United States Government Accountability Office

GAO Report to Congressional Committees

GLOBAL WAR ON 

TERRORISM 

Fiscal Year 2006 

Obligation Rates Are 

Within Funding Levels 

and Significant 

Multiyear 

Procurement Funds 

Will Likely Remain 

Available for Use in 

Fiscal Year 2007 

November 2006 

GAO-07-76 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2006

GLOBAL WAR ON TERRORISM 

Fiscal Year 2006 Obligation Rates Are 

Within Funding Levels and Significant 

Multiyear Procurement Funds Will Likely 

Remain Available for Use in Fiscal Year 

2007 

Highlights of GAO-07-76, a report to 

congressional committees 

Because of broad congressional 

interest, GAO is examining the 

costs of military operations in 

support of the Global War on 

Terrorism (GWOT) under the 

Comptroller General’s authority to 

conduct evaluations on his own 

initiative. In September 2005, GAO

reported the Department of

Defense (DOD) cannot ensure 

reported GWOT obligations are 

complete, reliable, and accurate, 

and recommended improvements. 

In this report, GAO (1) compared

supplemental and annual 

appropriations identified for GWOT 

in fiscal year 2006 to the military

services’ reported obligations as of 

June 2006 and their cost

projections for the remainder of 

the fiscal year, and (2) examined

DOD’s efforts to improve the 

reliability of GWOT obligation data. 

For this engagement, GAO 

analyzed fiscal year 2006 GWOT 

related appropriations and

reported obligations, and DOD’s 

corrective actions. 

What GAO Recommends

Because significant multiyear 

procurement funds from fiscal year 

2006 will likely remain available, 

GAO suggests Congress require 

DOD provide year-end data on fund 

availability and plans for additional

funds received or requested. DOD 

disagreed, noting, among other

things, it had already justified its 

needs. To ensure appropriate 

transparency, GAO continues to 

believe Congress needs updated

data on DOD’s plans.

As of June 2006, which represents 9 months (75 percent) of fiscal year 2006, 

the military services have reported obligating about $51.6 billion (55 percent) 

of the $93.3 billion they received for GWOT in supplemental and annual 

appropriations for military personnel, operation and maintenance, and 

procurement. Our analysis of reported obligations and the military services’ 

forecasts of their likely costs for fiscal year 2006 suggest that the rates of 

obligation for military personnel and operation and maintenance are within 

fiscal year 2006 GWOT funding levels and significant amounts of multiyear 

procurement funds will likely remain available for use in fiscal year 2007. 

The rates of obligation for military personnel are within funding levels for all 

military services except the Army, which plans to transfer about $591 million 

in funds from other appropriations accounts to cover its military personnel 

obligations. The rates of obligation for operation and maintenance are within 

funding levels for all military services. As of June, the military services 

reported obligating about 85 percent of military personnel funds and 60 

percent of operation and maintenance funds. For various reasons, most 

notably being that supplemental funds were not appropriated until June 

2006, the military services do not expect to obligate a large portion of 

procurement funds, which generally are available for multiple years, and 

therefore these funds will remain available in fiscal year 2007. The military 

services received about 32 percent ($6.8 billion) of procurement funding in 

annual appropriations and 68 percent ($14.7 billion) in the supplemental 

appropriation. As of June, the military services reported obligating about 68 

percent of the procurement funds received in the annual appropriation. 

DOD and the military services have taken specific steps intended to improve 

the accuracy and reliability of their reported GWOT obligation data. Some 

problems remain with transparency over certain costs and inaccuracies in 

reported obligations. In response to GAO’s prior recommendations, DOD 

now requires components to perform a monthly variance analysis to identify 

and explain significant changes in obligations and to attest to the accuracy 

of monthly obligation reports, and affirm it provides a fair representation of 

ongoing activities. Because these efforts are in the early stages of 

implementation, GAO has not fully evaluated their impact. Existing cost 

reporting procedures limit transparency of certain obligations because DOD 

continues to report large amounts in miscellaneous “other” categories. Also, 

DOD’s cost reports for fiscal year 2005 understated total GWOT obligations 

for that year because they did not initially include about $1.1 billion in 

obligations tied to the training and equipping of Afghan and Iraqi security 

forces. Without transparent and accurate cost reporting, Congress and DOD 

will continue to be unable to reliably know how much the war is costing, 

examine details on how appropriated funds are being spent, or have 

historical data useful in considering future funding needs. On the basis of 

GAO’s work, DOD updated its guidance on the reporting of obligations in 

miscellaneous “other” categories and revised its September 2005 cost-of-war 

report to more fully reflect past obligations. 

www.gao.gov/cgi-bin/getrpt?GAO-07-76.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Sharon Pickup 

at (202) 512-9619 or pickups@gao.gov. 
Contents 

Letter 1

Results in Brief 4

Background 8

Fiscal Year 2006 Rates of Obligations Are Within Funding Levels 

and Significant Multiyear Procurement Funds Will Likely 

Remain Available for Use in Fiscal Year 2007 11 

DOD and the Military Services Have Taken Specific Steps Intended 

to Improve GWOT Cost Reporting Procedures and Data 

Reliability; Some Problems Remain 15 

Conclusions 23

Matter for Congressional Consideration 24 

Agency Comments and Our Evaluation 24 

Appendix I Scope and Methodology 29 

Appendix II DOD’s Process for Reporting GWOT Obligations 33 

Appendix III Comments from the Department of Defense 36 

Appendix IV GAO Contact and Staff Acknowledgments 39 

 

Tables 

Table 1: Fiscal Year 2006 Appropriations Identified for GWOT for 

the Military Services 9 

Table 2: DOD’s Six Largest Obligation Categories from Fiscal Year 

2001 through Fiscal Year 2006 (June) 20 

Table 3: DOD Supplemental and Cost of War Execution Report for 

Fiscal Year 2006 35 

Page i GAO-07-76 Global War on Terrorism
Figures 

Figure 1: Military Services’ Fiscal Year 2006 Reported GWOT 

Military Personnel Obligations of Appropriations 

Identified for GWOT through June 2006 12 

Figure 2: Military Services’ Fiscal Year 2006 Reported GWOT 

Operation and Maintenance Obligations of Appropriations 

Identified for GWOT through June 2006 13 

Figure 3: Military Services’ Fiscal Year 2006 Reported GWOT 

Procurement Obligations of Appropriations Identified for 

GWOT through June 2006 15 

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Page ii GAO-07-76 Global War on Terrorism
United States Government Accountability Office

Washington, DC 20548 

November 13, 2006 

Congressional Committees 

Since the September 11, 2001, terrorist attacks, Congress has provided the

Department of Defense (DOD) with about $381 billion, as of June 2006, in 

supplemental and annual appropriations for military operations both in the 

United States and overseas in support of the Global War on Terrorism 

(GWOT).1

 DOD received about $114.4 billion in appropriations for GWOT 

in fiscal year 2006, $49 billion of which was received in its annual 

appropriation and $65.4 billion of which came through a supplemental 

appropriation. The portion of annual appropriations for GWOT, also 

known as “Title IX” or “bridge” funding,2

 was provided to pay for ongoing 

military operations during the first part of the fiscal year. In June 2006, 

Congress passed a supplemental appropriation to provide funding for 

GWOT operations through the remainder of the fiscal year. Of the $114.4 

billion provided in fiscal year 2006, about $93.3 billion was appropriated to 

the military services for military personnel, operation and maintenance, 

and procurement. The remaining funds provided, about $21.1 billion, were 

for defensewide agencies; research, development, test, and evaluation; and 

military construction. In fiscal year 2006 through June, DOD reported total 

obligations of about $63 billion for GWOT, including about $54 billion for 

Operation Iraqi Freedom (OIF) and about $9 billion for Operation 

Enduring Freedom (OEF). 

DOD compiles and reports obligations3

 incurred to support GWOT in a 

monthly Supplemental and Cost of War Execution Report. This document 

is used by senior DOD leadership, along with other information, in 

evaluating the costs of the war and formulating future budget requests to 

fund GWOT. The document identifies the monthly and cumulative 

 1 For purposes of this report, GWOT refers to the ongoing military operations overseas. 

2

 Title IX is the section of the annual defense appropriation that outlines emergency 

spending provisions for operations in support of GWOT. 

3

 According to Department of Defense Financial Management Regulation, 7000.14-R, vol. 

1, Definitions, p. xvii (December 2001), obligations are incurred through actions such as

orders placed, contracts awarded, services received, or similar transactions made by

federal agencies during a given period that will require payments during the same or a

future period.

Page 1 GAO-07-76 Global War on Terrorism
reported incremental GWOT obligations. DOD reports these obligations by 

appropriation, contingency operation,

4

 and military service or defense 

agency. According to Volume 12, Chapter 23 of the DOD Financial 

Management Regulation, the monthly cost reports are typically compiled 

in the 45 days after the end of the reporting month in which the obligations 

are incurred.

5

 DOD has prepared monthly reports on the obligations 

incurred for its involvement in GWOT since fiscal year 2001. 

