Military Operations: Some Funds for Fiscal Year 1999 Contingency
Operations Will Be Available for Future Needs (Briefing Report,
09/21/1999, GAO/NSIAD-99-244BR).
Pursuant to a congressional request, GAO provided information on: (1)
the costs of and funding for fiscal year (FY) 1999 overseas military
contingency operations; and (2) whether any funds remaining at the end
of FY 1999 can be applied to FY 2000 funding requirements.
GAO noted that: (1) based on its analysis of available funding and costs
through June 1999, GAO believes that there is sufficient funding for all
FY 1999 contingency operations costs and project that between $138
million and $475 million of the funds originally appropriated to fund FY
1999 contingency operations could be applied to FY 2000 funding
requirements; (2) the availability of funds originally intended to fund
FY 1999 contingency operations is due primarily to the fact that combat
operations in Kosovo ended in June 1999 rather than continuing to the
end of the fiscal year as anticipated; and (3) the Department of Defense
agrees that there are sufficient funds to meet FY 1999 costs, but
believes that only $138 million will be available to apply to FY 2000
funding requirements.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-99-244BR
TITLE: Military Operations: Some Funds for Fiscal Year 1999
Contingency Operations Will Be Available for Future Needs
DATE: 09/21/1999
SUBJECT: Defense contingency planning
Military operations
NATO military forces
Reprogramming of appropriated funds
International cooperation
Cost analysis
Defense appropriations
Armed forces abroad
IDENTIFIER: Yugoslavia
Kosovo (Serbia)
General Framework Agreement for Peace in Bosnia and
Herzegovina (Dayton Agreement)
Bosnia
Persian Gulf War
Iraq
South Asia
Overseas Contingency Operations Transfer Fund
Hurricane Mitch
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Briefing Report to the Chairman, Subcommittee on Defense, Committee on
Appropriations, House of Representatives
September 1999
MILITARY OPERATIONS
Some Funds for Fiscal Year 1999 Contingency Operations Will Be Available
for Future Needs
*****************
*****************
GAO/NSIAD-99-244BR
National Security and
International Affairs Division
B-283395
September 21, 1999
The Honorable Jerry Lewis
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives
Dear Mr. Chairman:
In fiscal year 1999, U.S. military forces are participating in a number of
contingency operations, most notably in the Balkans and Southwest Asia.
Through June 1999, the Department of Defense (DOD) has reported about $4
billion in incremental costs/Footnote1/ for contingency operations in
fiscal year 1999 and is estimating that there will be several billion
dollars in additional costs through the end of the fiscal year. In
response to your request, this report examines (1) the costs of and
funding for fiscal year 1999 contingency operations and (2) whether any
funds remaining at the end of fiscal year 1999 can be applied to fiscal
year 2000 funding requirements.
Background
Since the end of the Persian Gulf War in 1991, the two largest contingency
operations involving U.S. military forces are in the Balkans and Southwest
Asia. These two operations account for 98 percent of DOD's reported fiscal
year 1999 incremental costs for contingency operations through June 1999,
the latest available data. In the Balkans, the United States was first
engaged in Bosnia and, beginning this year, in Kosovo. U.S. involvement in
Bosnia began in July 1992 as part of humanitarian relief efforts and then,
in April 1993, the United States began to participate in the North
Atlantic Treaty Organization (NATO) enforcement of a no-fly zone over
Bosnia and Herzegovina in support of United Nations peacekeeping. From
December 1995 through the present date, the United States has deployed
military personnel in and around Bosnia to assist in implementing the
General Framework Agreement (also known as the Dayton Agreement). U.S.
forces, currently numbering about 6,200, are part of a multilateral
coalition under NATO command. On March 24, 1999, the United States
provided military forces in support of NATO combat operations against
Yugoslavia following the failure of peace talks and escalating violence
against ethnic Albanians in Kosovo. By late May 1999, more than 39,000
U.S. military personnel were involved in the operation. Combat operations
officially ended on June 20, 1999. With the Yugoslav acceptance of a peace
plan and United Nations' endorsement of the plan, the United States began
providing troops to the NATO-led Kosovo Force, whose mission is peace
enforcement in Kosovo. In fiscal year 1999, DOD has reported almost $3.1
billion in incremental costs for Balkans operations through June 1999.
U.S. forces have been involved in no-fly zone enforcement over parts of
Iraq since the end of the Persian Gulf War. The size of the U.S. force
involved has on average comprised 15,000 to 20,000 personnel, many of them
Navy and Marine Corps personnel embarked on ships. Beginning in December
1998 and continuing to this day, the United States has conducted a low
level of air strikes against Iraq, first in support of United Nations
weapons of mass destruction inspection efforts and then in response to
Iraqi attempts to target allied aircraft enforcing the no-fly zones. In
fiscal year 1999, DOD has reported $887 million in incremental costs
through June 1999.
DOD budgets for the cost of ongoing contingency operations and Congress
includes funds for ongoing operations in the annual defense appropriations
acts./Footnote2/ In the case of new or expanded operations, such as the
operations involving Kosovo and the late 1998 military action involving
Iraq, costs have not been budgeted in advance and the services generally
borrow funds from other activities that they planned to conduct later in
the fiscal year. If these funds are not replenished through supplemental
appropriations or reprogramming of previously appropriated funds, then the
services have to cancel planned activities.
Congress appropriates funds both directly to the services' appropriations
accounts and to the Overseas Contingency Operations Transfer Fund. DOD can
transfer funds in the Overseas Contingency Operations Transfer Fund to the
services' appropriations accounts as operations unfold during the year.
Any funds remaining in the fund at the end of a fiscal year can be carried
over to the next fiscal year. The bulk of fiscal year 1999 contingency
operation funding was placed in the Overseas Contingency Operations
Transfer Fund for subsequent transfer to the services. Congress also
established a considerably smaller Operational Rapid Response Transfer
Fund in fiscal year 1999 to fund the accelerated acquisition and
deployment of selected technologies and systems for the military action
involving Yugoslavia. Section I of this briefing report contains
additional background information.
Results in Brief
Based on our analysis of available funding and costs through June 1999, we
believe that there is sufficient funding for all fiscal year 1999
contingency operations costs and project that between $138 million and
$475 million of the funds originally appropriated to fund fiscal year 1999
contingency operations could be applied to fiscal year 2000 funding
requirements. The availability of funds originally intended to fund fiscal
year 1999 contingency operations is due primarily to the fact that combat
operations in Kosovo ended in June 1999 rather than continuing to the end
of the fiscal year as anticipated. DOD agrees that there are sufficient
funds to meet fiscal year 1999 costs, but believes that only $138 million
will be available to apply to fiscal year 2000 funding requirements.
Table 1 summarizes our analysis of the changes in funding requirements as
a result of operational changes in Kosovo and Southwest Asia. In examining
these changes, it is important to recognize that cost estimates are being
revised and fiscal year 1999 cost reports are only available through June
1999. While it is not possible to precisely detail the net change in costs
precipitated by the early end of military action and U.S. participation in
the Kosovo Force and the resulting implications for funding, it is
possible to provide a rough estimate of the possible net change based on
the currently available data.
