Summary
Congress needs the best available data about DOD's resource tradeoffs between the dual priorities of transformation and fighting the global war on terrorism. To help shape its priorities, in 2001 DOD developed a capabilities-based approach focused on how future adversaries might fight, and a risk management framework to ensure that current defense needs are balanced against future requirements. Because the Future Years Defense Program (FYDP) is DOD's centralized report providing DOD and Congress data on current and planned resource allocations, GAO assessed the extent to which the FYDP provides Congress visibility over (1) projected defense spending and (2) implementation of DOD's capabilities-based defense strategy and risk management framework.
The FYDP provides Congress with mixed visibility over DOD's projected spending for the current budget year and at least four succeeding years. On the one hand, it provides visibility over many programs that can be aggregated so decision makers can see DOD's broad funding priorities by showing shifts in appropriation categories. On the other hand, in some areas DOD likely understates the future costs of programs in the FYDP because it has historically employed overly optimistic planning assumptions in its budget formulations. As such, DOD has too many programs for the available dollars, which often leads to program instability, costly program stretchouts, and delayed program termination decisions. Also, the FYDP does not reflect costs of ongoing operations funded through supplemental appropriations. Since September 2001, DOD has received $158 billion in supplemental appropriations to support the global war on terrorism, and DOD expects to request another supplemental in January 2005 to cover operations in Iraq and Afghanistan. While DOD officials stated they are uncertain of the amount of the request, some requirements they intend to fund with the supplemental appropriation have already been identified, such as temporarily increasing the Army's force structure. Defining costs during ongoing operations is challenging and supplemental appropriations are sometimes necessary; however, not considering the known or likely costs of ongoing operations expected to continue into the new fiscal year as part of larger budget deliberations will preclude DOD and congressional decision makers from fully examining the budget implications of the global war on terrorism. The FYDP provides Congress limited visibility over important DOD initiatives. While DOD is considering how to link resources to defense capabilities and the risk management framework, it does not have specific plans to make these linkages in the FYDP, in part because the initiatives have not been fully defined or implemented. Because the FYDP lacks these linkages, decision makers cannot use it to determine how a proposed increase in capability would affect the risk management framework, which balances dimensions of risk, such as near term operational risk versus risks associated with mid- to long-term military challenges.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Sharon L. Pickup
Government Accountability Office: Defense Capabilities and Management
(202) 512-9619
Recommendations for Executive Action
Recommendation: In the interest of providing Congress greater visibility over projected defense spending, the Secretary of Defense should direct the Undersecretary of Defense (Comptroller) to provide Congress data on known or likely costs for ongoing operations that are expected to extend into fiscal year 2005 for consideration during its deliberation over DOD's fiscal year 2005 budget request and accompanying FYDP.
Agency Affected: Department of Defense
Status: Implemented
Comments: In GAO's report, "Future Years Defense Program: Actions Needed to Improve Transparency of DOD's Projected Resource Needs" (GAO-04-514, May 7, 2004), GAO noted that it was important for DOD and congressional decision makers to have the most complete information possible on the costs of ongoing operations as they deliberate the budget. For example, GAO noted that in presentations related to the 2005 President's budget submitted to Congress in early February 2004, DOD officials reported that the budget did not include funding for ongoing operations in Iraq and Afghanistan, and they expected another supplemental would be needed in January 2005 to finance incremental costs for these operations. In the interest of providing Congress greater visibility over projected defense spending, we recommended that the Secretary of Defense direct the Undersecretary of Defense (Comptroller) to include known or likely projected costs of ongoing operations that are expected to extend into fiscal year 2005 for consideration during its deliberation over DOD's fiscal year 2005 budget request and FYDP. In its response to GAO, DOD noted that at that point in the War on Terrorism, current operations were simply too fluid to accurately determine a year in advance the amount of additional funding that would be required. As such, DOD stated that any attempt to include these estimates in DOD's budget request or FYDP would unnecessarily complicate resource discussions and decisions. However, shortly after issuance of GAO's report, on May 13, 2004, the Deputy Defense Secretary, in a prepared statement to the Senate Armed Services Committee, said he supported President Bush's request for a $25 billion reserve fund to ensure adequate resources for both its core defense activities and its operations in Iraq and Afghanistan. He said that DOD had planned to cash flow fiscal year 2005 operations in Iraq and Afghanistan until a Supplemental budget request could be prepared by early 2005. However, higher projected troop levels increased the risk that certain accounts--especially Operation and Maintenance--Army would have difficulty cash flowing operations beyond the February-March timeframe in 2005. He listed a number of specific requirements related to this request, although detailed dollar breakouts were not provided. Appropriations conferees chose to allocate the $25 billion among various appropriation accounts in approving the administration request. By requesting additional resources to conduct ongoing operations GAO believes the Deputy Defense Secretary followed the intent of its recommendation to provide the Congress a more accurate picture of defense resource needs during fiscal year 2005 budget deliberations.
Recommendation: In the interest of providing Congress greater visibility over projected defense spending, the Secretary of Defense should direct the Undersecretary of Defense (Comptroller) to include known or likely projected costs of ongoing operations for the fiscal year 2006 and subsequent budget requests and accompanying FYDPs.