We have conducted a series of reviews under the Comptroller General’s 

authority examining the reported obligations and funding for military 

operations in support of GWOT. In July 2004, we issued a report stating 

that large amounts of DOD’s obligations were being reported in 

miscellaneous “other” categories, which provided little insight into how 

those funds had been spent.6

 In September 2005, we issued a report 

identifying numerous reliability issues with DOD’s reported GWOT 

obligation data, which make it difficult for DOD and Congress to know 

reliably how much the war is costing, examine details on how 

appropriated funding is being spent, or have historical data useful in 

considering future funding needs.7

 Over the years, we have made a series

of recommendations to the Secretary of Defense intended to improve the 

transparency and reliability of DOD’s GWOT obligation data, including 

recommendations that DOD (1) revise the cost reporting guidance so that 

large amounts of reported obligations are not shown in “miscellaneous” 

categories, and (2) take steps to ensure that reported GWOT obligations 

are reliable. In response, the Department has implemented many of our 

previous recommendations. 

 4

 DOD defines contingency operations to include small, medium, and large-scale campaignlevel military operations, including support for peacekeeping operations, major 

humanitarian assistance efforts, noncombatant evacuation operations, and international 

disaster relief efforts. 

5

 Volume 12, Chapter 23 of DOD’s Financial Management Regulation, 7000.14R generally 

establishes financial policy and procedures related to DOD contingency operations. 

Volume 6A, Chapter 2 and Volume 3, Chapter 8 of the DOD Financial Management 

Regulation also include provisions to ensure the accuracy of cost reporting. 

6

 GAO, Military Operations: Fiscal Year 2004 Costs for the Global War on Terrorism Will 

Exceed Supplemental, Requiring DOD to Shift Funds from Other Uses, GAO-04-915

(Washington, D.C.: July 21, 2004). 

7

 GAO, Global War on Terrorism: DOD Needs to Improve the Reliability of Cost Data and 

Provide Additional Guidance to Control Costs, GAO-05-882 (Washington, D.C.: Sept. 21,

2005). 

Page 2 GAO-07-76 Global War on Terrorism
To assist Congress in its oversight role and to help it consider future 

GWOT funding needs, we prepared this report under the Comptroller 

General’s authority to conduct evaluations on his own initiative. In it we 

assess the outlook of fiscal year 2006 reported GWOT obligations and 

funding based on data through June 2006, and determine DOD’s progress 

in addressing problems we identified regarding the reliability of DOD’s 

reported GWOT obligation data. We (1) compared supplemental and 

annual appropriations identified for GWOT in fiscal year 2006 to the 

military services’ reported obligations as of June 2006 and their cost 

projections for the remainder of the fiscal year, and (2) examined the 

extent to which DOD has taken steps to improve its cost reporting 

procedures and the reliability of its reported GWOT obligation data. 

To compare the military services’ reported obligations against available 

funding appropriated for GWOT in fiscal year 2006, we analyzed copies of

DOD’s monthly Supplemental and Cost of War Execution Report for 

October 2005 through June 2006 and reviewed applicable supplemental 

and annual appropriations and DOD reports on the transfer of funds 

between various appropriation accounts. We also interviewed key officials 

from the Office of the Under Secretary of Defense (Comptroller)8

 and the 

Army, Navy, Marine Corps, and Air Force to determine if their projected 

GWOT obligations are within fiscal year 2006 funding levels. As previously 

reported, we found the data in DOD’s monthly Supplemental and Cost of 

War Execution Report to be of questionable reliability. Consequently, we 

are unable to ensure that DOD’s reported obligations for GWOT are 

complete, reliable, and accurate, and they should therefore be considered 

approximations. In addition, as recently as November 2005, DOD 

acknowledged that systemic weaknesses with its financial management 

systems and business operations continue to impair its financial 

information. To examine the steps DOD has taken to improve the 

reliability of its reported GWOT obligations, we interviewed key officials 

from the DOD Comptroller and the Army, Navy, Marine Corps, and Air 

Force to determine the extent to which our previous recommendations 

have been implemented. We also reviewed any new guidance issued by 

DOD regarding the analysis and reporting of obligations for contingencies. 

In addition, we performed limited testing of the reported GWOT 

obligations for military personnel and discussed with DOD and military 

service financial managers their specific processes and procedures used to 

 8

 For purposes of this report, we refer to the Office of the Under Secretary of Defense

(Comptroller) as the DOD Comptroller. 

Page 3 GAO-07-76 Global War on Terrorism
ensure that reported GWOT obligation data provided by the subordinate 

commands are accurate and reliable. 

We performed our work from January 2006 through September 2006 in 

accordance with generally accepted government auditing standards. 

As of June 2006, which represents 9 months (75 percent) of fiscal year 

2006, the military services reported obligating about $51.6 billion (55 

percent) of the $93.3 billion they received for GWOT in supplemental and 

annual appropriations for military personnel, operation and maintenance, 

and procurement. Our analysis of reported obligations and the military 

services’ forecasts of their likely costs for fiscal year 2006 suggest that the

rates of obligation for military personnel and operation and maintenance 

are within fiscal year 2006 GWOT funding levels and significant amounts 

of multiyear procurement funds will likely remain available for use in 

fiscal year 2007. As of June, the military services reported obligating about 

85 percent of military personnel funds and 60 percent of operation and 

maintenance funds. Fiscal year 2006 rates of obligation for military 

personnel for GWOT are within GWOT funding levels for all military 

services except the Army. According to military service officials, the Army 

experienced higher than anticipated obligations for military personnel due 

primarily to increased recruitment and retention incentives offered to 

assist in manning the force during GWOT and increased death gratuity 

benefits provided in the National Defense Authorization Act for fiscal year 

2006. The Army expects to be able to cover these obligations by 

transferring about $591 million in funds from other appropriations 

accounts into the military personnel account under authority granted by 

Congress.9

 In addition, the military services’ rates of obligation for 

operation and maintenance for GWOT are within fiscal year 2006 GWOT 

funding levels for all military services. According to military service 

officials, operation and maintenance obligations in June 2006 were lower 

than anticipated due to reduced spending relating to contracts and certain 

operations bills. For example, the Army reduced spending on contracts for 

Results in Brief 

 9

 DOD uses “transfer authority” to shift funds between appropriation accounts, for 

example, between military personnel and operation and maintenance. Transfer authority is

granted by Congress to DOD usually pursuant to specific provisions in authorization or

appropriation acts. The ability to shift funds within a specific appropriation account, like 

operation and maintenance, is referred to as “reprogramming.” In general, DOD does not 

need statutory authority to reprogram funds within an account as long as the funds to be

spent would be used for the same general purpose of the appropriation and the 

reprogramming does not violate any other specific statutory requirements or limitations. 

Page 4 GAO-07-76 Global War on Terrorism
selected base closures and restructuring in Iraq because of the security 

environment and uncertainty regarding receipt of supplemental funding. 

Furthermore, for fiscal year 2006, GWOT-related procurement funds are 

expected to remain largely unobligated by the end of the fiscal year, and 

will remain available in fiscal year 2007. Procurement funds appropriated 

in one fiscal year may remain available in future fiscal years because they 

are available for obligation over multiple years. For fiscal year 2006, the 

military services received about 32 percent ($6.8 billion) of procurement 

funding in Title IX as part of the annual appropriation and 68 percent 

($14.7 billion) in the supplemental appropriation. As of June, the military 

services have spent about 68 percent of the procurement funds received 

through Title IX. Given the time required to negotiate new procurement 

contracts, military service officials stated that they were prevented from 

obligating much of their procurement funds received in the supplemental 

appropriation prior to the end of the fiscal year and therefore expect 

reported monthly procurement obligations to be higher in the last month 

of fiscal year 2006 and in early fiscal year 2007. However, given that at the 

time of this report DOD had only reported obligations through June 2006, 

we were unable to determine how much funding would remain at the end 

of the fiscal year. Since it is likely that much of the procurement funding 

from fiscal year 2006 will remain available in fiscal year 2007, knowledge 

of what those available amounts are and how DOD plans to spend them 

would assist congressional decision makers in determining DOD’s future 

funding needs. 

DOD and the military services have taken specific steps intended to 

improve the accuracy and reliability of their reported GWOT obligation 

data. Some problems remain with transparency over certain costs and 

inaccuracies in reported obligations. In response to our previous 

recommendation to improve the accuracy and reliability of reported 

GWOT obligation data, in August 2005 the DOD Comptroller issued 

guidance10 to the secretaries of the military services and the directors of 

the defense agencies to help DOD components11 more accurately and 

consistently report obligations for contingencies such as GWOT. This 

guidance directed DOD components to perform a monthly variance 

analysis to review and validate that their reported obligations are accurate 

and provide a fair representation of ongoing activities, and to include an 

 10 DOD Comptroller, Memorandum: Analysis of Contingency Operation Costs (Aug. 30,

2005). 

11 “Components” refers to all military services and DOD agencies. 

