United States General Accounting Office

GAO Report to Congressional Requesters

September 1998 DOD COUNTERDRUG

ACTIVITIES

Reported Costs Do Not

Reflect Extent of

DOD’s Support

GAO/NSIAD-98-231

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279766 

September 23, 1998

The Honorable James M. Inhofe

Chairman 

The Honorable Charles S. Robb

Ranking Minority Member

Subcommittee on Military Readiness

Committee on Armed Services

United States Senate

The Department of Defense (DOD) provides personnel, equipment, and

facilities in support of U.S. drug interdiction and other counterdrug

activities. The Office of National Drug Control Policy reported that DOD’s

fiscal year 1999 budget request for these activities is $882.8 million.

Because you believe the reported funds do not reflect the full extent of

DOD’s support, you asked us to determine, for fiscal years 1994 through

1998 (1) the total operating and support (O&S) costs that can be associated

with counterdrug activities and (2) the share of the original procurement

costs of those weapon systems most often used by the active component

in counterdrug activities.1

 Under the Foreign Assistance Act, DOD also

provides assistance to foreign countries in support of counterdrug

activities. You asked us to determine, for fiscal years 1994 through 1998,

the amount of assistance DOD provided under section 506(a)(2)(A)(i)(I) of

the act, hereafter referred to as 506(a)(2).

Background The U.S. response to drug abuse and drug trafficking is to integrate

domestic and international efforts to reduce the demand and supply of

drugs. The Office of National Drug Control Policy was established by the

Anti-Drug Abuse Act of 1988. It is responsible for establishing policies,

priorities, and objectives for the nation’s drug control program. The Office

has established five long-range goals as a basis to reduce drug abuse,

trafficking, and their consequences. DOD supports each of these goals, as

shown in table 1.

1

O&S costs are those resources required to operate and support a system, a subsystem, or a major

component during its useful life in the operational inventory.

Page 1 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

Table 1: National Drug Control

Strategy Goals and DOD’s Support Goal Description Examples of DOD’s efforts

1 Educate and enable America’s youth

to reject illegal drugs as well as

alcohol and tobacco

National Guard and service outreach

programs (primarily for youths) that

assist community groups.

2 Increase the safety of America’s

citizens by substantially reducing

drug-related crime and violence

DOD components provide direct

support to drug law enforcement

agencies in the form of equipment and

support services.

3 Reduce health and social costs to the

public of illegal drug use

DOD provides demand reduction,

drug testing, education, and

awareness programs for uniformed

and civilian employees.

4 Shield America’s air, land, and sea

frontiers from the drug threat

DOD provides personnel and

equipment to detect and monitor drug

trafficking to the United States.

5 Break foreign and domestic drug

sources of supply

DOD supports intelligence, detection,

monitoring, and interdiction efforts in

foreign countries.

Source: The National Drug Control Strategy, 1998: Budget Summary and Ten-Year Plan.

DOD’s counterdrug budget, as reported by the Office, is comprised of two

major categories: the Central Transfer Account and the military

departments’ operations (OPTEMPO). The Office defines the Central

Transfer Account as a single budget line that accounts for all associated

DOD counterdrug resources, with the exception of active component

military personnel costs and military OPTEMPO. Specifically, the account

funds such items as special supply and equipment purchases, reserve

component military personnel costs, and travel costs for individuals

supporting counterdrug activities. The military departments’ OPTEMPO

costs, currently funded in the services’ operation and maintenance

accounts, are for fuel, spare parts, and depot-level repairables for weapon

systems used in counterdrug activities. Table 2 shows DOD’s reported

counterdrug spending for fiscal years 1994-98.

Page 2 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

Table 2: DOD’s Reported Counterdrug

Spending for Fiscal Years 1994-98

Fiscal year

Dollars in millions

Category 1994 1995 1996 1997 1998a Total

Central Transfer

Account $671.3 $721.3 $678.4 $806.2 $712.9 $3,590.1

Military OPTEMPO 143.6 118.9 143.6 133.8 134.9 674.8

Total $814.9 $840.2 $822.1 $940.1 $847.7 $4,264.9

Note: Totals do not add due to rounding.

aEnacted budget authority for fiscal year 1998.

