Summary

During fiscal year 1995, the Defense Department (DOD) participated in contingency operations around the globe, including Haiti, Southwest Asia, and the former Yugoslavia. To help cover the incremental costs of these operations, Congress provided DOD with a supplemental appropriation. In an earlier report (GAO/NSIAD-96-121BR), GAO found that although DOD ended fiscal year 1995 with supplemental funding of $12 million above its reported incremental costs, some of the military services and defense agencies had reported costs that exceeded their supplemental appropriations while other services had reported costs below their supplemental appropriations. GAO also indicated that costs surged in September 1995. This briefing report provides information on (1) how the services that reported costs in excess of supplemental funding covered their shortfalls and (2) why the surge occurred.

GAO found that: (1) the Army and the Navy reported incremental contingency costs that exceeded their operations and maintenance (O&M) supplemental appropriations; (2) while they covered their shortfall differently, both Army and Navy officials believe that unit readiness was not affected significantly; (3) the reported shortfalls, however, may not be as great as reported costs suggest; (4) GAO previously reported that some Army and Navy O&M costs were overstated; (5) the surge in September costs primarily related to accounting adjustments, end of fiscal year payments, and other spending, including spending associated with higher operating tempo in Bosnia and southwest Asia; and (6) GAO identified $92 million in accounting adjustments and $82 million in end-of-fiscal year payments, which together represented 60 percent of the September costs that GAO examined.