Report to the Subcommittee on

Defense, Committee on Appropriations,

U.S. Senate

United States General Accounting Office

GAO

July 2001 DEFENSE BUDGET

Need for Continued

Visibility Over Use of

Contingency Funds

GAO-01-829
Page 1 GAO-01-829 Defense Budget

July 6, 2001

The Honorable Daniel K. Inouye

Chairman

The Honorable Ted Stevens

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

Since the end of the Persian Gulf War in February 1991, the Department of

Defense (DOD) has reported over $25 billion in incremental costs for its

overseas contingency operations.1

 These operations include the

enforcement of no-fly zones, humanitarian assistance, and peace

enforcement operations. The majority of these costs ($22 billion) have

been incurred in the Balkans (Bosnia and Kosovo) and Southwest Asia. In

fiscal year 2001, U.S. military forces are continuing to participate in a

number of contingency operations, primarily in the Balkans and

Southwest Asia. Appendix I contains a map depicting the location of

DOD’s operations for fiscal year 2001.

In response to your request, we examined (1) the adequacy of DOD’s

incremental contingency operations funding for all ongoing contingency

operations in fiscal year 2001, (2) DOD’s estimated contingency operations

costs for fiscal year 2002, and (3) the ramifications of DOD’s plan to

change the method for funding its operations in Southwest Asia. At your

request, we are also continuing to examine DOD’s management of its

contingency operations expenditures, including the economy and

efficiency with which these funds are spent, and will report our results at a

later date.

 1

As used in this report, “incremental costs” means those directly attributable costs that

would not have been incurred if it were not for the operation. It should be recognized that

DOD’s financial systems cannot reliably determine costs and that only the total obligations

are captured by the Department’s accounting systems. The services use various

management information systems to identify incremental obligations and to estimate costs.

Although we use the term costs throughout this report as a convenience, we are actually

referring to DOD’s obligation of funds.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-829 Defense Budget

Existing funds are sufficient to cover DOD’s estimated costs for

contingency operations for fiscal year 2001. In January 2001, the Office of

the Secretary of Defense (Comptroller) revised the estimates made in

developing the President’s fiscal year 2001 budget on the basis of

information provided by the military services and other defense agencies

and its own assessment of what constituted legitimate contingency costs.

The Comptroller’s office concluded that some costs had increased while

other costs had decreased and that, on balance, there was sufficient

funding for fiscal year 2001. On the basis of more current data through

June 2001, we made an updated assessment of fiscal year 2001

contingency operations’ costs, concluding that existing contingency

funding was still sufficient to cover estimated costs and that the latest

available data suggested that about $121 million may remain available at

the end of the fiscal year. Accordingly, the administration’s request for

$32 million in additional appropriations for the Army reserve component’s

increased participation in contingency operations, which was included in

the original fiscal year 2001 supplemental appropriation request, is

unnecessary. The request for fiscal year 2001 supplemental funding has

since been amended, eliminating the $32 million and requesting that the

Congress rescind $61 million in funds previously appropriated for

contingency operations. The Department is taking action to reprogram the

remaining funds.

Since DOD developed its original fiscal year 2002 budget estimate for

contingency operations in fiscal year 2002, estimated costs have declined

by $284 million. Specifically, in April 2001, the Army in Europe estimated

that its costs in the Balkans may decline by as much as $284 million

because of a variety of factors, including reductions in the number of

personnel and the amount of equipment deployed there. In June 2001, the

administration submitted a revised fiscal year 2002 budget for DOD, which

reflected the $284 million decline. In addition, the administration is

currently conducting a review of its policy toward Iraq, the results of

which could affect the scope of DOD’s operations in Southwest Asia.

DOD is transferring the funding for its Southwest Asia operations to the

services’ direct appropriations accounts beginning in fiscal year 2002

rather than fund these operations through its contingency operations fund,

which could have both positive and negative ramifications. The positive

ramification is that appropriating funds directly to the services’

appropriations accounts could provide an added incentive to better

control costs. The negative ramification is the possible loss of visibility for

Southwest Asia funds because of (1) the substantial movement of funds

within the services’ operation and maintenance accounts as has occurred

Results in Brief
Page 3 GAO-01-829 Defense Budget

over a period of years and (2) the possible discontinuance of cost

reporting for operations in Southwest Asia.