Source: Office of National Drug Control Policy’s budget summaries for 1995-98.

DOD provides assistance to foreign countries that support counterdrug

activities. An authority to transfer defense equipment and services to

support international narcotics control efforts is section 506(a)(2) of the

Foreign Assistance Act.

Results in Brief There are significant operating and support costs for counterdrug

activities that are not reflected in DOD’s counterdrug reported costs and

funding requests. These include costs associated with military services’

weapon systems and costs for deployed personnel who are not assigned to

specific weapon systems. The costs associated with weapon systems, if

allocated to counterdrug activities, would total in excess of $2 billion for

fiscal years 1994 through 1996.2

 The number of military personnel

deployed in the United States who were not assigned to specific weapon

systems totaled about 14,000. These individuals were assigned for various

time periods between fiscal year 1994 and 1996. Although we did not

estimate the support costs for these personnel, they would be in addition

to the costs reported by DOD and the $2 billion we estimated. According to

DOD officials, these operating and support costs are not included in DOD’s

counterdrug budgets because they pertain to the existing force structure

that supports the national defense mission and would be incurred

regardless of the type of operations conducted. This practice is consistent

with the way DOD reports incremental costs for contingency operations.

The military services use numerous weapon systems for counterdrug

activities that were purchased to support the national military strategy.

The weapon systems most often used for counterdrug activities were the

2

Cost data were not yet available for fiscal years 1997 and 1998.

Page 3 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

Air Force’s E-3 aircraft, the Army’s UH-60 helicopter, and the Navy’s P-3

aircraft and Perry class frigate. With the assistance of service officials, we

developed a methodology to allocate to counterdrug activities a share of

the original procurement costs of these systems. Using this methodology,

we calculated that about $150 million of the procurement costs for these

four systems could be allocated to counterdrug activities for fiscal

years 1994-97.3

In fiscal years 1994 and 1995, there were no transfers of articles and

services to foreign countries under section 506(a)(2). In fiscal years 1996

and 1997,4

 a total of $131 million in articles and services were transferred

from DOD under this authority.

Additional O&S Costs

Associated With

DOD’s Counterdrug

Activities

There are significant O&S costs associated with the military services’

weapon systems used for counterdrug activities that are not reflected in

DOD’s counterdrug reported costs and funding requests. These include

intermediate and depot-level maintenance costs, active military personnel

salaries and benefits, and base operating support costs. To identify these

additional costs, we primarily used the services’ Visibility and Management

of Operating and Support Costs (VAMOSC) database,5

 which allocates O&S

costs by weapon system. We determined that there were O&S costs for

major weapon systems (ships and aircraft) used in counterdrug activities

in excess of $2 billion over the $406.2 million in OPTEMPO costs reported by

DOD for fiscal years 1994 through 1996.6 Figure 1 compares these additional

costs to DOD’s reported costs by fiscal year.

3

Data were not yet available to estimate these costs for fiscal year 1998.

4

As of August 14, 1998, there had been no approved transfers of equipment and services under this

section for fiscal year 1998.

5

An information system for reporting historical weapon system O&S costs derived from a wide range

of service data sources.

6

VAMOSC data were not yet available for fiscal years 1997 and 1998.

Page 4 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

Figure 1: Additional O&S Costs and

DOD’s Reported OPTEMPO Costs for

Counterdrug Activities

2,500

2,000

1,500

1,000

500

0

1994 1995 1996 Total

Additional O&S costs

Reported OPTEMPO costs

732.7

143.6

696.2

118.9

609.5

143.6

406.2

2,038.3

Dollars in millions

Note: Totals do not add due to rounding.

Source: Developed by GAO using DOD and service data.

Our estimate incorporated all O&S costs for these systems reported in the

VAMOSC database. However, each service reports O&S data differently. To

the extent possible, we obtained additional data from other service

sources to develop comparable costs across the services and added the

additional costs to the VAMOSC data. For example, because Navy

installation support costs are not captured in its VAMOSC database, we

calculated these costs based on average cost factors and personnel data

provided by the Navy. We were unable to obtain the same categories of

data for the services in all cases.

