Defense Spending

In light of the nation’s fiscal imbalance, the Department of Defense (DOD) will face competing demands for resources as it continues to support ongoing operations and prepare for future threats. With an annual appropriation of about $512 billion in fiscal year 2009, and supplemental funding of about $807 billion over the past several years to support the global war on terror, the department has a larger budget than any other federal agency. To maximize its use of resources and minimize wasteful spending, the department needs to become more disciplined in its approach to developing plans and budgets. It also needs to take greater steps to improve the efficiency and effectiveness of its programs and operations, particularly with respect to weapon systems acquisition and contract management.

With tightened budgets likely governmentwide, better fiscal discipline is essential and will require sustained leadership at the highest levels of the department, with clear accountability for achieving results.

• The department’s current approach to planning and budgeting is based on overly optimistic planning assumptions and lacks a strategic, risk-based framework for determining priorities and making investment decisions. As a result, it continues to experience a mismatch between programs and budgets, and it does not fully consider long-term resource implications and the opportunity cost of selecting one alternative over another.

  Full Report of GAO-05-325SP (PDF, 90 pages), Highlights of GAO-06-13 (PDF), and Highlights of GAO-08-619 (PDF)

• While the combat effectiveness of U.S. forces is unparalleled, DOD has not been as effective in managing its ongoing business operations, resulting in substantial waste and inefficiency that have adversely affected mission performance and increased the vulnerability of programs to fraud, waste, abuse, and mismanagement. The department's senior leadership has shown a commitment to transforming business operations, but challenges remain in sustaining and building on this momentum, particularly during a period of transition to a new administration.

  Highlights of GAO-07-1072 (PDF), Highlights of GAO-08-436T (PDF)

• The department continues to rely heavily on emergency funding requests to cover the costs of contingency operations that have been ongoing for several years, even though some of these costs are the same ones it incurs for base needs. Specifically, changes in DOD’s funding guidance have resulted in billions of dollars being added to the global war on terrorism funding requests for what DOD calls the “longer war against terror, “ making it difficult to distinguish between incremental costs to support specific contingency operations and longer-term costs typically associated with DOD’s baseline budget.

  Highlights of GAO-08-68 (PDF)

• The department’s major weapon system programs continue to take longer to develop, cost more, and deliver fewer quantities and capabilities than originally planned. The total acquisition cost of DOD’s 2007 portfolio of major programs has grown by nearly $300 billion over initial estimates. At the strategic level, DOD’s processes for identifying needs, allocating resources, and buying weapon systems are fragmented and broken. At the program level, weapon system programs are initiated without sufficient knowledge about requirements, technology, and design maturity. Instead, managers rely on assumptions that are consistently too optimistic.

  Highlights of GAO-08-467SP (PDF), Highlights of GAO-08-1159T (PDF), and Highlights of GAO-07-388

• The department spent more than $315 billion acquiring goods and services in fiscal year 2007, more than double the amount it spent 6 years earlier. It is increasingly relying on contractors to provide services to help meet critical missions and support acquisition functions. However, the lack of well-defined requirements, the use of ill-suited business arrangements, and the lack of an adequate number of trained acquisition and contract oversight personnel contribute to unmet expectations and schedule delays and place the department at risk of potentially paying more than necessary for contract arrangements.

  Highlights of GAO-06-800T (PDF), Highlights of GAO-08-568T (PDF)

^ Back to topWhat Needs to Be Done

• The new administration needs to move quickly to nominate and fill key leadership positions, including the Deputy Secretary of Defense (now statutorily designated as the Chief Management Officer), the Deputy Chief Management Officer, the Undersecretaries of Defense, and the Secretaries and the Undersecretaries in the military departments (now statutorily designated as each department’s Chief Management Officer). DOD senior leaders must have sufficient authority to make trade-offs between competing near-term and long-term demands, get the highest return from the funding choices that are made, and put sufficient controls in place to manage an increasingly large and involved contractor workforce.
  
  
• DOD needs to adopt a risk-based approach to investment decision making that links strategic goals to plans and budgets; assesses the values and risks of various courses of actions as a tool for re-examining defense programs, setting priorities, and allocating resources; and uses performance measures to assess outcomes.

  Highlights of GAO-06-13 (PDF), Highlights of GAO-08-619 (PDF)

• DOD needs to identify what costs are related to the war on terror and, in consultation with the Office of Management and Budget, build these costs into the base defense budget instead of continuing to fund these costs with emergency funding requests.
  

  Highlights of GAO-08-68 (PDF)

• DOD needs to review its existing and planned weapon system acquisition programs to (1) determine the right mix of programs to invest in by making better decisions as to which programs should be pursued given existing and expected funding and, more importantly, by deciding which programs should not be pursued; (2) ensure that programs that are started are executable by matching requirements with resources and locking in those requirements; and (3) make it clear that programs will then be executed based on knowledge and holding program managers responsible for that execution.

  Highlights of GAO-08-1159T (PDF), Highlights of GAO-08-467SP (PDF), Highlights of GAO-08-619 (PDF), Highlights of GAO-07-388, and Highlights of GAO-06-110 (PDF)

• DOD needs to determine the appropriate mix of contractor, civilian, and military personnel and ensure it retains a sufficient institutional capacity to provide effective management and oversight.

  Highlights of GAO-08-436T (PDF), Highlights of GAO-08-572T (PDF)

^ Back to topKey Reports

Defense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight

GAO-08-572T, March 11, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 42 pages)   Accessible Text

Global War on Terrorism: DOD Needs to Take Action to Encourage Fiscal Discipline and Optimize the Use of Tools Intended to Improve GWOT Cost Reporting

GAO-08-68, November 6, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 64 pages)   Accessible Text   Recommendations (HTML)

Defense Business Transformation: A Full-time Chief Management Officer with a Term Appointment Is Needed at DOD to Maintain Continuity of Effort and Achieve Sustainable Success

GAO-08-132T, October 16, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 45 pages)   Accessible Text

Defense Acquisitions: Fundamental Changes Are Needed to Improve Weapon Program Outcomes

GAO-08-1159T, September 25, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 21 pages)   Accessible Text

More Reports