Page 5 GAO-07-76 Global War on Terrorism
explanation of variances that exceed a certain threshold. The DOD 

Comptroller also issued guidance directing submitting DOD components 

to attest to the accuracy of their monthly obligation data contained in 

DOD’s Supplemental and Cost of War Execution Report and affirm that 

the report provides a fair representation of ongoing activities. Because 

these efforts are in the early stages of implementation, we have not fully 

evaluated their impact. The Army also made improvements to the 

accuracy of its imminent danger pay reporting shortly after the issuance of

our September 2005 report and DOD’s guidance regarding the analysis of 

contingency operations costs. In addition to these efforts, further 

improvements are needed in the cost reporting process. For example, 

existing cost reporting procedures limit the visibility over or transparency 

of certain obligations because DOD continues to report large amounts of 

obligations in miscellaneous “other” categories. For example, in fiscal year 

2005, about $12.8 billion (or 26 percent of all obligations) reported in the 

operation and maintenance account were in “other supplies and 

equipment” and “other services and miscellaneous contracts.” This trend 

has continued in fiscal year 2006. Little has been done DOD-wide to 

further refine reporting of these miscellaneous obligations in DOD’s costof-war reports, although the Army has taken some steps at the 

headquarters level to reduce the amounts reported in these “other” 

categories by revising its reporting methodology to redirect some of the 

obligations into reporting categories that more closely describe the 

obligations. Moreover, while the components have taken steps to improve 

their reporting of GWOT obligations, as required by DOD’s financial 

management regulation, inaccuracies in DOD’s reported obligations 

continue to exist. For example, we found that DOD’s cost-of-war reports 

understated total GWOT obligations because they did not include about 

$1.1 billion in obligations for fiscal year 2005 tied to the training and 

equipping of Afghan and Iraqi security forces. According to DOD officials, 

because the funds for these purposes became available later in the fiscal 

year, DOD did not have a reporting format in the cost-of-war reports for 

these obligations and planned to amend its September 2005 cost-of-war 

report at some point to reflect them. Without transparent and accurate

reporting of GWOT obligations, the public, Congress, and DOD will 

continue to be unable to reliably know how much the war is costing, 

examine details on how appropriated funds are being spent, or have 

historical information useful in determining future funding needs. 

In a draft of this report, we made two recommendations to DOD to 

improve the transparency and accuracy of its cost reporting. DOD agreed 

with one recommendation to revise Volume 12, Chapter 23 of the DOD 

Financial Management Regulation to provide additional subcategories 

Page 6 GAO-07-76 Global War on Terrorism
for “other supplies and equipment,” “other services and miscellaneous 

contracts,” and “other military personnel” to provide further breakdown of 

reported obligations in miscellaneous categories and, in fact, in October 

2006, issued a revision to Chapter 23 to provide such breakdowns. We 

believe this meets the intent of our recommendation and removed the 

recommendation from the final report. DOD disagreed with the basis of a 

second recommendation to amend the September 2005 version of DOD’s 

Supplemental and Cost of War Execution Report to include the 

unreported Afghan and Iraqi security forces fund obligations for fiscal year 

2005. In its comments, DOD stated that this information was provided to 

Congress in another report and therefore did not agree with our 

observation that the costs were “understated”. DOD also stated it had 

revised its September 2005 cost-of-war report to reflect these obligations.

However, since DOD has already issued and provided us with an amended 

September 2005 cost-of-war report including the about $1.1 billion in fiscal 

year 2005 obligations, we believe this fulfills the intent of our 

recommendation and removed the recommendation from the final report. 

DOD’s comments and our evaluation of them can be found at the end of 

this report. DOD’s comments are reprinted in appendix III. 

In addition, since it is likely significant multiyear procurement funding 

from fiscal year 2006 will remain available in fiscal year 2007, we have 

included a matter for congressional consideration. Congress should 

consider requiring DOD to provide information on how much procurement 

funding remains available for obligation at the conclusion of the fiscal year 

and how the department intends to obligate this funding and any other 

procurement funding received or requested for GWOT in fiscal year 2007

and beyond. DOD also did not agree with our matter for congressional 

consideration, stating that it has plans for reconstituting forces deployed 

in the war on terror and that it is not reasonable to infer that these funds 

are available for other purposes. We do not believe that our report implies 

that any previously appropriated procurement funding is available for 

other purposes. On the contrary, we stated that significant multiyear 

funds will remain available at the end of fiscal year 2006 for procurement 

purposes. Given that DOD received more procurement funding with the 

enactment of the fiscal year 2007 defense appropriation and authorization 

bills and is expected to request more in a fiscal year 2007 supplemental 

appropriation, we believe it is important that Congress have a complete 

picture of all funding DOD has available for procurement purposes when 

considering future appropriations requests from DOD and have retained 

the matter. 

Page 7 GAO-07-76 Global War on Terrorism
After the terrorist attacks of September 11, 2001, the President announced 

a Global War on Terrorism requiring the collective instruments of the 

entire federal government to counter the threat of terrorism. Military 

operations to combat terrorism began with Operation Noble Eagle, which 

is aimed at defending the United States homeland against terrorist attacks, 

and Operation Enduring Freedom (OEF), which takes place principally in 

and around Afghanistan, but also covers additional operations in the Horn 

of Africa, the Philippines, and elsewhere.12 In 2003, the United States began 

Operation Iraqi Freedom (OIF), which takes place principally in Iraq. 

These operations involve a wide variety of activities such as combating 

insurgents, training the military forces of other nations, and conducting 

small-scale reconstruction and humanitarian relief projects. DOD and the 

military services are responsible for carrying out these operations. 

Background 

To fund these operations in fiscal year 2006, Congress provided DOD with 

funding for GWOT as part of its annual appropriations, known as “Title IX” 

or “bridge” funding, and through supplemental appropriations. This 

funding totaled about $114.4 billion, of which about $93.3 billion went to 

the military services’ three major appropriations accounts: military 

personnel, operation and maintenance, and procurement. The remaining 

funds provided, about $21.1 billion, were for defensewide agencies; 

research, development, test and evaluation; and military construction. As 

shown in table 1, the military services received about $15.9 billion for 

military personnel, about $55.9 billion for operation and maintenance, and 

about $21.5 billion for procurement. 

 12 From fiscal year 2001 through fiscal year 2004, military operations in defense of the 

homeland were funded through supplemental appropriations. Since fiscal year 2005, DOD 

has funded these operations through its regular annual budget. 

Page 8 GAO-07-76 Global War on Terrorism
Table 1: Fiscal Year 2006 Appropriations Identified for GWOT for the Military Services 

Dollars in billions 

 Army Navy Marine Corps Air Force Totals

Military personnel 

Title IX $ 5.1 $ 0.1 $ 0.5 $ 0.5 

Supplemental 6.8 0.9 0.8 1.2 

Total 11.9 1.0 1.3 1.7 $ 15.9 

 

Operation and maintenance

Title IX 21.6 1.8 1.9 2.5 

Supplemental 18.0 2.8 1.7 5.6 

Total 39.6 4.6 3.6 8.1 55.9 

 

Procurement 

Title IX 4.6 0.3 1.7 0.1 

Supplemental 9.0 1.0 2.6 2.2 

Total 13.6 1.3 4.3 2.3 21.5 

Grand total 93.3

Source: GAO analysis of Pub. L. No. 109-148 (2005) and Pub. L. No. 109-234 (2006). 

Note: Totals may not compare to those in the report due to rounding. 

In addition to the funds appropriated to the military services, since 2003 

Congress has also appropriated funds to the Iraqi Freedom Fund (IFF), a 

special account providing funds available for 2 fiscal years and that can be

transferred to the military services’ appropriations accounts. DOD may 

transfer funds from the IFF to other accounts to cover additional expenses 

for ongoing military operations in Iraq, operations authorized by the 

Authorization for Use of Military Force,13 and other operations and related

activities in support of GWOT. In fiscal year 2006 through June, DOD had 

transferred about $3.7 billion of the funds originally appropriated to the 

IFF into the military services’ appropriations accounts, most of which 

were to cover the expenses for classified programs and to defeat 

improvised explosive devices. 

For fiscal year 2006 through June, DOD has reported total obligations of 

about $63 billion for GWOT, including about $54 billion for OIF and about

 13 Pub. L. No. 107-40 (Sept. 18, 2001). 

Page 9 GAO-07-76 Global War on Terrorism
$9 billion for OEF. DOD began the fiscal year operating under a continuing

resolution14 and legislation providing the $49 billion bridge funding was not 

passed until December 2005, causing the services to curtail spending early

in the fiscal year. Additionally, military service officials stated they had 

anticipated receiving supplemental appropriations in May, but since this 

funding was not appropriated until June, the military services took steps 

to reduce costs until supplemental funds were received, including 

postponing payment of bills and delaying certain maintenance activities.

Appendix II contains an explanation of DOD’s process for reporting 

obligations.

Between September 2001 and June 2006, Congress provided DOD with 

about $381 billion in supplemental and annual appropriations for military 

operations in support of GWOT. DOD reported total obligations15 of about

$287 billion for overseas GWOT-related activities from September 2001 

through June 2006, including about $227 billion for operations in Iraq and

about $60 billion for operations in Afghanistan, the Horn of Africa, the 

Philippines, and elsewhere. In addition to overseas obligations, DOD 

reported about $27.7 billion in obligations related to defense of the U.S. 

homeland from 2001 through June 2006. 

 14 A continuing resolution is a joint resolution enacted by Congress, providing budget 

authority for federal agencies and programs to continue in operation until the regular 

appropriations acts are enacted. 

