United States General Accounting Office

GAO Report to Congressional Requesters

July 1998 FUTURE YEARS

DEFENSE PROGRAM

Substantial Risks

Remain in DOD’s

1999-2003 Plan

GAO/NSIAD-98-204

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-278787 

July 31, 1998

The Honorable John R. Kasich

Chairman, Committee on the Budget

House of Representatives

The Honorable Charles E. Grassley

United States Senate

Our earlier analysis of the Department of Defense’s (DOD) Future Years

Defense Program (FYDP) for fiscal year 1998 found substantial risk that the

program would not be executed as planned.1

 According to DOD, compared

to the fiscal year 1998 FYDP, the Quadrennial Defense Review (QDR)

proposed a more balanced, modern, and capable program that can be

executed within currently proposed budgets. DOD planned to incorporate

many of the details of the QDR blueprint into its fiscal year 1999 FYDP.

2

 As

you requested, we (1) identified the Department’s plans to address the

financial and programmatic risk areas that the QDR found in DOD’s program,

(2) compared DOD’s 1999 FYDP with its 1998 FYDP to identify major changes

and adjustments to address these risks areas, and (3) explored whether

there were risk areas in DOD’s 1999 program. Our report does not reflect

any adjustments that may have been taken by the Committees on

Authorizations and Appropriations during their reviews of the 1999

defense budget request.

Background 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). The act directed the Secretary of Defense, in

consultation with the Chairman, Joint Chiefs of Staff, to conduct a review

of the defense needs from 1997 to 2015.

Since its bottom-up review in 1993, DOD has repeatedly stated that it must

reduce its infrastructure to offset the cost of future modern weapon

systems.3

 Our analysis of DOD’s FYDPs and infrastructure activities over the

past several years showed that the infrastructure portion of DOD’s budget

1

Future Years Defense Program: DOD’s 1998 Plan Has Substantial Risk in Execution

(GAO/NSIAD-98-26, Oct. 23, 1997).

2

Unless otherwise stated, the years and dollars shown in this report are on a fiscal year basis.

3

Infrastructure comprises activities that provide support services to mission programs and primarily

operate from fixed locations.

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B-278787 

had not decreased as DOD planned.4 Further, planned funding increases for

modern weapon systems have repeatedly been shifted further into the

future with each succeeding FYDP.

In May 1997, under the balanced budget agreement, the President and

Congress set forth a budget blueprint for the national defense budget

function. As part of the agreement, national defense funding levels were

established for 1999-2002.

The FYDP is an authoritative record of current and projected force

structure, costs, and personnel levels that has been approved by the

Secretary of Defense. In addition, it is used extensively throughout DOD for

analytical purposes and for making programming and budgeting decisions.

The 1998 FYDP supported the President’s 1998 budget and included budget

estimates for 1998-2003. The 1999 FYDP supports the President’s 1999

budget and includes budget estimates for 1999-2003.

Results in Brief Although DOD has reduced military and civilian personnel, force structure,

and facilities over several years, DOD has been unable to shift funds from

infrastructure to modernization. In 1997, infrastructure spending was

59 percent of DOD’s total budget, the same percentage as in 1994. DOD

acknowledged in the QDR that it has postponed procurement plans because

funds were redirected to pay for underestimated operating costs and new

program demands, and projected savings from outsourcing and other

initiatives had not materialized. To address this diversion of funds, the QDR

directed DOD to cut some force structure and personnel, eliminate

additional excess facilities through more base closures and realignments,

streamline infrastructure, and reduce quantities of some new weapon

systems.

DOD made adjustments in the 1999 FYDP to decrease the risk that funds

would migrate from procurement to unplanned operating expenses. For

example, funding for operation and maintenance is projected to be

substantially higher and funding for military personnel and procurement is

projected to be considerably lower than anticipated 1 year ago. DOD has

programmed additional funds in areas, such as medical care, that have

been previously underestimated or underbudgeted. It also has

programmed additional funds for new programs such as the National

4

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).

Page 2 GAO/NSIAD-98-204 Future Years Defense Program
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Missile Defense System. Moreover, DOD has moderated its procurement

plans. As a result of these and other changes, DOD believes that its 1999

program is on a sounder financial footing.

Although DOD made adjustments in the 1999 FYDP, we continue to see risks

that DOD’s program may not be executable as planned. For example, DOD

projects savings of $24.1 billion as a result of lower projected inflation

rates and fuel costs and favorable foreign currency exchange rates.

However, if these rates and costs do not hold true to DOD’s assumptions,

projected savings will not materialize, and DOD will have to adjust future

budgets by cutting programs and/or requesting additional budget

authority. Also, considerable risk remains in the services’ plans to cut

175,000 military and civilian personnel and save $3.7 billion annually by

2003. For example, plans for some cuts are incomplete or are based on

optimistic assumptions about the potential to achieve savings through

outsourcing and reengineering and may not be implemented on time.

Furthermore, the adequacy of funding for the Defense Health Program is

contingent upon several assumptions, including that Congress will

authorize the reduction of 61,700 active military personnel recommended

in the QDR and that the reduction will be a mix of retirements and other

attrition. Without this reduction, costs will be higher than planned. Also,

new programs, such as the deployment of the National Missile Defense

System, may require additional investment funding. According to several

analyses, this system has high technical risk that would likely cause

increased costs and program delays. Moreover, the 1999 FYDP does not

include funds to deploy and operate the system if a decision is made to do

so.

Further indication of risk can be found in DOD’s procurement plans and

additional proposed initiatives to reduce facilities. DOD’s estimates for

procurement spending, in relation to DOD’s total budget, run counter to

DOD’s experience over the last 32 years. 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 approximately 29 percent while the total

DOD budget will remain relatively flat. Also, on some important proposed

initiatives, such as base closures and military personnel reductions, DOD

will need congressional approval. Moreover, as long as the funding levels

agreed to in the balanced budget agreement for national defense remain

unaltered, DOD must solve its funding issues within its current and

projected total budget.

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DOD’s Plans to

Address Risk

A principal objective of the QDR was to understand and devise ways to

manage the financial risk in DOD’s program. In the QDR, the Department

acknowledges that it has a historic, serious problem—the postponement

of procurement modernization plans to pay for current operating and

support costs. DOD refers to this as migration of funds. According to DOD,

the chronic erosion of procurement funding has three general sources:

underestimated day-to-day operating costs, unrealized savings from

initiatives such as outsourcing or business process reengineering, and new

program demands. The QDR concluded that as much as $10 billion to

$12 billion per year in future procurement funding could be redirected as a

result of these three general sources. The QDR also identifies other areas of

significant future cost risks.

To address this financial instability, the QDR directed DOD to cut some force

structure and personnel, eliminate additional excess facilities through

more base closures and realignments, streamline infrastructure, and

reduce quantities of some new weapon systems. By taking these actions,

the Secretary of Defense intended that the 1999 budget and FYDP would be

fiscally executable, modernization targets would be met, the overall

defense program would be rebalanced, and the program would become

more stable.

During the QDR, DOD identified initiatives to reduce infrastructure costs and

personnel. However, even as the QDR report was released, the Department

acknowledged that more could be done. The Department’s November 1997

Defense Reform Initiative Report provided a second set of initiatives to

streamline and improve DOD’s infrastructure and support activities. Money

saved by these initiatives is to help fund weapons modernization. The

Defense Management Council, chaired by the Deputy Secretary of

Defense,5

 was charged by the Secretary to ensure implementation of the

reform decisions. The Council also was directed to examine similar

reforms for each of the services and to negotiate an annual performance

contract with the director of each defense agency.

The 1999 FYDP

Reflects Significant

Resource Adjustments

The 1999 FYDP reflects the budget blueprint outlined in the balanced

budget agreement, and therefore, its total budget does not vary greatly

from that in the 1998 FYDP. The common 5-year period of both FYDPs

(1999-2003) shows that the 1998 FYDP totaled $1,355 billion and the 1999

5

Other members of the Council are the Vice Chairman of the Joint Chiefs of Staff, the four Under

Secretaries of Defense, the three service Under Secretaries, and the four service Vice Chiefs.

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FYDP totaled $1,356 billion. Table 1 compares the two plans, by primary

appropriation account.

