year 2007 appropriations and multiyear funding for procurement; military construction; and research, development, test, and evaluation from previous GWOT-related appropriations that have yet to be obligated, and obligations for classified activities, which are not included in DOD's reported obligations. DOD's total reported obligations related to GWOT have demonstrated a steady annual increase each fiscal year through 2006.
GAO-07-783R, Global War on Terrorism: Reported Obligations for the Department of Defense
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May 18, 2007:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C. W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
Subject: Global War on Terrorism: Reported Obligations for the
Department of Defense:
Since 2001, Congress has provided the Department of Defense (DOD) with
hundreds of billions of dollars in supplemental and annual
appropriations for military operations in support of the Global War on
Terrorism (GWOT).[Footnote 1] DOD's reported annual costs for GWOT have
shown a steady increase from about $0.2 billion in fiscal year 2001 to
about $98.4 billion in fiscal year 2006. So far in fiscal year 2007,
Congress has provided DOD with $70 billion in annual
appropriations[Footnote 2] for GWOT. To continue its GWOT operations,
DOD has requested an additional $93.4 billion in supplemental
appropriations for fiscal year 2007 and $141.7 billion in
appropriations for fiscal year 2008. The United States' commitments to
GWOT will likely involve the continued investment of significant
resources, requiring decision makers to consider difficult trade-offs
as the nation faces an increasing long-range fiscal challenge. The
magnitude of future costs will depend on several direct and indirect
cost variables and, in some cases, decisions that have not yet been
made. DOD's future costs will likely be affected by the pace and
duration of operations, the types of facilities needed to support
troops overseas, redeployment plans, and the amount of equipment to be
repaired or replaced.[Footnote 3]
DOD compiles and reports monthly and cumulative incremental
obligations[Footnote 4] incurred to support GWOT in a monthly
Supplemental and Cost of War Execution Report. DOD leadership uses this
report, along with other information, to advise Congress on the costs
of the war and to formulate future GWOT budget requests. DOD reports
these obligations by appropriation, contingency operation,[Footnote 5]
and military service or defense agency. The monthly cost reports are
typically compiled in the 45 days after the end of the reporting month
in which the obligations are incurred.[Footnote 6] DOD has prepared
monthly reports on the obligations incurred for its involvement in GWOT
since fiscal year 2001.
Section 1221 of the National Defense Authorization Act for Fiscal Year
2006[Footnote 7] requires us to submit quarterly updates to Congress on
the costs of Operation Iraqi Freedom and Operation Enduring Freedom
based on DOD's monthly Supplemental and Cost of War Execution Reports.
This report, which responds to this requirement, contains our analysis
of DOD's reported obligations for military operations in support of
GWOT through February 2007. Specifically, we assessed (1) DOD's
appropriations and reported obligations for military operations in
support of GWOT to date and (2) DOD's fiscal year 2007 reported
obligations for GWOT by military service and appropriation account.
Scope and Methodology:
To conduct our work, we analyzed applicable annual and supplemental
appropriations from fiscal year 2001 through February 2007 and DOD's
monthly Supplemental and Cost of War Execution Reports from September
2001 to February 2007. Specifically, we identified appropriated amounts
intended for GWOT and reported GWOT obligations for each operation,
military service, and appropriation account. Our prior work[Footnote 8]
has found the data in DOD's monthly Supplemental and Cost of War
Execution Report to be of questionable reliability. Consequently, we
are unable to ensure that DOD's reported obligations for GWOT are
complete, reliable, and accurate, and they therefore should be
considered approximations. Factors contributing to DOD's challenges in
reporting reliable cost data include long standing deficiencies in
DOD's financial management systems.
DOD is taking steps to improve GWOT cost reporting. Specifically, over
the years, we have made a series of recommendations to the Secretary of
Defense intended to improve the transparency and reliability of DOD's
GWOT obligations and DOD has implemented many of these recommendations.
For example we have recommended that DOD (1) revise the cost reporting
guidance so that large amounts of reported obligations are not shown in
"other" miscellaneous categories and (2) take steps to ensure that
reported GWOT obligations are reliable. In response, DOD has modified
the guidance to more clearly define some of the cost categories and is
taking additional steps, which we have not yet fully evaluated, to
strengthen the oversight and program management of the cost reporting.
