April 25, 2011

Honorable C.W. Bill Young

Chairman, Subcommittee on Defense

Committee on Appropriations

U.S. House of Representatives

Washington, DC 20515

Dear Mr. Chairman:

In response to a request by the Subcommittee on Defense, the Congressional Budget Office 

(CBO) has examined ways to establish a clearer relationship between the readiness of the armed 

forces and operation and maintenance spending by the Department of Defense. CBO’s analysis is 

attached.

I hope that you find this information helpful. The staff contact for the analysis is Adebayo 

Adedeji. 

Sincerely,

Douglas W. Elmendorf

Attachment

cc: Honorable Harold Rogers

Chairman, House Committee on Appropriations

Honorable Norman D. Dicks

Ranking Member, House Committee on Appropriations

CONGRESSIONAL BUDGET OFFICE

Linking the Readiness of the 

Armed Forces to DoD’s Operation and 

Maintenance Spending 

April 2011

Spending for operation and maintenance (O&M) supports the military services’ dayto-day activities, such as the training of military units, maintenance of equipment, 

recruitment of service members, operations of military bases, and provision of administrative services. In 2010, appropriations for O&M (excluding funds for the Defense 

Health Program) totaled $157 billion and constituted some 29 percent of the Department of Defense’s (DoD’s) “base” budget.1

DoD typically cites the readiness of military units to perform their missions in wartime as the primary justification for its O&M budget requests to the Congress. For 

example, budget materials that the Army submitted with its 2012 request for O&M 

funding state the following: “The budget provides resources to train and sustain the 

active component combat forces at readiness levels consistent with mission requirements. . . .”2

 The Navy in part justified its 2012 O&M request with this statement: 

“Our top readiness priority is ensuring that forces are fully trained, ready to deploy, 

and fully supported while deployed. The budget reflects the best balance of resources 

to achieve this priority.”3

DoD broadly defines “readiness” as the ability of U.S. military forces to fight and 

meet the demands of the National Military Strategy (which describes the armed 

forces’ role in achieving national security objectives). DoD assesses readiness on at 

1. DoD’s base budget supports the ordinary activities of the department, such as development and 

procurement of weapon systems and the day-to-day operations of the military and civilian workforces. DoD also receives additional funds to pay for the wars in Afghanistan and Iraq and for 

other contingency operations. Those funds are counted in the budget totals but are not considered 

part of DoD’s base budget. 

2. Department of the Army, Fiscal Year (FY) 2012 Budget Estimates, vol. 1, Operation & Maintenance, 

Army: Justification Book (February 2011), p. 5, www.asafm.army.mil/Documents/

OfficeDocuments/Budget/BudgetMaterials/FY12/opmaint//oma-v1.pdf.

3. Department of the Navy, Office of Budget, Highlights of the Department of the Navy FY 2012 

Budget (February 2011), p. 4-3, www.finance.hq.navy.mil/FMB/12pres/Highlights_book.pdf.
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least two levels—the unit level and the joint level.4 “Unit readiness” is the ability of 

units such as Army brigades, Marine Corps regiments, Navy ships, and Air Force 

squadrons to perform their designated missions. “Joint readiness” refers to a commander’s ability to execute missions with units from more than one service. 

DoD, however, has not been able to clearly identify the relationship between the 

department’s O&M spending and the readiness of military units. Nor has the Congressional Budget Office’s (CBO’s) analysis—which used historical data to attempt to 

establish statistical relationships between O&M spending and readiness for selected 

units—yielded a well-defined linkage. (CBO’s analysis focused only on unit readiness 

because of the role it plays in DoD’s assessments of the services’ need for O&M funding.) Those efforts were not fruitful, largely because the information needed to determine that linkage—effective measures of readiness and detailed data on spending—is 

not readily available or may not, in fact, exist. The military’s current measures of readiness are not readily applicable to such analyses, and there are some concerns about 

the quality of its assessments of readiness. 