Table 1: DOD’s 1998 and 1999 FYDPs, by Primary Appropriation Account

Fiscal year

Dollars in billions

Account FYDP 1999 2000 2001 2002 2003 Total

Military personnel 1998 $70.1 $71.4 $73.3 $75.3 $77.5 $367.5

1999 70.8 70.7 71.6 73.0 74.9 361.0

Change 0.7 –0.7 –1.6 –2.2 –2.6 –6.4

Operation and maintenance 1998 91.4 92.0 93.8 91.8 95.2 464.3

1999 94.6 95.7 97.7 99.5 101.7 489.2

Change 3.3 3.6 3.9 7.6 6.5 24.9

Procurement 1998 50.7 57.0 60.7 68.3 68.0 304.7

1999 48.7 54.1 61.3 60.7 63.5 288.3

Change –2.0 –2.9 0.6 –7.7 –4.5 –16.4

Research, 1998 35.0 33.4 32.9 34.2 35.8 171.4

development, test, 1999 36.1 33.9 33.0 33.5 34.3 170.9

and evaluation Change 1.0 0.5 0.1 –0.7 –1.5 –0.5

Military construction 1998 4.3 4.3 4.2 3.4 3.4 19.6

1999 4.3 4.9 4.4 3.7 4.0 21.3

Change 0.0 0.6 0.2 0.3 0.6 1.7

Family housing 1998 4.0 3.9 4.0 3.9 4.0 19.8

1999 3.6 3.9 3.9 3.9 4.2 19.4

Change –0.4 0.0 –0.1 0.0 0.2 –0.4

Revolving and 1998 1.7 1.3 1.3 1.4 1.4 7.0

management 1999 0.6 0.8 0.4 0.4 1.1 3.2

funds Change –1.1 –0.5 –1.0 –1.0 –0.3 –3.9

Defense-wide contingencies 1998 0.1 0.1 0.1 –0.1 0.1 0.2

1999 0.0 0.0 0.0 0.8 1.4 2.3

Change –0.1 –0.1 –0.1 0.9 1.4 2.1

Total 1998 $257.2 $263.5 $270.3 $278.2 $285.3 $1,354.5

1999 $258.6 $264.0 $272.3 $275.5 $285.1 $1,355.5

Change $1.4 $0.5 $2.0 $-2.7 $-0.2 $1.0

Note: Program estimates in the 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: 1998 and 1999 FYDPs.

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Appropriation

Changes to Rebalance

the Defense Program

As shown in table 1, DOD adjusted its three largest appropriations

substantially in the 1999 FYDP. Specifically, DOD added $24.9 billion to

operation and maintenance (O&M) accounts and decreased the

procurement and military personnel accounts by $16.4 billion and

$6.4 billion, respectively. (App. I shows the differences between accounts

in the 1998 and 1999 FYDPs for each appropriation.)

Military Personnel In comparing the two FYDPs, we found that planned active duty military

personnel and the comparable military personnel accounts have net

decreases of 56,500 personnel and $6.4 billion, respectively. All services

contribute to these planned decreases. For example, the Air Force has the

largest programmed decreases—a reduction of 21,200 personnel and a

2.9-percent decrease in funding. Figure 1 shows the total active military

personnel levels for the 1998 and 1999 FYDPs.

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Figure 1: DOD Total Active Military Personnel for the 1998 and 1999 FYDPs

1999 2000 2001 2002 2003

1,100

1,200

1,300

1,400

1,500

1,600

Fiscal year

Personnel in thousands

1999 FYDP 1998 FYDP

1,424.7

1,395.8

1,421.3 1,421.8

1,382.3 1,371.2 1,366.4 1365.5

1,422.4 1,422.0

Source: 1998 and 1999 FYDPs.

In the 1999 FYDP, active military personnel decrease 2.2 percent, and the

corresponding appropriation accounts decrease in real terms at

5.4 percent. The Air Force contributes the largest planned decreases in

personnel (7.2 percent) and funding in real terms (9 percent).

Operation and Maintenance Planned O&M funding from 1999 to 2003 increases by $24.9 billion

(5.4 percent) from the 1998 FYDP to the 1999 FYDP. Contributing to the

increase is the elimination of a previously projected $7.8 billion savings

due to management initiatives. Those savings, programmed in the 1998

FYDP for 2001 to 2003, are not programmed in the 1999 FYDP. We reported

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that the 1998 FYDP savings were programmed by the Office of the Secretary

of Defense (OSD), although there were no details about how the savings

would be achieved.6

 According to DOD, over $8 billion of the $24.9 billion

increase went into the readiness-related accounts of depot maintenance,

real property maintenance, and spare parts. At the service level in the 1999

FYDP, O&M funding increases for every active duty component: Air Force,

$5.4 billion (5.3 percent); Navy, $4.3 billion (4.1 percent); Army, $1.9 billion

(2.2 percent); and Marine Corps, $450 million (3.6 percent). Also, O&M,

defense-wide planned funding increases $294 million.

Civilian personnel salaries and benefits account for about 40 percent of

annual O&M appropriations.7

 Overall, civilian personnel levels decrease

more than double the rate in the 1999 FYDP than in the 1998 FYDP. In the

1998 FYDP, the total number of civilian personnel was projected to decline

4.6 percent, and in the 1999 FYDP the decline is projected to be 9.9 percent.

In the 1999 FYDP, the Air Force projects the largest decline of civilian levels

(12.3 percent), and OSD and defense-wide organizations project the second

largest decline (10.1 percent).

Figure 2 shows the total civilian personnel levels for the 1998 and 1999

FYDPs.

6

Future Years Defense Program: DOD’s 1998 Plan Has Substantial Risk in Execution.

7

Approximately 88 percent of DOD civilian payroll costs are paid from O&M appropriations. The

remainder is funded from the research, development, test, and evaluation; military construction; and

family housing appropriation accounts.

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Figure 2: DOD Total Civilian Personnel for the 1998 and 1999 FYDPs

1999 2000 2001 2002 2003

500

600

700

800

900

Fiscal year

Personnel in thousands

1998 FYDP 1999 FYDP

751.6

732.9

721.2 717.8 717.1

746.5

715.5

694.2

680.3 672.5

Source: 1998 and 1999 FYDPs.

Procurement Procurement funding from 1999 to 2003 is projected to decline by a total of

$16.4 billion (5.4 percent) from the 1998 to the 1999 FYDP. The largest

decline is in 2002—$7.7 billion, from $68.3 billion to $60.7 billion.8

 This is

the fifth straight budget year since 1995 that DOD has deferred procurement

goals established in previous FYDPs. For example, the 1995 FYDP, developed

after DOD’s bottom-up review, projected funding of $57.1 billion in 1998.

However, DOD is executing a fiscal year 1998 procurement budget of

$42.6 billion, a difference of $14.5 billion.

The most significant change in procurement is found in the defense-wide

accounts—a net decrease of $13.8 billion. Contributing to this decrease

was the liquidation of the projected $19.8 billion modernization reserve.

We reported that DOD had programmed the modernization reserve funds in

8

The difference does not add due to rounding.

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anticipation that savings would be achieved from reduced operating costs

and that the savings would become available for procurement.9

 Among the

services, the Army and the Marine Corps project increases of $1.3 billion,10

or 2.7 percent, and $342 million, or 7.7 percent, respectively. The Navy and

the Air Force project decreases of $2.9 billion, or 2.6 percent, and

$1.4 billion, or 1.4 percent, respectively.

Program Additions and

Cuts to Reduce Risk

Identified in QDR

DOD made other adjustments in the 1999 FYDP to (1) meet unplanned

operating expenses, such as medical care, or new program demands, such

as the National Missile Defense System and (2) avoid disrupting or

displacing other investment plans.

In the 1999 FYDP, the Defense Health Program, which accounts for about 

11 percent of annual O&M spending, is projected to receive higher funding

in every year (1999-2003) when compared with the 1998 FYDP. The

cumulative projected increase from the 1998 FYDP is $1.6 billion. According

to a Defense Health Affairs official, the projected increase would

adequately fund the core medical mission, which is comprised of 2 parts,

direct care and managed care contracts. However, significant cost-saving

initiatives will be necessary in the non-patient care areas of the program.11

The 1999 FYDP includes an acquisition program stability reserve to address

unforeseeable cost growth that can result from technical risk and

uncertainty associated with developing advanced technology for weapons

systems, for example, unexpected engineering problems. Currently, cost

growth in one program requires offsets from other programs, which in

turn can disrupt the overall modernization program. DOD’s plan is to

distribute the reserve among programs for the budget year before a

President’s budget is submitted to Congress. The service acquisition

executives centrally will manage the reserves, and the Under Secretary of

Defense for Acquisition and Technology will provide oversight. These

reserve funds total $2.4 billion for 2000-2003. Between 2000 and 2003,

approximately $2.3 billion, or 97 percent, of the funding is programmed in

procurement accounts for the Army, Air Force, Navy, and Marine Corps.

The remaining 3 percent is programmed in the defense-wide research,

9

Future Years Defense Program: DOD’s 1998 Plan Has Substantial Risk in Execution.

10Although total Army procurement increases in the 1999 FYDP, there is a $3.2 billion, or 31-percent

decrease in the Army missile procurement account. A significant portion of the decrease was due to

the move of funding for the Patriot System and Theater Ballistic Missile Defense Program from the

Army to the Procurement, defense-wide account.

11In fiscal year 1997, DOD significantly underbudgeted the 1997 O&M Defense Health Program, but

Congress appropriated additional funds. Unrealistically low estimates continued in the 1998 FYDP in

fiscal years 1998 and 1999, as documented by DOD in the 1998 President’s budget submission.