We are continuing to review the fiscal year 2007 funding requirements
and reported obligations, the reliability of the obligations, and DOD's
ongoing efforts to improve its cost reporting, which include procedures
for attesting to the accuracy of data and analyzing variances. We will
report on our findings later this year.
We conducted our work from March 2007 through April 2007 in accordance
with generally accepted government auditing standards.
Summary:
From fiscal year 2001 through April 2007, Congress has provided DOD
with about $454 billion[Footnote 9] for its efforts in support of GWOT.
DOD has reported obligations of about $407.1 billion for military
operations in support of the war from fiscal years 2001 through 2006
and from the beginning of fiscal year 2007 through February 2007, the
latest available data. The $46.9 billion difference between DOD's GWOT
appropriations and reported obligations can generally be attributed to
certain fiscal year 2007 appropriations and multiyear funding for
procurement; military construction; and research, development, test,
and evaluation from previous GWOT-related appropriations that have yet
to be obligated, and obligations for classified activities, which are
not included in DOD's reported obligations.[Footnote 10] DOD's total
reported obligations related to GWOT have demonstrated a steady annual
increase each fiscal year through 2006. Figure 1 shows DOD's reported
GWOT obligations by fiscal year, from fiscal year 2001 through fiscal
year 2006 and from the beginning of fiscal year 2007 through February
2007.
Figure 1: DOD's Reported GWOT Obligations for Fiscal Years 2001 through
2006 and from the Beginning of Fiscal Year 2007 through February 2007:
[See PDF for Image]
Source: GAO analysis of DOD data.
Notes: Fiscal year 2007 reflects DOD's reported obligations from
October 2006 through February 2007. Reported GWOT obligations include
Operation Noble Eagle, Operation Enduring Freedom, and Operation Iraqi
Freedom. Figures include about $19.4 billion obligated in fiscal years
2002 and 2003, which was not included in DOD's cost-of-war reports.
This includes about $13.3 billion from the Defense Emergency Response
Fund and $6.1 billion from Pub. L. No. 108-7 (Consolidated
Appropriations Resolution, 2003). GAO has assessed the reliability of
DOD's obligation data and found significant problems, such that these
data may not accurately reflect the true dollar value of GWOT
obligations.
[End of figure]
Through February 2007, DOD's total reported obligations are already
more than half the total amount of obligations it reported for all of
fiscal year 2006. In addition, DOD's reported investment obligations--
which include procurement; research, development, test, and evaluation;
and military construction, through February 2007--are approximately
equal to its reported obligations for investments during all of fiscal
year 2006. As a result, total reported obligations for fiscal year 2007
may well exceed the amount reported for fiscal year 2006.
DOD's reported obligations to date include about $304.6 billion for
operations in and around Iraq as part of Operation Iraqi Freedom, and
about $74.2 billion for operations in Afghanistan, the Horn of Africa,
the Philippines, and elsewhere as part of Operation Enduring Freedom.
It also includes about $28.3 billion for operations in defense of the
homeland as part of Operation Noble Eagle. Figure 2 shows DOD's
reported GWOT obligations for Operation Iraqi Freedom, Operation
Enduring Freedom, and Operation Noble Eagle from fiscal year 2001
through February of fiscal year 2007.
Figure 2: DOD's Reported GWOT Obligations by Operation for Fiscal Years
2001 through 2006 and from the Beginning of Fiscal Year 2007 through
February 2007:
[See PDF for Image]
Source; GAO analysis of DOD data.
Notes: Fiscal year 2007 reflects DOD's reported obligations from
October 2006 through February 2007. Operation Iraqi Freedom began in
fiscal year 2003; therefore no obligations were reported in fiscal
years 2001 and 2002 for this operation. Figures include about $19.4
billion obligated in fiscal years 2002 and 2003 that was not included
in DOD's cost-of-war reports. This includes about $4.1 billion for
Operation Enduring Freedom, $9.2 billion for Operation Noble Eagle, and
$6.1 billion for Operation Iraqi Freedom. GAO has assessed the
reliability of DOD's obligation data and found significant problems,
such that these data may not accurately reflect the true dollar value
of GWOT obligations.