15 DOD’s reported obligations do not include obligations for classified activities, which are

not captured in DOD’s monthly Supplemental and Cost of War Execution Report. 

However, on the basis of conference reports for various supplemental appropriations acts, 

the Congressional Budget Office estimates those costs are at least $25 billion. 

Page 10 GAO-07-76 Global War on Terrorism
Our analysis of reported obligations and the military services’ forecasts of 

their likely costs for fiscal year 2006 suggest that the rates of obligation for 

military personnel and operation and maintenance are within fiscal year 

2006 GWOT funding levels and significant amounts of multiyear 

procurement funds will likely remain available for use in fiscal year 2007. 

As of June, the military services reported obligating about 85 percent of 

military personnel funds and 60 percent of operation and maintenance 

funds. Fiscal year 2006 rates of obligation for military personnel for GWOT 

are within GWOT funding levels for all military services except the Army, 

due primarily to increased recruitment and retention incentives offered by 

the Army to assist in manning the force during GWOT and increased death 

gratuity benefits provided in the National Defense Authorization Act for 

fiscal year 2006. The military services’ rates of obligation for operation and 

maintenance for GWOT are within fiscal year 2006 GWOT funding levels 

for all military services, although they curtailed spending in multiple 

categories due to uncertainty relating to receipt of supplemental funding.

For fiscal year 2006, the GWOT procurement funds appropriated to the 

military services are largely expected to remain unobligated and will 

remain available in fiscal year 2007. Procurement funds may remain 

available in future fiscal years because they are available for obligation 

over multiple years. 

Fiscal year 2006 rates of obligation for military personnel for GWOT are 

within GWOT funding levels for all military services except the Army. The 

Army experienced higher than anticipated obligations for military 

personnel due primarily to increased recruitment and retention incentives 

offered to assist in manning the force during GWOT and increased death 

gratuity benefits provided in the National Defense Authorization Act for 

fiscal year 2006. To avoid a problem in the last quarter of the fiscal year, 

the Army included a transfer action in the so-called fiscal year 2006 

omnibus reprogramming request DOD submitted to Congress. This action 

transfers about $591 million in funds from various appropriation accounts 

to the Army’s military personnel account and fund the Army’s remaining 

military personnel needs for fiscal year 2006. As figure 1 shows, after 9 

months, or 75 percent of the fiscal year, the Army reported obligations of 

91 percent, the Navy 63 percent, the Marine Corps 72 percent, and Air 

Force 68 percent of available GWOT appropriations. 

Fiscal Year 2006 Rates 

of Obligations Are 

Within Funding Levels

and Significant 

Multiyear 

Procurement Funds 

Will Likely Remain 

Available for Use in 

Fiscal Year 2007 

Fiscal Year 2006 Rates of 

Obligation for Military 

Personnel for GWOT Are 

Within GWOT Funding 

Levels for All Military 

Services Except the Army 

Page 11 GAO-07-76 Global War on Terrorism
Figure 1: Military Services’ Fiscal Year 2006 Reported GWOT Military Personnel 

Obligations of Appropriations Identified for GWOT through June 2006 

0

10

20

30

40

50

60

70

80

90

100

Army Navy Marine Air Force

Percent

Military services

Fiscal year 2006 appropriations identified for GWOT remaining unobligated

Fiscal year 2006 reported obligations through June 2006

Source: GAO analysis of DOD data.

$1,075

$10,851

$381

$655

$365

$941

$540

$1,130

June

Notes: June 2006 represents 75 percent of the fiscal year and is an indication of where DOD would 

be if it had obligated its available funding equally each month throughout the fiscal year. Reported 

obligations include those from both the active and reserve components. We have previously 

assessed the reliability of DOD’s obligations data and found that while the data we report reflect the 

data used by DOD to advise Congress on the cost of the war, they may not accurately reflect the true

dollar value of GWOT obligations.

Fiscal Year 2006 Rates of 

Obligation for Operation 

and Maintenance for 

GWOT Are Within Fiscal 

Year 2006 GWOT Funding 

Levels for All Military 

Services 

The military services’ rates of obligation for operation and maintenance 

for GWOT are within fiscal year 2006 GWOT funding levels for all military 

services. As shown in figure 2, after 9 months, or 75 percent of the fiscal 

year, the Army reported obligations of 61 percent, the Navy 49 percent, the 

Marine Corps 58 percent, and the Air Force 62 percent of available GWOT 

appropriations. The military services’ reported GWOT operation and 

maintenance obligations are less than anticipated because they curtailed 

spending at the beginning of the year due to uncertainty relating to the 

receipt of supplemental funding. For example, sustainment contracts in 

Iraq, Afghanistan, and Kuwait were scaled back due to the unpredictability 

of fiscal year 2006 funding. In addition, Army officials stated that contracts 

for selected base closures and restructuring in Iraq have been scaled back

due to the security environment. As previously stated, the Navy is 

Page 12 GAO-07-76 Global War on Terrorism
reporting lower than anticipated obligations for operation and

maintenance because many Navy components took steps to reduce 

spending early in the fiscal year. For example, Navy officials stated that 

they withheld payment of certain operations bills, such as transportation, 

and deferred obligations for depot maintenance to stay within available

funding as the military services awaited receipt of supplemental funding. 

Figure 2: Military Services’ Fiscal Year 2006 Reported GWOT Operation and

Maintenance Obligations of Appropriations Identified for GWOT through June 2006

0

10

20

30

40

50

60

70

80

90

100

Army Navy Marine Air Force

Percent

June

Military services

Fiscal year 2006 appropriations identified for GWOT remaining unobligated

Fiscal year 2006 reported obligations through June 2006

Source: GAO analysis of DOD data.

$15,609

$23,994

$2,331

$2,261

$1,509

$2,080

$3,079

$5,042

Notes: June 2006 represents 75 percent of the fiscal year and is an indication of where DOD would 

be if it had obligated its available funding equally each month throughout the fiscal year. Reported 

obligations include those from both the active and reserve components. We have previously 

assessed the reliability of DOD’s obligations data and found that while the data we report reflect the 

data used by DOD to advise Congress on the cost of the war, they may not accurately reflect the true

dollar value of GWOT obligations.

Page 13 GAO-07-76 Global War on Terrorism
For fiscal year 2006, the GWOT procurement funds appropriated to the 

military services are largely expected to remain unobligated and will 

remain available in future fiscal years. Procurement funds can remain 

available for future fiscal years because they generally are available for 

obligation over multiple years. For fiscal year 2006, the military services 

received about 32 percent ($6.8 billion) of procurement funding in Title IX

as part of the annual appropriation and 68 percent ($14.7 billion) in the 

supplemental appropriation. As of June the military services have spent 

about 68 percent of the procurement funds received through Title IX. 

GWOT Appropriations for 

Procurement in Fiscal Year 

2006 Will Largely Remain 

Unobligated and Remain 

Available for Future Fiscal 

Years 

We project that DOD’s procurement obligations will remain low in fiscal 

year 2006 for two reasons. First, the majority of the fiscal year 2006 

procurement appropriations were provided in the GWOT supplemental 

appropriation, which the military services did not receive until June 2006. 

Second, officials stated that supplemental funds had been expected in May 

2006 but were not received until June 2006 and the time required to 

negotiate new procurement contracts may prevent the military services 

from obligating much of their procurement funds prior to the end of fiscal

year 2006. As a result, significant procurement funds will remain available 

in fiscal year 2007. Figure 3 shows, the percentage of the total available

GWOT procurement appropriations obligated through June 2006. 

According to military service officials, they expect higher procurement 

obligations late in fiscal year 2006 and into early fiscal year 2007. At the 

time of this report, DOD had only reported obligations through June 2006; 

therefore, we were unable to determine how much funding would remain 

at the end of the fiscal year. DOD received more procurement funding with 

the enactment of the fiscal year 2007 defense appropriation bill. Since it is 

likely that much of the procurement funding from fiscal year 2006 will 

remain available in fiscal year 2007, knowledge of what those available 

amounts are and how DOD plans to spend them would assist 

congressional decision makers in determining DOD’s future funding needs. 

Page 14 GAO-07-76 Global War on Terrorism
Figure 3: Military Services’ Fiscal Year 2006 Reported GWOT Procurement 

Obligations of Appropriations Identified for GWOT through June 2006

0

10

20

30

40

50

60

70

80

90

100

Army Navy Marine Air Force

Percent

Military services

Fiscal year 2006 appropriations identified for GWOT remaining unobligated

Fiscal year 2006 reported obligations through June 2006

Source: GAO analysis of DOD data.

$10,057

$3,503

$1,135

$159

$3,410

$878

$2,245

$110

Notes: Reported obligations include those from both the active and reserve components. We have 

previously assessed the reliability of DOD’s obligations data and found that while the data we report

reflect the data used by DOD to advise Congress on the cost of the war, they may not accurately 

reflect the true dollar value of GWOT obligations. 