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development, test, and evaluation account. Table 2 shows the allocation of

these funds, by year.

Table 2: Proposed Acquisition

Program Stability Reserve

Fiscal year

Dollars in millions

2000 2001 2002 2003 Total

Reserve $244 $485 $725 $966 $2,420

Source: 1999 FYDP.

As stated in a recent report on weapon acquisitions,12 we have not

evaluated the program stability reserve or the way DOD plans to implement

it. Nonetheless, DOD’s use of the reserve has the potential for

communicating to program managers which practices will be encouraged

and which ones will not. For example, if the reserve funds are used

primarily to pay for problems that are revealed in late product

development or early production, the fund could reinforce existing

incentives for not dealing with problems until they occur. Conversely, if

the fund is used to resolve and preclude problems, the fund could

encourage problems to be revealed earlier in programs.

The 1999 FYDP increased National Missile Defense System research,

development, test, and evaluation funding by $1.4 billion, or 75 percent

($1.8 billion to $3.2 billion), from the 1998 FYDP. The program is to provide

protection against a limited ballistic missile attack. DOD’s approach,

commonly referred to as “3+3,” is to develop, within 3 years, elements of

an initial system that can be deployed within 3 years of a deployment

decision. The initial deployment decision review is scheduled for 2000.

According to DOD, if a sufficient missile threat to the United States has not

materialized at that time, development will continue, and the program will

maintain a capability to deploy within 3 years.

The QDR directed that some planned procurement be cut, in part to address

overall affordability concerns. In the 1999 FYDP, DOD reduced quantities of

some weapon systems from the 1998 FYDP. For example, DOD reduced the

planned purchase of Joint Surveillance Target Attack Radar Systems’

aircraft from 8 to 2, F-22 fighters from 70 to 58, and F/A-18E/F fighters

from 228 to 204.

12Best Practices: Successful Application to Weapon Acquisitions Requires Changes in DOD’s

Environment (GAO/NSIAD-98-56, Feb. 24, 1998).

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Some Funding Additions in

Anticipation of Future

Expenses

When comparing the 1999 FYDP with the 1998 FYDP, substantial planned

funding appears in the 1999 FYDP outyears. OSD has programmed funds in

two appropriation accounts without distributing the amounts to a DOD

organization. Within the revolving and management funds, DOD working

capital funds are anticipated to receive $450 million in 2000 to reduce

advance billings. Moreover, in 2003, $700 million is programmed for

potential purchases of war reserve materials. According to an Army

official, the Army and an outside study group have verified requirement

shortages in Army war reserve materials. If future DOD programming and

budgeting cycles reveal that the programmed funds are needed, then the

amounts would be requested in the applicable President’s budget.

Accordingly, trade-offs within other DOD programs would not have to be

made.

Estimated costs associated with DOD’s request for the base closure and

realignment round in 2001 appear in the defense-wide contingencies

account. Net costs of $832 million and $1.45 billion are programmed in

fiscal years 2002 and 2003, respectively. The costs represent a net amount,

since DOD anticipates savings from the avoidance of military construction

and the cessation of some O&M activities. If Congress does not give DOD

new base closure authority, DOD could budget these funds for other

activities.

Infrastructure Reductions

Are Critical to Achieving

DOD’s Modernization Plans

In 1997, infrastructure spending was 59 percent of DOD’s total budget, the

same percentage that was reported in DOD’s bottom-up review report for

1994. Both the 1998 and the 1999 FYDPs projected that infrastructure

spending would decline to 54 percent of DOD’s budget in 2003.

To modernize the force, DOD plans to increase procurement funding to

$60 billion per year. If DOD is to achieve a $60 billion budget goal, it must

reduce funding for its infrastructure activities from the military personnel

and O&M accounts. As explained in our previous reports and reflected in

the 1999 FYDP, about 80 percent of DOD’s infrastructure activities are

funded from these appropriation accounts. However, as discussed in the

next section, our review of the 1999 FYDP found substantial risks that DOD’s

plans may not occur, thereby jeopardizing DOD’s attempts at fixing the

migration of funds problem and adhering to procurement plans.

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DOD’s Program

Continues to Have

Substantial Risk

Although DOD made adjustments in the 1999 FYDP to decrease the risk that

funds would migrate from procurement to unplanned operating expenses,

we continue to see risks that DOD’s program may not be executable as

planned. These risks involve unrealized savings and other program needs.

Projected Savings From

Favorable Inflation and

Foreign Currency

Exchange Rates Used for

Additional Programs

We reported in May 1998 that as a result of lower projected inflation rates

by the executive branch, DOD calculated that its goods and services over

the 1999-2003 period would cost about $21.3 billion less than projected 

1 year ago.13 In addition, DOD projected savings of about $2.8 billion as a

result of lower projected fuel costs and favorable foreign currency

exchange rates. DOD said that with these assumed savings, it can fund

additional procurement items and civilian and military pay raises, which

account for $15 billion of the $24.1 billion.

The executive branch’s projection of DOD’s inflation rate for 1999 is

1.5 percent, which is a historically low rate of inflation.14 If the projected

savings from lower inflation, lower fuel costs, and favorable foreign

currency exchange rates materialize, DOD can fund the additional

programs. However, if those savings do not materialize, DOD will have to

adjust its future budgets by cutting programs and/or requesting additional

budget authority from the President and Congress.

Some Personnel Cuts and

Associated Savings May

Not Be Achieved

DOD’s decision to reduce personnel as part of the QDR was driven largely by

the objective of identifying dollar savings that could be used to increase

modernization funding. We reported in April 1998 that considerable risk

remains in some of the services’ plans to cut 175,000 personnel and save

$3.7 billion annually by 2003.15 The projected cuts and savings are as a

result of the QDR and are in addition to those previously planned.

The 1999 FYDP does not include all the personnel cuts directed by the QDR.

With the exception of the Air Force, the services have plans that should

enable them to achieve the majority of their active military cuts by the end

of 1999. OSD determined that some of the Air Force’s active military cuts

announced in May 1997 to restructure fighter squadrons and consolidate

bomber squadrons should not be included in the 1999 FYDP because the

plans were not executable at this time.

13Defense Budget: Projected Inflation Savings (GAO/NSIAD-98-177R, May 11, 1998).

14Projected inflation rates are 1.6 percent for 2000 and 1.7 percent for 2001-2003.

15Quadrennial Defense Review: All Personnel Cuts and Associated Savings May Not Be Achieved

(GAO/NSIAD-98-100, Apr. 30, 1998).

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In addition, plans for some cuts included in the 1999 FYDP are still

incomplete or based on optimistic assumptions. For example, there is no

agreement within the Army on how 25,000 of the 45,000 reserve cuts will

be allocated. This decision on how to allocate the reserve cuts will not be

made before the next force structure review. Moreover, plans to achieve

savings through outsourcing and reengineering may not be implemented

by 2003 as originally anticipated.16 For example, the Army plans to

compete 48,000 positions to achieve the majority of its civilian reductions.

However, according to an Army official, those reductions cannot be

completed by 2003. Although it announced studies covering about 14,000

positions, it has not identified the specific functions or location of the

remaining positions to be studied. In addition, the Army’s plan to eliminate

about 5,300 civilian personnel in the Army Materiel Command through

reengineering efforts involves risk because the Command does not have

specific plans to achieve these reductions.17 Although outsourcing is only a

small part of the Navy’s QDR cuts, the Navy has an aggressive outsourcing

program that involves risk. Specifically, the Navy has programmed savings

of $2.5 billion in the 1999 FYDP based on plans to study 80,500

positions—10,000 military and 70,500 civilian—by 2003. Moreover, the

Navy has not identified the majority of the specific functions that will be

studied to achieve the expected savings. According to a Navy acquisition

official, the Navy’s ambitious projected outsourcing savings may not

materialize, thereby jeopardizing its long-term O&M and procurement plans.

OSD recognizes that personnel cuts and the planned savings from those

cuts have not always been achieved, which contribute to the migration of

procurement funding. Therefore, OSD has established two principal

mechanisms for monitoring the services’ progress in reducing personnel

positions. First, it expects to review the services’ plans for reducing

personnel positions during annual reviews of the services’ budgets.

Second, the Defense Management Council will monitor the services’

progress in meeting outsourcing goals.

DOD’s plans are based on the assumption that Congress will modify the

permanent statutory minimum end-strength levels. These personnel levels,

or floors, require the services to collectively employ at least 1,414,590

16The decision to outsource is based on the result of conducting private-public competitions. This

process determines whether functions could be done more economically by contractors or by in-house

civilian employees.

17The Army now plans to eliminate 7,410 personnel.