Table****Helvetica:x11****1: GAO Estimate of Change in Funding
Requirements for Fiscal Year 1999
Contingency Operations
(Dollars in millions)
-------------------------------------------------------------------------
| Contingenc : Cost category : Potential : Potential : Net change |
| y operation: : decrease : increase : |
|-----------------------------------------------------------------------|
| Kosovo : Air operations : $1,745 : : |
|-----------------------------------------------------------------------|
| : Kosovo Force : : $1,157 : |
|-----------------------------------------------------------------------|
| : Redeployment : : 351 : |
| : and : : : |
| : reconstitution : : : |
|-----------------------------------------------------------------------|
| : Humanitarian : 162 : : |
| : relief : : : |
|-----------------------------------------------------------------------|
| : Munitions : -- : -- : |
|-----------------------------------------------------------------------|
| : Contingency : -- : -- : |
| : reserve : : : |
|-----------------------------------------------------------------------|
| : Rapid Response : -- : -- : |
| : Transfer Fund : : : |
|-----------------------------------------------------------------------|
| : Subtotal : $1,907 : $1,508 : $399 |
|-----------------------------------------------------------------------|
| Southwest : : 76 : : 76 |
| Asia : : : : |
|-----------------------------------------------------------------------|
| Total : : $1,983 : $1,508 : $475 |
-------------------------------------------------------------------------
Funding Is Available to Meet All Fiscal Year 1999 Requirements
--------------------------------------------------------------
The early end of combat operations against Yugoslavia has had the greatest
impact on fiscal year 1999 contingency operations funding. The costs
associated with the air campaign as well as humanitarian assistance have
declined substantially. This has, in turn, substantially reduced the
funding requirement for these activities and made funds available for
other operational costs. At the same time, the costs of participation in
the Kosovo Force and the redeployment and reconstitution of equipment used
in the combat operations against Yugoslavia were unbudgeted. However, on
balance, decreased funding requirements exceed increased requirements;
therefore, there is sufficient funding for all Kosovo operations' fiscal
year 1999 costs. DOD also estimates that sufficient funds initially
budgeted to finance combat operations will be left to fund participation
in the Kosovo Force and redeployment and reconstitution costs. Section II
of this briefing report contains the details of our analysis.
Estimated Southwest Asia fiscal year 1999 cost estimates and funding
status present a mixed picture. Military personnel costs have risen by
about $120 million, primarily due to an expected increase in Air Force
costs. At the same time, estimated operation and maintenance costs have
declined $76 million. Office of the Secretary of Defense (Comptroller)
officials assume that the services can absorb the increased military
personnel costs within their existing military personnel funding because,
as of August 30, 1999, the services had not requested any additional
funds. Consequently, the Comptroller's office plans to use the $76 million
excess in funds related to reduced operation and maintenance costs to help
fund other contingency operations. Section III contains details on
Southwest Asia costs and funding.
Between $138 Million and $475 Million in Funds Could Be Available to Help
Fund Fiscal Year 2000 Costs
---------------------------------------------------------------------------
We estimate that there could be between $138 million and $475 million
remaining at the end of fiscal year 1999 that could be used to reduce
fiscal year 2000 funding requirements for contingency operations, which
are expected to exceed $5 billion. The primary differences between DOD's
$138 million estimate and our $475 million estimate relate to (1) the
$162 million in unexpended funds for humanitarian needs and whether DOD
will be tasked to resource additional humanitarian needs and
(2) $175 million in estimated reconstitution costs that DOD expects will
occur in fiscal year 2000. In discussing the $175 million in estimated
fiscal year 2000 reconstitution costs with DOD officials, they agreed that
the
$175 million will not have been distributed to the services by the end of
fiscal year 1999. These officials also noted that they do not intend to
include that amount in their fiscal year 2000 budget request for Kosovo
operations, which is still being developed because they view fiscal year
2000 reconstitution costs associated with the air campaign as covered in
their current air campaign cost estimates and planned funds use. Section
IV of this briefing report contains additional detail.
Agency Comments and Our Evaluation
In written comments on a draft of this report DOD stated that our original
estimate of the amount of funds that can be applied to fiscal year 2000
costs was too high. In our draft report, we had identified up to $1.9
billion as available to be applied to fiscal year 2000 requirements. DOD
estimates that $138 million will be available to apply to fiscal year 2000
requirements. DOD arrived at this estimate through a comparison of
appropriated funds and revised cost estimates for Kosovo-related and
Southwest Asia operations. DOD identified four reasons for the differences
between our estimate and theirs. Based on DOD's comments and additional
information we obtained, we have reduced our estimate of the amount of
funds that could be available to apply to fiscal year 2000 requirements.
However, we still feel that up to $475 million in additional funds could
be available to apply to fiscal year 2000 requirements. Appendix I
contains the full text of DOD's comments.
DOD identified the following reasons for the differences in estimated
costs. One reason our estimate is higher than DOD's is because we assumed
DOD's cost report through the end of June represented the total cost of
the Kosovo air campaign. DOD disagrees with this assumption because it
states that there is a time lag between recording obligations and their
inclusion in the cost report. DOD states that the most accurate estimates
of the air campaign costs are the budget estimates for the balance of
fiscal year 1999 submitted by the services and defense agencies. We
recognize that some additional costs are likely to be reported beyond
June. Preliminary July 1999 air campaign cost data for the military
services show an additional $196 million in costs, which probably includes
a mix of further air campaign and redeployment costs. Consequently, we
have reduced our air campaign cost calculation. We had already excluded
from our calculation of potential carry-over funds DOD's estimate of
$351 million in fiscal year 1999 redeployment and reconstitution costs.
However, we have included in our calculation of the amount of funds that
would be available to apply to fiscal year 2000 requirements $175 million
in estimated reconstitution costs that DOD expects will occur in fiscal
year 2000. In discussing this matter with DOD officials, they agreed that
this $175 million will not have been distributed to the services by the
end of fiscal year 1999.
A second reason our estimate is higher is that while our report includes
$162 million in uncommitted funds set aside for refugee relief as
available for fiscal year 2000 requirements, DOD believes that it is
premature to declare such uncommitted funds as excess and available for
fiscal year 2000 requirements. We exclude from our calculation the funds
DOD has identified as needed for planned activities and question whether
additional DOD funds need to be used for further relief activities given
the efforts of other organizations. For example, on August 31, 1999, the
United Nations reported that measures to repair structures in Kosovo and
to place people in temporary housing should ensure winter shelter for all
of the nearly 700,000 people whose homes have been damaged or destroyed.
In a draft of this report, we stated that $1.1 billion for readiness and
munitions would be available and could be applied to fiscal year 2000
requirements. DOD, in commenting on the draft report, stated that (1) it
has validated requirements in excess of the $1.1 billion for readiness and
munitions, (2) expects the President will soon transmit an official budget
request that designates a significant portion of these funds as emergency,
and (3) consequently, these funds should not be considered as available
for fiscal year 2000 requirements. We agree that DOD can use these funds
for specific items that the President identifies as meeting a critical
readiness or sustainability need, to include replacement of expended
munitions, and designates as an emergency requirement. Given that the
President is expected to soon transmit a budget request, we have excluded
the
$1.1 billion from our calculations and have revised our report
accordingly. If the President's submission involves less than the full
$1.1 billion, the difference may become available to help fund other
requirements.