Agency Affected: Department of Defense
Status: Implemented
Comments: In GAO's report, "Future Years Defense Program: Actions Needed to Improve Transparency of DOD's Projected Resource Needs" (GAO-04-514, May 7, 2004), GAO noted that DOD and congressional decision makers need to have the most complete information possible on the costs of ongoing operations as they deliberate the budget. For example, GAO noted that in presentations related to the 2005 President's budget submitted to Congress in early February 2004, DOD officials reported that the budget did not include funding for ongoing operations in Iraq and Afghanistan, and they expected another supplemental would be needed in January 2005 to finance incremental costs for these operations. In the interest of providing Congress greater visibility over projected defense spending, GAO recommended that the Secretary of Defense direct the Undersecretary of Defense (Comptroller) to include known or likely projected costs of ongoing operations for the fiscal year 2006 and subsequent budget requests and accompanying Future Years Defense Programs (FYDPs). The FYDP is DOD's centralized report providing DOD and the Congress data on current and planned resource allocations. In response, DOD maintained that it does provide such data to Congress when it is sufficiently reliable, although GAO's report indicated otherwise. Notwithstanding DOD's assertion, such action has now been mandated by the Congress. The Department of Defense Appropriations Act for fiscal year ending September 30, 2005, contains a provision (Section 9012) that requires additional reporting on the costs of ongoing operations over the period fiscal year 2006 through 2011. That provision states that the President shall provide to the Congress a report detailing the estimated costs over the period from fiscal year 2006 to 2011 of Operation Iraqi Freedom and Operation Enduring Freedom, or any related military operations in and around Iraq and Afghanistan, and the estimated costs of reconstruction, internal security, and related economic support to Iraq and Afghanistan: provided, that the President may waive the requirement to submit this report only if the President certifies in writing to the Congress that estimates of these future military and economic support costs cannot be provided for purposes of national security: provided further, that the report referenced above shall be submitted no later than January 1, 2005. Both House and Senate Appropriations Committees were briefed on GAO's work on DOD's projected resource needs. This legislative provision effectively carries out the intent of GAO's recommendation to DOD, which is to ensure that congressional decision makers have the opportunity to examine the budget implications of the Global War on Terrorism as part of their larger budget deliberations on defense spending.
Recommendation: To enhance the effectiveness of the FYDP as a tool for planning and analysis in the current strategic environment, the Secretary of Defense should direct the Office of Program Analysis and Evaluation to align the program elements in the FYDP to defense capabilities needed to meet the defense strategy, as these capabilities are identified and approved, and the dimensions of the risk management framework and include this alignment with the FYDP provided to Congress.
Agency Affected: Department of Defense
Status: Implemented
Comments: DOD nonconcurred with this recommendation on the basis that a FYDP linked to defense capabilities would be less informative than the current system and would be needlessly complex. However, DOD has made substantial progress toward implementing the intent of this recommendation. First, in a May 6, 2005, memo, the Secretary of Defense announced the completion of a Joint Force Capability Assessment that recommended 21 Joint Capability Areas. While the Secretary acknowledged the need for further development, he asked that these Joint Capability Areas be used wherever appropriate. Specifically, his memo tasked OSD PA&E to "apply the capabilities lexicon to the program and budget databases as appropriate prior to the FY 08-18 POM cycle." Further, DOD's February 2006 Quadrennial Defense Review Report noted that the Department will begin to break out its budget according to joint capability areas. DOD stated that such a joint capability view--in place of a military department or traditional budget category display--should improve the Department's understanding of the balancing of strategic risks and required capability trade-offs associated with particular decisions. While GAO's recommendation called for DOD to link these capabilities to the FYDP, linkage to the budget represents significant progress toward the intent of GAO's recommendation, and a substantial improvement over current reporting.
Recommendation: To enhance the effectiveness of the FYDP as a tool for planning and analysis in the current strategic environment, the Secretary of Defense should direct the Office of Program Analysis and Evaluation to report funding levels for defense capabilities and the dimensions of the risk framework in its summary FYDP report to Congress.
Agency Affected: Department of Defense
Status: Implemented
Comments: DOD nonconcurred with this recommendation stating that it did not intend to imbed capabilities or the risk management framework in the FYDP. DOD nonconcurred with this recommendation on the basis that a FYDP linked to defense capabilities would be less informative than the current system and would be needlessly complex. However, DOD has made substantial progress toward implementing the intent of this recommendation. First, in a May 6, 2005, memo, the Secretary of Defense announced the completion of a Joint Force Capability Assessment that recommended 21 Joint Capability Areas. While the Secretary acknowledged the need for further development, he asked that these Joint Capability Areas be used wherever appropriate. Specifically, his memo tasked OSD PA&E to "apply the capabilities lexicon to the program and budget databases as appropriate prior to the FY 08-18 POM cycle." Further, DOD's February 2006 Quadrennial Defense Review Report noted that the Department will begin to break out its budget according to joint capability areas. DOD stated that such a joint capability view--in place of a military department or traditional budget category display--should improve the Department's understanding of the balancing of strategic risks and required capability trade-offs associated with particular decisions. While GAO's recommendation called for DOD to link these capabilities to the FYDP, linkage to the budget represents significant progress toward the intent of GAO's recommendation, and a substantial improvement over current reporting.
