Future Years Defense Program: DOD's 1998 Plan Has Substantial Risk in Execution (Letter Report, 10/23/97, GAO/NSIAD-98-26)
Pursuant to a congressional request, GAO compared the Department of
Defense's (DOD) fiscal year (FY) 1998 Future Years Defense Program
(FYDP) with the FYDP for FY 1997, focusing on: (1) how major programs
were adjusted from the 1997 FYDP to the 1998 FYDP; (2) how these
adjustments may affect programs in the future; and (3) proposed
Quadrennial Defense Review (QDR) initiatives that may have been taken by
the the committees on authorization and appropriations during their
reviews of the FY 1998 defense budget request.
GAO noted: (1) its comparison of the 4 years common to both DOD's FY
1998 FYDP and FY 1997 FYDP (1998-2001) shows that funding for military
personnel, operation and maintenance, and research, development, test,
and evaluation is projected to be higher, and funding for procurement is
projected to be lower than anticipated 1 year ago; (2) for the fourth
straight budget year since 1995, DOD has not met its procurement goals
established in pervious FYDPs; (3) the 1998 FYDP retains substantial
risk that DOD's program will not be executed as planned; (4) although
the 1998 FYDP projects that a smaller percentage of DOD's total budget
will be needed to pay for infrastructure activities than that projected
in the 1997 FYDP, DOD's projections are questionable; (5) for example,
the 1998 FYDP projects billions of dollars in savings due to management
initiatives, but DOD does not have details on how all the savings will
be achieved; (6) also, DOD projects no real growth in the cost of the
Defense Health Program during 1998-2001, whereas this program increased
73 percent in real terms during 1985-96; (7) another reason GAO believes
the 1998 FYDP poses risks is that the estimates for procurement
spending, in relation to DOD's total budget and its operation and
maintenance projections, run counter to DOD's experience over the last
30 years; (8) DOD acknowledged in its May 1997 Report of the QDR that
the 1998 FYDP includes substantial financial risk; (9) the Secretary has
stated that absent any further changes, the fiscal patterns and
assumptions embedded in the 1998 FYDP are most likely not going to free
up sufficient funds to achieve DOD's modernization goals; (10) according
to DOD, compared to the 1998 FYDP, the QDR proposes a more balanced,
modern, and capable defense program that can be achieved within
currently proposed budgets; (11) to accomplish its goals, DOD proposes
that it reduce personnel, make some modest changes in force structure,
realize additional infrastructure saving through fundamental reforms and
base realignments and closures, and continue to improve its business
operations; (12) the success of these initiatives will require
discipline, execution, and aggressive follow-through on the part of DOD
management; and (13) on some important initiatives, such as base
closures and military personnel reductions, DOD will need congressional
approval.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-98-26
TITLE: Future Years Defense Program: DOD's 1998 Plan Has
Substantial Risk in Execution
DATE: 10/23/97
SUBJECT: Military downsizing
Defense cost control
Future budget projections
Defense budgets
Defense appropriations
Comparative analysis
Defense economic analysis
Defense procurement
Strategic planning
Defense contingency planning
IDENTIFIER: DOD Future Years Defense Program
DOD Quadrennial Defense Review
Defense Health Program
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Cover
================================================================ COVER
Report to Congressional Requesters
October 1997
FUTURE YEARS DEFENSE PROGRAM -
DOD'S 1998 PLAN HAS SUBSTANTIAL
RISK IN EXECUTION
GAO/NSIAD-98-26
Future Years Defense Program
(701101)
Abbreviations
=============================================================== ABBREV
DOD - Department of Defense
FYDP - Future Years Defense Program
O&M - operation and maintenance
QDR - Quadrennial Defense Review
RDT&E - research, development, test, and evaluation
THAAD - Theater High Altitude Area Defense
Letter
=============================================================== LETTER
B-277841
October 23, 1997
The Honorable John R. Kasich
Chairman, Committee on the Budget
House of Representatives
The Honorable Charles E. Grassley
The Honorable William V. Roth, Jr.
United States Senate
Since its bottom-up review in 1993, the Department of Defense (DOD)
has repeatedly stated that it must reduce its infrastructure to
offset the cost of future modern weapon systems. Our analysis of
DOD's Future Years Defense Programs (FYDP) for fiscal years 1996 and
1997 showed that DOD continued to allocate about the same percentage
of its budget for infrastructure activities as it did at the time of
the bottom-up review and that planned weapon systems increases had
repeatedly been shifted further into the future with each succeeding
FYDP.\1 As requested, we compared DOD's fiscal year 1998 FYDP with
the FYDP for fiscal year 1997. Specifically, we determined (1) how
major programs were adjusted from the 1997 FYDP to the 1998 FYDP and
(2) how these adjustments may affect programs in the future. We also
identified proposed Quadrennial Defense Review (QDR) initiatives that
could impact future FYDPs. We do not reflect any adjustments that
may have been taken by the Committees on Authorizations and
Appropriations during their reviews of the fiscal
year 1998 defense budget request.
--------------------
\1 Future Years Defense Program: Lower Inflation Outlook Was Most
Significant Change From 1996 to 1997 Program (GAO/NSIAD-97-36, Dec.
12, 1996); Defense Infrastructure: Costs Projected to Increase
Between 1997 and 2001 (GAO/NSIAD-96-174, May 31, 1996); and Future
Years Defense Program: 1996 Program Is Considerably Different From
the 1995 Program (GAO/NSIAD-95-213, Sept. 15, 1995).
BACKGROUND
------------------------------------------------------------ Letter :1
An objective of DOD's 1993 Report on the Bottom-Up Review was to
identify potential infrastructure savings and to launch a long-term
process to reduce and streamline DOD's infrastructure without harming
readiness. The report stated that infrastructure activities
accounted for $160 billion in fiscal year 1994, or about 60 percent
of DOD's total obligational authority. DOD defines infrastructure as
those activities that provide services to mission programs, such as
combat forces, and primarily operate from fixed locations.
Our analysis of DOD's FYDPs and infrastructure activities over the
past few years showed that the infrastructure portion of DOD's budget
had not decreased as DOD planned. As explained in our previous
reports, about 80 percent of DOD's infrastructure activities are paid
for from the military personnel and operation and maintenance (O&M)
accounts. Therefore, if DOD is to free up dollars for weapons
modernization, it must reduce funding requirements for these
accounts.
The FYDP is an authoritative record of current and projected force
structure, costs, and personnel levels that have been approved by the
Secretary of Defense. The 1997 FYDP supported the President's fiscal
year 1997 budget and included budget estimates for fiscal years
1997-2001. The 1998 FYDP supports the President's fiscal year 1998
budget and includes budget estimates for fiscal years 1998-2003.
In May 1997, DOD completed its first QDR. The QDR was required by
the Military Force Structure Review Act, which was included in the
National Defense Authorization Act for Fiscal Year 1997 (P.L.