[End of figure]
As figure 2 shows, from fiscal years 2003 through 2006 DOD's reported
obligations for Operation Iraqi Freedom consistently increased both in
dollar amount and as a proportion of total reported GWOT obligations.
In contrast, DOD's reported obligations for Operation Noble Eagle have
consistently decreased since fiscal year 2003, while those for
Operation Enduring Freedom have remained within a range of $10.3
billion to $15.9 billion each fiscal year.
DOD's reported fiscal year 2007 obligations as of February total $55.3
billion. The Army accounts for the largest proportion of reported
obligations--about $41.6 billion, about ten times higher than the near
$4.3 billion in obligations reported for the Air Force, the service
with the next greatest reported amount. Among appropriation accounts,
operation and maintenance, which include items such as support for
housing, food, and services; the repair of equipment; and
transportation to move people, supplies, and equipment, accounts for
the largest reported obligations--about $26.8 billion. Obligations for
investment, which include procurement; research, development, test, and
evaluation; and military construction, account for more than a quarter
of reported obligations or about $16.4 billion. Figure 3 shows DOD's
reported obligations through February of fiscal year 2007, by military
service and appropriation account.
Figure 3: DOD's Reported GWOT Obligations for Fiscal Year 2007, by
Military Service and Appropriation Category, as of February 2007:
[See PDF for Image]
Source; GAO analysis of DOD data.
Notes: GAO has assessed the reliability of DOD's obligation data and
found significant problems, such that these data may not accurately
reflect the true dollar value of GWOT obligations. Obligation figures
may not add to $55.3 billion because of rounding.
[End of figure]
In previous work,[Footnote 11] we reported that significant amounts of
multiyear procurement funding provided in the fiscal year 2006
supplemental appropriation would likely not be obligated by DOD in
fiscal year 2006 and would remain available for use in fiscal year
2007. A large amount of these multiyear funds has since been obligated,
which accounts for the large amount of investment obligations shown in
fiscal year 2007.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD stated that it has
already taken action to address concerns we have raised regarding the
reliability of the data presented in DOD's Supplemental and Cost of War
Execution Reports, including requiring component organizations to
attest to the accuracy of the data submitted, report data variances and
the methodology for computing the data, and increased management
oversight of the cost reporting process. DOD also expressed concern
that we continue to represent the data in these cost-of-war reports as
being of questionable reliability. We agree that DOD has taken steps to
improve cost reporting, which we acknowledge in our report. We also
note DOD is just beginning to implement many of these efforts, and that
we are continuing to evaluate them. As we state in our scope and
methodology section, we are currently evaluating the attestation and
variance analysis processes to gain insights into their effect on data
reliability. Until all DOD's efforts are more fully implemented, it is
too soon to know the extent to which these changes will improve DOD's
cost reporting. While establishing sound cost reporting procedures and
oversight is clearly important, the reliability of the cost-of-war
reports is also dependent on the quality of DOD's accounting data. As
stated in our report, factors contributing to DOD's challenges in
reporting reliable cost data include long standing deficiencies in
DOD's financial management systems. We are aware that DOD has efforts
underway to improve these systems as well. DOD also provided technical
comments and we have incorporated them in the report as appropriate.
DOD's comments are included in appendix I in this report.
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 or your staff have any questions about this report, please
contact me at (202) 512-9619 or pickups@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Key contributors to this report are
listed in appendix II.
Signed by:
Sharon Pickup:
Director, Defense Capabilities and Management:
[End of section]
Appendix I: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
1100 Defense Pentagon:
Washington, DC 20301-1100:
Comptroller:
May 1 1 2007:
Ms. Sharon Pickup:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Ms. Pickup:
This is the Department of Defense (DoD) response to the Government
Accountability Office (GAO) Draft Report GAO-07-783R, "Global War On
Terrorism: Reported Obligations for the Department of Defense dated
April 24, 2007 (GAO Code 350991).