Yet even if readiness were well measured, determining the relationship between readiness and O&M spending presents challenges. Some activities supported by O&M 

spending may be more directly related to a unit’s current readiness than other such 

activities are; in addition, some spending from other types of appropriations may 

affect readiness. Also, spending intended to support units’ readiness activities must be 

distinguished from spending for overseas contingency operations (for example, in Iraq 

and Afghanistan). If DoD is to determine how O&M spending affects units’ readiness, it may have to conduct controlled experiments in which it methodically varies 

readiness-related spending for otherwise similar units. 

Trends in Operation and Maintenance Spending

In its budget requests, DoD divides O&M activities into four categories—operating 

forces, mobilization, training and recruiting, and administration and servicewide 

activities—that reflect the activities’ major mission or function.5

 To focus on readiness, CBO consolidated the spending for those activities into two categories:

4. See Joint Chiefs of Staff, Department of Defense Dictionary of Military and Associated Terms, Joint 

Publication 1-02 (April 2001; as amended through August 19, 2009), pp. 454–455. DoD and 

other experts also consider “strategic readiness,” a synthesis of unit and joint readiness that 

describes the ability of the armed forces as a whole (including the services, the combatant commands, and combat support agencies) to fight and meet the demands of the National Military 

Strategy. (A combatant command is composed of forces from two or more services and has a broad 

and continuing mission.)

5. DoD also requests funds for O&M activities within the Defense Health Program, but CBO 

excluded that program from its current analysis because the program is not directly related to 

units’ training and readiness.
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CBO

B Mission-related spending for training and for maintaining the equipment of forces 

that may ultimately deploy in a conflict. The category includes spending for operating forces and mobilization activities (but excludes costs related to the operation 

of military bases—such as for cleaning, landscape maintenance, and utilities). In 

CBO’s judgment, mission-related spending is more directly linked to units’ readiness than is other O&M spending.

B Infrastructure-related spending for the deployable forces described above. The 

category comprises spending for DoD’s training and recruiting activities (which 

includes the individual skills training that is typically conducted in the classrooms 

of the military services’ training schools) and for administration and servicewide 

activities (central functions such as human resources management and certain 

intelligence programs). It also includes funds for operating military bases drawn 

from all four of DoD’s O&M categories.

In total, O&M spending in DoD’s base budget, measured in 2011 dollars, rose 

from $128 billion in 2000 to $157 billion in 2010, an increase of 23 percent above 

inflation. (All spending presented in this CBO analysis is expressed in 2011 dollars.) 

Mission-related spending accounted for slightly more than half of the growth, rising 

by 26 percent—from $56 billion in 2000 to $71 billion in 2010 (see Table 1). 

Infrastructure-related spending grew by 20 percent over the same period—from 

$72 billion in 2000 to $86 billion in 2010. 

To assess longer-term trends, CBO examined O&M spending per active-duty service 

member, so as to remove the effects that increases in the overall size of the force structure had on such trends. Between 1980 and 2001, O&M costs per active-duty service 

member climbed steadily, rising by an average of about $1,700 annually (see 

Figure 1).6 Increasing costs for fuel, pay raises for civilian DoD workers, and the 

maintenance of aging weapon systems account for some—but not all—of that longterm growth. However, the source of the remaining growth is not easy to identify—at 

least not with the data that DoD regularly provides to the Congress in the budgeting 

process.

Since 2002, O&M spending per active-duty service member has risen more rapidly 

than that $1,700-per-year trend. The wars in Iraq and Afghanistan have led to modest 

increases in the number of active-duty military personnel but large hikes in the 

amount of O&M funding per active-duty service member: In 2010, those additional 

funds boosted DoD’s total O&M spending (excluding spending for the Defense 

Health Program) by 70 percent above its base budget amount. Those increases were 

the result of the cost of conducting major operations on the other side of the world, 

6. The rate of increase in O&M costs per active-duty service member is greater if spending for the 

Defense Health Program is included—an average annual increase of $2,200. For additional discussion, see Congressional Budget Office, Long-Term Implications of the 2011 Future Years Defense 

Program (February 2011), Box 2-1. 
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CBO

Table 1.