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active duty military personnel.18 This assumption risks the execution of

DOD plans. If Congress does not lower the floors, costs for military

personnel will be substantially higher. Currently, DOD plans to have

1,396,000 active duty military personnel in 1999, but if the services must

retain about 19,000 personnel to meet the floors, they would need about

$1.1 billion more in 1999 military personnel funds. Furthermore, costs to

meet the floors in 2000-2003 would be higher because DOD projects lower

end-strength levels than currently permitted by law. Notably, in 2003, DOD

projects 1,366,000 personnel—about 49,000 below current statutory floors.

If DOD is precluded from implementing its planned personnel reductions, it

would have to make other compensating adjustments to its overall

program.

Unprogrammed Bills Could

Lead to Higher O&M Costs

The QDR reported that unprogrammed expenses arise that displace funding

previously planned for procurement. The most predictable of these

expenses are underestimated costs in day-to-day operations, especially for

depot maintenance, real property maintenance, and medical care. The

least predictable are unplanned deployments and smaller-scale

contingencies.

The services and defense agencies plan to obligate $73 billion for depot

maintenance between 1999 and 2003. This estimate, despite its magnitude,

does not allow the defense agencies and services to achieve OSD’s goal of

funding 85 percent of their maintenance requirements during 1999-2003.

According to DOD, the potential liability of unfunded depot maintenance in

the 1999 FYDP is $300 million per year. For example, the Army—which

added $362 million between 1999 and 2003—is projected to meet only

68 percent of its depot maintenance requirements in 1999 and 79 percent

by 2003.

Despite four base realignment and closure rounds, DOD still has excess,

aging facilities and has not programmed sufficient funds for maintenance,

repair, and upgrades. Each service has risk embedded in its real property

maintenance program to the extent that validated real property needs are

not met. For example, in the 1999 President’s budget submission, the Air

Force plans to fund real property maintenance at the preventive or

preservation maintenance level in 1999, which allows only for day-to-day

recurring maintenance. This results in risk because the physical plant is

degraded and the backlog of maintenance and repair requirements

18The National Defense Authorization Act for Fiscal Year 1998 identifies permanent end-strength

floors—the lowest number of military end strength for each of the services. The services have a

1-percent flexibility (the Army has 1.5 percent) in meeting the permanent end-strength levels.

Page 15 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

increases. Also, while the Marine Corps added funds during 1999-2003, the

Commandant of the Marine Corps determined that the planned funding

would merely minimize deterioration of its facilities. Further, although the

Army added approximately $1 billion for real property maintenance in the

1999 FYDP, it was not projected to meet its funding goal until 2002.

According to a Defense Health Affairs official, the cumulative O&M funding

increase of $1.6 billion over the 1998 FYDP adequately funds the core

medical mission, which is comprised of 2 parts, direct care and managed

care contracts. However, the 1999 FYDP funding is contingent on several

assumptions that contain risk. First, the Defense Health Program assumes

program-related personnel reductions due to outsourcing and privatization

initiatives. Estimated savings for these efforts grow to $131 million by

2003. Second, the program assumes a 1-percent savings from utilization

management, such as reducing the length of hospital stays from 4 days to 3

days. Third, population adjustments due to force structure reductions play

a pivotal role. The projected program assumes that Congress will

authorize QDR recommended reductions of 61,700 active military personnel

and the reductions will be a mix of retirements and nonretirement

attrition. If end-strength reductions are not authorized or a higher

percentage of the reduction stems from retirements than originally

planned, the program will experience higher costs than estimated. Without

the authority to reduce active duty end strengths, the beneficiary

population of service personnel and their dependents will not decrease. In

addition, retirements do not reduce costs because retirees and their

dependents remain part of the beneficiary population. According to a

Defense Health Affairs official, the funded program does not include an

allowance for the impact of advances in medical technology and the

intensity of treatment that was identified in a previous GAO report as a risk

factor.19

Our recent work raises questions about whether cost savings and

efficiencies in defense health care will materialize. In August 1997,20 we

reported that a key cost-saving initiative of TRICARE, DOD’s new managed

health care system, was returning substantially less savings than

anticipated and the situation was not likely to improve. In our

19Defense Health Program: Future Costs Are Likely to Be Greater Than Estimated

(GAO/NSIAD-97-83BR, Feb. 21, 1997).

20Defense Health Care: TRICARE Resource Sharing Program Failing to Achieve Expected Savings

(GAO/HEHS-97-130, Aug. 22, 1997).

Page 16 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

February 1998 testimony to Congress,21 we stated that implementation of

TRICARE was proving complicated and difficult and that delays had

occurred and may continue.

Notwithstanding the historical costs of several, often overlapping

contingency operations, the 1999 FYDP provides funds only for the

projected “steady state” costs of Southwest Asia operations—$800 million

in 1999. According to OSD officials, by design the FYDP does not include

funds for (1) the sustainment of increased operations in the Persian Gulf

to counter Iraq’s intransigence on United Nations inspections,22 (2) the

President’s extension of the mission in Bosnia, or (3) unknown

contingency operations. DOD’s position is that costs for the mission in

Bosnia should be financed separately from planned DOD funding for

1999-2003.23 Further, the QDR concluded that contingency operations will

likely occur frequently over the next 15 to 20 years and may require

significant forces, given the national security strategy of engagement and

the probable future international environment. Thus, it is likely that DOD

will continue to have unplanned expenses to meet contingency operations.

Base Closure Savings Have

Been Difficult to Estimate

Precisely

In reporting on lessons learned from prior base closure rounds, we noted

that savings, though not well documented, are expected to be substantial.24

However, the precise amount and timing of net recurring savings realized

from base closure actions is uncertain.25 For example, when compared

with the 1998 FYDP, the Air Force has revised its 1999 FYDP O&M savings for

the fourth round of base closures. In the 1998 FYDP, the Air Force

estimated net savings at $253 million, whereas in the 1999 FYDP it projects

21Defense Health Care: Operational Difficulties and System Uncertainties Pose Continuing Challenges

to TRICARE (GAO/T-HEHS-98-100, Feb. 26, 1998).

22DOD programmed $150 million per year in 2000-2003 for additional military personnel costs that

could result from increased Southwest Asia operations. OSD programmed the 2000-2003 funds in the

O&M Overseas Contingency Operations Transfer Fund, rather than distributing this money to each

service’s military personnel account.

23In December 1997, the President extended DOD’s Bosnia operations past June 1998. To cover 1999

Bosnia costs, in March 1998, the administration submitted a nonoffset emergency budget amendment

of $1.9 billion. Moreover, the President’s 1999 budget request contains an allowance for undistributed

funds to cover contingencies such as Bosnia and natural disasters. The President considers Bosnia

funding to have first claim on this allowance and has accordingly informed the relevant congressional

committees.

24Military Bases: Lessons Learned From Prior Base Closure Rounds (GAO/NSIAD-97-151, July 25,

1997).

25Savings can begin to accrue even as costs are being incurred to implement a base closure decision.

One-time implementation costs may increase or decrease from initial estimates during the

implementation period. Such increases or decreases can affect the point at which savings exceed

implementation costs and net savings begin to accrue on an annual recurring basis.

Page 17 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

net savings at $85 million—a difference of $167 million.26 This is the

second consecutive FYDP that the Air Force has lowered its expectations of

near-term savings.

In our comparison of the 1997 and 1998 FYDPs, we reported that the Navy’s

savings estimates for the fourth round of base closures were incorrect in

that the savings were for outsourcing and competition initiatives. In the

1999 FYDP, the Navy continues to report estimated outsourcing savings

incorrectly as base closure savings. According to a Chief of Naval

Operations official, the Navy will work with appropriate budget and

programming offices to correct the reported FYDP information.

Risk in Meeting

Procurement Goals

We reported that, since 1965, O&M spending has increased consistently

with increases in procurement spending.27 However, in its 1998 FYDP, DOD

was optimistic in projecting increases in procurement together with

decreases in O&M. In the 1999 FYDP, DOD takes a more moderate position,

projecting that O&M spending in real terms will remain relatively flat while

procurement increases at a moderate rate. Figure 3 shows the historical

relationship between O&M and procurement spending and compares the

projections of the 1998 and the 1999 FYDPs.

26The difference may not add due to rounding.

27Future Years Defense Program: DOD’s 1998 Plan Has Substantial Risk in Execution.

Page 18 GAO/NSIAD-98-204 Future Years Defense Program
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Figure 3: Historical and Projected Relationship Between Procurement and O&M Spending in Constant 1999 Dollars

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

0

20

40

60

80

100

120

140

Fiscal year

Dollars in billions

Historical and

1999 O&M 1998 O&M Historical and 

1999 procurement 1998 procurement

Source: DOD.

We reported that DOD’s plans for procurement spending also run counter to

another historical trend.28 Specifically, DOD procurement spending rises

and falls in nearly direct proportion to movements in its total budget;

however, in the 1998 FYDP, DOD projected an increase in procurement of

about 43 percent but a relatively flat total DOD budget. The 1999 FYDP

procurement projections continue to run counter to the historical trend,

although DOD has moderated its position. Specifically, DOD projects that

procurement funding will rise in real terms during 1998-2003 by

28Future Years Defense Program: DOD’s 1998 Plan Has Substantial Risk in Execution.