104-201). DOD said that it designed the QDR to be a fundamental and
comprehensive examination of America's defense needs from 1997 to
2015. It considered potential threats, strategy, force structure,
readiness posture, military modernization programs, defense
infrastructure, and other elements of the defense program. The QDR
is intended to provide a blueprint for a strategy-based, balanced,
and affordable defense program. DOD plans to incorporate many of the
details of the QDR blueprint into its fiscal
year 1999 budget and FYDP for fiscal years 1999-2003.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
Our comparison of the 4 years common to both DOD's fiscal year 1998
FYDP and 1997 FYDP (1998-2001) shows that funding for military
personnel; O&M; and research, development, test, and evaluation
(RDT&E) is projected to be higher and funding for procurement is
projected to be lower than anticipated 1 year ago. For the fourth
straight budget year since 1995, DOD has not met its procurement
goals established in previous FYDPs.
The 1998 FYDP retains substantial risk that DOD's program will not be
executed as planned. Although the 1998 FYDP projects that a smaller
percentage of DOD's total budget will be needed to pay for
infrastructure activities than that projected in the 1997 FYDP, DOD's
projections are questionable. For example, the 1998 FYDP projects
billions of dollars in savings due to management initiatives, but DOD
does not have details on how all the savings will be achieved. Also,
DOD projects no real growth in the cost of the Defense Health Program
during 1998-2001, whereas O&M funds in DOD's health program increased
73 percent in real terms during 1985-96. Another reason we believe
the 1998 FYDP poses risks is that the estimates for procurement
spending, in relation to DOD's total budget and its O&M projections,
run counter to DOD's experience over the last 30 years.
DOD acknowledged in its May 1997 Report of the Quadrennial Defense
Review that the 1998 FYDP includes substantial financial risk. The
Secretary has stated that absent any further changes, the fiscal
patterns and assumptions embedded in the 1998 FYDP are most likely
not going to free up sufficient funds to achieve DOD's modernization
goals. According to DOD, compared to the 1998 FYDP, the QDR proposes
a more balanced, modern, and capable defense program that can be
achieved within currently proposed budgets. To accomplish its goals,
DOD proposes that it reduce personnel, make some modest changes in
force structure, realize additional infrastructure savings through
fundamental reforms and base realignments and closures, and continue
to improve its business operations. The success of these initiatives
will require discipline, execution, and aggressive follow-through on
the part of DOD management. On some important initiatives, such as
base closures and military personnel reductions, DOD will need
congressional approval.
THE 1998 FYDP REFLECTS SOME
CHANGE SINCE THE 1997 FYDP BUT
RETAINS SUBSTANTIAL RISK IN
EXECUTION
------------------------------------------------------------ Letter :3
The 1997 FYDP, which totaled $1,281 billion, represented DOD's 5-year
program through fiscal year 2001.\2 The 1998 FYDP, which totals
$1,607 billion, covers the 6-year period through fiscal year 2003.
The 1997 plan overlaps the 1998 plan for the 4 years 1998-2001.
Table 1 compares the two plans, by appropriation.
Table 1
DOD's 1997 and 1998 FYDPs, by
Appropriation
(Dollars in billions)
Fiscal year Total
------------------------------------------------ --------------
1997 1998
1997 1998 1999 2000 2001 2002 2003 FYDP FYDP
Appropriation FYDP ---- ---- ---- ---- ---- ---- ---- ------ ------
Military FY $69. $69. $70. $71. $73. $353.2
personnel 1997 8 2 0 1 1
FY 69.5 70.1 71.4 73.3 $75. $77. $437.1
1998 3 5
Change 0.3 0.1 0.3 0.2
Operation and FY 89.1 88.6 90.1 92.3 95.9 456.0
maintenance 1997
FY 93.5 91.4 92.0 93.8 91.8 95.2 557.7
1998
Change 4.9 1.3 - -
0.3 2.1
Procurement FY 38.9 45.5 50.5 57.7 60.1 252.7
1997
FY 42.6 50.7 57.0 60.7 68.3 68.0 347.3
1998
Change - 0.2 - 0.6
2.9 0.7
Research, FY 34.7 35.0 33.7 31.9 31.7 167.0
development, 1997
test, and
evaluation
FY 35.9 35.0 33.4 32.9 34.2 35.8 207.2
1998
Change 0.9 1.3 1.5 1.2
Military FY 5.5 4.8 4.7 4.1 4.2 23.3
construction 1997
FY 4.8 4.3 4.3 4.2 3.4 3.4 24.4
1998
Change 0 - 0.2 0
0.4
Family housing FY 4.0 3.8 4.1 4.1 4.1 20.1
1997
FY 3.8 4.0 3.9 4.0 3.9 4.0 23.6
1998
Change 0 - - -
0.1 0.2 0.1
Other FY 1.9 2.1 1.9 1.4 1.4 8.7
1997
FY 2.2 1.7 1.4 1.4 1.2 1.5 9.4
1998
Change 0.1 - 0.0 0.0
0.2
================================================================================
Total FY $244 $249 $255 $262 $270 $1,281
1997 .0 .0 .1 .5 .4 .0
FY $252 $257 $263 $270 $278 $285 $1,606
1998 .2 .2 .5 .3 .2 .3 .7
Change $3.2 $2.1 $1.0 -
$0.1
--------------------------------------------------------------------------------
Note: Program estimates in DOD's FYDP are expressed in total
obligational authority, which is the sum of the new budget authority
provided for a given fiscal year and any other amounts authorized to
be credited to a specific fund or account during that year, including
transfers between funds or accounts. Total obligational authority
may not reflect the precise budget authority adjustments made in the
President's budget. Totals may not add due to rounding.
Source: 1997 and 1998 FYDPs.
Focusing on the years common to both FYDPs, table 1 shows that the
costs of military personnel; O&M; and RDT&E are higher than
previously planned, while planned procurement spending is reduced.
Specifically, the 1998 FYDP adds about $1 billion to the military
personnel accounts, $3.7 billion to O&M accounts, and $4.9 billion to
RDT&E accounts and reduces planned procurement spending by $2.8
billion. Increases in the O&M accounts and decreases in the
procurement accounts are inverse to DOD's goals since the bottom-up
review, which have been to reduce infrastructure and increase funding
for weapons modernization. This is the fourth straight budget year
since 1995 that DOD has not met procurement goals established in
previous FYDPs.
Savings achieved from infrastructure reductions have too often not
been as large as anticipated and tended to be absorbed by unplanned
or underestimated expenses in day-to-day operations. According to
DOD, the most prevalent underestimated expenses are for depot
maintenance, real property maintenance, military construction, and
medical care. Because of unrealized savings, weapons modernization
plans have repeatedly been delayed.
Defense budgets are planned to remain relatively flat in
inflation-adjusted terms through 2003 as part of the balanced budget
agreement. Therefore, if DOD is to achieve real growth in the
procurement accounts, it must reduce funding for its infrastructure
activities.