Operation and Maintenance Appropriations, Excluding 

Those for the Defense Health Program, in DoD’s 

Base Budget for 2000 and 2010 

(Billions of 2011 dollars)

Source: Congressional Budget Office based on data from the Department of Defense (DoD).

Notes: DoD submits an annual request to the Congress for operation and maintenance funding for 

its base budget, which supports the ordinary activities of the department, such as development and procurement of weapon systems and the day-to-day operations of the military and 

civilian workforces. DoD also requests additional funds to pay for the wars in Afghanistan 

and Iraq and for other such contingency operations. Those funds are not considered part of 

the base budget. 

a. Excludes support for military bases. 

the exceptional wear and tear on equipment in combat, and the large number of 

reserve and National Guard personnel deployed.7

 The extent to which DoD will continue to receive such additional funds will depend on future overseas contingency 

operations, the number and scope of which are uncertain.

Measuring the Readiness of Military Units

Measuring unit readiness requires an assessment of the resources of military units and 

their ability to perform their missions—which may involve both the completion of a 

set of well-defined tasks and a general preparedness for adapting to new circumstances. A common way of assessing a unit’s readiness is to use a rater—someone 

7. CBO did not include reserve and National Guard personnel in calculating O&M costs per activeduty service member, but their support nevertheless adds to such costs. (That is, in calculating that 

ratio, CBO did not include the number of reserve and National Guard personnel in the denominator but did reflect the costs to support them in the numerator.) 

Mission-Related Appropriationsa

Operating forces 51 67 29

Mobilization 5 5 -6 ____ ____ ___

Subtotal 56 71 26

Infrastructure-Related Appropriations

Training and recruiting 10 13 20

Administration and servicewide activities 45 46 1

Support for military bases 16 28 70 ____ ____ ___

Subtotal 72 86 20

Total 128 157 23

2000 and 2010

Change Between

2000 2010

Percentage
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CBO

Figure 1.

Operation and Maintenance Costs, Excluding Those for the 

Defense Health Program, per Active-Duty Service Member 

(Thousands of 2011 dollars)

Source: Congressional Budget Office.

Notes: The Department of Defense (DoD) submits an annual request to the Congress for operation 

and maintenance (O&M) funding for its base budget, which supports the ordinary activities 

of the department, such as development and procurement of weapon systems and the dayto-day operations of the military and civilian workforces. DoD also requests additional funds 

to pay for the wars in Afghanistan and Iraq and for other such contingency operations. Those 

funds are not considered part of the base budget. The Future Years Defense Program (FYDP) 

is a five- or six-year plan associated with DoD’s annual budget request. 

Historical costs exclude those for the Defense Health Program and for elements within the 

FYDP that were consolidated in 1993 when DoD began budgeting separately for the Defense 

Health Program. 

trained to grade a unit’s performance by judging the extent to which it can undertake 

the tasks essential to its mission. Raters generate more reliable information—reliable 

in the sense that another rater would have given the same grade when observing the 

same performance—when they are not members of the unit, when they observe many 

units, and when the tasks they must assess are well defined. 

Military forces most need a high degree of readiness at the time they deploy. The 

capacity to attain such readiness quickly is valuable, but units are not generally 

expected to maintain it at all times. The period immediately before units deploy is the 

point at which comparison ratings are most informative: All deploying units intend 

then to be at their maximum level of readiness, and by that time the missions relevant 

to the deployment have been clearly defined. However, recent deployments to Iraq 

and Afghanistan have illustrated the importance of adaptability as well. For example, 

armor units may be deployed as infantry and operate without the tanks that usually 

accompany them. In that case, ratings of the units’ readiness to carry out infantryrelated tasks would be most important before deployment, even though the unit 

would in general be focusing during its training on tasks involving the use of tanks.