We have identified several matters for congressional consideration

regarding the need for additional funds in fiscal year 2001, the need to

ensure that the President’s budget request for fiscal year 2002 is adjusted

upon the completion of the Iraq policy review to reflect the results of the

review, and steps that could be taken to mitigate the potentially negative

consequences of appropriating funds for Southwest Asia operations

directly to the services’ appropriations accounts.

During fiscal year 2001, U.S. military forces are participating or have

participated in a number of contingency operations, and the Congress has

appropriated funds to cover DOD’s costs. The largest ongoing contingency

operations are in the Balkans and Southwest Asia. DOD budgets for the

cost of ongoing contingency operations, and the Congress has

appropriated funds for these operations to the services’ military personnel

accounts and the Overseas Contingency Operations Transfer Fund (the

Transfer Fund). DOD transfers funds out of the Transfer Fund to the DOD

components’ appropriation accounts as operations unfold during the year.

Any moneys remaining in the Transfer Fund at the end of a fiscal year

remain available until expended. In the case of new, expanded, or

otherwise unfunded operations, such as at the onset of operations

involving Kosovo, costs are not budgeted in advance. DOD’s components

request funds from the Transfer Fund as long as they are available or use

funds appropriated for other activities that are planned for later in the

fiscal year. If these funds are not replenished through supplemental

appropriations or the reprogramming of funds from other sources, the

components have to absorb the costs within their regular appropriations.

Out of the $25 billion in the incremental costs that DOD has reported for

overseas contingency operations since 1991, $15.1 billion has been for U.S.

military involvement in the Balkans through September 2000. U.S.

involvement in the Balkans began in July 1992 as part of humanitarian

relief efforts in Bosnia, Herzegovina, and Croatia and expanded in April

1993, when the United States began to participate in the North Atlantic

Treaty Organization’s (NATO) enforcement of a no-fly zone over Bosnia

and Herzegovina. In December 1995, U.S. troops deployed as part of a

multilateral coalition under NATO command in and around Bosnia to

assist in implementing the General Framework Agreement (also known as

the Dayton Agreement). The number of U.S. military personnel in Bosnia

has steadily declined from about 18,000 in February 1996 to about 4,300 in

Background
Page 4 GAO-01-829 Defense Budget

April 2001. In addition to U.S. military personnel in Bosnia, about 250 U.S.

military personnel are stationed in Hungary, which shares a border with

Bosnia, in support of operations in Bosnia.

In June 1999, the United States began providing troops for the NATO-led

Kosovo Force, whose mission is peace enforcement in Kosovo. The United

States is currently providing about 5,600 troops as part of a NATO force. In

addition, the United States has about 400 troops in Macedonia to operate a

staging base for U.S. troops entering and departing Kosovo.

From the end of the Persian Gulf War in 1991 through September 2000,

DOD reported $7.1 billion in incremental costs for its operations in

Southwest Asia. U.S. forces have been involved in enforcing no-fly zones

in Southwest Asia since the end of the Persian Gulf War. The size of the

U.S. force varies substantially depending on the level of tension with Iraq.

Of the 15,000-20,000 personnel in the area, many are Navy and Marine

Corps personnel deployed on ships.

The funds that the Congress appropriated for fiscal year 2001 contingency

operations should be sufficient to cover the estimated costs for these

operations. In January 2001, DOD estimated that there were sufficient

funds for fiscal year 2001 operations but that these funds will be

completely utilized, leaving no carry over of funds in the Overseas

Contingency Operations Transfer Fund that could be applied to funding

requirements for fiscal year 2002. Our June 2001 analysis of DOD’s costs

reached the same conclusion: that there are sufficient funds for

contingency operations in fiscal year 2001 but that June 2001 data suggest

that after adjusting for cost increases and decreases about $121 million

may be available at the end of the fiscal year, owing largely to management

efficiencies that the Army in Europe has achieved in Balkan operations.

Because funds already appropriated are sufficient for DOD’s fiscal year

2001 operations, a requested $32 million for contingency operations

contained in the original June 2001 request for supplemental funding in

fiscal year 2001 for DOD is unnecessary. The request for fiscal year 2001

supplemental funding has since been amended, eliminating the $32 million

and requesting that the Congress rescind $61 million in funds previously

appropriated for contingency operations. DOD is taking action to

reprogram part of the savings achieved by the Army in Europe.