The 1997 FYDP projected that spending for infrastructure would
decline slightly from 58 percent to 57 percent of DOD's budget during
1998-2001. The 1998 FYDP shows that spending for infrastructure is
projected to decline from 58 percent to about 55 percent of DOD's
budget from 1998 through 2001 and further decline to 54 percent
through 2003. This planned decline in infrastructure spending is
predicated primarily on planned reductions in O&M accounts. Our
review of these and other accounts and DOD's own review of the
current FYDP found risks that sufficient reductions will not occur
and that planned procurement increases will not materialize. We
discuss these risks in later sections of this report.
--------------------
\2 Unless otherwise stated, the dollar values shown in this report
are in current dollars and on a fiscal year basis.
QDR FINDS THAT PROGRAM
CHANGES MUST BE MADE TO
MITIGATE KNOWN COST RISKS
---------------------------------------------------------- Letter :3.1
In the QDR report, the Secretary of Defense expressed doubts that the
1998 FYDP goes far enough to break the cycle of the migration of
funds from planned procurement to unplanned expenses. Specifically,
the report states the following:
"Based on an assessment of recent patterns and the assumptions
embedded in the current six-year plan, the QDR concluded that
there was a potential for annual migration to unplanned expenses
of as much as $10-$12 billion per year in the later years of the
plan. Migration in that range would undermine much of the
planned increase in procurement. Instead of growing to $60
billion, procurement funding could be expected to stall in the
range of $45 to $50 billion. Some growth from the FY 1998 level
could be expected from ongoing efforts to reduce the cost of
defense infrastructure and from the natural transition of
several major programs from development to production. Absent
any further changes to the defense program, however, growth
above $50 billion would be highly unlikely."
A principal resource management objective of the QDR was to
understand the financial risk in DOD's program plans and devise ways
to manage that risk. In the QDR report, the Secretary recognizes the
sources of instability that are built into the current FYDP and
presents plans to mitigate that instability through more realistic
planning assumptions in the 1999 FYDP. Those assumptions include
making some force structure reductions and greater personnel
reductions, shedding additional excess facilities through more base
closures and realignments, streamlining operations, and proceeding
more prudently on the acquisitions of new weapons. DOD recognizes in
the report that it will need congressional approval to accomplish
some of the more significant cost-reduction measures, such as
additional base closures and military personnel reductions. In
appendix I, we discuss specific QDR proposals that could impact
future defense programs.
FISCAL YEAR 1998 PROGRAM
PROVIDES FOR SMALL INCREASE IN
ACTIVE MILITARY PERSONNEL
------------------------------------------------------------ Letter :4
By comparing the 1998 FYDP with the 1997 FYDP, we found that during
fiscal years 1998-2001, active duty military personnel and the
comparable military personnel accounts have net increases of 4,655
personnel and $929 million, respectively. The overall increases are
due to changes in the active Army. The Army has programmed 10,000
more military personnel by the end of 1998 and an additional 10,000
personnel in 1999 for a total increase of 20,000 from the 1997
FYDP.\3 The Air Force and Navy have programmed personnel decreases in
every year for the common period, and the Marine Corps' 1998
personnel remains unchanged from the 1997 FYDP.
Within the active components, some military personnel programs
expected to receive the largest cumulative funding increases during
1998-2001 are the Army's recruit training ($1.8 billion), general
skill training ($1.4 billion), and integrated recruit and skill
training ($965 million). Some of the largest cumulative decreases in
military personnel costs are projected for the Navy's general skill
training ($547 million) and the Army's and Air Force's defense
medical centers, station hospitals, and medical clinics ($249 million
and $191 million, respectively). Appendix II provides a description
of these and other programs identified in this report.
The 1998 FYDP shows that the Navy and Air Force plan to lower active
duty force levels in fiscal years 1998-2003 by 3,319 and 6,031,
respectively. The planned decreases would bring force levels below
the permanent end-strength levels set forth in the National Defense
Authorization Act for Fiscal Year 1996. If DOD is precluded from
implementing its planned personnel reductions, it will have to make
other compensating adjustments to its overall program.
--------------------
\3 According to an Army official, contrary to what the 1998 FYDP
shows, the Army will end 1997 with about 490,000 active duty
personnel and plans to be down to about 480,000 personnel by the end
of 1999.
RISKS IN EXECUTING O&M PLANS
------------------------------------------------------------ Letter :5
Overall, a comparison of the 1998 FYDP with the 1997 FYDP shows an
increase of $3.7 billion in O&M funding during 1998-2001. By
service, the 1998 FYDP projections differ considerably from the 1997
projections when comparing dollar values in the common 4-year period.
The Air Force's 1998 FYDP projections are higher than the 1997 FYDP
projections in every year. Air Force programs that are projected to
receive the largest cumulative gains between 1998 and 2001 are base
operations for tactical air forces ($904 million), training ($525
million), and F-15A/B/C/D squadrons ($410 million). The Air Force
program, logistics operations other than working capital funds, has
the largest projected cumulative decrease during the common
period--$437 million.
The Navy and Marine Corps 1998 FYDP O&M estimates are higher in 1998
and 1999, with decreases in 2000 and 2001. The Navy's largest
projected cumulative increases include nonindustrially funded depot
maintenance ($564 million) and administrative base operations ($418
million). The Marine Corps' largest projected cumulative increase is
for other combat support ($444 million). The largest cumulative
projected decreases are in the Navy's logistics support activities
($330 million) and in the Marine Corps' other personnel activities
program ($302 million).
In contrast, the Army's 1998 FYDP O&M funds are lower in every year
than the 1997 FYDP. Some of the Army's largest projected cumulative
decreases are in real property maintenance ($800 million) and
nonindustrially funded depot maintenance ($622 million). Despite
lower 1998 FYDP levels, Army base operations increase by $2.3 billion
during 1998-2001.
According to the Secretary of Defense, support costs have been
consistently underestimated in recent years. In underestimating
costs, DOD risks the execution of its program as originally desired.
The following sections describe significant influences on the O&M
accounts.
OPERATIONAL CHANGES IN
BOSNIA COULD LEAD TO HIGHER
O&M COSTS
---------------------------------------------------------- Letter :5.1
Part of the higher 1998 O&M level in the 1998 FYDP is due to DOD's
request for almost $1.5 billion for Bosnia operations.\4 In July
1997, we reported that recent operational decisions will increase the
cost estimate for 1998 and that other decisions, such as changes in
the size and composition of the force and the timing of withdrawal,
could lead to further increases in the O&M cost estimate for 1998.\5
--------------------
\4 The 1997 FYDP did not include any funds for Bosnia beyond fiscal
year 1997.
\5 Bosnia: Cost Estimating Has Improved, but Operational Changes
Will Affect Current Estimates (GAO/NSIAD-97-183, July 28, 1997).
LARGE PROJECTED SAVINGS IN
O&M DEPENDENT ON MANAGEMENT
INITIATIVES
---------------------------------------------------------- Letter :5.2
DOD is depending on a number of management initiatives, both defined
and undefined, to achieve large savings in future O&M costs. For
example, undefined savings of $600 million in 2001 were included in
the 1998 FYDP. These savings were not in the 1997 FYDP. Moreover,
additional savings of $4.2 billion and $3 billion are projected in
2002 and 2003, respectively. According to DOD officials, the savings
were programmed by the Office of the Secretary of Defense, although
details do not exist on how the savings will be achieved. In
addition to these savings to be generated through undefined
initiatives, DOD has programmed over $16 billion in savings from
defined initiatives. These include outsourcing installation support,
improving maintenance processes, improving material management
processes, consolidating inventory control points, and reducing the
life-cycle costs of weapon systems by reducing the operation and
support costs for fielded and new systems.