Finally, DOD states that the $300 million appropriated to the Operational
Rapid Response Transfer Fund has been apportioned and allocated to the
military departments for execution and that these funds will be obligated
shortly. In our draft report we had considered the $300 million in the
transfer fund to be available. We have adjusted our calculations to
reflect the fact that these funds have been distributed and are no longer
available to apply toward fiscal year 2000 requirements.
Scope and Methodology
To assess the costs of fiscal year 1999 contingency operations and the
adequacy of funding to finance them, we undertook a number of activities.
To understand how DOD derived its cost estimates, we determined DOD's
assumptions in developing estimates for the Balkans and Southwest Asia
operations through discussions with the Office of the Secretary of Defense
(Comptroller) and the military services and a review of various budget
documents. To obtain information on reported costs, we reviewed DOD's
contingency operations cost reports and fund distributions to the military
services and other DOD agencies. We also held discussions and reviewed
data at the Office of the Secretary of Defense (Comptroller), all service
headquarters, and major commands within each service that were heavily
involved in contingency operations in the Balkans and/or Southwest Asia,
including the U.S. Army Forces Command, U.S. Army Europe, the Air Force's
Air Combat Command, the Air Mobility Command, and the Navy Commanders in
Chief, U.S. Atlantic and Pacific Fleet. We did not perform a data
reliability assessment of reported costs. We have previously reported that
when considering the cost of operations, it should be recognized that
DOD's financial systems cannot reliably determine costs./Footnote3/ Only
the total obligations are captured by the accounting systems. The services
use various management information systems to identify incremental
obligations and to estimate costs.
To determine how operational changes have affected costs and the
implications for fiscal year 1999 and fiscal year 2000 funding
requirements, we undertook several steps. These included (1) identifying
the assumptions made in developing DOD's budget requests, (2) ascertaining
the pace of actual operations and comparing them with the assumptions made
to develop budget requests, (3) reviewing the latest available cost
reports, and (4) comparing them to available funding. To undertake these
steps, we met with officials in the military services, including selected
major commands and unified commands such as the U.S. European Command,
U.S. Central Command, U.S. Pacific Command, and U.S. Transportation
Command; reviewed service documents, including detailed budget estimates
and cost reports; reviewed the legislation containing contingency
operations funding; and discussed these matters with officials from the
Office of the Secretary of Defense (Comptroller) and the Joint Staff.
We performed our work between January and July 1999 in accordance with
generally accepted government auditing standards.
We are sending copies of this report to the Honorable William Cohen,
Secretary of Defense; the Honorable William J. Lynn, Under Secretary of
Defense (Comptroller); and the Honorable Jacob Lew, Director, Office of
Management and Budget. We are also sending copies to Congressman John
Murtha, Ranking Minority Member, Subcommittee on Defense, House Committee
on Appropriations; Senator Ted Stevens, Chairman, Subcommittee on Defense
and Senator Daniel Inouye, Ranking Minority Member, Senate Committee on
Appropriations; Senator John Warner, Chairman, and Senator Carl Levin,
Ranking Minority Member, Senate Committee on Armed Services; and
Congressman Floyd Spence, Chairman, and Congressman Ike Skelton, Ranking
Minority Member, House Committee on Armed Services. Copies will also be
made available to
other interested parties on request. Principal contributors to this report
are listed in appendix II. If you or your staff have any further questions
concerning this report, please contact me at (202) 512-3504.
Sincerely yours,
*****************
*****************
Norman J. Rabkin
Director, National Security Preparedness Issues
--------------------------------------
/Footnote1/-^ As used in this report, "incremental costs" means those
costs that would not have been incurred if it were not for the
operation. It should be recognized that DOD's financial systems cannot
reliably determine costs and only the total obligations are captured by
the accounting systems. The services use various management information
systems to identify incremental obligations and to estimate costs.
Although we use the term costs throughout this report as a convenience,
we are actually referring to DOD's obligation of funds.
/Footnote2/-^ See for example, Pub. L. 105-262, Oct. 17, 1998, 112 Stat.
2279 at 2284.
/Footnote3/-^ Contingency Operations: DOD's Reported Costs Contain
Significant Inaccuracies (GAO/NSIAD-96-115, May 17, 1996).
Letter 1
Background
12
Fiscal Year 1999 Cost and Funding for Balkans Operations
24
Fiscal Year 1999 Cost and Funding for Southwest Asia Operations
46
Funding Status for Fiscal Years 1999 and 2000
48
Appendixes
Appendix I:Comments From the Department of Defense
52
Appendix II:GAO Contacts and Staff Acknowledgments
54
DOD Department of Defense
KFOR Kosovo Force
NATO North Atlantic Treaty Organization
OCOTF Overseas Contingency Operations Transfer Fund
OSD Office of the Secretary of Defense
SWA Southwest Asia
BACKGROUND
==========
*****************
*****************
The Department of Defense (DOD) describes contingency operations as
military operations that go beyond the routine deployment or stationing of
U.S. forces abroad but fall short of large-scale theater warfare. In a
March 1999 report to Congress, DOD reported that since the end of the
Persian Gulf War in February 1991, U.S. military forces have conducted or
participated in approximately 50 overseas smaller-scale contingency
operations involving the deployment of 500 or more military personnel at
any one time. These operations included noncombatant evacuation
operations, no-fly zone enforcement, humanitarian assistance, and peace
enforcement operations.
In fiscal year 1999, U.S. military forces participated in a number of
contingency operations, most notably in the Balkans and in Southwest Asia
(SWA). In the Balkans, the United States continues to participate in the
peace enforcement operation in Bosnia and U.S. forces became engaged first
in military operations against the Federal Republic of Yugoslavia and its
province of Kosovo and then in a peace enforcement operation in Kosovo.
For purposes of this report, we refer to operations involving the Federal
Republic of Yugoslavia, including Kosovo, as Kosovo operations. In SWA,
U.S. forces enforced the no-fly zones over the northern and southern
portions of Iraq in support of United Nations Security Council
resolutions. Beginning in December 1998 and continuing to this day, the
United States has also conducted a low level of air strikes against Iraq,
first in support of United Nations weapons of mass destruction inspection
efforts and then in response to Iraqi attempts to target allied aircraft
enforcing the no-fly zones. U.S. forces were also engaged in several
smaller operations, particularly the provision of humanitarian assistance
in response to Hurricane Mitch in Central America. In March 1999, we
reported to you on the scope of DOD's efforts in response to Hurricane
Mitch and its cost./Footnote1/
*****************
*****************
Since the end of the Persian Gulf War in 1991, two of the largest
contingency operations involving U.S. military forces are in the Balkans
and SWA. In the Balkans, the United States was first engaged in Bosnia
and, beginning this year, in Kosovo. U.S. involvement in Bosnia began in
July 1992 as part of humanitarian relief efforts in Bosnia and Herzegovina
and Croatia. In April 1993, the United States began to participate in the
North Atlantic Treaty Organization (NATO) enforcement of a no-fly zone
over Bosnia and Herzegovina in support of United Nations peacekeeping.