DOD and the military services have taken specific steps intended to 

improve the accuracy and reliability of their reported GWOT obligation 

data. Some problems remain with transparency over certain costs and 

inaccuracies in reported obligations. The DOD Comptroller has 

established new monthly variance reporting and affirmation requirements, 

and the military services have improved the accuracy of some of their 

reported obligations. In addition to these efforts, further improvements are 

needed in the cost reporting process. For example, existing cost reporting 

procedures do not provide transparency and visibility over certain GWOT 

obligations because DOD and the military services continue to report large 

obligations in miscellaneous “other” categories that provide little insight 

on how those funds have been spent. We also continue to find

inaccuracies in the overall reported GWOT obligations due to unreported 

obligations related to the training and equipping of Afghan and Iraqi 

security forces. Until DOD takes steps to address these problems, it will 

DOD and the Military 

Services Have Taken 

Specific Steps 

Intended to Improve 

GWOT Cost Reporting 

Procedures and Data 

Reliability; Some 

Problems Remain 

Page 15 GAO-07-76 Global War on Terrorism
continue to be difficult for Congress and DOD to reliably know how much

the war is costing, examine details on how appropriated funds are being 

spent, or have historical information useful to determine future funding 

needs. 

DOD and the Military 

Services Have Established 

New Monthly Variance 

Reporting and Affirmation 

Requirements, and Have 

Improved the Accuracy of 

Some Reported Obligation 

Data 

The DOD Comptroller has established new monthly variance reporting and 

affirmation requirements intended to improve GWOT cost reporting 

procedures, and the military services have improved the accuracy of some 

reported obligations. Specifically, in response to our previous 

recommendation to improve the accuracy and reliability of reported 

GWOT obligation data, the DOD Comptroller, in August 2005, issued 

guidance16 to the secretaries of the military services and the directors of 

the defense agencies to help DOD components more accurately and 

consistently report obligations for contingencies such as GWOT. This 

guidance directed DOD components to perform a monthly variance 

analysis to review and validate that their reported obligations are accurate 

and provide a fair representation of ongoing activities, and to include an 

explanation of variances that exceed a certain threshold.17 Thresholds 

triggering the variance analysis review differ by cost category. 

DOD components were directed to use, to the fullest extent possible, 

actual obligation data as captured in the official accounting systems. When 

obligation data were not available in the accounting system, then an 

auditable alternative methodology was to be established providing 

explanation of all sources used to capture the data other than official 

accounting systems. For example, when using alternate data sources, 

DOD’s variance analysis guidance requires each DOD component to 

provide detail on the type or description of the cost, the cost category 

impacted, an explanation of why data are not available from the 

accounting system, a description of the criteria or methodology used to 

calculate costs, and the mechanism used to track these costs. Each of the 

military services directed its major and subordinate commands to 

complete the monthly variance analysis, and submit the analysis to the 

command level, where financial management officials are expected to 

review obligations data for discrepancies. In early fiscal year 2006, DOD 

 16 DOD Comptroller, Memorandum: Analysis of Contingency Operation Costs (Aug. 30,

2005). 

17 The DOD components submit their monthly variance reports to the Defense Finance and 

Accounting Service along with their reported obligation data.

Page 16 GAO-07-76 Global War on Terrorism
set up a task force under the leadership of the DOD Comptroller to 

develop and refine DOD’s efforts to improve the reliability of its reported 

obligations, including the variance analyses. This task force includes 

representatives from each of the military services’ financial management 

and comptroller offices, as well as representatives from Defense Finance 

and Accounting Service.

DOD began including the variance analyses with the November 2005 DOD 

Supplemental and Cost of War Execution Report. In reviewing the 

variance analysis submissions since then, we have noted improvements in 

both the variance analysis submissions as well as the explanations 

provided on the use of alternate data sources. Military service officials 

stated that the variance analysis highlighted several problems and allowed 

them to correct the mistakes before submitting their reports to the DOD 

Comptroller for inclusion in the monthly DOD Supplemental and Cost of 

War Execution Report. In June 2006, DOD issued revised guidance18 for 

analyzing obligations for contingency operations based on the experiences 

of the DOD components with the variance analysis over the last several 

months. 

Because efforts to implement the variance analysis are still in the early 

stages, we have not fully evaluated the impact of this new initiative on cost 

reporting. However, in reviewing the June 2006 variance submission, we 

identified two examples of where additional explanation could be 

provided. For example, in reviewing the Air Force’s June 2006 variance 

report for military personnel obligations—which includes imminent 

danger pay, hardship duty pay, and family separation pay—we found that 

the Air Force had used an alternative data source, but provided limited 

explanation as to the criteria and methodology it used to track these 

obligations. Our past work has shown significant problems with DOD’s 

reported obligations data, in particular its military personnel obligations, 

including imminent danger pay. Upon discussion with Air Force officials,

they recognized that their explanation could be expanded to provide 

further clarification. We also found problems with the explanations 

provided for variances in the Marine Corps’ June 2006 operation and 

maintenance obligations for GWOT. For example, the Marine Corps 

reported that its obligations for transportation in support of OEF had 

decreased by 81 percent, due to the refinement of transportation 

 18 DOD Comptroller Memorandum: Revised Instructions for Analysis of Contingency

Operation Costs (June 13, 2006). 

Page 17 GAO-07-76 Global War on Terrorism
obligations in previous months. However, no further explanation is 

provided as to what types of refinements were made and how these 

refinements resulted in reductions in obligations. Similarly, the Marine 

Corps Reserve reported that its obligations for personnel support for OIF 

had changed by 900 percent due to a realignment of expenses. However, 

no explanation is provided as to where the obligations were realigned and

why the realignment was made. Marine Corps officials subsequently stated

that the variance explanation for transportation was not fully addressed 

due to an administrative oversight and the variance explanation for 

personnel support was not provided because, in their view, the small 

obligations reported, totaling $1000, which is associated with the variance, 

did not warrant explanation. Because the variance analysis process is 

relatively new, we are not making recommendations at this time, but will 

continue to monitor this process in the future. 

Furthermore, to help ensure that the obligations for contingency 

operations being reported were as accurate as possible, DOD developed 

an affirmation process. In March 2006, the DOD Comptroller issued initial 

guidance19 directing submitting DOD components to attest to the accuracy 

of their monthly obligation data contained in DOD’s Supplemental and 

Cost of War Execution Report and affirm that the report provides a fair 

representation of ongoing activities. The affirmation was to accompany 

the monthly GWOT cost report and would be provided to the Defense 

Finance and Accounting Service by the comptroller or financial manager 

of the associated DOD component. However, shortly thereafter, the DOD 

Comptroller instructed the military services to delay submission of their 

affirmation memos until revised guidance could be issued. Revised 

guidance was issued in late June 2006, to allow for further delegation of

the affirmation authority. All other requirements for the affirmation were 

unchanged. Specifically, DOD’s guidance now requires that each military 

service’s Assistant Secretary for Financial Management & Comptroller, the 

Deputy, or the Director for Budget provide the affirmation. However, we 

note that it does not contain criteria or factors that could be considered 

during the review process. In discussions with military service officials, 

some military services are relying on the judgment of their major and 

subordinate commands that the costs are indeed accurate as a basis for 

their affirmation, while others have instituted additional management 

reviews of the reported costs. Because this affirmation process is new, we 

 19 DOD Comptroller Memorandum: Accuracy of Contingency Operation and Disaster 

Relief Cost Reports (Mar. 3, 2006). 

Page 18 GAO-07-76 Global War on Terrorism
are making no recommendations regarding the process at this time, but 

will continue to monitor this process in the future. 

Finally, we found that the Army made improvements to the accuracy of its 

imminent danger pay reporting shortly after the issuance of our September 

2005 report and DOD’s guidance regarding the analysis of contingency 

operations costs. As part of our work last year, we conducted limited 

testing of military personnel obligations data and reported wide monthly 

swings in imminent danger pay with little correlation to the numbers of 

deployed personnel.20 Reported imminent danger pay obligations for 

GWOT should correlate to the approximate number of deployed forces in

eligible areas.21 In our September 2005 report we noted a reporting 

discrepancy for DOD’s reported imminent danger pay in fiscal year 2004.

The reported obligations suggested that more than 1 million personnel 

were deployed in support of OIF and OEF, while according to DOD only 

about 221,300 personnel from all the military services were deployed. DOD 

was able to identify the accounting error and provide a revised obligations 

figure. Our analysis of reported Army imminent danger pay for fiscal year 

2006 through May 2006 shows that the accuracy of these data improved, 

with reduced monthly swings and closer correlation to the actual number 

of deployed personnel. 

Cost Reporting Procedures 

Do Not Provide Visibility 

and Transparency over 

Certain Obligations

Existing cost reporting procedures do not provide visibility and 

transparency over certain obligations because DOD continues to obligate

large amounts of funds in miscellaneous “other” categories that provide 

little insight on how those funds have been spent. For example, in fiscal 

year 2005, close to 26 percent of obligations reported in the operation and

maintenance account were in “other supplies and equipment” and “other 

services and miscellaneous contracts.”22 This trend has continued in fiscal 

year 2006. As shown in table 2, from fiscal year 2001 through June of fiscal

year 2006, DOD has reported operation and maintenance obligations in the 

 20 GAO-05-882. 

21 As of October 1, 2002, all military personnel—both Active and Reserve Component—in 

areas designated as eligible for imminent danger pay receive $225 per month. Such areas 

include, but are not limited to, the countries of Iraq, Afghanistan, Kuwait, Qatar, Bahrain, 

and Saudi Arabia. The monthly amount is payable in full without being prorated or

reduced, for each month, during any part of which a service member qualifies and 

regardless of the actual period of time served on active or inactive duty during that month. 