The Department has already taken prudent and appropriate action to
address GAO's concerns. Based on GAO recommendations, the each of the
Department's component organizations attests in writing to the accuracy
of the data submitted for the Department's Cost of War reports. In
addition, the Department requires and analyzes footnotes in the Cost of
War reports. These footnotes report data variances and describe the
methodology for computing data. The Department has also increased
management oversight of the cost of war reporting process by
establishing a senior level steering group and program management
office. I am concerned, however, that, despite our actions, the GAO
report continues to represent the data in the Department's Cost of War
report as being of questionable reliability.
We are constantly striving to improve the Cost of War report. We value
the GAO's important contribution to our process of continual
improvement. We look forward to working with your staff on our plans to
further improve the Department's Cost of War reports.
Sincerely,
Signed by:
J. David Patterson:
Principal Deputy:
[End of section]
Appendix II: GAO Contact and Staff Acknowledgements:
GAO Contact:
Sharon Pickup (202) 512-9619:
Acknowledgements:
In addition to the contact listed above, Ann Borseth, Assistant
Director, Susan Ditto, George Duncan, Richard Geiger, Ron La Due Lake,
Brian Mateja, Lonnie McAllister, Christopher Miller, and Thomas Twambly
made key contributions to this report.
(350991):
FOOTNOTES
[1] After the terrorist attacks of September 11, 2001, the President
announced a Global War on Terrorism, requiring the collective
instruments of the entire federal government to counter the threat of
terrorism. Ongoing military and diplomatic operations overseas,
especially in Iraq and Afghanistan, constitute a key part of GWOT.
These operations involve a wide variety of activities, such as
combating insurgents, civil affairs, capacity building, infrastructure
reconstruction, and training military forces of other nations.
[2] That portion of annual appropriations designated for GWOT, also
known as Title IX or bridge funding, was provided by Congress to pay
for ongoing military operations during the first part of the fiscal
year.
[3] For more information see GAO, Securing, Stabilizing, and Rebuilding
Iraq: Key Issues for Congressional Oversight, GAO-07-308SP (Washington,
D.C.: Jan. 9, 2007), and Global War on Terrorism: Observations on
Funding, Costs, and Future Commitments, GAO-06-885T (Washington, D.C.:
July 18, 2006).
[4] According to Department of Defense Financial Management Regulation,
7000.14-R, Volume 1, Definitions, p. xvii (December 2001), obligations
are incurred through actions such as orders placed, contracts awarded,
services received, or similar transactions made by federal agencies
during a given period that will require payments during the same or a
future period.
[5] DOD defines contingency operations to include small, medium, and
large-scale campaign-level military operations, including support for
peacekeeping operations, major humanitarian assistance efforts,
noncombatant evacuation operations, and international disaster relief
efforts.
[6] Volume 12, Chapter 23, of DOD Financial Management Regulation,
7000.14-R. This regulation generally establishes financial policy and
procedures related to DOD contingency operations. Volume 6A, Chapter 2,
and Volume 3, Chapter 8, of the DOD Financial Management Regulation
also include provisions to ensure the accuracy of cost reporting.
[7] Pub. L. No. 109-163, § 1221(c) (2006).
[8] For more information see GAO, Global War on Terrorism: DOD Needs to
Improve the Reliability of Cost Data and Provide Additional Guidance to
Control Costs, GAO-05-882 (Washington, D.C.: Sept. 21, 2005), and
Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are Within
Funding Levels and Significant Multiyear Procurement Funds Will Likely
Remain Available for Use in Fiscal Year 2007, GAO-07-76 (Washington,
D.C.: Nov. 13, 2006).
[9] From fiscal year 2001 through fiscal year 2004, military operations
in defense of the homeland (Operation Noble Eagle) were funded through
supplemental appropriations. Since fiscal year 2005, DOD has funded
these operations through its regular budget, and these amounts cannot
be separately identified. DOD recently began including the obligations
tied to this operation, about $3 billion, as part of its total
available funding, which is included in the $454 billion.
[10] Appropriations for military personnel and operation and
maintenance are usually available for 1 year, while appropriations for
research and development funds are usually available for 2 years;
procurement funds (with the exception of shipbuilding funds, which are
sometimes longer) for 3 years; and military construction funds for 5
years.
[11] GAO-07-76.
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