Existing Funds Are

Sufficient to Cover

the Cost of DOD’s

Contingency

Operations in Fiscal

Year 2001
Page 5 GAO-01-829 Defense Budget

On the basis of its review of contingency operations costs, completed in

January 2001, DOD concluded that existing funds are sufficient to cover

the estimated cost of these operations. According to DOD’s budget

submission for fiscal year 2001, ongoing contingency operations in fiscal

year 2001 were estimated to cost almost $4.2 billion. (See table 1.) On an

operational basis, about $3.1 billion (75 percent) was for operations in the

Balkans. Most of the remainder was for Southwest Asia, with the balance

of about $4 million planned for operations in East Timor.

Table 1: Estimated Costs for DOD’s Contingency Operations, Fiscal Year 2001

Dollars in millions

Military

personnel

Operation and

maintenance

Miscellaneous

procurement Total

Bosnia $153.4 $1,234.4 $20.8 $1,408.6

Kosovo 194.5 1,455.9 62.6 1,713.0

Total Balkans $347.9 $2,690.3 $83.4 $3,121.6

Southwest Asia 144.8 913.7 1,058.5

East Timor 0 3.9 3.9

Total $492.7 $3,607.9 $83.4 $4,184.0

Source: DOD’s fiscal year 2001 President’s budget submission.

In its January 2001 review, the Office of the Secretary of Defense

(Comptroller) revised the estimates made in developing the President’s

budget for fiscal year 2001.2

 The Comptroller’s review was based on

information provided by the military services and defense agencies (such

as the Defense Logistics Agency) and on its own assessment of what

constituted legitimate contingency costs. Overall, the Comptroller’s office

initially concluded that (1) some costs had increased while others had

decreased and that, on balance, there was sufficient funding for fiscal

year 2001 and (2) $104.2 million would remain available to fund fiscal

year 2002 requirements.

 2

The President’s budget is developed almost a year before the fiscal year in which it takes

effect. We have previously reported that developing accurate budget estimates for

contingency operations is difficult because DOD has to make judgments about a variety of

factors, such as the size and composition of the military force to be used and because

events may differ from the assumptions. (See Contingency Operations: Defense Cost and

Funding Issues [GAO/NSIAD-96-121BR, Mar. 15, 1996]). The budget estimate, therefore, is

a snapshot in time.

DOD Revises Cost

Estimates but Concludes

That Funding Is Sufficient
Page 6 GAO-01-829 Defense Budget

Among the services, the Comptroller’s office estimated that the Air Force’s

cost requirements had increased by $90 million while the Army’s and

Navy’s cost requirements had decreased by $52 million and $107 million,

respectively. The balance of the changes occurred in the defense agencies,

which experienced a net decline in costs. Included in its revised estimate

was a Comptroller’s office adjustment to the Air Force’s and Navy’s

estimates. The Comptroller’s office disallowed $41 million in the Air

Force’s costs in Southwest Asia because it concluded that these costs

went beyond the critical tasks of the relocation of headquarters in Saudi

Arabia and so were not eligible for contingency operation funding.

Regarding the Navy, the Comptroller’s office disallowed $121 million in

flying-hour costs because it concluded that the associated flying hours

were performed as part of normal training levels. In response to appeals

from the Air Force and Navy after the Comptroller’s office completed its

January 2001 review, the Deputy Secretary of Defense restored a large part

of the fund reduction: the full $41 million to the Air Force and

$63.2 million of the Navy’s $121 million in flying hour costs. The sum of

these restored funds, which will be taken from the Transfer Fund, exactly

equaled the $104.2 million that the Comptroller’s office previously

estimated would remain available at the end of the fiscal year to fund

fiscal year 2002 requirements.

On the basis of more current data through June 2001, we updated the

assessment of contingency operations’ costs for fiscal year 2001,

concluding that existing contingency funding was still sufficient to cover

estimated costs and that some funds may now be available at the end of

fiscal year 2001. In June 2001, the administration submitted a request for

$6.1 billion in supplemental funding for DOD for fiscal year 2001, which

included $32 million for the military personnel costs of increased Army

reserve component participation in contingency operations. On the basis

of our analysis, we concluded that while the Army’s military personnel

costs had increased, other contingency operations costs had decreased,

and that there is no need for the $32 million in supplemental funding for

contingency operations in fiscal year 2001. The request for fiscal year 2001

supplemental funding has since been amended, eliminating the $32 million.