BASE CLOSURE SAVINGS HAVE
BEEN DIFFICULT TO PRECISELY
ESTIMATE
---------------------------------------------------------- Letter :5.3
In reporting on lessons learned from prior base closure rounds, we
noted that costs associated with closing bases can be significant;
savings, though not well documented, are expected to be substantial;
and achieving annual recurring savings to offset costs may take
several years.\6 However, the exact amount of actual savings realized
from base closure actions is uncertain.
In the 1997 FYDP, the Air Force was the only service that projected
savings from the fourth round of base closures. The savings was
projected at $586 million during 1998-2001. The 1998 FYDP projects
total Air Force savings of $119 million for these 4 years, $467
million less than the 1997 FYDP. Moreover, the savings slip to
1999-2001. The 1998 FYDP also includes projected savings for the
Navy from the fourth round of base closures. However, the Navy's
projected savings in the FYDP of $687 million in 2000 and 2001 is
incorrect. According to the Navy, this estimate is for outsourcing
and competition initiatives. Instead, base closure savings
projections should show $1.3 billion for 1998-99, with steady state
annual savings of $732 million thereafter.
--------------------
\6 Military Bases: Lessons Learned From Prior Base Closure Rounds
(GAO/NSIAD-97-151, July 25, 1997).
ESTIMATES FOR LOWER HEALTH
CARE COSTS MAY BE
UNREALISTIC
---------------------------------------------------------- Letter :5.4
The Defense Health Program, approximately 11 percent of projected
annual O&M spending, changes considerably from the 1997 FYDP to the
1998 FYDP. When compared with the 1997 FYDP, the 1998 FYDP shows
lower funding levels between 1998 and 2001. Figure 1 shows funding
levels for the Defense Health Program for the entire period covering
the 1997 and 1998 FYDPs.
Figure 1: Defense Health
Program Funding for the 1997
and 1998 FYDPs
(See figure in printed
edition.)
Source: DOD FYDP data.
DOD significantly underbudgeted the 1997 O&M Defense Health Program,
and Congress appropriated additional funds for the program.
Shortfalls continue in the 1998 FYDP in fiscal years 1998 and 1999,
as documented by DOD in the 1998 President's budget submission.
Moreover, when the program in the 1998 FYDP is viewed in constant
dollars, DOD projects no growth between fiscal year 1998 and 2001.\7
This appears to be unrealistic, given that during fiscal years
1985-96, O&M funds in DOD's health program increased 73 percent in
real terms. In addition, our analysis of the Defense Health Program
during the 1998 FYDP development showed that one key assumption DOD
used to estimate future program costs appeared to be unrealistic and
another was questionable.\8 Although DOD's budget assumptions appear
to be optimistic, the extent to which future costs might exceed the
budget estimates is unknown.
--------------------
\7 The 1997 FYDP had 5.8 percent real growth between fiscal year 1998
and 2001.
\8 Defense Health Program: Future Costs Are Likely to Be Greater
Than Estimated (GAO/NSIAD-97-83BR, Feb. 21, 1997).
CIVILIAN PERSONNEL LEVELS
ARE PROJECTED TO DECLINE
STEADILY
---------------------------------------------------------- Letter :5.5
Civilian personnel levels have a direct effect on O&M costs because
civilians' salaries and benefits account for about 40 percent of
annual O&M appropriations.\9 Overall, civilian personnel levels
continue downward at nearly the same rate in the common period in
both FYDPs. In the 1997 FYDP, the total number of civilian personnel
was projected to decline 6.2 percent between fiscal year 1998 and
2001. During the same period in the 1998 FYDP, the number of
civilians is projected to decrease at a rate of 6.6 percent.
--------------------
\9 Approximately 87 percent of DOD civilian payroll costs are paid
from O&M appropriations. The remainder is funded from the RDT&E,
military construction, and family housing appropriation accounts.
RISKS THAT PROCUREMENT PLANS
MAY NOT SUCCEED
------------------------------------------------------------ Letter :6
The 1998 FYDP reflects a net decline in planned procurement during
the
4 years common to the 1997 FYDP. The largest decline is in 1998, for
which the President's budget requested $42.6 billion in lieu of the
$45.5 billion projected in last year's FYDP. Projected spending
declined by 10 percent or more over the common years for some major
programs, including the Advanced Tactical Fighter, Abrams tank
upgrade, Bradley base sustainment, Javelin and Hellfire missiles,
UH-60 Blackhawk and SH-60 helicopters, Medium Launch Space Vehicle,
Joint Standoff Weapon, and Global Positioning System.
Both the 1997 and 1998 FYDPs anticipate procurement spending of $60
billion in 2001. The 1998 FYDP projects that procurement costs will
increase to about $68 billion for 2002 and remain at that level for
2003.
The 1998 FYDP procurement accounts include funds reserved for
modernization that were not included in the 1997 FYDP. These funds
total $19.8 billion for 1999-2003. Table 2 shows the allocation of
these funds by year.
Table 2
Proposed Modernization Reserve, by
Fiscal Year
(Dollars in millions)
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
-------------------- -------- -------- -------- -------- --------
Reserve $965 $1,783 $2,454 $6,640 $8,003
----------------------------------------------------------------------
Source: 1998 FYDP.
DOD has programmed the funds in anticipation that savings will be
achieved from reduced operating costs and that the savings will
become available for procurement. However, DOD has not assigned
these projected funds to specific programs.
With each FYDP from fiscal year 1995 to 1997, DOD has not met its
plans to increase procurement. There is risk that DOD's 1998 plan
also may not succeed. Since 1965, O&M spending has increased
consistently with increases in procurement spending. However, the
1998 FYDP shows that DOD plans to change that historical relationship
from 1998 through 2003 by increasing procurement while decreasing O&M
spending. Figure 2 shows the historical and projected relationship
between O&M and procurement spending.
Figure 2: Historical and
Projected Relationship Between
Procurement and O&M Spending in
Constant 1998 Dollars
(See figure in printed
edition.)
DOD's plans for procurement spending in the 1998 FYDP also run
counter to another historical trend. Specifically, DOD procurement
spending rises and falls in nearly direct proportion to movements in
its total budget. However, DOD projects that procurement funding
will rise in real terms during 1998-2003 by about 43 percent while
the total DOD budget remains relatively flat. Figure 3 shows the
historical trend and DOD's FYDP projections.
Figure 3: Historical and
Projected Relationship Between
Procurement Spending and DOD's
Total Budget in Constant 1998
Dollars
(See figure in printed
edition.)