Page 19 GAO/NSIAD-98-204 Future Years Defense Program
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approximately 29 percent while the total DOD budget will remain relatively

flat. Figure 4 shows the historical relationship between the total DOD

budget and procurement spending and DOD’s 1999 FYDP projections.

Figure 4: Historical and Projected Relationship Between Procurement Spending and DOD’s Total Budget in Constant 1999

Dollars

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

0

100

200

300

400

500

Fiscal year

Dollars in billions

Total DOD Procurement 1999 projected

Source: DOD.

Page 20 GAO/NSIAD-98-204 Future Years Defense Program
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Recent Procurement

Trends Impact

Longer-Term Affordability

Over the 1995-98 FYDPs, DOD did not meet its plans to increase

procurement. For example, since 1995, DOD has lowered the estimated

funding for 1998 procurement from about $57 billion in the 1995 FYDP to

about $43 billion in the 1998 FYDP. The 1999 FYDP continues this trend, as

table 3 shows.

Table 3: Comparison of DOD’s Procurement Plans

Planned procurement funding

Dollars in billions

FYDP 1995 1996 1997 1998 1999 2000 2001 2002 2003 Average

1995 $43.3 $48.4 $49.8 $57.1 $60.1

1996 39.4 43.5 51.4 54.2 $62.3 $67.3

1997 38.9 45.5 50.5 57.7 60.1

1998 42.6 50.7 57.0 60.7 $68.3 $68.0

1999 48.7 54.1 61.3 60.7 63.5

Unrealized

procurement

–$9.0 –$10.9 –$14.5 –$11.4 –$8.2 –$6.0 –$7.6 –$4.5 –$9.0

Source: 1995, 1996, 1997, 1998, and 1999 FYDPs.

In its QDR report, DOD recognized that these trends have longer-term

implications. Specifically, “some of these reductions have accumulated

into long-term projections, creating a so-called ’bow wave’ of demand for

procurement funding in the middle of the next decade.” The QDR report

concludes that “this bow wave would tend to disrupt planned

modernization programs unless additional investment resources are made

available in future years.”

The bow wave is particularly evident when considering DOD’s aircraft

modernization plans. In September 1997, we reported that DOD’s aircraft

investment strategy involved the purchase or significant modification of at

least 8,499 aircraft in 17 aircraft programs at a total procurement cost of

$334.8 billion (in 1997 dollars) through the aircrafts’ planned completions.29

DOD’s planned funding for the 17 aircraft programs exceeds, in all but 

1 year between fiscal year 2000 and 2015, the long-term historical average

percentage of the budget devoted to aircraft purchases. Compounding

these funding difficulties is the fact that these projections are very

conservative. The projections do not allow for real program cost growth,

which historically has averaged at least 20 percent, nor do the projections

allow for the procurement of additional systems. However, as a result of

29Aircraft Acquisition: Affordability of DOD’s Investment Strategy (GAO/NSIAD-97-88, Sept. 8, 1997).

Page 21 GAO/NSIAD-98-204 Future Years Defense Program
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the QDR, the 1999 FYDP service aircraft procurement accounts have been

moderated. Compared with the 1998 FYDP, the 1999 FYDP reduces projected

funding by $3.9 billion, or 4 percent.

Program Demands and

Cost Growth

The QDR report cited cost growth of complex, technologically advanced

programs and new program demands as two areas contributing to the

migration of funds from procurement. For years, we have reported on the

impact of cost growth in weapon systems and other programs such as

environmental restoration. Specifically, we reported in 1994 that program

cost increases of 20 to 40 percent have been common for major weapon

programs and that numerous programs experienced increases much

greater than that.30 We continue to find programs with optimistic cost

projections. For example, we reported in June 1997 that we were skeptical

the Air Force could achieve planned production cost reductions of

$13 billion in its F-22 fighter aircraft program.31

Other DOD programs have also experienced cost growth. For example, DOD

estimated in December 1997 that the projected life-cycle cost of the

Chemical Demilitarization Program had increased by 27 percent over the

previous year’s estimate.32 As stated earlier, DOD has established a reserve

fund that can be used to help alleviate disruptions caused by cost growth

in weapon systems and other programs due to technological problems.

However, it remains to be seen whether the need will exceed available

reserve funds.

Policy decisions and new program demands can also cause perturbations

in DOD’s funding plans, according to the QDR report. DOD has programmed

$1.4 billion more for the National Missile Defense System in the 1999 FYDP

than the 1998 FYDP. Despite the increase, considerable risk remains with

the program’s funding. For example, technical and schedule risks are very

high, according to the QDR, our analysis,33 and an independent panel.34 The

30Future Years Defense Program: Optimistic Estimates Lead to Billions in Overprogramming

(GAO/NSIAD-94-210, July 29, 1994).

31Tactical Aircraft: Restructuring of the Air Force F-22 Fighter Program (GAO/NSIAD-97-156, June 4,

1997).

32The program was established by the National Defense Authorization Act of 1986 (P.L. 99-145, as

amended). DOD is required to destroy the complete chemical stockpile by April 29, 2007.

33National Missile Defense: Schedule and Technical Risks Represent Significant Development

Challenges (GAO/NSIAD-98-28, Dec. 12, 1997).

34Report of the Panel on Reducing Risk in Ballistic Missile Defense Flight Test Programs, February 27,

1998.

Page 22 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

panel noted that based on its experience, high technical risk is likely to

cause increased costs and program delays and could cause program

failure. In addition to the technical and schedule risks, the 1999 FYDP does

not include funds to procure the missile system. If the decision is made in

2000 to deploy an initial missile system by 2003, billions of dollars of

procurement funds would be required to augment the currently

programmed research and development funds.

As another example, the 1999 FYDP was predicated on the U.S. shifting to a

Strategic Arms Reduction Treaty (START) II nuclear force posture. START II

calls for further reductions in aggregate force levels, the elimination of

multiple-warhead intercontinental ballistic missile launchers, the

elimination of heavy intercontinental ballistic missiles, and a limit on the

number of submarine-launched ballistic missile warheads. START II was

approved by the U.S. Senate in January 1996 but is pending enforcement

until ratification by Russia’s parliament. In the absence of START II

enforcement, the United States may decide to sustain the option of

continuing START I force levels. According to the Secretary of Defense’s

1998 Annual Report to the President and the Congress, the 1999 budget

request includes an additional $57 million beyond what otherwise would

have been requested to sustain the START I level. However, maintaining this

force beyond 1999 will result in additional unplanned costs.

Conclusions Recently, DOD has found itself in a counterproductive cycle. Past attempts

at streamlining infrastructure and/or reengineering business practices

have not produced the anticipated savings programmed in recent FYDPs.

Money saved from these initiatives was to help fund modernization. For

the past 5 years, projected procurement funding has slipped with each

succeeding FYDP. Moreover, unanticipated contingency costs, higher

day-to-day operating expenses, and new program demands also have

caused the migration of funds from procurement to operating and support

costs. In the QDR, DOD specified this problem, identified its causes, and

directed measures to make the program more stable. In the 1999 FYDP, DOD

has taken a step toward abating this chronic migration of funds. However,

even with a rebalanced program, DOD faces substantial risk in its execution

of this first, post-QDR plan. We found that several of DOD’s projections are

questionable and/or contain risk. Furthermore, as long as the national

defense funding levels agreed to in the balanced budget agreement remain

unaltered, solutions to DOD’s funding issues must be found within its

current and projected budget. Therefore, it is critical that DOD continues to

strive for realistic assumptions and plans in its future budget cycles.

Page 23 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD took issue with some of our

characterizations. DOD stated that the 1999 FYDP represents considerable

progress toward the objectives of funding readiness-related O&M

requirements, implementing plans to streamline and reduce infrastructure,

and reducing the risk of migrating funds. DOD noted that our report does

not acknowledge that the risks in achieving these objectives have been

substantially reduced in the 1999 FYDP and the Department’s program is on

a sounder financial footing. Moreover, DOD acknowledges that all risks

have not been eliminated and intends to pursue future initiatives to

address the remaining risks. We agree, as stated in our report, that DOD

made adjustments from the 1998 FYDP to the 1999 FYDP to increase O&M and

decrease the risk that funds would migrate from procurement to operating

expenses. Moreover, it has plans to reduce infrastructure. However, as

explained in this report, we continue to see risks that DOD’s program may

not be executable as planned in part because the services’ plans to reduce

military and civilian personnel are incomplete or based on optimistic

assumptions.