Our assessment showed that the largest change since the Comptroller’s

office’s January 2001 revised estimate occurred in the Army’s costs, while

the Navy and Air Force reported little or no net change in their cost

estimates. We estimate that the Army’s overall costs have declined by

$128 million—with higher military personnel costs more than offset by

lower operation and maintenance costs. The Army increased its estimate

DOD Does Not Need

Supplemental Funding for

Fiscal Year 2001

Contingency Costs
Page 7 GAO-01-829 Defense Budget

of military personnel costs by $72 million because of a greater reliance on

reserve units in Bosnia. This increase was more than offset by a

$200 million decline in the Army in Europe’s estimated operation and

maintenance costs for the Balkans. This amount included a $138.5 million

decline in Kosovo costs owing to a variety of management efficiencies,

including reduced contract costs, airlift, and other transportation costs,

and fewer soldiers and equipment. It also included a $61.5 million net

reduction in Bosnia costs owing to a reduction in the number of soldiers

and the amount of equipment there and to management efficiencies.

There has been no net change in the Navy’s estimated costs since the

Comptroller’s office’s review. However, since it developed its input for the

President’s budget for fiscal year 2001, the cost per flying hour for a

number of Navy aircraft has increased substantially. For example, the cost

per flying hour for the F-14 aircraft rose 21 percent; for the F-18 aircraft,

7 percent; and for the EA-6B aircraft, 14 percent. Although the Navy

increased its budget estimate to reflect those higher costs, as discussed

earlier, the Comptroller’s office disallowed a larger amount—$121 million

in flying-hour costs—because it concluded that rather than increasing

funds for its primary program (its training program), the Navy instead used

contingency flying hours to increase its primary program flying. According

to the Navy, senior Navy leadership plans to address the overall issue of

the adequacy of funds to support its flying-hour program by requesting

additional funds for the program in the June 2001 request for supplemental

appropriations for DOD. Consequently, the Navy does not plan to seek

additional funds for its participation in contingency operations.

Calculating contingency hours will no longer be an issue after fiscal

year 2001 because, beginning in fiscal year 2002, the Navy will fund all

flying hours in its overall flying-hour program; therefore, there will be no

need to separate contingency flying hours.

We estimate that the Air Force’s costs increased slightly—by $7 million—

from the Comptroller’s office’s January 2001 review on the basis of

discussions with the Air Force commands in the United States, Europe,

and the Pacific, and the Air Force’s headquarters personnel.

On balance, we estimate that after adjusting for (1) the Army’s cost

increases and decreases, including the Army in Europe’s $200 million cost

reduction, and (2) the Air Force’s cost increase, there could be

$121 million left at the end of fiscal year 2001. That amount could be

applied against funding requirements for contingency operations in fiscal

year 2002. However, the Comptroller’s office advised us that it plans to

address the $200 million in reduced costs for the Army in Europe by
Page 8 GAO-01-829 Defense Budget

seeking a rescission of some of these funds and reprogramming the

balance. The supplemental request for fiscal year 2001 has been amended

to include a request that the Congress rescind $61 million in funds

previously appropriated for contingency operations. DOD is taking action

to reprogram the remaining $139 million and proposes that it be used for

noncontingency operations. The Comptroller’s office also advised us that

unless other savings are identified, the services would have to fund any

increased costs within their existing budgets.

Since DOD developed its original budget estimate for contingency

operations in fiscal year 2002, estimated costs have declined by several

hundred million dollars. In June 2001 the administration submitted a

revised fiscal year 2002 budget for DOD, which included $4 billion for

ongoing contingency operations in the Balkans and Southwest Asia.

(See table 2.) This submission reflected a $284 million decline in the

Army’s costs in the Balkans. The budget estimate may be further altered

when the administration completes its Iraq policy review, which may

affect the scope of operations in Southwest Asia.

Table 2: DOD’s Estimated Overseas Contingency Costs, Fiscal Year 2002

Dollars in millions

Military

personnel

Operation and

maintenance Total

Army $462.9 $2,064.3 $2,527.2

Navy 60.5 141.9 202.4

Marine Corps 6.2 4.6 10.8

Air Force 114.4 831.4 945.8

Other DOD and classified

programs 340.9 340.9

Total $644.0 $3,383.1 $4,027.1

Source: DOD.

As shown in table 2, the bulk of the costs (84 percent) are for operation

and maintenance, and the balance is for military personnel. By service, the

Army has the bulk of the costs (63 percent), followed by the Air Force

(23 percent). By operation, the bulk of the costs are in the Balkans

(71 percent), and the balance is in Southwest Asia.