22 The percentage of reported obligations in this category includes obligations for 

Operation Noble Eagle, Operation Enduring Freedom, and Operation Iraqi Freedom. 

Page 19 GAO-07-76 Global War on Terrorism
cost reports of $26.5 billion for “other services and miscellaneous 

contracts” and obligations of $23.9 billion for “other supplies and 

equipment.” During this time frame, DOD has reported military personnel 

obligations of about $15.7 billion for “other military personnel.” 

Table 2: DOD’s Six Largest Obligation Categories from Fiscal Year 2001 through Fiscal Year 2006 (June) 

Dollars in thousands 

Category FY 2005 FY 2006 as of June Total FY 2001 to June 2006 

Reserve components called to active duty $8,398,240 $6,033,225 $37,809,078

Operation OPTEMPO (fuel, petroleum, oils, 

lubricants, and spare parts) 

8,344,809 7,964,114 34,024,022

Facilities/base support 9,118,936 5,982,880 28,885,801

Other services/miscellaneous contracts 6,609,012 2,979,547 26,584,689

Other supplies & equipment 6,250,765 3,901,483 23,982,627

Other military personnel 2,541,957 3,792,359 15,775,832

Source: GAO’s analysis of DOD’s reported GWOT data.

Note: The reported obligations in this chart include obligations for Operation Noble Eagle, Operation 

Enduring Freedom, and Operation Iraqi Freedom.

We have previously stated our concerns that while the miscellaneous 

“other” categories defined in DOD’s Financial Management Regulation

provide a uniform framework for capturing obligations, they do not 

provide the specificity or transparency needed for Congress and others to 

understand clearly how funds appropriated for contingency operations are 

being used, particularly since these categories involve billions of dollars in 

reported obligations. We have reported for several years, and as recently

as July 2004, that large amounts of reported obligations for GWOT are in 

miscellaneous “other” categories in both the operation and maintenance 

and the military personnel accounts.23 For example, in our report on fiscal 

year 2003 funding24 we pointed out that almost 35 percent of obligations 

reported in the operation and maintenance account were in “other 

supplies and equipment” and “other services and miscellaneous contracts.” 

We previously recommended that DOD revise its cost reporting guidance

 23 GAO, Military Operations: Fiscal Year 2004 Costs for the Global War on Terrorism

Will Exceed Supplemental, Requiring DOD to Shift Funds from Other Uses, GAO-04-915 

(Washington, D.C.: July 21, 2004). 

24 GAO, Military Operations: Fiscal Year 2003 Funding and Reported Obligations in 

Support of the Global War on Terrorism, GAO-04-668 (Washington, D.C.: May 13, 2004). 

Page 20 GAO-07-76 Global War on Terrorism
so that the use of miscellaneous “other” categories is minimized when 

reporting obligations. 

In response to our recommendations, in January 2005, DOD expanded the 

cost categories for contingency operations in the DOD Financial 

Management Regulation to include an additional category for military 

personnel obligations related to active component end strength. These 

obligations had previously been recorded in the “other military personnel” 

category. However, DOD did not refine reporting of the other 

miscellaneous obligations in DOD’s cost-of-war reports. On its own 

initiative, the Army has taken some steps to provide better transparency 

over the operation and maintenance obligations previously reported in the 

“other services and miscellaneous contracts” category. Specifically, it has

revised its reporting methodology to redirect some of its contracting 

obligations into other reporting categories more directly tied to the 

contracted activity. For example, the Army is now reporting obligations 

for information technology contracts tied to DOD’s Projects and 

Contracting Office25 under the command, control, communications, 

computers, and intelligence cost category. It has also begun reporting 

contract obligations associated with the special technical inspection and 

repair process at the Army’s Aviation and Missile Command under the 

reporting category for intermediate level maintenance. However, the Navy, 

Marine Corps, and Air Force have yet to take similar steps. On the basis of 

our work, in October 2006 DOD updated its guidance on the reporting of 

obligations in miscellaneous “other” categories to more fully reflect these

obligations. 

Inaccuracies in Reported 

GWOT Obligations

Continue to Exist 

We continue to find inaccuracies in the overall reported GWOT 

obligations. For example, DOD had not reported certain obligations tied to

the training and equipping of Afghan and Iraqi security forces in fiscal year

2005. Based on our work, DOD has since taken corrective action. In 

September 2005, DOD issued an update to the DOD Financial 

Management Regulation governing contingency operations, adding an 

additional cost reporting category called “Other Support Costs,” in the 

 25 In May 2004, the President signed National Security Presidential Directive 36, which 

established the Projects and Contracting Office as a temporary organization within DOD. 

The Projects and Contracting Office provides acquisition and project management support 

for the reconstruction effort in Iraq. 

Page 21 GAO-07-76 Global War on Terrorism
DOD Supplemental and Cost of War Execution Report.

26 This “Other 

Support Costs” category includes obligations such as the reimbursement 

of coalition countries for logistical and military support, lift and 

sustainment for coalition partners during military operations, training and 

equipping the Afghan National Army and the Armed Forces of Iraq, and 

obligations tied to the Commander’s Emergency Response Program. 27 

At the time of a draft of this report, DOD had not yet reported obligations 

tied to the training and equipping of Afghan and Iraqi security forces for 

fiscal year 2005. While DOD has begun reporting obligations incurred for 

these activities in fiscal year 2006, the DOD Comptroller’s office had not 

amended its previously reported obligations for fiscal year 2005 to include 

these obligations. According to DOD officials, because the funds for these 

purposes became available later in the fiscal year, DOD did not have a 

reporting format in the cost-of-war reports for these obligations and 

planned to amend its September 2005 cost-of-war report at some point to 

reflect them. For example, DOD had not reported more than $1.1 billion in 

obligations tied to these categories, the majority of which is for the Armed 

Forces of Iraq. Excluding these obligations from the cost-of-war reports 

understates DOD’s total GWOT obligations for fiscal year 2005, and limits 

Congress’s visibility over DOD’s total fiscal year 2006 GWOT requirements. 

However, in October 2006, DOD did amend the September 2005 cost-ofwar report to reflect the $1.1 billion in fiscal year 2005 obligations. 

In reviewing the Army’s fiscal year 2006 obligations to finance the training

and equipping of the Afghan National Army, we found that the obligations 

reported by the Army in DOD’s GWOT cost reports were being 

understated between the October 2005 and March 2006 cost reports, when 

compared to the Office of Management and Budget’s (OMB) SF 133 Report 

on Budget Execution and Budgetary Resources28 for the same time period. 

In total, we found that the Army had understated obligations by almost 

 26 These “Other” costs are reported in up to 20 categories and are included as subsidiary 

reports to the Army’s and the Defense Security Cooperation Agency’s DOD Supplemental 

and Cost of War Execution Report. 

27 The Commander’s Emergency Response Program provides funds to military commanders 

for small-scale reconstruction and humanitarian relief projects in Iraq and Afghanistan. 

28 The Office of Management and Budget’s SF 133 Report on Budget Execution and 

Budgetary Resources fulfills the requirement in 31 U.S.C. § 1511 - 1514 that the President 

review federal expenditures at least four times a year. The report provides a basis to 

determine obligation patterns and provide historical reference that can be used to help 

prepare the President’s budget, program operating plans, and spend-out rate estimates.

Page 22 GAO-07-76 Global War on Terrorism
$371 million. In discussions with the DOD Comptroller, we pointed out 

that the obligations data being reported to OMB were different from the 

data being reported to DOD for its GWOT cost-of-war report. According to

DOD Comptroller officials, prior to fiscal year 2005 appropriations for the 

training and equipping of the Afghan National Army flowed to the Defense 

Security Cooperation Agency for obligation through the Foreign Military 

Sales program. After the Afghanistan Security Forces Fund was 

established in fiscal year 2005, the Defense Security Cooperation Agency 

began transferring the funds directly to the Foreign Military Sales program 

for use by the Army. Additionally, the DOD Comptroller noted that upon 

transfer from the Afghanistan Security Forces Fund, DOD and OMB 

consider these funds fully obligated, since the funds will not be spent 

elsewhere. However, the Defense Security Cooperation Agency and the

Army were not reporting the transferred amounts as obligations, but were 

instead reporting the amount of funds disbursed through the Foreign 

Military Sales program. The Army’s lower obligation data were appearing 

in DOD’s Supplemental and Cost of War Execution Report from October 

2005 through March 2006. Once this matter came to light, DOD 

Comptroller officials took action to reflect the accurate obligations against 

the Afghanistan Security Forces Fund. The April 2006 report reflects the 

corrected cumulative obligations through April 2006. 