In addition to O&S costs associated with weapon systems, there were

support costs associated with personnel deployed for counterdrug

activities who were not assigned to specific weapon systems, such as

personnel in intelligence units. For example, about 14,000 military

personnel were assigned to counterdrug activities in the United States

Page 5 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

between fiscal year 1994 and 1996 who were not associated with specific

weapon systems. During those years, these personnel were assigned to

missions for varying lengths of time on a rotational basis. The pay,

benefits, and support costs associated with these personnel were in

addition to the counterdrug costs reported by DOD and the $2 billion we

estimated.7

DOD officials indicated that these additional O&S costs are not included in

DOD’s counterdrug budget because they pertain to the existing force

structure that supports the national defense mission and, therefore, they

would be incurred regardless of the type of operations conducted. This

practice is consistent with the way DOD reports incremental costs for

contingency operations.

Pro Rata Share of

Procurement Costs

for Most Used

Weapon Systems

To estimate the pro rata share of the original procurement costs of

weapon systems used most often by the active component in counterdrug

activities, we used the total flying hours or steaming days these systems

were used for counterdrug activities. We identified three types of aircraft

and one type of ship for this analysis—the Air Force E-3 aircraft, Army

UH-60 helicopter, and Navy P-3 aircraft and Perry class frigate. For the

four systems, we obtained their original procurement costs and their

original expected lives (in flying hours or steaming days). Using these

factors, we computed a cost per hour/day that could be applied to the time

flown/steamed for counterdrug activities. Using the methodology we

developed, we calculated that about $150 million of the procurement costs

for the four systems could be allocated to counterdrug activities for fiscal

years 1994-97.8

 As shown in table 3, most of these costs were for the Perry

class frigate due to the number of days steamed in support of counterdrug

activities.

7

We did not estimate a cost value for these personnel because their length of deployment and military

rank data were not readily available.

8

We estimated the pro rata share of procurement costs through fiscal year 1997 because actual flying

hour and steaming day data were not yet available for fiscal year 1998.

Page 6 GAO/NSIAD-98-231 Counterdrug Activities
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Table 3: Pro Rata Share of

Procurement Costs for Most Used

Weapon Systems Fiscal year

Dollars in millions

System 1994 1995 1996 1997 Total

E-3 $3.1 $1.2 $1.6 $1.5 $7.4

UH-60 1.8 2.1 3.2 5.4 12.5

P-3 3.2 4.4 5.4 4.4 17.4

FFG (Perry Class Frigate) 37.7 33.8 23.2 19.0 113.7

Total $45.8 $41.5 $33.4 $30.3 $151.0

Source: Developed by GAO using DOD and service data.

The $151 million does not include the cost of research and development

and modifications. Service officials advised us that this methodology

reflects neither life-cycle nor depreciation costs.

Foreign Assistance

Provided Under

Section 506(a)(2)

Under section 506(a)(2) of the Foreign Assistance Act, the President is

authorized to transfer up to $75 million in defense articles and services

each fiscal year. In fiscal years 1994 and 1995, there were no transfers

under this authority. In fiscal years 1996 and 1997,9

 a total of $131 million

in articles and services were transferred from DOD under this authority.

For example, in fiscal year 1996, DOD transferred $75 million in articles and

services, such as C-26 aircraft, patrol boats, and radio equipment, to

support counterdrug activities in Colombia, Peru, Venezuela, and eastern

Caribbean countries. DOD also provides equipment and services to foreign

governments and U.S. law enforcement agencies under a number of other

authorities.

Agency Comments DOD generally concurred with a draft of this report. DOD stated that it

established the counterdrug program within the current force structure

and that it funds all costs that are incremental and unique to the

counterdrug mission in the Central Transfer Account. It also stated that

the services continue to program, budget, and fund major acquisition

costs, depot level maintenance costs, and force structure requirements, as

part of fulfilling its overall mission. It believes that section 506(a)(2) costs

should be included in the value of the counterdrug program but did not

believe that O&S and acquisition costs should be included because these

are service-specific costs that are intrinsically incurred by each service.