From December 1995 through the present date, the United States has
deployed military personnel in and around Bosnia to assist in implementing
the General Framework Agreement (also known as the Dayton Agreement). U.S.
forces are part of a multilateral coalition under NATO command. The number
of U.S. military personnel in Bosnia has steadily declined, from about
18,000 in February 1996, to about 6,900 in October 1998, to about 6,200
troops in July 1999, and Americans held key leadership positions,
including command of the operation. In addition to U.S. military personnel
in Bosnia, there have been as many as several thousand U.S. military
personnel stationed in the nearby countries of Hungary, Croatia, and Italy
in support of Bosnia operations.
On March 24, 1999, the United States provided military forces in support
of NATO military action against Yugoslavia following the failure of peace
talks and escalating violence against ethnic Albanians in Kosovo. NATO
called this action Operation Allied Force. It began on March 24, 1999, was
suspended 78 days later on June 10, 1999, and officially ended on June 20,
1999. By late May 1999, about 39,000 U.S. military personnel drawn from
all the military services were involved in the operation stationed at
various locations throughout Europe. Following the signing of an agreement
permitting the deployment of multinational forces, the withdrawal of
Yugoslav troops, and United Nations endorsement of the plan, the United
States began providing troops to the NATO-led Kosovo Force (KFOR), whose
mission is peace enforcement in Kosovo. The United States is providing
7,005 troops. In addition, the United States will have 1,500 troops in
Macedonia to operate a staging base for U.S. troops entering and departing
Kosovo, which are not included in the KFOR troop total.
From the beginning of U.S. military involvement in the Balkans in 1992
through June 1999, DOD has reported $10.6 billion in incremental costs.
The bulk of these costs, about 83 percent, have been for operations in
Bosnia, given their longer duration vis-****ITCCentury Book:x88****-vis
the newer Kosovo operation.
U.S. forces have been involved in no-fly zone enforcement over parts of
Iraq since the end of the Persian Gulf War. The size of the U.S. force
involved varies substantially depending on the level of tension with Iraq.
The Congressional Research Office reports that during the mid-1990s, U.S.
forces in the Persian Gulf region on average comprised 15,000 to 20,000
personnel, many of them Navy and Marine Corps personnel embarked on ships.
In May 1999, force levels were at about 18,500. From the end of the
Persian Gulf War in 1991 through June 1999, DOD has reported $6.2 billion
in incremental costs for SWA operations.
*****************
*****************
The United States has been a major force provider in the Balkans. In
Bosnia, U.S. military personnel comprise about 20 percent of the NATO-led
force as of July 1999 (6,200 of 30,000). In the air campaign involving
Kosovo, the United States provided the lion's share of aircraft, about
two-thirds of the aircraft used at the end of the campaign. On June 2,
1999, DOD reported that in addition to the United States, 13 nations were
providing aircraft for the campaign, with the United States contributing
720 aircraft and other nations contributing a total of 325 aircraft.
Unlike the air campaign, the United States is providing a much smaller
portion of forces for KFOR, about one-seventh, or 7,005 of an estimated
force of 50,000, when deployment is complete. The United Kingdom will be
the largest troop-contributing nation, with about 10,000 troops. One of
its generals is the KFOR commander.
Within NATO, each nation participating in military operations assumes the
cost of its own operations. NATO refers to this practice as "letting costs
lie where they fall." NATO does not provide estimates of the overall cost
of the operation or of the cost of each member's contribution. All NATO
members contribute to NATO common costs, which are paid through NATO's
military budget and its infrastructure budget. In the Balkans, the
military budget pays for headquarters costs, including facility rental and
maintenance, office supplies and furniture, vehicles, and travel; the
infrastructure budget pays for new construction, theater-wide
communications, initial procurement of automated data processing
equipment, and theater-wide infrastructure. At the current NATO membership
level of 19 nations, the United States' assigned contribution is 23.15
percent of the military budget and 22.333 percent of the infrastructure
budget. NATO's Bosnia military budget for calendar year 1999 is an
estimated $36.7 million; its infrastructure budget an estimated $48
million. NATO budgets on a calendar year basis rather than the fiscal year
basis used for U.S. budgets. The U.S. share of the military budget is
about $8.6 million; its share of the infrastructure budget is about $10.8
million. For Kosovo-related operations, NATO's military budget is
estimated at $68.9 million, of which the U.S. share is about $16 million.
Estimates are not available yet for the infrastructure budget. The U.S.
share is paid out of DOD's budget and is part of DOD's incremental cost of
Balkans operations.
*****************
*****************
DOD tracks the "incremental costs" of participation in contingency
operations. As used in this report, "incremental costs" means those costs
that would not have been incurred if it were not for the operation.
Examples of incremental costs include (1) special payments to
participating military personnel, such as imminent danger pay;
(2) transportation costs to deploy personnel and equipment to the area of
operations; (3) contractor support for deployed forces; and
(4) redeployment and reconstitution, including repair of equipment used in
the operation.
Through June 1999, DOD reported $4 billion in incremental costs for all
contingency operations in which U.S. military forces have been involved in
fiscal year 1999. The large majority of these costs--98 percent--were
incurred in the Balkans and SWA. DOD prepares monthly contingency
operations cost reports, the most recent of which is the report of costs
incurred through June 1999. The cost reports include costs associated with
the deployment of forces; their sustainment, including contractor support;
operating tempo; special pays and allowances for which deployed military
personnel are eligible; the pay of mobilized reservists; and redeployment
of U.S. forces and reconstitution of equipment used in the operations.
DOD's latest year-end estimate for fiscal year 1999 contingency operations
is about $6 billion for the military services, compared with the $3.9
billion the services reported through June 1999. Reported costs through
June represent 65 percent of the services' full year estimate. As costs
associated with the conclusion of the Kosovo air campaign and U.S.
participation in peace enforcement in Kosovo are incurred, reported costs
will increase. However, as will be discussed later, costs are likely to be
lower than estimated.
Among the services and DOD agencies, the Army, which has had soldiers in
Bosnia since the beginning of the fiscal year and has now deployed
soldiers to Kosovo, reported the largest costs for fiscal year 1999
contingency operations through June-49 percent of the services' total. Air
Force costs represented 40 percent of the services' total and Navy and
Marine Corps costs were 11 percent of the total. The remaining costs are
for DOD agencies involved in contingency operations, which are spread over
a number of defense-wide agencies, such as the U.S. Special Operations
Command and the Defense Information Systems Agency. Costs reported by
these agencies through June 1999 represent a much smaller portion of
overall DOD costs-only 3 percent of the DOD total. Year-end estimates for
these DOD agencies were not available at the time of our review.
*****************
*****************
DOD budgets for the cost of ongoing contingency operations and Congress
includes funds for ongoing operations in the annual defense appropriations
acts. In the case of new or expanded operations, such as the operations
involving Kosovo and the late 1998 attacks against Iraq, costs have not
been budgeted in advance and the services generally borrow funds that they
planned to spend later in the fiscal year. If these funds are not
replenished through supplemental appropriations or reprogramming of
previously appropriated funds, then the services have to cancel planned
activities.