While the military services expect increases in the amount of reported 

obligations for procurement in the last month of fiscal year 2006, much of 

this multiyear funding will remain available in fiscal year 2007. Since it is 

likely that much of the procurement funding from fiscal year 2006 will 

remain available in fiscal year 2007, knowledge of those amounts and how 

DOD plans to spend them would ensure congressional decision makers 

have additional information to use in determining DOD’s future funding 

needs. While DOD has taken steps to improve its cost reporting 

procedures and the reliability of its reported GWOT obligation data, lack 

of transparency and inaccuracies in reported GWOT obligations continue 

to exist. The large obligations in miscellaneous categories do not provide 

decision makers with transparency over how those funds have been spent,

while underreported obligations understate DOD’s total GWOT 

obligations. Until DOD and the military services revise their cost reporting 

procedures to address these problems, it will continue to be difficult for 

the public, Congress, and DOD to reliably know how much the war is 

costing, examine details on how appropriated funds are being spent, or 

have historical information useful in determining future funding needs. 

Conclusions 

Page 23 GAO-07-76 Global War on Terrorism
When conducting its deliberations over DOD’s funding needs, Congress 

should consider requiring DOD to provide fiscal year-end information on 

how much procurement funding remains available for obligation at the 

conclusion of fiscal year 2006. Congress should also require DOD to 

provide a plan detailing how the department intends to obligate this 

funding and any other procurement funding received or requested for 

GWOT for fiscal year 2007 and beyond. 

In written comments on a draft of this report, DOD agreed with one 

recommendation made in the draft report and disagreed with the second. 

DOD also provided technical comments and we have incorporated them in 

the report as appropriate. 

Matter for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 

DOD agreed with our recommendation that Volume 12, Chapter 23 of the 

DOD Financial Management Regulation be revised to provide additional 

subcategories for “other supplies and equipment,” “other services and 

miscellaneous contracts,” and “other military personnel” to provide further 

breakdown of reported obligations in miscellaneous categories. DOD 

further stated that it has updated the DOD Financial Management 

Regulation to expand the cost categories of the data reported in its 

monthly Supplemental and Cost of War Execution Reports. This 

guidance, issued in October 2006, adds elements that expand these “other” 

cost categories into more descriptive subcategories that provide additional 

details on DOD’s reported obligations for pay and allowances, permanent 

changes of station, temporary storage, supplies and equipment and 

contract services. We believe this meets the intent of our recommendation 

and removed the recommendation from the final report. 

DOD did not agree with the basis of our recommendation that it amend the 

September 2005 version of DOD’s Supplemental and Cost of War 

Execution Report to include about $1.1 billion in unreported fiscal year 

2005 obligations tied to the training and equipping of Afghan and Iraqi 

security forces. In its comments, DOD stated that this information was 

provided to Congress in an October 2005 report pursuant to Section 9010

of the Department of Defense Appropriations Act, 200529 and therefore did 

not agree with our observation that the fiscal year 2005 costs of the war 

were “understated” by $1.1 billion. However, DOD stated it did amend the 

September 2005 cost-of-war report to include the $1.1 billion in fiscal year 

 29 Pub. L. No. 108-287 (Aug. 5, 2004). 

Page 24 GAO-07-76 Global War on Terrorism
2005 obligations, as we recommended, and noted this in their comments. 

We recognize that DOD did report some of these obligations to Congress 

in this October 2005 report entitled Report on the Military Operations of

the Armed Forces and the Reconstruction Activities of the Department of

Defense in Iraq and Afghanistan. However, in reviewing the obligation 

figures included in this report, we note these figures do not match those 

reported in DOD’s amended September 2005 cost-of-war report and the 

Office of Management and Budget’s (OMB) SF 133 Report on Budget 

Execution and Budgetary Resources for fiscal year 2005. According to a 

DOD official, the figures in DOD’s October 2005 report were preliminary 

and did not reflect all technical adjustments. Furthermore, this official 

stated that reports pursuant to Section 9010 no longer include obligations 

against the Afghan and Iraqi security forces funds because these obligation 

figures are being reported in DOD’s monthly Supplemental and Cost of 

War Execution Reports. As we discuss in this report, DOD’s monthly 

Supplemental and Cost of War Execution Report is used by senior DOD 

leadership, along with other information, in evaluating costs of the war 

and formulating future budget requests to fund GWOT. Since this 

document does provide historical data with which to evaluate the costs of

the war and advise Congress, we believe it is important that DOD include 

all GWOT related obligations in these reports. Since DOD has already 

issued and provided us with an amended September 2005 cost-of-war 

report including the about $1.1 billion in fiscal year 2005 obligations, we 

believe this fulfills the intent of our recommendation and removed the 

recommendation from the final report. 

With respect to our suggestion that Congress consider requiring DOD to 

provide fiscal year-end information on how much procurement funding 

remains available for obligation at the conclusion of fiscal year 2006 and 

require DOD to provide a plan detailing how the department intends to 

obligate this funding and any other procurement funding received or 

requested for GWOT in fiscal year 2007 and beyond, DOD commented that 

it has plans for reconstituting forces deployed in the war on terror and that 

it is not reasonable to infer that these funds are available for other 

purposes. DOD further stated that it had justified the procurement 

requirements to Congress and already provides reports that clearly state 

the status of obligations for all GWOT funds. We do not believe that our 

report implies that any previously appropriated procurement funding is 

available for other purposes. On the contrary, we stated that significant 

multiyear funds will remain available at the end of fiscal year 2006 for 

procurement purposes. Given that DOD received more procurement 

funding with the enactment of the fiscal year 2007 defense appropriation 

bill and is expected to request more in a fiscal year 2007 supplemental 

Page 25 GAO-07-76 Global War on Terrorism
appropriation, we believe it is important that Congress have a complete 

and up-to-date picture of all funding DOD has available for procurement 

purposes when considering future appropriations requests from DOD. 

We are sending copies of this report to other interested congressional 

committees; 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. In 

addition, this report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

If you have any questions regarding this report, please contact me at (202)

512-9619 or pickups@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix IV. 

Sharon L. Pickup 

Director, Defense Capabilities and Management 

Page 26 GAO-07-76 Global War on Terrorism
List of Congressional Committees

The Honorable John Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Judd Gregg 

Chairman 

The Honorable Kent Conrad 

Ranking Minority Member 

Committee on the Budget 

United States Senate 

The Honorable Ted Stevens 

Chairman 

The Honorable Daniel K. Inouye 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Duncan L. Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

The Honorable Jim Nussle 

Chairman 

The Honorable John M. Spratt, Jr. 

Ranking Minority Member 

Committee on the Budget 

House of Representatives 

Page 27 GAO-07-76 Global War on Terrorism
The Honorable C.W. Bill Young 

Chairman 

The Honorable John P. Murtha 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Page 28 GAO-07-76 Global War on Terrorism
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To compare the military services’ reported obligations against available 

funding appropriated for Global War on Terrorism (GWOT) in fiscal year 

2006, we analyzed applicable annual and supplemental appropriations 

provided to the military services and Department of Defense (DOD) 

reports on GWOT obligations. To identify funding for the GWOT, we 

reviewed applicable annual and supplemental DOD appropriations in 

fiscal year 2006. We also reviewed DOD reports on the transfer or 

reprogramming of funds among various appropriation accounts or budget 

activities to support GWOT. To examine DOD’s reported obligations, we 

obtained and analyzed copies of the October 2005 through June 2006 

monthly DOD Supplemental and Cost of War Execution Report from the 

Office of the Under Secretary of Defense (Comptroller) to identify 

reported obligations by operation and by appropriation account for the 

military services. We focused our review on the reported obligation of 

GWOT funds appropriated for military personnel, operation and 

maintenance, and procurement for the Army, Air Force, Navy, and Marine 

Corps, for both active and reserve forces, because they represented more 

than 80 percent of the funds obligated in fiscal year 2006. We excluded

classified programs from our review because obligations for those 

programs are not reported in DOD’s monthly Supplemental and Cost of 

War Execution Report. In addition, for fiscal year 2006, we reviewed the 

latest available obligation data and held discussions with the military 

services on the results of their midyear budget reviews. We compared the 

military services’ reported obligations through June 2006, the latest 

available reported obligation data at the time of our review, to the 

supplemental appropriations provided to calculate the proportion of funds 

obligated through June. We then compared those proportions to the 

proportion of the fiscal year that has elapsed through June—which 

represents 75 percent of the fiscal year—to assess whether based on 

obligations through June funding is likely to be greater than, less than, or 

equal to obligations. We also interviewed key officials from the Office of 

the Under Secretary of Defense (Comptroller) and the Army, Navy, Marine 

Corps, and Air Force to determine if their projected GWOT obligations are 

within fiscal year 2006 funding levels. We recognize that funds are not 

obligated equally each month throughout the fiscal year and that the 

supplemental appropriation funding was not received by the military 

services until June. 

GWOT obligations provided in this report are DOD’s claimed obligations 

as reported in DOD’s monthly Supplemental and Cost of War Execution 

Report. As previously reported, we found the data in DOD’s monthly 

Supplemental and Cost of War Execution Reports to be of questionable 

reliability. Consequently, we are unable to ensure that DOD’s reported 

Page 29 GAO-07-76 Global War on Terrorism
Appendix I: Scope and Methodology 

obligations for GWOT are complete, reliable, and accurate, and they 

should therefore be considered approximations. In addition, as recently 

as November 2005, DOD acknowledged that systemic weaknesses with its 

financial management systems and business operations continue to impair

its financial information. Despite the uncertainty about obligation data, we

are reporting the information because it is the only way to approach an 

estimate of the costs of the war. Also, despite the uncertainty surrounding 

the true dollar figure for obligations, these data are used to advise 

Congress on the cost of the war. 