9

As of August 14, 1998, there had been no approved transfers of equipment and services under this act

for fiscal year 1998.

Page 7 GAO/NSIAD-98-231 Counterdrug Activities
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DOD stated that we did not estimate the cost of active duty military

personnel salaries or excess defense articles under 10 U.S.C. 2576(a).

We agree with DOD and specifically state in the report that DOD does not

include depot-level maintenance and other O&S costs in its counterdrug

budget because they pertain to existing force structure and would be

incurred regardless of the type of operations conducted. We also agree

and state that weapon systems used for counterdrug activities were

purchased to support the overall mission of DOD. We recognize, as DOD

pointed out, that most O&S and weapon systems costs would be incurred

regardless of the counterdrug mission. We included active component

military personnel costs associated with weapon systems used for

counterdrug activities, but did not include these costs for personnel

deployed to a counterdrug activity that were not associated with a weapon

system because data were not readily available. Although we do not

specifically mention defense articles under 10 U.S.C. 2576(a), we state in

the report that DOD provides equipment and services to foreign

governments under other authorities. We believe, and DOD recognizes, that

our cost estimates can be used as a reference in estimating DOD’s support

for counterdrug activities.

Scope and

Methodology

To estimate the O&S costs not captured in the DOD counterdrug budget, we

first obtained data on the weapon systems, operating hours, and costs

directly associated with counterdrug activities. These data were reported

by the services to the Office of the Secretary of Defense for fiscal

years 1994-98. In addition, we obtained total O&S costs, primarily reported

in the VAMOSC database, for these systems. Although each service reports

VAMOSC data differently, we attempted to gather and analyze the data in the

same manner for all services. To the extent possible, where data were not

available in VAMOSC, we worked with the services to obtain information

from other service sources. For example, we calculated Navy installation

support costs based on average cost factors and personnel data the Navy

provided. We also calculated Army mission personnel costs for aviation

systems by obtaining average personnel costs and other personnel data

from the Army. Once we obtained the O&S data, we estimated a total O&S

cost per hour and applied this cost rate to the number of hours flown/days

steamed in support of counterdrug activities. We subtracted the

DOD-reported counterdrug costs from our computed cost to avoid double

counting. We were unable to obtain some data, such as Army base

operating support costs. We interviewed officials and obtained documents

at the Army Cost and Economic Analysis Center, the Navy Center for Cost

Page 8 GAO/NSIAD-98-231 Counterdrug Activities
B-279766 

Analysis, the Air Force Cost Analysis Center, the Office of the DOD

Coordinator for Drug Enforcement Policy and Support, and the Army, the

Navy, and the Air Force counterdrug offices. We did not independently

verify the data provided to us.

To estimate a pro rata share of the original procurement costs for systems

most often used in counterdrug activities, we developed a methodology in

consultation with the services. We obtained procurement costs and useful

life data from the service program offices for each of the systems in our

analysis. We did not independently verify the data provided to us.

To obtain information on the value of section 506(a)(2) assistance for

counterdrug purposes, we interviewed officials and examined documents

at the Defense Security Assistance Agency, which develops, implements,

and monitors security assistance plans and programs.

We performed our review between March 1998 and August 1998 in

accordance with generally accepted government auditing standards.

We are providing copies of this report to the Secretaries of Defense, the

Army, the Navy, and the Air Force.

This report will also be made available to others on request. If you or your

staff have any questions about this report, please contact me at

(202) 512-3504. Robert Pelletier, Lisa Quinn, and Joe Kirschbaum prepared

this report.

Richard Davis

Director, National Security

 Analysis

Page 9 GAO/NSIAD-98-231 Counterdrug Activities
Appendix I 

Comments From the Department of Defense

Page 10 GAO/NSIAD-98-231 Counterdrug Activities
Appendix I 

Comments From the Department of Defense

(701131) Page 11 GAO/NSIAD-98-231 Counterdrug Activities
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