DOD's plans to increase procurement funding to pay for modern weapon
systems will also have to provide for potential cost growth in
existing systems. Program cost increases and schedule delays are two
of the oldest, most prevalent, and most visible problems associated
with weapon systems development and procurement. In 1994, we
reported that program cost increases of 20 to 40 percent have been
common for major weapon programs, with numerous programs experiencing
increases much greater than that.\10 A 1993 RAND study of weapon
system cost growth prepared for the Air Force concluded that there
had been no substantial reduction in the average cost growth of
weapon systems over the last 30 years, despite the implementation of
several initiatives intended to mitigate the effects of cost risk and
the associated cost growth.\11
We continue to find examples of program projections that appear to be
overly optimistic. For example, in our 1997 high-risk report, we
noted that the Joint Air-to-Surface Standoff Missile Program
contained significant schedule and cost risk.\12 The plan is to
develop and initially deploy the Air Force's most capable
precision-guided munition in 5 years for no more than $700,000 per
missile. However, the plan does not appear to allow enough time to
develop and test the munition's complex technology and to integrate
the missile into the appropriate aircraft.
In June 1997, we reported that we were skeptical the Air Force could
achieve planned production cost reductions of $13 billion proposed in
its F-22 fighter aircraft program.\13 The planned reductions in F-22
unit costs are greater than achieved in prior fighter programs, and
initiatives to reduce the production costs are not fully developed.
As a result of the QDR analysis, DOD has decided to reduce total
procurement of F-22s by about 100 aircraft, in part due to its own
overall affordability concerns.
--------------------
\10 Future Years Defense Program: Optimistic Estimates Lead to
Billions in Overprogramming (GAO/NSIAD-94-210, July 29, 1994).
\11 An Analysis of Weapon System Cost Growth (RAND, MR-291-AF, 1993).
\12 Defense Weapon Systems Acquisition (GAO/HR-97-6, Feb. 1997).
\13 Tactical Aircraft: Restructuring of the Air Force F-22 Fighter
Program (GAO/NSIAD-97-156, June 4, 1997).
RDT&E PROJECTED TO INCREASE
------------------------------------------------------------ Letter :7
Total projected RDT&E funding for the 4 common years increases from
$132 billion in the 1997 FYDP to $137 billion in the 1998 FYDP--an
increase of $5 billion. Table 3 shows total planned funding for the
seven budget activities of RDT&E during 1998-2001 in both the 1997
and 1998 FYDPs.
Table 3
Planned Funding for RDT&E by Budget
Activity During the 4 Common Years of
1997 and 1998 FYDPs
(Dollars in millions)
1997 1998
RDT&E budget activity FYDP FYDP Change
---------------------------------------- -------- -------- --------
Basic research $5,167 $4,877 -$290
Applied research 12,434 12,174 -260
Advanced technology development 13,896 14,013 117
Demonstration and validation 17,606 19,045 1,439
Engineering and manufacturing 29,505 31,276 1,771
development
RDT&E management support 11,908 12,397 489
Operational systems development 41,749 43,497 1,749
======================================================================
Total $132,265 $137,279 $5,014
----------------------------------------------------------------------
Source: 1997 and 1998 FYDPs.
As table 3 shows, the $5-billion increase is almost totally allotted
to three budget activities--demonstration and validation, engineering
and manufacturing development, and operational systems development.
Two accounts were reduced slightly over the period--basic and applied
research.
Programs for which funding was significantly increased over the
common years of both FYDPs include the Joint Strike Fighter ($223
million), airborne laser technology ($307 million), B-1B bomber
enhancements ($114 million), and dual-use applications programs ($120
million). Programs for which funding was significantly reduced over
the common years of both FYDPs include experimental evaluation of
major innovative technologies ($2.9 billion), defense airborne
reconnaissance ($1.7 billion), advanced military satellite
communications ($567 million), and the advanced technology transition
program ($125 million).
SIGNIFICANT CHANGES IN FUNDING
FOR MILITARY CONSTRUCTION
PROGRAMS
------------------------------------------------------------ Letter :8
The overall funding level for military construction changed little
between the 1997 FYDP and the 1998 FYDP during the 4 common years.
However, our examination of programs showed several changes. We
found significant increases in Army base operations ($391 million),
Navy base realignment and closure activities ($335 million), Marine
Corps base operations ($116 million), training base operations ($67
million), logistics base operations ($51 million), and Army National
Guard base operations ($50 million). We also found significant
decreases in Army management headquarters construction ($713
million), chemical agents and munitions destruction ($158 million),
Air Force base operations for airlift activities ($145 million), Air
Force environmental compliance ($122 million), and Navy environmental
compliance ($49 million).
FAMILY HOUSING IMPROVEMENT AND
OPERATIONS FUNDS PROJECTED TO
DECLINE
------------------------------------------------------------ Letter :9
Total funding for family housing decreases by $337 million, or about
2 percent, for the common years in the 1997 and 1998 FYDPs. The
decrease is due primarily to reduced funding for improvements and
operations costs. Table 4 compares total funding for the common
years of the 1997 and 1998 FYDPs for family housing programs.
Table 4
Funding for Family Housing Programs
During the 4 Common Years in the 1997
and 1998 FYDPs
(Dollars in millions)
1997 1998
Family housing program FYDP FYDP Change
---------------------------------------- -------- -------- --------
Maintenance $5,458 $5,556 $98
Operations 4,858 4,500 -358
Improvements 2,569 2,127 -442
Leasing 2,072 2,089 17
New construction 1,167 1,156 -11
Homeowner's Assistance 0 275 275
Debt payments 474 458 -16
Construction (planning and design) 0 100 100
======================================================================
Total $16,598 $16,261 -$337
----------------------------------------------------------------------
Source: 1997 and 1998 FYDPs.
AGENCY COMMENTS AND OUR
EVALUATION
----------------------------------------------------------- Letter :10
DOD generally concurred with a draft of this report. It emphasized
that the full implications of the QDR on programs and budgets will
not be fully expressed until the submission of the fiscal years
1999-2003 defense program in February 1998. DOD's comments are
included as appendix III.
SCOPE AND METHODOLOGY
----------------------------------------------------------- Letter :11
To determine the major program adjustments in DOD's fiscal year 1998
FYDP, we interviewed officials in the Office of Under Secretary of
Defense (Comptroller); the Office of Program Analysis and Evaluation;
and the Army, Navy, and Air Force program and budget offices. We
examined a variety of DOD planning and budget documents, including
the 1997 and 1998 FYDPs and the QDR report. We also reviewed the
President's fiscal
year 1998 budget submission; our prior reports; and pertinent reports
by the Congressional Budget Office, the Congressional Research
Service, and others.
To determine the implications of program changes and underlying
planning assumptions, we discussed the changes with DOD officials.
We compared DOD's automated data with published documents provided by
DOD. Specifically, we compared total budget estimates, appropriation
totals, military and civilian force levels, force structure levels,
and some specific program information. Based on our comparisons, we
were satisfied that DOD's automated FYDP data and published data are
in agreement. We did not test DOD's management controls of the FYDP
data. The FYDP is DOD's primary source of official program
information. It is used extensively throughout DOD for analytical
purposes and for making programming and budgeting decisions.