In April 2001, the Army in Europe provided us with its revised cost

estimate, which indicates that its costs in the Balkans could decline by as

much as $284 million. It estimated that its share of the Army’s costs in

Bosnia, which are included in the budget estimate, could decline by as

Cost Estimates for

Fiscal Year 2002 Have

Changed and a Key

Decision Affecting

Costs Is Pending
Page 9 GAO-01-829 Defense Budget

much as $171 million–from $700 million to $529 million. The decline is a

result of a decision to reduce the amount of personnel and equipment in

Bosnia. It is a net figure reflecting these declines and expected increases

in other areas, including contractor costs. The Army in Europe also

estimated that its share of the Army’s costs in Kosovo, which are also

included in the budget estimate, could decline by as much as

$113 million—from $1.084 billion to $971 million. The decline is a result of

reductions in personnel and equipment and declines in other costs,

including contractor costs and airlift. It is a net figure reflecting these

declines and expected increases in other areas, including an increase in

the number of smaller camps, referred to as “outposts.”

Our initial draft of this report, developed before the administration

submitted its revised DOD budget for fiscal year 2002, noted that the

Army’s cost estimate for operations in the Balkans in fiscal year 2002 had

declined substantially. This led us to conclude that since DOD developed

its original January 2001 budget estimate considerably less funding might

be needed for fiscal year 2002. In the June 2001 revision to DOD’s budget

for contingency operations in fiscal year 2002, the administration reduced

DOD’s budget request by $284 million to reflect the lower Army cost

estimate for Balkan operations.

The administration is conducting an Iraq policy review, the outcome of

which will affect DOD’s costs in Southwest Asia in fiscal year 2002 and

beyond. According to DOD officials, the review includes a reassessment of

the level of operations involving Iraq. The review could result in a decision

to change the level of air operations or keep them at their current level.

Until that review is completed, which is scheduled for June 2001, future

costs cannot be accurately estimated. Therefore, DOD’s budget estimate

involving Southwest Asia may need to be adjusted, depending on the

outcome of the policy review.
Page 10 GAO-01-829 Defense Budget

DOD is transferring the funding for operations in Southwest Asia to the

services’ individual appropriations accounts beginning in fiscal year 2002

rather than fund them through the Overseas Contingency Operations

Transfer Fund. DOD has concluded that since operations in Southwest

Asia have been ongoing for 10 years and there appears to be no plan to

withdraw forces in the near term, the requirements there should no longer

be funded from the contingency fund. We have identified both positive and

negative ramifications of such a decision and some steps that the Congress

may wish to consider that could mitigate the negative consequences.

Shifting funding for contingency operations to the services’ individual

appropriations accounts could provide an added incentive to better

control costs. Currently, DOD seeks and the Congress provides funding

through the Transfer Fund on the basis of the services’ budget estimates

and the Comptroller’s office’s review of those estimates. Funds

appropriated to the Transfer Fund are solely for the support of

contingency operations. We are currently examining how contingency

funds are spent and so are not in a position at this time to conclude

whether funds are being spent in an economical and efficient manner.

However, we believe that there is little financial incentive for the services

to minimize costs under the current system because they do not have to

weigh funding for contingency operations against competing budgetary

priorities, since contingency operations are funded separately.

But there are potentially negative consequences associated with the

proposed shift, which involve the visibility of funds. Most contingency

costs are funded through the operation and maintenance account. Funds

appropriated to the operation and maintenance account of each of the

services and other DOD components can be used for a wide variety of

purposes, including training, base operations, and real property

maintenance. In committee reports that accompany appropriations

legislation for DOD, the Congress provides DOD with guidance on how the

funds are to be spent. However, we have previously reported that billions

of dollars in funds move within the services’ operation and maintenance

accounts, as the services try to balance competing budgetary needs. For

example, we reported in February 2000 that from fiscal year 1994 through

fiscal 1998, DOD changed funding amounts for 245 subactivities within the

services’ operation and maintenance accounts by almost $43 billion

Because Operations

in Southwest Asia Will

No Longer Be Funded

as Contingency

Operations, Some

Safeguards May Be

Needed
Page 11 GAO-01-829 Defense Budget

compared with the amounts the Congress initially designated for them.3

These changes involved both increases and decreases in the amounts

designated by the Congress. Once funds for operations in Southwest Asia

are appropriated directly to the services’ appropriation accounts, the

visibility of such movements of funds as they pertain to operations in

Southwest Asia may not be clear.

