Summary

The Secretary of Defense contends that the Defense Department (DOD) must increase its procurement funding if it is to have a modern future force. The Secretary wants to reform the acquisition process and streamline infrastructure to pay, in part, for force modernization. DOD now expects decreases in its operation and maintenance account and increases in its procurement account beginning in fiscal year 1998. This report reviews how the Army and the Air Force obligated their annual operation and maintenance account funds and compares their obligations to what was requested in the President's budgets. GAO determines what part of total obligations was used for infrastructure activities as opposed to combat force. The Navy is not included in this review because, at the headquarters level, it does not maintain the level of budget request and obligation data that GAO needed for its analysis.

GAO found that; (1) the services have a great deal of flexibility as to how they use their O&M funds; (2) this flexibility is evident in the O&M obligation trends, which illustrate that the proposed uses of O&M identified in the budget request may not always reflect how the funds are obligated; (3) this is particularly true for the Army, which historically obligates less funds for its combat forces than it requests even when Congress appropriates more than was requested; (4) the Army and the Air Force obligate about one-third of their O&M funds for activities directly related to combat forces, including training and recruitment; (5) the remainder goes to support infrastructure-type activities such as base support and management activities; (6) from fiscal years 1993 through 1995, the Army obligated less than 20 percent of its O&M funds for combat forces and support of the forces and the Air Force obligated about 26 percent of its O&M funds for such purposes; (7) when training and recruiting funds are added, the Army's and the Air Force's obligations are about 30 and 34 percent, respectively; (8) the balance of the O&M funds was obligated for infrastructure-type functions such as base support and management activities. During the 3-year period, the Army obligated 33 percent of its O&M funds for base support and 37 percent for management activities; (9) the Air Force obligated 30 percent of its O&M funds for base support and 35 percent for management activities for that same period; (10) the fastest growing accounts were minor construction, maintenance and repair, administrative activities, and international activities; (11) when the amounts obligated for combat forces and support of the forces and training and recruitment are compared to the amounts requested for these categories, the Army historically requested more than it obligated; (12) conversely, it often obligates more than requested for infrastructure and management activities; (13) in part, this may be due to Congress appropriating more than requested; (14) however, it can also be the result of O&M funds requested for one purpose being obligated for another purpose; (15) GAO's comparison of the amounts obligated and budgeted by the Air Force for these same functions showed that the Air Force obligated slightly more than it requested for combat forces; (16) with regard to training and recruiting, the Air Force obligated less than the amounts requested; and (17) it obligated more than it requested for base support and slightly less than it requested for management activities.