DOD has received about $8.8 billion for contingency operations during
fiscal year 1999. Funding came from several sources: (1) a carry forward
of $343 million remaining in the Overseas Contingency Operations Transfer
Fund (OCOTF) from prior year appropriations; (2) $439 million for the
OCOTF from the fiscal year 1999 DOD Appropriations Act;/Footnote2/
(3) $1,859 million in supplemental appropriations contained in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year
1999,/Footnote3/ enacted in October 1998; and (4) $6 billion in
supplemental appropriations enacted in May 1999./Footnote4/ In addition,
according to Office of the Secretary of Defense (OSD) (Comptroller)
officials,
$119.8 million from the fiscal year 1999 DOD Appropriations Act was
allocated by DOD for military personnel in SWA. The Secretary of Defense
transfers funds from the OCOTF to the services for expenses related to
overseas contingency operations as operations unfold during the year. The
bulk of fiscal year 1999 contingency operation funding, $7.3 billion, was
placed in the OCOTF, with most of the remainder appropriated directly to
the services' appropriation accounts. Funds remaining in the OCOTF at the
end of a fiscal year can be carried forward to the next fiscal year.
Part of the above funding was provided following an April 1999 request by
the President for $5.5 billion in additional supplemental funding for DOD
operations involving Kosovo and SWA. The President's request included
funding for air operations, military personnel costs, munitions, and
humanitarian assistance. After receiving this request, Congress
appropriated not only the $5.5 billion requested, but also an additional
$550 million for critical readiness or sustainability needs, including
replacement of expended munitions, and for a special Operational Rapid
Response Transfer Fund, /Footnote5/ which will be discussed later in this
report. While the President requested that almost all the funds be placed
in the OCOTF for subsequent transfer to the services and Congress
appropriated a large portion of the funds accordingly, Congress also
appropriated some funds directly to the services' appropriations accounts
and to the new Operational Rapid Response Transfer Fund.
Almost two-thirds of the $8.8 billion in contingency operations funding
was for operation and maintenance, normally the largest cost category.
Operation and maintenance funds are used for a wide variety of purposes,
including transportation of personnel, goods, and equipment; unit
operational tempo (fuel and repair parts); and intelligence,
communications, and logistics support. About 20 percent of the funding was
for munitions replenishment, reflecting the air campaign involving Kosovo
and the air strikes in SWA, and for other critical readiness or
sustainability needs. These funds were split between direct appropriations
to the services' procurement accounts and a contingent appropriation for
readiness and munitions that was included in the OCOTF. Just over
10 percent of the available funding was for military personnel accounts,
which fund the pay and allowances of mobilized reservists and special
payments or allowances for all qualifying military personnel, such as
Imminent Danger Pay ($150 per month) and Family Separation Allowance
($75 per month).
--------------------------------------
/Footnote1/-^ Military Operations: DOD's Disaster Relief Assistance in
Response to Hurricane Mitch (GAO/NSIAD-99-122R, Mar. 29, 1999).
/Footnote2/-^ Pub. L. 105-262, Oct. 17, 1998, 112 Stat. 2279 at 2284.
/Footnote3/-^ Pub. L. 105-277, Oct. 21, 1998, 112 Stat. 2681 at 2681-556.
/Footnote4/-^ Pub. L. 106-31, May 21, 1999, 113 Stat. 57 at 76-78.
/Footnote5/-^ Pub. L. 106-31, May 21, 1999, 113 Stat. 57 at 78.
Of the $698 million, $684 million was directly appropriated to the
services' procurement accounts. According to OSD (Comptroller) records,
the remaining $14 million was placed in the OCOTF for the purpose of
Tomahawk Land-Attack Missile recertifications. See Pub.
FISCAL YEAR 1999 COST AND FUNDING FOR BALKANS OPERATIONS
========================================================
*****************
*****************
As discussed earlier, Congress provided supplemental funding in May 1999
for U.S. military operations involving Kosovo as well as heightened
military operations in SWA. In developing its budget for Kosovo
operations, which served as the principal basis for the President's
supplemental funding request, DOD included estimates for air operations,
military personnel costs, munitions replenishment, and humanitarian
assistance. The budget was designed to ensure that military forces had
sufficient resources to sustain the high operating tempo of the air
campaign through the end of the fiscal year. DOD estimated that military
operations, including air operations and military personnel costs, would
be $3,301 million. It further estimated that $1,548 million would be
needed to replenish munitions already expended and create a
readiness/munitions contingency reserve for additional munitions that
would be expended as the air campaign continued. Humanitarian assistance
was estimated at another $335 million.
Accurately estimating the cost of contingency operations, particularly
those involving uncertain situations such as the one in Kosovo, is
difficult. DOD has to make assumptions about a variety of factors, such as
the duration of operations. Events, however, may differ from the
assumptions. In developing the Kosovo estimate, DOD assumed that air
operations would continue through the end of the fiscal year, and there
was no peace agreement at the time the estimate was being prepared. DOD,
therefore, did not include funding for peace enforcement and redeployment
and reconstitution of forces engaged in the air campaign in its fiscal year
1999 estimate.
The approved supplemental funding contained resources within the OCOTF for
the Presidential call up of a large number of reservists and the special
payments and allowances for which deployed personnel were eligible, air
operations in and around the Federal Republic of Yugoslavia, humanitarian
relief efforts for Kosovo refugees, and a contingent appropriation for
readiness and munitions to prevent any degradation in readiness of U.S.
forces in the Balkans and around the world as operations continued through
the fiscal year. The supplemental also placed funds in procurement
accounts for the restoration of inventory levels of munitions and in an
Operational Rapid Response Transfer Fund to support specific requests from
U.S. regional commanders for the accelerated acquisition and deployment of
military technologies and systems needed for the conduct of Operation
Allied Force, or to provide substitute or replacement systems for other
theaters to replace assets diverted as a result of Operation Allied Force,
NATO's name of the operation./Footnote1/
With the termination of Operation Allied Force in mid-June 1999 and the
subsequent redeployment of assets, DOD costs for some of the funded
categories should be lower than anticipated because estimates were
premised on air operations continuing through the end of the fiscal year
at a high operating tempo. Consequently, remaining balances from funded
categories that have costs lower than their budgeted level should be more
than sufficient to offset the costs associated with peace enforcement and
the redeployment and reconstitution of forces involved in Operation Allied
Force, which were not included in the appropriation. As a result, a
portion of these funds are likely to remain at the end of the fiscal year
to apply toward fiscal year 2000 funding requirements.
*****************
*****************
DOD's cost estimate included $3.3 billion for air operations involving
Kosovo as well as for the Kosovo Diplomatic Observer Mission and the air
verification mission, two smaller operations involving monitoring events
in Kosovo from late 1998 through early 1999, both of which ended shortly
before the air campaign began. In support of NATO's air campaign, DOD
committed approximately 600 aircraft at the time the supplemental funding
request was submitted and planned to deploy up to an additional 300
aircraft. Near the end of the air campaign, about 720 aircraft had
deployed. These aircraft initially came from units forward stationed in
Europe, with most of the additional aircraft coming from the continental
United States. In developing the cost estimate, a high operating tempo was
anticipated through the remainder of the fiscal year. Deployed aircraft
included Air Force aircraft at air bases throughout Europe, Navy aircraft
operating from the aircraft carrier stationed in the region, land-based
Navy and Marine Corps aircraft, and Army Apache attack helicopters.