1980 1985 1990 1995 2000 2005 2010 2015

0

50

100

150

200

250

Funding Requested by DoD for

Its 2011 Base Budget and

Overseas Contingency Operations

Estimated Annual Trend from 1980 to 2001

 (Average annual growth = $1,700)

Actual FYDP

Period

Historical O&M Costs per

Active-Duty Service Member
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CBO

Measuring readiness can be time-consuming, requiring trade-offs between the time a 

unit spends on such assessments and the time it allocates to other demands. At the 

Army’s National Training Center (NTC) and Joint Readiness Training Center 

(JRTC), only a small number of units can be rated each year in training exercises in 

which they are opposed by another force.8

 Such exercises provide valuable information about readiness; however, it would be extremely costly to expand them so that 

large numbers of units could be evaluated every year. One way to reduce the resources 

needed for evaluating readiness and still give some feedback to each unit would be to 

limit the ratings given to all units to a small subset of representative tasks. Alternatively, DoD could assess overall readiness in greater depth by selecting a sample of 

units from among those nearing a scheduled deployment and conducting a comprehensive evaluation of their readiness. Another factor that complicates such assessments, however, is that the measured readiness of a group of units as a whole may 

depend disproportionately on a few units within the group. (For example, in a carrier 

strike force, the readiness of an aircraft carrier may be more critical than that of a 

support ship.) As a result, in assessing overall readiness in the armed forces, the most 

useful evaluative approaches and methods of combining the ratings of different kinds 

of units are not clear. 

DoD’s main measure of units’ readiness is the Status of Resources and Training System (SORTS), which uses quantitative indicators and the judgment of units’ commanding officers to assess whether units have the personnel, equipment, training, and 

supplies they need to go to war. For example, the system’s ratings include an overall 

readiness rating (called a C-rating) and one for a unit’s training (T-rating), which indicates a unit’s ability to perform its mission-essential tasks.9

 To be rated T-1 (the top 

rating), a unit must be able to perform at least 85 percent of its mission-essential 

tasks. (The percentage cutoffs for the other T-ratings are 70 to 84 for T-2, 55 to 69 for 

T-3, and below 55 for T-4.)

DoD has revised SORTS by adding information management features, among others. 

The resulting system, the Enhanced Status of Resources and Training System 

(ESORTS), allows users to assign missions to units and formulate a list of tasks essential to accomplishing those missions. The units’ ability to perform the tasks is then 

rated and reported. (ESORTS uses categories and color codes that include green for 

8. One of the objectives of the NTC and JRTC is to provide battalions and brigades with realistic 

training that includes live fire and force-on-force engagements, which are not usually possible at 

units’ home stations. 

9. SORTS also includes ratings for three other underlying “resource areas” in addition to training: the 

personnel “fill,” or P-rating (the percentage of authorized personnel that the unit has on hand); the 

equipment fill, or S-rating (the percentage of authorized equipment that the unit has on hand); 

and the condition of the equipment, or R-rating (the proportion of combat-essential equipment 

and other such items that are “fully operational to perform wartime missions”).
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“Yes,” yellow for “Qualified Yes,” and red for “No,” as well as the traditional SORTS 

ratings—for example, C-1 to C-4 and T-1 to T-4.)10

The information from SORTS and ESORTS is of limited value in measuring readiness, for several reasons: 

B The ratings are done under the supervision of units’ commanding officers, who are 

not independent observers; 

B The time at which the ratings would, in principle, be most informative (immediately before a unit deploys) is the time at which the incentives for commanding 

officers to rate the unit as fully ready are the strongest—because the unit cannot 

deploy if the rating is too low; and

B The tasks that are evaluated may not accurately reflect the units’ wartime roles. 

(For example, units designed for traditional armored combat are currently 

deployed to Afghanistan to undertake the very different mission of counterinsurgency. Their standard mission-essential tasks may not match the new 

mission well.)

