Report Overview

The Department of Defense fiscal year 2003 Performance and
Accountability Report is designed to provide useful information for
American citizens, the President, Congress, other federal organizations,
and Department of Defense military members, civilians and contractors.

Our report encompasses the Department's operations for fiscal year 2003,
which occurred from October 1, 2002 through September 30, 2003. It
contains five parts. Combined, they provide a thorough accounting of the
Department's stewardship of our critical resources and services to the
American people.

The pressures on the Department's resources have never been greater and
will continue to grow in the years ahead. Our response must be to focus
relentlessly on efficient and careful use and management of these
resources. Only by effectively measuring the results we achieve, as
documented in this report, can we adjust the tactics and strategies we
use to meet our goal of mission excellence, and deliver the best
possible performance for our customers, the American people.

**Part 1: Management Discussion and Analysis** is a high-level overview
of the Department's performance and financial information for fiscal
year 2003. It is designed for citizens, members of the public, and
officials from federal, state, and local government. Part 1 starts with
a discussion of the Department of Defense (DoD) mission, organization
and resources. It highlights the Department's performance---covered in
more detail in Part 2---by summarizing the strategic plan and goals and
the fiscal year 2003 annual performance goals and

results. Next, it provides financial highlights---covered in more detail
in Part 3---for fiscal year 2003. The Department's compliance with legal
and regulatory requirements are also discussed in this section. Part 1
concludes with a summary of the Department's status on meeting the
President's Management Agenda objectives.

**Part 2: Performance Information** presents the Department's strategic
plan, strategic objectives, annual performance goals, and annual
performance results for fiscal year 2003 in accordance with the
Government Performance and Results Act. It displays key performance
indicators---and their fiscal year 2003 goals and results---that the
Department uses to manage certain risk areas and to accomplish its
strategic objectives.

**Part 3: Financial Information** is composed of the Department's
principal financial statements, notes to these statements, consolidating
and combining statements, and other required information for fiscal year
2003. This section includes the DoD Inspector General Auditors' Report
on the Department's fiscal year 2003 financial statements. The Auditors'
Report provides the Inspector General's assessment of whether the
Department's financial statements are fairly presented, in all material
respects, and in conformity with generally accepted accounting
principles.

**Part 4: Inspector General Summary of Management Challenges** presents
a summary of the most serious management challenges facing the
Department. This assessment was prepared by the DoD's Office of
Inspector General.

**Part 5: Appendices** presents detailed DoD performance indicators and
a list of internet links for further information referred to in this
report.

We are interested in your feedback regarding the content of this report.
Please feel free to email your comments to <DoDPAR@osd.mil> or write to:

U.S. Department of Defense

Office of the Under Secretary of Defense (Comptroller)

1100 Defense Pentagon

Washington, DC 20301-1100

Additional copies of this report can be obtained by sending a written
request to the e-mail or mailing address listed above.

You may also view this document at
[www.dod.mil/comptroller/par](http://www.dod.mil/comptroller/par).