The NATO air campaign was officially terminated on June 20, 1999, and the
next day the Secretary of Defense authorized the Allied Force commander to
begin redeploying more than 300 aircraft to their home stations in the
United States and Europe. On June 25, 1999, the Secretary of Defense
authorized the redeployment of a second increment of 315 U.S. aircraft.
Through June 1999, DOD reported $1.3 billion in operations costs for
Kosovo air operations or about 38 percent of the initial $3.3 billion
estimate. Consequently, the early termination of the air campaign will
result in estimated air operations costs being much lower than
anticipated. In discussing our analysis with the Office of the Secretary
of Defense (OSD) (Comptroller), a senior OSD (Comptroller) official agreed
that enough funds are available from the supplemental funding initially
budgeted for air operations to fund fiscal year 1999 KFOR operations as
well as redeployment and reconstitution costs and fiscal year 2000
reconstitution costs and that a small amount of funds, $62 million, would
remain at the end of the fiscal year.
Some aircraft are being retained in theater to provide continued air
support for KFOR. Also, according to U.S. European Command officials
involved with Operation Allied Force, air support was being restructured
to support Balkan operations in Bosnia and Kosovo. At the time of our
visit, the details had not yet been finalized.
*****************
*****************
As Yugoslav forces withdrew from Kosovo, NATO forces began peace
enforcement operations. KFOR was established to create the secure
conditions for the rebuilding of Kosovo, the re-establishment of law and
order, the safe return of refugees to their homes, social and economic
reconstruction, and the full investigation of all war crimes and
atrocities. The United States committed 7,005 personnel as part of the
estimated 50,000 troops that will comprise KFOR. Another 1,500 U.S.
military personnel will be in Macedonia in support of the U.S. forces
serving as part of KFOR. The United States is responsible for one of five
sectors established in Kosovo, with the United Kingdom, Germany, France,
and Italy operating the others. Forces from many other countries are also
involved with this peace enforcement effort.
Initially, about 4,800 soldiers and Marines provided the first U.S.
presence. These initial forces have been replaced by U.S. Army troops from
the 1st Infantry Division, based in Germany. Estimates for KFOR operations
during fiscal year 1999 total $1.2 billion. The Army, which is providing
the large majority of KFOR forces, estimates its costs in support of
Kosovo peace enforcement through September 1999 at $924 million. The
remainder of the estimated costs includes $88 million for the Navy/Marine
Corps, $86 million for the Air Force, and $99 million for other Defense
agencies. The corresponding DOD funding requirement is $41 million less
than the cost estimate because DOD estimates that the services will not
incur some normal home station costs as a result of their participation in
KFOR. For June 1999, the first month of the KFOR operation, DOD reported
$350 million in costs. DOD did not include any cost estimates for
providing forces to KFOR in its April 1999 supplemental request because it
did not know when the conflict would end at the time it developed the
supplemental request.
Considering the magnitude of the estimated KFOR costs coupled with the
fact that the operation is now in the last quarter of the fiscal year, the
Army's funding need for this force is critical. According to officials at
U.S. Army Europe, which will incur the bulk of the costs, funding
flexibility is very limited because the fiscal year is drawing to a close.
This makes it difficult if not impossible to borrow funds planned to be
spent later in the fiscal year. OSD (Comptroller) is aware of the
situation and in July provided an interim distribution of $500 million
from the OCOTF to finance KFOR.
*****************
*****************
DOD's supplemental request for Kosovo and SWA operations did not include
any redeployment and reconstitution costs. Redeployment costs include the
transportation costs associated with returning personnel and equipment to
their home station. Reconstitution costs include the cost to clean,
inspect, maintain, replace, and restore equipment to the required
condition at the conclusion of the contingency operation. Kosovo
operations were assumed to continue at a high rate through the end of the
fiscal year. Since the air campaign terminated in June, many of the
aircraft and associated personnel have returned to their home stations. As
such, redeployment and reconstitution costs are being incurred during
fiscal year 1999.
The services are estimating reconstitution and redeployment costs of
$351 million for fiscal year 1999. The Air Force's redeployment and
reconstitution cost estimate is the highest, $275 million. It consists of
temporary duty pay, spare parts, flying hours for redeployment, and
reconstitution costs. Of this amount, the Air Force estimated $46 million
in redeployment costs and over 600 of the aircraft involved in the air
campaign have already returned to home station. The Army has the second
largest cost estimate for redeployment and reconstitution, $61 million.
The Army estimated $20 million for redeploying the 5,500 personnel and
support equipment associated with the Apache helicopters and multiple-
launch rocket systems and $41 million for reconstitution. Redeployment is
ongoing and its planned completion was mid-August 1999. The Navy has the
smallest cost, $15 million, for the redeployment of EA-6B, F/A-18, and P-3
aircraft. For the most part, naval ships and aircraft used in the Kosovo
operation were the naval forces normally forward deployed as part of
normal peacetime presence. The Navy did not estimate any reconstitution
costs for fiscal year 1999 and estimates $4 million for fiscal year 2000.
OSD (Comptroller) cost estimates also include $175 million in additional
Air Force reconstitution costs in fiscal year 2000.
We believe reconstitution estimates may be high for several reasons: (1)
the air campaign lasted only 78 days, (2) the buildup occurred over more
than a month so not all aircraft were used for the full duration of the
air campaign, and (3) the Army's Apache helicopters only engaged in
training for combat operations and trained for a shorter period of time
than the 78 days of the air campaign.
*****************
*****************
DOD requested and Congress included $335 million in the 1999 emergency
supplemental appropriation to provide refugee relief to displaced Kosovars
as part of the funds placed in the OCOTF./Footnote2/ Through June 1999,
DOD has reported that it spent $97 million in humanitarian assistance.
Funds distributed through the OCOTF were used for camp construction,
refugee relief, and other humanitarian purposes. Considerably less money
has been spent on refugee relief because the conflict in Kosovo ended much
sooner than anticipated and refugees began returning to their homes in
June 1999. DOD plans called for construction of three tent camps to be
built in Albania as temporary housing for the Kosovar refugees. However,
only one camp was completed, although additional costs were incurred for
the second and third camps even though they were not built. These costs
consisted of site preparation at the second camp and tents for both the
second and third camps.