The information about readiness that DoD regularly provides to the Congress as part 

of its budget requests is, for the most part, different from what SORTS provides and 

even more limited. In most cases, the budget requests describe the size of forces (for 

example, the personnel levels and number of pieces of major equipment) or the “output” produced (the number of tons of equipment shipped, for instance). The measure 

used for field training of operational units—known as operational tempo, or 

optempo—is included in the requests, but it describes the units’ activities only generally (for example, in terms of underway days for ships, flying hours for aircraft squadrons, and miles driven by tanks or other vehicles for ground units). How those metrics 

relate to the readiness levels in SORTS is not specifically stated in many of the 

requests. In short, the information in DoD’s budget requests constitutes an assessment of some of the activities that could lead to a high degree of readiness among 

units but does not directly reflect the units’ ability to perform their missions. That 

lack of data leaves policymakers without the means to judge whether an increase or 

decrease in those activities would affect units’ readiness.

Identifying DoD’s Operation and Maintenance Spending for 

Unit Readiness

Even if the readiness of the military services’ various units could be measured effectively, the challenge of estimating the linkage between readiness and DoD’s O&M 

10. DoD continues to revise its readiness reporting and is in the process of implementing the Defense 

Readiness Reporting System, which incorporates ESORTS and is designed to provide moredetailed information about each unit’s resources and training. That new system is the subject of a 

forthcoming CBO study and is not discussed here.
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CBO

spending would remain. That challenge derives in part from the difficulty of identifying the amounts of money that DoD is allocating to activities intended to enhance 

readiness. 

The activities that O&M spending supports differ in how closely tied they are to readiness. CBO identified a portion of O&M funding that it considered mission related 

and thus more directly linked to readiness than other O&M spending. Nevertheless, 

infrastructure-related spending also supports readiness, albeit less directly. Moreover, 

some aspects of units’ readiness are related to funding for purposes other than O&M. 

For example, a unit’s total resources for personnel depend on funds from the military 

personnel appropriation, and whether a unit has sufficient tanks or trucks reflects current and historical appropriations for procurement.

Identifying the total amount that DoD spends on unit readiness is also complicated 

by the ongoing operations in Iraq, Afghanistan, and other countries. The historical 

data that DoD provides to the Congress about actual O&M spending commingles 

the funding appropriated for those overseas contingency operations with the money 

appropriated for the base (nonwar) budget. The additional funding for those operations has supported U.S. military forces overseas by covering costs for food, housing, 

and security; fuel, spare parts, and maintenance for military equipment; transportation of personnel and equipment to and from the theater of operations; and other services. Those costs are incurred primarily because the units are deployed for operations 

overseas; the funds are not, for the most part, intended to promote readiness. Commingling that additional spending with base budget appropriations in the reported 

data makes it particularly difficult to identify how much DoD has spent on readinessrelated activities during the past eight years.

Using Empirical Methods to Estimate How Changes in 

Operation and Maintenance Spending Might Affect 

Unit Readiness 

Better information about the relationship between the amount of O&M spending 

and military units’ readiness would enable policymakers to make more-informed decisions about the types and amounts of funding to provide for O&M during the appropriation process. One avenue for providing such information is through statistical 

analyses that examine the effects on readiness of changes in O&M spending. Studies 

of that kind are complicated, however, because previous assessments of readiness may 

affect the spending allocated to each unit. For example, a preliminary assessment of a 

unit’s readiness for deployment may have indicated some gaps. DoD might then 

direct more resources to that unit to boost its readiness in time for its deployment, 

transferring the resources from a unit whose preliminary assessment indicated a high 

level of readiness. As a result of the transfer, DoD could consider both units to have a 

high degree of readiness before deploying, and there would be no observed correlation 

of readiness with overall spending. Yet it would be a mistake to conclude that spending in such a case did not matter.
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CBO found evidence that was consistent with such shifting of resources in its statistical analyses of the factors associated with training ratings in SORTS. In particular, the 

imminence of deployment was more strongly associated with units’ readiness than 

were other factors (such as underway days for ships, expenditures on materials that the 

units consumed, or hours spent in maintaining their equipment). That is, units 

tended to increase their training and improve their T-ratings as their deployment date 

approached. That finding is consistent with DoD’s often-observed practice of giving 

units with an upcoming deployment priority in securing resources for training and 

supplies. That practice, though sensible, complicates statistical analyses to isolate the 

effects of overall O&M spending on readiness.