DOD said that it has been able to reduce the proportion of resources

devoted to infrastructure activities from 47 percent in 1994 to 45 percent in

1997, as a percent of total obligation authority. Moreover, DOD states that

we are inaccurate in reporting that infrastructure in 1997 remains at

59 percent of DOD’s total budget, the same percentage as in 1994. Our

method of calculating the infrastructure in DOD’s budget is based on the

methodology prescribed by OSD’s Office of Program Analysis and

Evaluation (PA&E) in late 1995. We have consistently used this

methodology since then to report on DOD’s progress in reducing its

infrastructure and DOD has agreed with our prior reports, findings, and

analysis. The methodology includes both direct infrastructure (that which

can be clearly identified in the FYDP) and a percentage of the defense

working capital funds that represents the infrastructure portion of these

funds.

In discussing DOD’s comments with PA&E officials, they stated that for a

number of reasons, including the difficulty of estimating the infrastructure

portion of defense working capital funds, PA&E is evaluating different

methodologies to estimate infrastructure in its budget. One such measure,

which DOD used to derive the percentages discussed in its letter, is to

estimate only the direct infrastructure. However, there are important

limitations in this methodology. While it is a simpler methodology, it

excludes a significant part of the infrastructure, which PA&E previously

considered important to capture. Moreover, DOD established an important

Page 24 GAO/NSIAD-98-204 Future Years Defense Program
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baseline in its October 1993 bottom-up review report when it said that

infrastructure activities in 1994 would account for approximately

59 percent of DOD’s total obligational authority (including revolving funds)

and that it needed to reduce that infrastructure. We strongly believe that it

is important to maintain a consistent baseline to measure changes in

infrastructure over time.

DOD believes that its assumptions of the savings rates for outsourcing

personnel are conservative. According to DOD, the estimated savings

reflected in the 1999 FYDP assume that the Department successfully

executes the currently projected schedule of competitions. Moreover, DOD

emphasizes that it needs to closely monitor implementation of projected

competition schedules through the programming and budgeting cycles. We

believe DOD has taken a step in the right direction to monitor

implementation of the outsourcing process. However, considerable risk

remains in the services’ plans to cut planned personnel by 2003 because

the plans are still incomplete or based on optimistic assumptions. DOD

suggested several technical changes for clarification and accuracy, which

we incorporated in the report where appropriate. DOD’s comments are

reprinted in their entirety in appendix II.

Scope and

Methodology

To determine the major program adjustments in DOD’s fiscal year 1999

FYDP, we interviewed officials in the Office of Under Secretary of Defense

(Comptroller); the Office of Program Analysis and Evaluation; the Army,

Navy, and Air Force program and budget offices; and Office of the

Assistant Secretary of Defense (Health Affairs). We examined a variety of

DOD planning and budget documents, including the 1998 and 1999 FYDPs

and the QDR report. We also reviewed the President’s fiscal year 1999

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 were in

agreement. We did not test DOD’s management controls of the FYDP data.

Page 25 GAO/NSIAD-98-204 Future Years Defense Program
B-278787 

Our review was conducted from November 1997 through June 1998 in

accordance with generally accepted government auditing standards.

We are sending copies of this report to other appropriate Senate and

House 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 III.

Richard Davis

Director, National Security

 Analysis

Page 26 GAO/NSIAD-98-204 Future Years Defense Program
Page 27 GAO/NSIAD-98-204 Future Years Defense Program
Contents

Letter 1

Appendix I 

Department of

Defense’s 1998 and

1999 Future Years

Defense Programs, by

Accounts

30

Appendix II 

Comments From the

Department of

Defense

44

Appendix III 

Major Contributors to

This Report

46

Tables Table 1: DOD’s 1998 and 1999 FYDPs, by Primary Appropriation

Account

5

Table 2: Proposed Acquisition Program Stability Reserve 11

Table 3: Comparison of DOD’s Procurement Plans 21

Table I.1: Military Personnel Appropriation Accounts, 1998 and

1999 FYDPs

31

Table I.2: Operation and Maintenance Appropriation Accounts,

1998 and 1999 FYDPs

32

Table I.3: Procurement Appropriation Accounts by Service, 1998

and 1999 FYDPs

34

Table I.4: Army Procurement Appropriation Accounts, 1998 and

1999 FYDPs

35

Table I.5: Navy/Marine Corps Procurement Appropriation

Accounts, 1998 and 1999 FYDPs

36

Table I.6: Air Force Procurement Appropriation Accounts, 1998

and 1999 FYDPs

37

Table I.7: Defense-wide Procurement Appropriation Accounts,

1998 and 1999 FYDPs

38

Page 28 GAO/NSIAD-98-204 Future Years Defense Program
Contents

Table I.8: Research, Development, Test, and Evaluation

Appropriation Accounts, 1998 and 1999 FYDPs

39

Table I.9: Military Construction Appropriation Accounts, 1998

and 1999 FYDPs

40

Table I.10: Family Housing Appropriation Accounts, 1998 and

1999 FYDPs

42

Table I.11: Revolving and Management Funds, 1998 and 1999

FYDPs

43

Table I.12: Defense-wide Contingencies, 1998 and 1999 FYDPs 43

Figures Figure 1: DOD Total Active Military Personnel for the 1998 and

1999 FYDPs

7

Figure 2: DOD Total Civilian Personnel for the 1998 and 1999

FYDPs

9

Figure 3: Historical and Projected Relationship Between

Procurement and O&M Spending in Constant 1999 Dollars

19

Figure 4: Historical and Projected Relationship Between

Procurement Spending and DOD’s Total Budget in Constant 1999

Dollars

20

Abbreviations

DOD Department of Defense

FYDP Future Years Defense Program

O&M operation and maintenance

OSD Office of the Secretary of Defense

PA&E Office of Program Analysis and Evaluation

QDR Quadrennial Defense Review

RDT&E research, development, test, and evaluation

START Strategic Arms Reduction Treaty

Page 29 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

The following tables show the differences between accounts in the 1998

and 1999 Future Years Defense Programs (FYDP) for each appropriation.

Totals may not add due to rounding.

Page 30 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.1: Military Personnel Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Military personnel, Army 1998 $20,963 $21,304 $21,816 $22,481 $23,188 $109,752

1999 21,002 20,807 21,300 21,939 22,629 107,678

Change 39 –497 –516 –542 –559 –2,074 –1.9

Military personnel, Navy 1998 16,388 16,749 17,284 17,729 18,235 86,386

1999 16,613 16,487 16,720 17,156 17,653 84,630

Change 225 –262 –564 –573 –582 –1,756 –2.0

Military personnel, 1998 6,330 6,525 6,702 6,892 7,087 33,536

Marine Corps 1999 6,272 6,442 6,611 6,776 6,949 33,049

Change –58 –83 –91 –116 –138 –487 –1.5

Military personnel, 1998 17,184 17,454 17,842 18,293 18,779 89,553

Air Force 1999 17,312 17,374 17,305 17,357 17,623 86,970

Change 127 –80 –537 –936 –1,156 –2,583 –2.9

Reserve personnel, 1998 2,064 2,094 2,158 2,202 2,280 10,799

Army 1999 2,152 2,169 2,204 2,196 2,265 10,985

Change 88 74 46 –6 –16 186 1.7

Reserve personnel, 1998 1,398 1,429 1,459 1,497 1,541 7,325

Navy 1999 1,387 1,385 1,404 1,428 1,463 7,067

Change –11 –44 –56 –69 –78 –258 –3.5

Reserve personnel, 1998 391 403 414 422 432 2,062

Marine Corps 1999 402 404 401 399 403 2,008

Change 11 1 –13 –24 –29 –54 –2.6

Reserve personnel, 1998 852 877 900 923 948 4,500

Air Force 1999 856 893 916 940 965 4,570

Change 4 16 16 17 17 70 1.6

National Guard personnel, 1998 3,184 3,207 3,281 3,375 3,473 16,520

Army 1999 3,405 3,352 3,342 3,354 3,410 16,863

Change 220 145 61 –21 –63 342 2.1

National Guard personnel, 1998 1,344 1,368 1,399 1,442 1,486 7,040

Air Force 1999 1,376 1,403 1,437 1,480 1,525 7,220

Change 32 35 38 38 38 180 2.6

Total 1998 $70,099 $71,410 $73,256 $75,257 $77,450 $367,472

1999 $70,777 $70,715 $71,639 $73,024 $74,884 $361,039

Change $678 –$695 –$1,617 –$2,232 –$2,566 –$6,432 –1.8

Page 31 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.2: Operation and Maintenance Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Operation and 1998 $16,891 $17,157 $17,340 $17,890 $18,297 $87,575