According to an OSD (Comptroller) official, up to an additional $76
million may be needed in humanitarian assistance costs. Of this amount,
$36 million is for the redeployment of Air Force personnel providing
humanitarian support, $10 million is the U.S. share of NATO common costs
for humanitarian assistance, and from $10 to $30 million is the amount
estimated to clean up unexploded ordinance in Kosovo. This official said
that DOD will continue to consider humanitarian requirements identified by
the interagency community, including the State Department, and will fund
those requirements if sufficient legal authority and funding exist. OSD
(Comptroller) continues to view all the humanitarian funds as dedicated to
additional humanitarian requirements. However, if no such requirements
arise, DOD may have up to $162 million to finance other contingency
operations costs. In fact, a July 1999 United Nations High Commissioner
for Refugees initial survey concluded that 40,000 to 50,000 homes in
Kosovo were uninhabitable and that organization is providing assistance to
start emergency repairs and has plans for assistance to make homes winter-
proof. On August 31, 1999, the United Nations reported that measures to
repair structures in Kosovo and to place people in temporary housing
should ensure winter shelter for all of the nearly 700,000 people whose
homes have been damaged or destroyed. This suggests that there may be few
additional humanitarian requirements to which DOD will be asked to respond.
*****************
*****************
Munitions usage in air attacks involving Kosovo and SWA resulted in the
depletion of the Navy's and the Air Force's inventories of several types
of preferred munitions and a need to immediately replenish them rather
than wait until the fiscal year 2001 budget process. The munitions
involved were the Navy's Tomahawk Land-Attack Missile and the Air Force's
Conventional Air Launched Cruise Missile, Joint Direct Attack Munition,
which adds more precision capability, and towed decoys, which are used
against radar guided missiles. To replenish and in the case of the Joint
Direct Attack Munition and towed decoys to increase production levels, DOD
requested and Congress appropriated $698 million./Footnote3/ Of this
amount, $521 million was requested for munitions expended in Kosovo
operations and $177 million for munitions expended in SWA operations.
Congress also appropriated an additional $1.1 billion as a readiness and
munitions contingency amount to ensure that the inventory of critical
munitions remains adequate for future operations and that U.S. force
readiness remains high, which is discussed later in this report.
As of June 1999, all of the $698 million appropriated for munitions
replenishment had been distributed by OSD (Comptroller) to the services.
The Navy received $444.7 million for its Tomahawk Land-Attack Missiles and
the Air Force received $253.2 million to replenish Conventional Air
Launched Cruise Missiles and increase production of the Joint Direct
Attack Munition and Air Force towed decoys.
*****************
*****************
In addition to the $698 million directly appropriated to the services for
munitions replenishment, Congress appropriated an additional $1.1 billion
as part of the May 1999 supplemental appropriation in what it termed a
contingent emergency appropriation for readiness and munitions. This
amount, included in the OCOTF, was to be available to meet critical
readiness and sustainability needs, including to replace other munitions
that were expected to be expended in the course of combat operation so
that adequate inventories would be maintained for future operations. Use
of this amount requires Presidential notification to Congress that
specifies specific items which meet a critical readiness and
sustainability need and designates the amount as an emergency requirement.
In written comments on a draft of this report DOD stated that the
Commanders in Chief of the Unified Commands and the Military Departments
have identified requirements for critical readiness or sustainability
items that greatly exceed the funding available in the OCOTF. DOD further
stated that the Joint Requirements Oversight Council had evaluated the
requests and validated requirements in excess of the
$1.1 billion. DOD described these requirements as consistent with
Congress' intended use of the funds and that it expects the President will
soon transmit an official budget request that designates a significant
portion of these funds as emergency. Consequently, DOD concluded that
these funds will not be available for fiscal year 2000 requirements. Given
that the President is expected to soon transmit a budget request, we have
excluded the $1.1 billion from our calculations. If the President's
submission involves less than the full $1.1 billion, the difference may
become available to help fund other requirements.
*****************
*****************
In addition to other amounts appropriated in the 1999 emergency
supplemental appropriations for military operations involving Kosovo,
Congress appropriated $300 million to a new appropriations account, the
Operational Rapid Response Transfer Fund. The funds are available for
obligation until September 30, 2000, but can only be obligated after
recommendations by the Joint Requirements Oversight Council to the
Secretary of Defense for his approval and the President's designation as
emergency. The appropriations legislation states that the funding in this
account is available only for the accelerated acquisition and deployment
of military technologies and systems needed for the conduct of Operation
Allied Force, or to provide accelerated acquisition and deployment of
military technologies and systems as substitute or replacement systems for
other regional commands that had assets diverted as a result of Operation
Allied Force./Footnote4/
Many U.S. military assets were deployed to Europe to meet the demands of
Operation Allied Force. In many instances this diverted capabilities and
forces from other regional commands, which have their own operational
requirements, such as those of the U.S. Central Command involving Iraq.
Because of these deployments and the uncertain duration of the operation
involving Kosovo, the House Committee on Appropriations recommended, and
Congress included, this additional funding because there were several
broad, high-leverage operational categories in which assets are in short
supply or deficient, but which could be used to great effect if such
assets were made available in sufficient numbers for Operation Allied
Force. /Footnote5/ These included tactical airborne electronic warfare and
surveillance; tactical imagery and signals intelligence reconnaissance
(particularly systems that can loiter over engagement areas such as
unmanned aerial vehicles) and related communications data links that can
rapidly disseminate information; and tactical communications systems in
general. Some of these unmanned aerial vehicles were lost during Operation
Allied Force.
According to an OSD (Comptroller) official, the early termination of the
air campaign will not affect their ability to use money from this transfer
fund. The services and defense agencies submitted their priority needs to
the Joint Requirements Oversight Council, which in turn on July 7, 1999,
forwarded its approved list of needs to the Secretary of Defense for
approval. On July 29, 1999, the President requested the funds and
designated the request as an emergency requirement. The President stated
that the funds will be used to acquire and replace equipment needed for
operations in Kosovo. In written comments on a draft of this report, DOD
stated that the $300 million appropriated to the Operational Rapid
Response Transfer Fund has been apportioned and allocated to the military
departments for execution and that these funds will be obligated shortly.
Our analysis indicates that about $40 million of the distribution appears
to be intended to replace equipment destroyed during combat operations and
for related costs, specifically some unmanned aerial vehicles, and about
$260 million appears to be enhancements to existing equipment that would
improve U.S. military capability to participate in contingency operations,
including in Kosovo. However, no mention has been made of replacing other
lost equipment, specifically the one F-117 combat aircraft that was shot
down during the air campaign and is no longer in production and the two
Apache attack helicopters lost in training accidents while preparing to
undertake combat operations.
*****************
*****************
During fiscal year 1999, DOD allotted $1,758 million from its
appropriations to conduct operations in Bosnia. As discussed earlier,
Congress provided funds for the OCOTF for ongoing contingency operations,
including Bosnia, in an emergency supplemental appropriation since no
funds were appropriated in DOD's fiscal year 1999 annual appropriations
legislation. Of the total, DOD programmed $1,416 million from the OCOTF
for Bosnia and the remaining $342 million was transferred to the services'
military personnel accounts, as directed by Congress. OSD transferred all
of the funds that were placed in the OCOTF primarily to the services
operation and maintenance and military personnel appropriation accounts.
In late July 1999, OSD (Comptroller) developed a revised estimate for the
cost of Bosnia operations for the fiscal year, which reflected a decline
in expected costs to about $1,593 million. The reduced estimate reflects
changes in the operation that have resulted in an expectation of lower
overall costs. Our analysis of the revised cost estimate indicated that
the key change in the estimate was a reduction in the Army's military
personnel costs. Within the services' operations costs, the Army's costs
rose slightly and an increase in Air Force costs was more than offset by a
decline in Navy costs. If actual costs for the balance of the fiscal year
closely track DOD's revised cost estimate, the services would have
received $165 million in funds that were in excess of their costs.