To accurately identify those effects at the unit level, DoD would have to compare the 

readiness of otherwise similar units that received different amounts of O&M funding. 

DoD could measure the contribution to readiness as, say, the increase in the percentage of mission-essential tasks completed per million dollars of spending. If the 

amounts available to otherwise similar units were methodically varied for reasons 

unrelated to their readiness, DoD could then determine the contributions made by 

different types of spending. For example, spending for training that involved driving a 

tank some specified number of miles might enhance readiness, whereas spending for 

training that involved continuing to drive the tank for additional miles might have 

less of an effect. Such information would have immediate value to DoD if the department used it to reallocate funding more efficiently among its units and training programs and thus enhance the total performance of all of them. 

The military services conduct exercises or similar kinds of training activities during 

which a unit is formally evaluated by staff from its higher-level headquarters. (An 

example is the large-scale force-on-force training conducted at the Army’s National 

Training Center.) The scenarios employed in that training are usually tailored to 

emphasize areas of particular interest to the unit’s commander. If, for units with varying amounts of training resources, DoD combined realistic training scenarios with a 

rigorous, comprehensive evaluation of a unit’s performance, those exercises could 

illustrate how changes in the resources available to a unit would affect its readiness. 

The Army, for example, could measure the effect of training resources on readiness in 

different ways. It could identify the natural variation in the training resources that 

units receive at their home stations in the period leading up to their NTC rotation 

and measure the level of proficiency in particular mission-essential tasks that they display at the NTC. The Army could then analyze the relationship between the resources 

that the units used before their visit to the center and their demonstrated performance. It is unclear, however, whether the quality of the data produced by studying 

that natural variation in resources would be sufficient to determine a linkage to readiness. Alternatively, the Army could explicitly vary the resources provided to some 

units at their home stations and measure the effects on their performance at the NTC. 

The other military services have similarly realistic multiunit training exercises that 
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CBO

might offer a setting for measuring the effects on readiness of varying levels of 

resources.

Other parts of the federal government use empirical methods to assess the effectiveness or capacity of programs to achieve their stated goals. Researchers in other 

federal agencies have conducted experiments that apply policy interventions—such 

as a change in the amount of certain resources—to groups of people and then formally evaluated the degree to which those interventions led to different outcomes 

among the groups. (For example, the Institute of Education Sciences evaluates the 

effectiveness of federal and other education programs and collects that information in 

its online What Works Clearinghouse. The Department of Labor maintains a research 

and evaluation inventory and an online library of studies of the effectiveness of its job 

training and other programs.)11 In other instances, such evaluations are specified in 

legislation, as was the case with the Medicare, Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 2000. (That law mandated a so-called demonstration project to test the effects of providing varying financial incentives to group 

practices of physicians to improve the quality and efficiency of the care they deliver to 

their Medicare patients.) DoD could adapt the body of knowledge gained from such 

research and apply it to assessments of the readiness of military units. 

Given the complexities of military combat, the wide variety of mission-essential tasks 

that the armed forces undertake, and the range of conditions under which those tasks 

might be performed, measurements of military readiness may be more complicated 

than the measurements mentioned in the examples above. To better understand the 

factors that promote readiness, policymakers could direct DoD through legislation to 

conduct an independent evaluation of the subject (that is, by an entity that is not part 

of DoD) and report the results. In the past, the Congress has asked DoD about the 

effects that boosting the O&M funds for operational tempo might have on the readiness of U.S. forces. The type of information and analyses discussed in this document 

could enable DoD to better respond to such inquiries.

11. Additional information can be found at Institute of Education Sciences, http://ies.ed.gov; 

and Department of Labor, “Research and Evaluation Inventory and Documents Library,” 

www.dol.gov/asp/programs/reidl/.