To examine the steps DOD has taken to improve the reliability of its 

reported GWOT obligations, we reviewed DOD Financial Management 

Regulation Volume 12, Chapter 23, which establishes DOD’s policies and 

procedures for developing contingency budget estimates and cost 

reporting. We analyzed DOD’s emergency supplemental budget requests 

for fiscal year 2006, and military service contingency operation financial

management policies and procedures. We analyzed the fiscal year 2006 

GWOT cost reports and held discussions with the DOD Comptroller and 

military service financial management officials regarding the processes 

used to ensure that GWOT obligation data provided were accurate and 

reliable. We conducted limited testing of the Army’s reported military 

personnel obligations, specifically imminent danger pay, and discussed 

our work with officials from the Army Budget Office and DOD 

Comptroller. We also obtained and reviewed information on DOD’s budget 

estimates, supplemental requests, budget reprogramming and transfer 

documents, and other supporting documentation. Lastly, we reviewed 

previous GAO reports and testimonies and reports from other agencies 

regarding guidance and oversight of contingency operations costs in 

DOD’s accounting systems. As of September 2006, we determined that 

problems with the completeness and accuracy of DOD’s reported 

obligations continue and we discuss these problems throughout the 

report. 

We interviewed DOD representatives regarding GWOT obligations and 

funding for fiscal year 2006 and the reliability of cost reporting in the 

following locations: 

• Office of the Under Secretary of Defense (Comptroller), 

Washington, D.C. 

• U.S. Pacific Command, Camp H.M. Smith, Hawaii 

• Defense Finance and Accounting Service Center, Denver, Colorado 

Page 30 GAO-07-76 Global War on Terrorism
Appendix I: Scope and Methodology 

• Headquarters, Department of the Army, Washington, D.C. 

• U.S. Army Installation Management Agency, Washington, D.C. 

• U.S. Army Installation Management Agency, Southeast Region, 

Fort McPherson, Georgia 

• U.S. Army Installation Management Agency, Pacific Region, Fort 

Shafter, Hawaii 

• Headquarters, U.S. Army Forces Command and Headquarters,

Third Army (Army Central Command), Fort McPherson, Georgia 

• Headquarters, U.S. Army Pacific, Fort Shafter, Hawaii 

• Army Materiel Command, Fort Belvoir, Virginia 

• Headquarters, 25th Infantry Division, Schofield Barracks, Hawaii 

• U.S. Army Garrison, Schofield Barracks, Hawaii 

• Headquarters, U.S. Marine Corps, Washington, D.C. 

• U.S. Marine Corps Forces Pacific, Camp H.M. Smith, Hawaii 

• Marine Corps Central Command, MacDill AFB, Florida 

• Department of the Navy, Headquarters, Washington, D.C. 

• Commander, U.S. Pacific Fleet, Pearl Harbor, Hawaii. 

• Military Sealift Command, Washington, D.C. 

• Department of the Air Force, Headquarters, Washington, D.C.

• U.S. Air Forces Pacific, Hickam Air Force Base, Hawaii 

• Air Force Air Combat Command, Langley Air Force Base, Virginia 

• Air Force Air Mobility Command, Scott Air Force Base, Illinois 

• U.S. Central Command Air Forces, Shaw Air Force Base, South 

Carolina 

Page 31 GAO-07-76 Global War on Terrorism
Appendix I: Scope and Methodology 

We performed our work from January 2006 through September 2006 in 

accordance with generally accepted government auditing standards. 

Page 32 GAO-07-76 Global War on Terrorism
Appendix II: DOD’s Process for Reporting Appendix II: DOD’ GWOT Obs Process for Reporting ligations 

GWOT Obligations 

Obligations are the foundation of all Global War on Terrorism (GWOT) 

cost reporting. The obligations incurred for military contingency 

operations are referred to as “incremental,” which are costs that are 

directly attributable to the operation that would not have been incurred if 

it were not for the operation.1

 The reported incremental obligations 

incurred for these military or contingency operations include the pay of 

mobilized reservists as well as the special pays and allowances for 

deployed personnel, such as imminent danger pay and foreign duty pay for 

those personnel serving in Operation Iraqi Freedom (OIF) and Operation 

Enduring Freedom (OEF); the cost of transporting personnel and materiel 

to the theater of operation and supporting them upon arrival; and the 

operational cost of equipment such as vehicles and aircraft, among many 

other obligations.2

 Obligations that are incurred regardless of whether 

there is a contingency operation, such as the base pay of active duty 

military personnel, are not considered incremental. 

When obligations are incurred, the military services enter them into their 

individual accounting systems. An obligation entry includes information 

on the funding source; the operational mission, such as OIF; and the 

category of cost, as determined by the individual military service. The 

Department of Defense’s (DOD) financial management regulation direct 

the military services to capture contingency costs, which include GWOT 

obligations, within their existing accounting systems and at the lowest 

possible level of organization. 

To improve the consistency of contingency-cost reporting between the 

multiple military services and agencies, on October 1, 1998, DOD 

implemented a standard contingency cost-breakdown structure. This costbreakdown structure was to facilitate future efforts to understand and 

interpret differences between estimated and actual obligations. Examples 

of cost categories include imminent danger or hostile fire pay, 

facilities/base support, airlift, vehicle procurement, and major military 

construction. Of the common cost categories and multiple subcategories 

 1

 Sections 230406 and 230902 of DOD’s Financial Management Regulation 7000.14-R, 

Volume 12, Chapter 23 “Contingency Operations” (September 2005) provide additional 

information on incremental costs. 

2

 Service members who are assigned, deployed, or traveling on temporary duty to certain

foreign areas are eligible for certain special pays and benefits, such as imminent danger

pay. 37 USC § 310 (a) (2) (D) (2006). 

Page 33 GAO-07-76 Global War on Terrorism
Appendix II: DOD’s Process for Reporting 

GWOT Obligations 

listed in DOD financial management regulation, 55 cost categories are 

used to report DOD’s monthly GWOT obligations. 

For GWOT cost reporting, individual obligation data that are coded as 

being in support of GWOT are recorded and sent through the military 

services’ chain of command where they are aggregated at successively 

higher command levels. Each military service and defense agency 

compiles its reported obligations in the standard contingency cost 

breakdown structure, and sends them to the Defense Finance and 

Accounting Service (DFAS). DFAS aggregates the individual submissions 

into the monthly Supplemental and Cost of War Execution Report. DFAS 

publishes 10 versions of this report on a monthly basis, each of which 

specifies GWOT obligations by operation, appropriation, and appropriate 

DOD component.3

 The monthly GWOT cost reports are then submitted to 

the DOD Comptroller for review and further dissemination.4

 The versions 

of the report published for fiscal year 2006 are listed in table 3. 

 3

 For fiscal year 2006, additional resources at DFAS were reassigned to assist in producing

and reviewing DOD’s monthly Supplemental and Cost of War Execution Report. 

4

 The DOD Comptroller has two full-time employees dedicated to reviewing the 

department’s GWOT obligations reported in DOD’s monthly Supplemental and Cost of War

Execution Report. 

Page 34 GAO-07-76 Global War on Terrorism
Appendix II: DOD’s Process for Reporting 

GWOT Obligations 

Table 3: DOD Supplemental and Cost of War Execution Report for Fiscal Year 2006 

Fiscal years 

2006 Summary

2006 Appropriations 

2005 Title IX Appropriation (Second Year Execution) 

2005 Iraq Security Forces Fund (Second Year Execution) 

2005 Coalition Support Fund (Second Year Execution) 

2005 Afghanistan Security Forces Fund (Second Year Execution) 

2005 Appropriations (Second Year Execution) 

2004 Title IX Appropriation (Third Year Execution) 

2004 Appropriations (Third Year Execution)

2003 Appropriations (Fourth Year Execution)

Source: Defense Finance and Accounting Service. 

Page 35 GAO-07-76 Global War on Terrorism
Appendix III: Comments from the Department Appendix III: Comments from the of Defense 

Department of Defense 

 Page 36 GAO-07-76 Global War on Terrorism
Appendix III: Comments from the Department 

of Defense 

 Page 37 GAO-07-76 Global War on Terrorism
Appendix III: Comments from the Department 

of Defense 

 Page 38 GAO-07-76 Global War on Terrorism
Appendix IV: 

A

GAO Contact and Staff 

cknowledgments 

Page 39 GAO-07-76

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Sharon Pickup (202) 512-9619 or pickups@gao.gov 

In addition to the contact named above, Ann Borseth, Assistant Director; 

Richard K. Geiger; Natalie Schneider; Kim Mayo; Renee S. Brown; and 

Lonnie McAllister made key contributions to this report. 

 Global War on Terrorism

GAO Contact 

Acknowledgments 

(350801) 
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