Our work was conducted from March through August 1997 in accordance
with generally accepted government auditing standards.
--------------------------------------------------------- Letter :11.1
We are providing copies of this report to other appropriate
congressional committees; the Secretaries of Defense, the Air Force,
the Army, and the Navy; and the Director, Office of Management and
Budget. We will also provide copies to others upon request.
If you have any questions concerning this report, please call me on
(202) 512-3504. Major contributors to this report are listed in
appendix IV.
Richard Davis
Director, National Security
Analysis
QUADRENNIAL DEFENSE REVIEW
INITIATIVES
=========================================================== Appendix I
The following sections describe proposed Quadrennial Defense Review
(QDR) initiatives that could impact the Department of Defense's (DOD)
future programs.
SMALLER ACTIVE AND RESERVE
FORCES ARE PLANNED
--------------------------------------------------------- Appendix I:1
Across DOD, QDR actions are to reduce active military end strength by
about 62,000 and Reserve end strength by about 54,000. The
reductions, by service, are shown in table I.1.
Table I.1
QDR Proposed Military Personnel
Reductions
Service Active military Reserves
------------------------------ ------------------ ------------------
Air Force 26,900 700
Army 15,000 45,000
Marine Corps 1,800 4,200
Navy 18,000 4,100
======================================================================
Total 61,700 54,000
----------------------------------------------------------------------
Source: QDR report.
According to the QDR, most of DOD's infrastructure is in the military
departments (medical and some logistics functions are the
exceptions). In fiscal year 1997, the military departments'
infrastructure activities employ 557,000 military personnel.
Further, the QDR states that about 37,000 of the active military
positions would be eliminated from infrastructure activities.
PROPOSED REDUCTIONS IN
OPERATION AND MAINTENANCE
--------------------------------------------------------- Appendix I:2
According to DOD, 61 percent of the people employed by the Department
in fiscal year 1997 are involved in infrastructure activities. Most
of these activities, including civilian pay, are funded from the
operation and maintenance (O&M) appropriation. Since the end of the
Cold War, DOD has reduced its military force structure and number of
military personnel faster than its supporting infrastructure. To
close the gap, and to begin to reduce the share of the defense budget
devoted to infrastructure, the QDR proposed the following four
actions:
-- Reduce the number of civilian personnel associated with
infrastructure by 72,000 more than the reductions in DOD's 1998
budget.
-- Request authority for two additional rounds of base closures and
realignments.
-- Improve the efficiency and performance of DOD support activities
by adopting innovative business practices of the private sector.
-- Consider far more nonwarfighting DOD support functions as
candidates for outsourcing, inviting commercial companies to
compete with the public sector to undertake certain support
functions.
PROPOSALS IMPACTING PROCUREMENT
--------------------------------------------------------- Appendix I:3
As DOD observed in its QDR report, each new defense program since the
bottom-up review has had to postpone the previous year's plan to
increase procurement spending. According to DOD, these postponements
have generally reflected the high priority DOD attaches to current
spending on readiness. Funding originally planned for procurement
was spent instead to meet day-to-day operating expenses. DOD refers
to this as a "migration" of funding. DOD pointed out that funds have
migrated because it has not managed financial risk to reflect the
importance it also attaches to investing in the future. The
implication for the future is that DOD's operating costs will
continue to exceed program estimates, resulting in substantial
unrealized weapons procurements early in the next century. DOD
recognizes the challenge it faces to achieve its modernization goals.
To address the problem of migrating funds, DOD plans to redirect
about $6 billion to $7 billion in resources annually by the end of
2003 from savings made available by reducing the force structure,
streamlining infrastructure, and adjusting modernization plans.
While DOD has retained its goal of increasing procurement funding to
roughly $60 billion by fiscal year 2001, it plans to moderate the
intermediate targets to $49 billion in 1999 and $54 billion in 2000.
The QDR also suggests reducing some purchases that were planned
beyond 2000.
Some of the QDR procurement proposals are as follows:
-- Reduce purchases of the Joint Surveillance and Target Attack
Radar System from 19 to 13 aircraft.
-- Decrease the total procurement of F-22 aircraft from 438 to 339
and slow the maximum planned annual production rate from 48 to
36.
-- Reduce the maximum production rate of F/A-18E/F aircraft from 60
to 48 per year. Also delay by 2 years, from 2000 to 2002,
production at the maximum rate.
-- Reduce planned purchases of the Joint Strike Fighter from 2,978
to 2,852. Also delay production at the planned maximum rate for
2 years, from 2010 to 2012.
-- Reduce planned purchases of the Marine Corps V-22 Osprey from
425 to 360 aircraft and accelerate procurement to a long-term
rate of 30 per year by 2004.
-- Limit procurement of B-2 bombers to the currently planned 21.
-- Create a funding reserve to offset cost growth in weapons
programs due to technical risk. Cost growth in existing
programs divert modernization funds.
QDR PROPOSES SUBSTANTIAL
INVESTMENTS IN RESEARCH,
DEVELOPMENT, TEST, AND
EVALUATION
--------------------------------------------------------- Appendix I:4
The QDR discusses broad efforts that are underway in all of the
military departments to exploit the Revolution in Military Affairs.
Underwriting DOD's extensive modernization effort and the Revolution
in Military Affairs are plans for substantial future investments in
research, development, test, and evaluation (RDT&E). DOD
acknowledges that some of these major investments, while deemed
essential to meet national goals, will involve very high financial
and technological risks. Therefore, it is likely that billions of
additional dollars will be directed to these programs over the coming
years. But according to DOD, the precise amount and allocation of
these dollars are still under review. Some of these programs were
identified in the QDR report and include the following:
-- Theater Ballistic Missile Defense Programs. According to DOD,
the Theater High Altitude Area Defense (THAAD) Program is
expected to take longer and cost more than the 1998 Future Years
Defense Program (FYDP) anticipated. DOD has decided to slow the
Army's portion of the THAAD program because of serious technical
problems and shift the deployment date from 2004 to 2006.
According to DOD, this action will improve the stability of the
program and lower program risk.
-- National Missile Defense. This high-priority program with the
executive branch and Congress is on an accelerated research and
development path. However, the QDR analysis concluded that this
program could not be deployed by the planned date of 2000 within
the current program budget. As a result, DOD decided it will
direct additional funds to national missile defense. DOD
acknowledges in the QDR report that even with the additional
funding, this program will remain a high risk.
-- Cruise Missile Defense. According to DOD, intelligence
estimates have revealed that a cruise missile threat to U.S.
forces may emerge after 2000. Therefore, over the next several
years, DOD plans to increase emphasis on a national cruise
missile defense.
-- Navigation. Upgrades to the space-based Global Positioning
System and compliance with global air traffic management rules
to become effective over the next several years will require
significant future expenditures, which are yet to be determined.
According to DOD, its very large fleet of aircraft will need to
be properly equipped with new navigation equipment to comply
with new procedures of the Federal Aviation Administration and
the International Civil Aviation Organization.