maintenance (O&M), 1999 17,273 17,533 17,833 18,337 18,541 89,517

Army Change 382 376 493 447 243 1,941 2.2

O&M, Navy 1998 21,518 20,199 20,763 21,137 21,252 104,869

1999 21,927 21,706 21,527 21,771 22,284 109,216

Change 409 1,507 764 634 1,032 4,346 4.1

O&M, Marine Corps 1998 2,404 2,482 2,511 2,567 2,621 12,585

1999 2,524 2,568 2,566 2,638 2,739 13,035

Change 120 86 56 71 118 450 3.6

O&M, Air Force 1998 18,628 19,456 20,506 20,414 21,311 100,316

1999 19,177 20,426 21,584 21,878 22,607 105,672

Change 549 969 1,079 1,464 1,295 5,356 5.3

O&M, defense-wide 1998 10,543 10,622 10,876 11,122 11,399 54,562

1999 10,751 10,672 10,890 11,138 11,405 54,856

Change 208 50 14 16 6 294 0.5

O&M, Army Reserve 1998 1,210 1,241 1,262 1,286 1,317 6,316

1999 1,203 1,244 1,234 1,285 1,309 6,275

Change –7 3 –28 0 –8 –41 –0.6

O&M, Navy Reserve 1998 858 885 857 952 859 4,412

1999 929 941 904 1,052 899 4,725

Change 71 56 47 100 40 313 7.1

O&M, Marine Corps 1998 115 116 116 119 122 588

Reserve 1999 115 114 107 108 110 553

Change –1 –2 –9 –12 –13 –36 –6.1

O&M, Air Force Reserve 1998 1,631 1,598 1,614 1,646 1,697 8,186

1999 1,745 1,671 1,692 1,734 1,778 8,620

Change 113 73 79 88 81 434 5.3

O&M, Army National 1998 2,367 2,478 2,533 2,598 2,735 12,711

Guard 1999 2,437 2,389 2,452 2,508 2,623 12,408

Change 70 –90 –81 –90 –112 –303 –2.4

O&M, Air National 1998 2,982 2,970 2,991 3,054 3,125 15,122

Guard 1999 3,094 3,072 3,114 3,214 3,285 15,779

Change 112 102 123 160 160 657 4.3

(continued)

Page 32 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Drug interdiction and 1998 652 663 688 702 720 3,425

counter-drug activities, 1999 728 712 726 735 748 3,649

defense Change 75 49 38 32 28 223 6.5

Defense Health Program 1998 9,743 10,143 10,568 10,730 10,908 52,092

1999 10,056 10,443 10,934 11,042 11,211 53,686

Change 313 300 366 312 303 1,594 3.1

Former Soviet Union 1998 345 504 237 0 0 1,085

threat reduction 1999 442 451 466 255 448 2,062

Change 98 –53 229 255 448 977 90.0

Overseas contingency 1998 0 0 0 0 0 0

operations transfer fund 1999 747 150 150 150 150 1,347

Change 747 150 150 150 150 1,347

Management initiatives 1998 0 0 –600 –4,200 –3,000 –7,800

1999 0 0 0 0 0 0

Change 0 0 600 4,200 3,000 7,800

Other O&M 1998 1,481 1,531 1,541 1,807 1,867 8,228

1999 1,477 1,597 1,494 1,612 1,583 7,762

Change –4 66 –47 –195 –285 –466 –5.7

Total 1998 $91,369 $92,045 $93,802 $91,826 $95,232 $464,274

1999 $94,623 $95,687 $97,673 $99,458 $101,720 $489,160

Change $3,254 $3,642 $3,871 $7,632 $6,487 $24,886 5.4

Note: Service O&M budgets contain funds that were formerly represented in defense-wide

revolving funds under the heading “Military Commissary Revolving Funds.”

Page 33 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.3: Procurement Appropriation Accounts by Service, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Army procurement 1998 $8,373 $9,351 $10,114 $10,616 $11,055 $49,509

1999 8,173 9,128 10,022 11,239 12,260 50,822

Change –200 –223 –93 623 1,205 1,313 2.7

Navy/Marine Corps 1998 20,447 23,384 23,975 25,920 24,364 118,090

procurement 1999 20,160 21,669 26,376 23,094 24,215 115,513

Change –287 –1,715 2,400 –2,826 –149 –2,577 –2.2

Air Force procurement 1998 18,183 19,609 21,335 22,216 21,543 102,886

1999 17,475 18,860 20,751 21,950 22,437 101,473

Change –708 –749 –584 –266 895 –1,413 –1.4

Defense-wide procurement 1998 3,711 4,653 5,237 9,584 11,044 34,229

1999 2,897 4,466 4,119 4,378 4,610 20,471

Change –814 –187 –1,118 –5,205 –6,434 –13,758 –40.2

Total 1998 $50,714 $56,996 $60,662 $68,335 $68,006 $304,714

1999 $48,705 $54,122 $61,267 $60,661 $63,523 $288,279

Change –$2,009 –$2,874 $606 –$7,674 –$4,483 –$16,435 –5.4

Page 34 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.4: Army Procurement Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Aircraft procurement, Army 1998 $1,241 $1,219 $1,391 $1,672 $1,789 $7,311

1999 1,326 1,372 1,456 2,007 2,074 8,234

Change 85 153 65 335 285 923 12.6

Missile procurement, Army 1998 1,541 1,881 2,008 2,501 2,211 10,143

1999 1,206 1,432 1,514 1,488 1,285 6,924

Change –336 –449 –494 –1,013 –927 –3,218 –31.7

Procurement of weapons and 1998 1,475 1,621 1,688 1,517 1,912 8,213

tracked combat vehicles, 1999 1,434 1,566 1,615 1,794 1,911 8,319

Army Change –41 –55 –73 277 –1 106 1.3

Procurement of ammunition, 1998 976 1,164 1,184 1,253 1,382 5,959

Army 1999 1,009 1,157 1,232 1,495 1,664 6,556

Change 33 –7 48 242 282 597 10.0

Other procurement, Army 1998 3,140 3,467 3,844 3,673 3,760 17,884

1999 3,199 3,602 4,204 4,456 5,327 20,788

Change 59 136 360 783 1,567 2,904 16.2

Total 1998 $8,373 $9,351 $10,114 $10,616 $11,055 $49,509

1999 $8,173 $9,128 $10,022 $11,239 $12,260 $50,822

Change –$200 –$223 –$93 $623 $1,205 $1,313 2.7

Page 35 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.5: Navy/Marine Corps Procurement Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Aircraft procurement, Navy 1998 $7,669 $9,164 $8,579 $8,404 $8,526 $42,342

1999 7,467 8,128 7,777 8,055 7,990 39,418

Change –203 –1,036 –801 –349 –536 –2,924 –6.9

Weapons procurement, 1998 1,436 1,821 2,018 2,173 2,394 9,842

Navy 1999 1,328 1,615 1,707 1,888 2,042 8,580

Change –108 –206 –311 –285 –352 –1,262 –12.8

Shipbuilding and conversion, 1998 5,958 6,576 8,048 9,760 7,617 37,959

Navy 1999 6,253 6,218 11,533 7,305 7,998 39,306

Change 295 –358 3,486 –2,455 380 1,347 3.5

Procurement of ammunition, 1998 503 561 499 524 579 2,666

Navy and Marine Corps 1999 430 489 475 500 577 2,470

Change –73 –72 –24 –24 –2 –196 –7.3

Other procurement, Navy 1998 4,185 4,297 3,880 4,128 4,327 20,817

1999 3,938 4,241 3,841 4,321 4,594 20,934

Change –248 –56 –39 193 267 117 0.6

Procurement, Marine Corps 1998 696 965 953 930 921 4,464

1999 746 978 1,042 1,025 1,015 4,806

Change 50 13 90 95 94 342 7.7

Total 1998 $20,447 $23,384 $23,975 $25,920 $24,364 $118,090

1999 $20,160 $21,669 $26,376 $23,094 $24,215 $115,513

Change –$287 –$1,715 $2,400 –$2,826 –$149 –$2,577 –2.2

Page 36 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.6: Air Force Procurement Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Aircraft procurement, 1998 $8,080 $8,730 $10,103 $10,920 $10,084 $47,916

Air Force 1999 7,756 8,215 9,485 10,388 10,157 46,001

Change –323 –514 –618 –532 73 –1,915 –4.0

Missile procurement, 1998 2,892 3,304 3,354 3,453 3,601 16,604

Air Force 1999 2,360 2,799 3,185 3,342 3,596 15,282

Change –532 –505 –169 –112 –5 –1,322 –8.0

Procurement of ammunition, 1998 457 619 788 813 943 3,620

Air Force 1999 384 547 722 693 813 3,159

Change –72 –72 –67 –120 –131 –462 –12.7

Other procurement, 1998 6,755 6,956 7,090 7,030 6,915 34,745

Air Force 1999 6,974 7,298 7,360 7,528 7,872 37,032

Change 220 342 270 498 957 2,286 6.6

Total 1998 $18,183 $19,609 $21,335 $22,216 $21,543 $102,886

1999 $17,475 $18,860 $20,751 $21,950 $22,437 $101,473

Change –$708 –$749 –$584 –$266 $895 –$1,413 –1.4

Page 37 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.7: Defense-wide Procurement Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Procurement, defense-widea 1998 $2,616 $1,774 $1,858 $2,013 $2,061 $10,322

1999 2,042 3,315 3,101 3,228 3,730 15,416

Change –575 1,541 1,243 1,215 1,669 5,094 49.3

National Guard and Reserve 1998 0 0 0 0 0 0

equipment 1999 0 0 0 0 0 0

Change 0 0 0 0 0 0

Chemical agents and 1998 1,094 1,096 924 931 980 5,026

munitions destruction, 1999 855 1,149 1,016 1,149 879 5,048

defense Change –239 53 92 218 –101 23 0.5

Modernization reserve 1998 0 1,783 2,454 6,640 8,003 18,881

1999 0 0 0 0 0 0

Change 0 –1,783 –2,454 –6,640 –8,003 –18,881

Defense export loan 1998 1 0 0 0 0 1

guarantees 1999 1 2 2 2 2 7

Change 0 2 2 2 2 6 1154.8

Total 1998 $3,711 $4,653 $5,237 $9,584 $11,044 $34,229

1999 $2,897 $4,466 $4,119 $4,378 $4,610 $20,471

Change –$814 –$187 –$1,118 –$5,205 –$6,434 –$13,758 –40.2

aIn the 1998 FYDP for 1999, $965 million was programmed for the modernization reserve.