Most of this funding, $161 million of the $165 million, was in military
personnel costs, which, as noted above, was transferred to the services
military personnel appropriations accounts. Funds appropriated to the
military personnel accounts are only available for use in the year for
which they are appropriated and any funds remaining at the end of that
year can no longer be obligated. Therefore, if any funds remain unused at
the end of the fiscal year they would no longer be available for
obligation and so would not be available to apply toward a subsequent
year's funding requirements. The remaining $4 million reflects operation
and maintenance funds above current estimates and according to an OSD
(Comptroller) official is factored into DOD's calculation of funds that
will be available to apply to fiscal year 2000 funding requirements.
--------------------------------------
/Footnote1/-^ Pub. L. 106-31, May 21, 1999, 113 Stat. 57 at 78.
/Footnote2/-^ Pub. L. 106-31, May 21, 1999, 113 Stat. 57 at 76-77.
/Footnote3/-^L. 106-31, May 21, 1999, 113 Stat. 57 at 76-78.
/Footnote4/-^ Pub. L. 106-31, May 21, 1999, 113 Stat. 57, pp. 78-79.
/Footnote5/-^ See H.R. Report 106-125, May 4, 1999, pp. 8-9.
FISCAL YEAR 1999 COST AND FUNDING FOR SOUTHWEST ASIA OPERATIONS
===============================================================
*****************
*****************
During fiscal year 1999, SWA funding has totaled almost $1,287 million,
excluding munitions replenishment funding, which, as discussed earlier,
was provided separately. The bulk of this funding, $1,152 million, was in
the OCOTF and most of it was subsequently transferred to the services and
defense agencies based on their cost experience. The remaining
$134 million/Footnote1/ was directly appropriated or transferred to the
services' military personnel accounts. Currently, SWA estimated costs and
funding status present a mixed picture. There has been a $120 million
increase in military personnel costs, primarily involving the Air Force,
and a
$76 million excess in funds originally intended to cover operation and
maintenance costs. OSD (Comptroller) officials assume that the services
can absorb the increased military personnel costs within their existing
military personnel funding because as of August 30, 1999, the services had
not requested any additional funds. Consequently, OSD (Comptroller) plans
to use the $76 million excess in funds related to operation and
maintenance costs to help fund other contingency operations.
--------------------------------------
/Footnote1/-^ Totals do not add due to rounding.
FUNDING STATUS FOR FISCAL YEARS 1999 AND 2000
=============================================
*****************
*****************
As discussed throughout this report, as the operations in the Balkans and
SWA have changed, the costs associated with those operations have also
changed. In some instances, such as in the case of Kosovo air operations,
costs have declined substantially with the earlier than expected
conclusion of the air campaign. Bosnia costs have declined from earlier
estimates used in developing funding levels as operational changes have
occurred. In other instances, such as U.S. participation in KFOR, funds
were not included in the budget and therefore all U.S. KFOR costs were
unfunded.
Cost estimates are being revised and cost reports are only available
through June 1999. As a result, it is not possible to detail the net
change in costs and the resulting implications for funding with precision.
It is, however, possible to provide a broad estimate of the possible net
change based on the currently available data. We project that costs for
budgeted contingency operations activities have decreased by $1,983
million and that there are $1,508 million in unbudgeted costs. This leads
us to conclude that DOD can cover the fiscal year 1999 unbudgeted costs of
KFOR and redeployment and reconstitution costs within previously
appropriated contingency operations funds. We have also concluded that as
much as $475 million in funding provided for fiscal year 1999 contingency
operations would be available to be applied to fiscal year 2000 funding
requirements.
Cost decreases involve Kosovo combat operations, humanitarian assistance,
and SWA operations costs. Cost increases involve KFOR costs and the
redeployment and reconstitution costs associated with returning aircraft,
other equipment, and personnel involved in the Kosovo air campaign to
their home stations. DOD agrees that there are sufficient funds for fiscal
year 1999 costs, but in written comments on a draft of this report stated
that only $138 million will be available to apply to fiscal year 2000
requirements. The difference between DOD's and our estimate is
$337 million. It consists of (1) $162 million in remaining humanitarian
funds that are dedicated to future humanitarian needs and (2) $175 million
in estimated reconstitution costs that DOD expects will occur in fiscal
year 2000. In discussing the $175 million in estimated fiscal year 2000
reconstitution costs with DOD officials, they agreed that the $175 million
will not have been distributed to the services by the end of fiscal year
1999. These officials also noted that they do not intend to include that
amount in their fiscal year 2000 budget request for Kosovo operations,
which is still being developed because they view fiscal year 2000
reconstitution costs associated with the air campaign as covered in their
current air campaign cost estimates and planned funds use.
*****************
*****************
Fiscal year 2000 contingency operations costs are likely to exceed
$5 billion. The President's budget for DOD in fiscal year 2000, submitted
to Congress in February 1999, includes $1.8 billion for ongoing Bosnia-
related operations and $1.1 billion for SWA operations at the force level
and operating tempo in place the previous September. Since there was no
KFOR at the time the budget was submitted, no funds were included for it.
OSD has not finalized its KFOR estimate yet, but its initial estimate is
that the cost will be at least $2.5 billion. It also expects SWA costs to
rise due to the increased level of assets and personnel deployed since
late last year, while Bosnia costs may decline due to the reduction in the
number of U.S. forces below 6,200 and an overestimation of Army Reserve
personnel needs. As just discussed, there may be funds remaining in the
OCOTF at the end of fiscal year 1999 that would be carried over and could
help fund fiscal year 2000 requirements. Both the House/Footnote1/ and
Senate/Footnote2/ DOD appropriations bills for fiscal year 2000 contain
reductions in appropriations to the OCOTF, $575 million in the House bill
and $300 million in the Senate bill. The House Appropriations Committee
report/Footnote3/ described the reduction as related to the termination of
air operations over Kosovo and reduced air operations tempo over SWA. The
Senate Appropriations Committee report/Footnote4/ described the reduction
as related to concerns about how money appropriated to the OCOTF is being
spent and the reduction in personnel supporting operations in Bosnia.
--------------------------------------
/Footnote1/-^ H.R. 2561, July 20, 1999.
/Footnote2/-^ S. 1122, May 25, 1999.
/Footnote3/-^ H.R. Report 106-244, July 20, 1999, p. 111.
/Footnote4/-^ S. Report 106-53, May 25, 1999, p. 38.
COMMENTS FROM THE DEPARTMENT OF DEFENSE
=======================================
*****************
*****************
*****************
*****************
GAO CONTACTS AND STAFF ACKNOWLEDGMENTS
======================================
GAO Contacts
Carol Schuster (202) 512-3958
Steve Sternlieb (202) 512-4534
Acknowledgments
In addition to those named above, Joe Rutecki, Bonita Anderson, and Herb
Dunn made key contributions to this report.
(701158)
*** End of document. ***