Visibility over the cost of operations in Southwest Asia could also be lost

as a result of the proposed funding shift. In accordance with Volume 12,

Chapter 23 of DOD Financial Management Regulations, the cost of the

participation in contingency operations is reported monthly. This

reporting provides important visibility on the level of resources needed to

sustain operations. The reporting also provides insight into how the funds

are spent because reported costs are placed in categories, such as

operation tempo, airlift, temporary duty travel, and facilities and base

support. As discussed earlier, DOD has reported that its costs for

Southwest Asia totaled $7.1 billion from 1991 through September 2000. It

is unclear as to whether cost reporting for Southwest Asia will continue

once it is no longer considered a contingency operation for funding

purposes.

The $32 million in supplemental funding for fiscal year 2001 requested for

the Army’s military personnel costs in support of contingency operations

is unnecessary. The administration has since amended its request for

supplemental funding to withdraw the request for this $32 million. The

budget outlook for contingency operations for fiscal year 2002 may be

affected by the results of the administration’s Iraq policy review, which

could result in a decision to change the level of air operations or keep

them at their current level. The shift of funding from the Overseas

Contingency Operations Transfer Fund to the services’ direct

appropriations could result in a significant loss of visibility over both costs

and the use of funds for operations in Southwest Asia.

 3

See Defense Budget: DOD Should Further Improve Visibility and Accountability of O&M

Fund Movements (GAO/NSIAD-00-18, Feb. 9, 2000.) We use the term “congressionally

designated or “congressional designation” to refer to amounts set forth in an appropriation

act’s conference report.

Conclusions
Page 12 GAO-01-829 Defense Budget

Regarding supplemental funding for fiscal year 2001, the Congress may

wish to consider the $32 million that was included in the supplemental

funding request for increased Army military personnel contingency

operations costs as withdrawn, on the basis of the amended supplemental

request.

The Congress may also wish to consider the following two actions in

appropriating funds for contingency operations for fiscal year 2002:

• Regarding the fiscal year 2002 budget for Southwest Asia operations, upon

completion of the Iraq policy review the Congress may wish to have DOD

provide an updated budget estimate reflecting the results of the policy

review.

• Regarding maintaining visibility over funding for operations in Southwest

Asia, the Congress may wish to direct that (1) appropriate committees be

provided with written notification if funds identified for operations in

Southwest Asia are obligated for any other purposes and (2) DOD

continue to report monthly on the costs of its operations in Southwest

Asia.

In oral comments on a draft of this report, the Office of the Under

Secretary of Defense (Comptroller) and service budget officials

responsible for contingency operations costs concurred with the contents

of this report. The Comptroller’s office advised us that DOD agrees with

the basic conclusions and findings addressed in the report.

To identify and assess the contingency cost information contained in this

report, we conducted work at the Office of the Secretary of Defense; the

Departments of the Army, Navy, and Air Force; U.S. Army Forces

Command; U.S. Army Europe; 1st Infantry Division, Wurzburg, Germany;

3rd Infantry Division, Fort Stewart, Georgia; U.S. Navy Pacific Fleet; Naval

Air Forces Pacific; U.S. Pacific Command; U.S. Army Pacific; Marine

Forces Pacific; Air Force Air Combat Command; and the U.S. Special

Operations Command. At these locations, we reviewed contingency

operations cost reports; DOD’s budget documents for fiscal years 2001 and

2002; and documents that supported contingency-related costs. We did not

verify the data used by the Defense Finance and Accounting Service to

create the contingency operations cost reports.

We performed our work from January through June 2001 in accordance

with generally accepted government auditing standards.

Matters for

Congressional

Consideration

Agency Comments

Scope and

Methodology
Page 13 GAO-01-829 Defense Budget

We are sending copies of this report to the Chairman and Ranking

Minority Member, Subcommittee on Defense, House Committee on

Appropriations; the Secretary of Defense; the Under Secretary of Defense

(Comptroller); and the Director, Office of Management and Budget. Copies

of this report will also be made available to others upon request.

If you have any questions regarding this report, please call me on

(757) 552-8100. Principal contributors to this report were Steve Sternlieb,

Ray S. Carroll, Lester Ward, and Laura Talbott.

Neal P. Curtin, Director

Defense Capabilities and Management
Appendix I: Location of Major Contingency

Operations

Page 14 GAO-01-829 Defense Budget

Appendix I: Location of Major Contingency

Operations

(350036)
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