Page 38 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.8: Research, Development, Test, and Evaluation Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Research, development, 1998 $4,497 $4,496 $4,674 $4,791 $4,675 $23,132

test, and evaluation 1999 4,781 4,755 4,900 4,887 4,885 24,206

(RDT&E), Army Change 284 259 225 96 210 1,074 4.6

RDT&E, Navy 1998 7,756 7,044 6,765 7,370 7,934 36,869

1999 8,109 7,605 7,231 7,671 8,269 38,885

Change 353 561 466 302 335 2,016 5.5

RDT&E, Air Force 1998 13,800 12,965 12,558 13,374 14,486 67,183

1999 13,598 12,614 12,287 12,791 13,142 64,431

Change –202 –351 –271 –583 –1,345 –2,751 –4.1

RDT&E, defense-wide 1998 8,689 8,586 8,580 8,397 8,383 42,636

1999 9,315 8,658 8,288 7,898 7,749 41,907

Change 625 72 –292 –500 –634 –729 –1.7

Developmental test and 1998 279 288 295 292 309 1,463

evaluation, defense 1999 251 263 263 259 273 1,309

Change –28 –25 –32 –33 –36 –154 –10.5

Operational test and 1998 23 24 25 25 26 124

evaluation, defense 1999 25 26 25 26 26 128

Change 2 1 0 0 0 4 3.2

Total 1998 $35,045 $33,403 $32,897 $34,249 $35,814 $171,407

1999 $36,079 $33,920 $32,993 $33,531 $34,344 $170,867

Change $1,034 $517 $96 –$718 –$1,470 –$540 –0.3

Page 39 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.9: Military Construction Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Military construction, 1998 $697 $606 $580 $736 $696 $3,315

Army 1999 791 948 877 972 769 4,357

Change 94 342 298 236 73 1,043 31.5

Military construction, 1998 475 696 734 815 863 3,584

Navy 1999 468 709 752 815 945 3,690

Change –7 13 19 –0 82 106 3.0

Military construction, 1998 465 522 539 647 680 2,854

Air Force 1999 455 452 518 624 649 2,698

Change –11 –70 –21 –23 –31 –156 –5.5

Military construction, 1998 709 750 705 628 610 3,402

defense-wide 1999 492 811 535 524 862 3,224

Change –218 61 –170 –104 252 –178 –5.2

Military construction, 1998 66 77 77 77 77 374

Army Reserve 1999 71 80 75 74 74 374

Change 5 3 –2 –3 –3 0 0.0

Military construction, 1998 15 11 25 28 44 122

Naval Reserve 1999 15 21 21 24 37 119

Change –0 11 –3 –4 –7 –4 –2.9

Military construction, 1998 34 45 31 34 37 181

Army National Guard 1999 48 61 48 48 48 253

Change 14 16 17 14 11 72 39.7

Military construction, 1998 32 111 127 58 61 389

Air National Guard 1999 35 107 123 56 59 380

Change 3 –4 –4 –2 –2 –9 –2.4

Military construction, 1998 12 29 31 35 37 145

Air Force Reserve 1999 11 26 30 33 35 135

Change –2 –3 –1 –2 –2 –10 –6.8

(continued)

Page 40 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

North Atlantic Treaty 1998 200 200 200 200 200 1,000

Organization Security 1999 185 293 341 388 386 1,593

Investment Program Change –15 93 141 188 186 593 59.3

Base realignment and 1998 1,551 1,240 1,183 131 116 4,221

closure account, II-IV 1999 1,731 1,380 1,072 159 118 4,459

Change 179 140 –111 28 2 239 5.7

Total 1998 $4,258 $4,287 $4,231 $3,390 $3,420 $19,586

1999 $4,301 $4,889 $4,393 $3,717 $3,982 $21,282

Change $43 $603 $162 $327 $562 $1,696 8.7

Page 41 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.10: Family Housing Appropriation Accounts, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Family housing, Army 1998 $1,256 $1,323 $1,324 $1,355 $1,376 $6,634

1999 1,208 1,245 1,235 1,263 1,319 6,271

Change –48 –77 –88 –92 –58 –363 –5.5

Family housing, Navy and 1998 1,272 1,287 1,309 1,349 1,375 6,591

Marine Corps 1999 1,196 1,204 1,211 1,243 1,259 6,112

Change –75 –83 –98 –106 –116 –480 –7.3

Family housing, Air Force 1998 1,093 1,121 1,145 1,172 1,191 5,722

1999 1,016 1,082 1,101 1,122 1,136 5,457

Change –77 –39 –44 –50 –55 –264 –4.6

Family housing, 1998 35 35 36 36 37 179

defense-wide 1999 37 38 38 38 38 189

Change 2 3 2 1 1 10 5.7

Homeowners assistance 1998 132 0 0 0 0 132

fund, defense 1999 110 0 0 0 0 110

Change –22 0 0 0 0 –22 –16.7

DOD family housing 1998 180 175 172 0 0 526

improvement fund 1999 7 341 338 200 400 1,286

Change –173 166 166 200 400 759 144.3

DOD military unaccompanied 1998 0 0 0 0 0 0

housing improvement 1999 0 0 0 0 0 0

fund Change 0 0 0 0 0 0

Total 1998 $3,966 $3,941 $3,985 $3,913 $3,979 $19,784

1999 $3,574 $3,910 $3,923 $3,866 $4,151 $19,424

Change –$392 –$31 –$62 –$47 $172 –$360 –1.8

Page 42 GAO/NSIAD-98-204 Future Years Defense Program
Appendix I 

Department of Defense’s 1998 and 1999

Future Years Defense Programs, by

Accounts

Table I.11: Revolving and Management Funds, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

DOD working capital 1998 $31 0 0 0 0 $31

funds 1999 95 $450 0 0 $700 1,245

Change 64 450 0 0 700 1,214 3,940.6

National defense sealift 1998 690 369 $404 $413 421 2,296

fund 1999 418 337 369 374 381 1,878

Change –272 –32 –35 –39 –40 –418 –18.2

Reserve mobilization 1998 0 0 0 0 0 0

income insurance fund 1999 37 0 0 0 0 37

Change 37 0 0 0 0 37

Military commissary 1998 939 944 943 942 942 4,709

revolving funda 1999 0 0 0 0 0 0

Change –939 –944 –943 –942 –942 –4,709

Total 1998 $1,659 $1,313 $1,347 $1,355 $1,363 $7,036

1999 $550 $787 $369 $374 $1,081 $3,160

Change –$1,110 –$526 –$978 –$981 –$282 –$3,876 –55.1

aFor the 1999 FYDP, commissary funds were transferred into each service’s O&M budget and

thus are no longer captured as a DOD revolving fund

Table I.12: Defense-wide Contingencies, 1998 and 1999 FYDPs

Fiscal year

Dollars in millions

FYDP 1999 2000 2001 2002 2003 Total

Percent

change

1999-2003

Undistributed contingencies, 1998 $85 $85 $85 –$115 $85 $225

defense 1999 1 2 2 832 1,449 2,284

Change –84 –84 –84 947 1,364 2,059 915.3

Page 43 GAO/NSIAD-98-204 Future Years Defense Program
Appendix II 

Comments From the Department of Defense

Page 44 GAO/NSIAD-98-204 Future Years Defense Program
Appendix II 

Comments From the Department of Defense

Page 45 GAO/NSIAD-98-204 Future Years Defense Program
Appendix III 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Robert Pelletier

Deborah Colantonio

William Crocker

Douglas Horner

Shawn Bates

Bob Kenyon

Robert Henke

(701127) Page 46 GAO/NSIAD-98-204 Future Years Defense Program
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