-- Counterproliferation. DOD said that it will increase planned
spending on counterproliferation by approximately $1 billion
over the 1999 FYDP, particularly for protective measures against
chemical weapons.
-- Force Protection and Combating Terrorism. According to the QDR,
DOD is increasing its research and development funding in this
area. The funding will support state-of-the-art programs,
including systems to detect, assess, and disable large vehicle
bombs; standoff explosive detection capabilities; capabilities
to maintain surveillance of and tag and track harmful materials
that can be used in terrorist attacks; and improvements to
robotic vehicles used in counterterrorism operations.
-- Information Operations. According to DOD, technical measures to
protect military information systems, in both hardware and
software, are being greatly expanded.
PROGRAM DESCRIPTIONS
========================================================== Appendix II
The following are descriptions of the programs in the FYDP, by
appropriation, that are mentioned in this report.
MILITARY PERSONNEL
-------------------------------------------------------- Appendix II:1
RECRUIT TRAINING UNITS
------------------------------------------------------ Appendix II:1.1
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the conduct of recruit
training and the basic introductory and indoctrination provided to
enlisted entrants in units devoted to such training at Army training
centers, recruit training commands, Marine Corps recruit depots, the
Air Force Military Training Center, and other DOD facilities.
GENERAL SKILL TRAINING
------------------------------------------------------ Appendix II:1.2
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the conduct of specialized
skill training in both DOD and civilian institutions, including
initial skill, skill progression, and functional training to provide
tactical, technical, administrative, and management skills.
Specifically includes, but is not limited to, officer basic courses,
advanced individual training at Army training centers, training in
aircraft maintenance and airfield operations, formal noncommissioned
officer and drill sergeant schools, survival training, Navy
apprenticeship training, and temporary duty specifically identified
for this training.
INTEGRATED RECRUIT AND SKILL
TRAINING
------------------------------------------------------ Appendix II:1.3
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the conduct of enlisted
recruit training and initial skill training in a single unit in a
single, uninterrupted formal course. Includes, for example, Army
one-station unit training and Navy apprenticeship training, when
conducted as a single, uninterrupted course with recruit training.
DEFENSE MEDICAL CENTERS,
STATION HOSPITALS, AND
MEDICAL CLINICS
------------------------------------------------------ Appendix II:1.4
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the provision of health
care in the continental United States in DOD-owned and operated
facilities that are staffed and equipped to provide inpatient care
for both surgical and nonsurgical conditions and outpatient care for
patients that are not hospitalized.
OPERATION AND MAINTENANCE
-------------------------------------------------------- Appendix II:2
BASE OPERATIONS
------------------------------------------------------ Appendix II:2.1
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the following:
administration, retail supply operations, maintenance of installation
equipment, other base services, bachelor housing operations and
furnishings, and other personnel support. Excluded from this program
are the following types of base operating support: real property
services, minor construction, maintenance and repair, base
communications, commissary operations, station hospitals, medical and
dental clinics, and family housing.
AIR FORCE TRAINING
------------------------------------------------------ Appendix II:2.2
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the operating cost of
aircraft used in training, field maintenance, organizational
maintenance, and permanent party student authorizations.
AIR FORCE F-15A/B/C/D
SQUADRONS
------------------------------------------------------ Appendix II:2.3
This program includes all F-15 acquisitions, research and
development, staff authorizations, peculiar and support equipment,
necessary facilities, and the associated costs specifically
identified and measurable to the F-15A/B/C/D, including wing
headquarters, tactical fighter squadrons, avionics maintenance, field
maintenance, consolidated aircraft maintenance, munitions
maintenance, and weapon system security.
AIR FORCE LOGISTICS
OPERATIONS, OTHER THAN
WORKING CAPITAL FUNDS
------------------------------------------------------ Appendix II:2.4
This program includes staff authorizations, necessary facilities, and
associated costs specifically identified and measurable to the costs
of civilian personnel, travel, and transportation for supply depot
operations; inventory control and materiel management-related
requirements computations; commodity management; standardization;
cataloging; systems and data management; procurement and contract
administration; requisition processing; inventory accounting; and the
management, receipt, storage preservation, issue, and distribution of
supplies.
NONINDUSTRIALLY FUNDED DEPOT
MAINTENANCE
------------------------------------------------------ Appendix II:2.5
This program includes, for all services, funds for reimbursement of
the industrial fund for depot maintenance of aircraft and equipment,
financing commercial depot maintenance contracts, and interservice
depot maintenance. Also includes staff, equipment, facilities, and
associated costs directly measurable to nonindustrially funded
depot-level maintenance at various facilities.
MARINE CORPS OTHER COMBAT
SUPPORT
------------------------------------------------------ Appendix II:2.6
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and associated costs specifically
identified and measurable to headquarters of Marine amphibious
forces, brigades, and units; communications battalions; force
reconnaissance companies; air and naval gunfire liaison companies;
and topographic platoons.
NAVY LOGISTICS SUPPORT
ACTIVITIES
------------------------------------------------------ Appendix II:2.7
This program includes staff authorizations and the associated costs
specifically identified and measurable to the following: centrally
managed logistics support services not directly related to another
program, production engineering activities that do not fit into
another program, and various other activities.
MARINE CORPS OTHER PERSONNEL
ACTIVITIES
------------------------------------------------------ Appendix II:2.8
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to resources associated with
units and activities devoted to enhancing the service's overall
morale, fostering good community relations, and providing
miscellaneous personnel support services.
ARMY REAL PROPERTY
MAINTENANCE AND REPAIR
------------------------------------------------------ Appendix II:2.9
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to maintenance and repair of
real property, such as utilities, buildings, other facilities,
pavements, land, and grounds. Includes such things as repair of
electrical circuitry, heating and air conditioning, water piping, and
routine maintenance work, such as caulking and painting, at fixed
installations.
RESEARCH, DEVELOPMENT, TEST,
AND EVALUATION
-------------------------------------------------------- Appendix II:3
JOINT STRIKE FIGHTER (JOINT
ADVANCED STRIKE TECHNOLOGY)
------------------------------------------------------ Appendix II:3.1
This program continues engineering and manufacturing development of a
joint program to develop a high-technology, low-cost, multirole
fighter aircraft for the Air Force, Navy, and Marine Corps.
AIRBORNE LASER TECHNOLOGY
------------------------------------------------------ Appendix II:3.2
This program includes funds to design, build, and test a weapon
system to acquire, track, and kill theater ballistic missiles in the
boost phase.
AIR FORCE B-1B BOMBER
ENHANCEMENTS
------------------------------------------------------ Appendix II:3.3
This program includes funds for the full-scale engineering
development of a strategic multirole bomber that maximizes range,
payload, and the ability to perform the missions of a conventional
bomber, cruise missile launch platform, and nuclear weapons delivery
system in both the tactical and strategic role.
DUAL-USE APPLICATIONS
PROGRAMS
------------------------------------------------------ Appendix II:3.4
The objective of this program is to leverage emerging dual-use
(potentially usable in both commercial and defense applications)
technologies to the direct benefit of military system acquisitions.
EXPERIMENTAL EVALUATION OF
MAJOR INNOVATIVE
TECHNOLOGIES
------------------------------------------------------ Appendix II:3.5
This program includes resources to demonstrate technology of major
program efforts. Principally, it includes technology investigations
aimed at providing radically new options for major increases in the
effectiveness of strategic and tactical command, control, and
communications mission areas.
DEFENSE AIRBORNE
RECONNAISSANCE
------------------------------------------------------ Appendix II:3.6
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to providing a central focus
for a multiservice requirements approach to develop and field future
airborne reconnaissance systems.
ADVANCED MILITARY SATELLITE
COMMUNICATIONS
------------------------------------------------------ Appendix II:3.7
This program includes demonstration and validation efforts to support
development of the follow-on satellite to the Milstar II program.
This system will provide the capability for survivable,
jam-resistant, worldwide, secure communications for strategic and
tactical warfighters.
ADVANCED TECHNOLOGY
TRANSITION PROGRAM
------------------------------------------------------ Appendix II:3.8
This program includes funds for advanced technology development,
which provides a formal mechanism to foster and encourage transition
of the most promising technological opportunities into development
programs.
MILITARY CONSTRUCTION
-------------------------------------------------------- Appendix II:4
NAVY BASE REALIGNMENT AND
CLOSURE ACTIVITIES
------------------------------------------------------ Appendix II:4.1
This program includes resources necessary to implement base
realignments and closures. Includes costs to prepare facilities and
property for disposal, relocate personnel and equipment, construct
new facilities for realigned forces, and assist affected communities.
Financing for this program is to be provided by the sale of assets
made available by base realignments and closures, and by appropriated
funding.
BASE OPERATIONS
------------------------------------------------------ Appendix II:4.2
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the following:
administration, retail supply operations, maintenance of installation
equipment, bachelor housing operations and furnishings, other base
services, and other personnel support. Excluded from this program
are the following types of base operating support: real property
services, minor construction, maintenance and repair, base
communications, commissary operations, station hospitals, medical and
dental clinics, and family housing.
ARMY MANAGEMENT
HEADQUARTERS-CONSTRUCTION
------------------------------------------------------ Appendix II:4.3
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to management resources for
the Headquarters, U.S. Army Corps of Engineers.
CHEMICAL AGENTS AND
MUNITIONS DESTRUCTION
------------------------------------------------------ Appendix II:4.4
This program includes resources, not otherwise provided for, that are
necessary for the destruction of the U.S. stockpile of lethal
chemical agents and munitions in accordance with the provisions of
section 1412 of the 1986 DOD Authorization Act, Public Law 99-145.
ENVIRONMENTAL COMPLIANCE
------------------------------------------------------ Appendix II:4.5
This program includes actions to achieve and maintain full and
sustained compliance with federal, state, and local environmental
laws and regulations; executive orders; and host nation regulations
and DOD policies. This program funds all costs related to
environmental compliance, including recurring costs of environmental
program management; nonrecurring costs of projects/services required
to bring DOD into compliance with environmental standards or notice
of violation; pest management programs to meet federal standards for
pest management and pesticide storage, handling, or use; overseas
cleanup and compliance efforts; and certification of innovative
technology for DOD applications.
FAMILY HOUSING
-------------------------------------------------------- Appendix II:5
MAINTENANCE
------------------------------------------------------ Appendix II:5.1
This program includes maintenance costs for the DOD Family Housing
Program.
OPERATIONS
------------------------------------------------------ Appendix II:5.2
This program includes costs specifically identifiable and measurable
to operations costs for the DOD Family Housing Program.
IMPROVEMENTS
------------------------------------------------------ Appendix II:5.3
This program includes costs specifically identifiable and measurable
to construction costs, including applicable planning costs, for
improving existing facilities under the DOD Family Housing Program
and other construction items.
LEASING
------------------------------------------------------ Appendix II:5.4
This program includes costs specifically identifiable and measurable
to administration and leasing costs of the Leased Housing Program.
NEW CONSTRUCTION
------------------------------------------------------ Appendix II:5.5
This program includes costs specifically identifiable and measurable
to the construction of new family dwelling units; new trailer court
facilities; new nondwelling buildings; new community facilities; and
new roads, driveways, walks, and utilities primarily for use by
family housing occupants.
HOMEOWNER'S ASSISTANCE
------------------------------------------------------ Appendix II:5.6
This program includes costs specifically identified with the Defense
Homeowner's Assistance Fund. These include reimbursements to
homeowners for losses in private sales; operating and maintenance
costs for acquired properties; appraisal fees; administrative costs
for all types of assistance; and equity payments to homeowners,
payments in foreclosure cases, and payments on assumed mortgages.
DEBT PAYMENTS
------------------------------------------------------ Appendix II:5.7
This program includes costs specifically identifiable and measurable
to debt payments for family housing.
CONSTRUCTION PLANNING AND
DESIGN
------------------------------------------------------ Appendix II:5.8
This program includes staff authorizations, peculiar and support
equipment, necessary facilities, and the associated costs
specifically identified and measurable to the planning and design of
military construction, access roads, and minor land acquisitions.
(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C.
Robert Pelletier
William Crocker
Deborah Colantonio
Alan Byroade
Shawn Bates
Nancy Ragsdale
RELATED GAO PRODUCTS
Bosnia: Cost Estimating Has Improved, but Operational Changes Will
Affect Current Estimates (GAO/NSIAD-97-183, July 28, 1997).
Military Bases: Lessons Learned From Prior Base Closure Rounds
(GAO/NSIAD-97-151, July 25, 1997).
Tactical Aircraft: Restructuring of the Air Force F-22 Fighter
Program (GAO/NSIAD-97-156, June 4, 1997).
Defense Budget: Observations on Infrastructure Activities
(GAO/NSIAD-97-127, Apr. 4, 1997).
High-Risk Series: Defense Weapon Systems Acquisition (GAO/HR-97-6,
Feb. 1997).
Defense Health Program: Future Costs Are Likely to Be Greater Than
Estimated (GAO/NSIAD-97-83BR, Feb. 21, 1997).
Future Years Defense Program: Lower Inflation Outlook Was Most
Significant Change From 1996 to 1997 Program (GAO/NSIAD-97-36, Dec.
12, 1996).
Defense Infrastructure: Costs Projected to Increase Between 1997 and
2001 (GAO/NSIAD-96-174, May 31, 1996).
Defense Infrastructure: Budget Estimates for 1996-2001 Offer Little
Savings for Modernization (GAO/NSIAD-96-131, Apr. 4, 1996).
Future Years Defense Program: 1996 Program Is Considerably Different
From the 1995 Program (GAO/NSIAD-95-213, Sept. 15, 1995).
DOD Budget: Selected Categories of Planned Funding for Fiscal Years
1995-99 (GAO/NSIAD-95-92, Feb. 17, 1995).
Future Years Defense Program: Optimistic Estimates Lead to Billions
in Overprogramming (GAO/NSIAD-94-210, July 29, 1994).
*** End of document. ***
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