United States General Accounting Office

GAO Briefing Report to Congressional

Requesters

September 1993 1994 DOD BUDGET

Potential Reductions to

the Operation and

Maintenance Programs

GAO/NSIAD-93-295BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-249828 

September 16, 1993

The Honorable Daniel K. Inouye

Chairman, Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable John P. Murtha

Chairman, Subcommittee on Defense

Committee on Appropriations

House of Representatives

The Honorable Earl Hutto

Chairman, Subcommittee on Readiness

Committee on Armed Services

House of Representatives

This report responds to your requests that we review the military services’

operation and maintenance (O&M) budget requests for fiscal year 1994. Our

objective was to determine whether the O&M accounts should be funded in

the amounts requested. We reviewed selected O&M accounts for U.S. Army,

Europe (USAREUR); U.S. Forces Command (FORSCOM); U.S. Army Training

and Doctrine Command; U.S. Air Forces, Europe (USAFE); Air Combat

Command; Air Logistics Command; Air Materiel Command; and the

Atlantic and Pacific Fleets. In addition, we reviewed selected accounts at

the headquarters level for the Army, Navy, Air Force, National Guard, and

Defense activities. In June and July 1993, we provided your staff with the

preliminary results of our work. This report summarizes and updates that

information.

As shown in table 1, we identified potential reductions and rescissions of

about $6.7 billion to the services’ and the Department of Defense activities’

fiscal year 1994 O&M budget.

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Table 1: Potential Reductions and Rescissions to the Fiscal Year 1994 O&M Budget Request by Service and Program

Category

Dollars in millions

Category Army Navy Air Force

National

Guard Defense Total

Unobligated funds (see p. 22) $511.9 $219.1 $239.0 $10.3 $980.3

Budget reserve (see p. 24) 200.0 1,000.0 1,200.0

Burden sharing (see p. 24) 257.6 155.0 412.6

Spare and repair parts (see p. 26) 1,540.0 3.0 783.0 $70.0 2,396.0

Residual value (see p. 32) 179.8 179.8

Depot maintenance (see p. 33) 1.1 30.2 274.3 0.9 306.5

Operating tempo (see p. 38) 226.0 226.0

Flying hours (see p. 40) 67.5 12.3 79.8

Travel (see p. 42) 148.0 16.3 3.3 167.6

Global initiatives (see p. 45) 98.0 98.0

Transportation (see p. 46) 21.0 21.0

Youth programs (see p. 47) 11.5a 11.5

Composite wings (see p. 47) 1.2 1.2

Training (see p. 48) 28.3 134.2 162.5

Civilian pay (see p. 50) 194.0 55.0 56.2 305.2

Special events (see p. 53) 5.1a 5.1

Repair and maintenance (see p. 54) 35.8 35.8

Underseas surveillance (see p. 54) 12.8 12.8

Counter-drug efforts (see p. 55) 78.6 78.6

Support to morale, welfare, and

recreation (see p. 56)

65.0 65.0

Total $3,154.2 $601.4 $2,694.3 $81.5 $213.9 $6,745.3

aRescission.

As shown in table 1, the potential reductions cover a variety of O&M

functions and activities. The primary reasons for the reductions are as

follows:

• An excessive amount of funds remain unobligated from prior years’ O&M

appropriations.

• The budget request for fiscal year 1994 included an amount in anticipation

of congressional reductions.

• The amount of funds that the services expect to receive from other

countries was not offset against the fiscal year 1994 budget request.

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• The services implemented cost-saving recommendations for improving

inventory management that are not reflected in the fiscal year 1994 budget

request.

• Factors affecting the requested budget amounts changed from the time the

budget requests were submitted, and these changed factors reduced the

amount of funds needed.

• The services expect to spend less than the amount of funds requested for

the specific purposes used to justify the budgeted amount.

The following sections briefly discuss each of the potential reductions

shown in table 1. A more detailed discussion is presented in appendix I.

Unobligated Funds

From Prior Years’

Appropriations

Exceed Needs

From fiscal years 1989 through 1992, the Army, Navy, Air Force, and

Defense Mapping Agency had $1.197 billion of unobligated O&M funds. The

unobligated balances of O&M appropriations are not available for new

obligations and may only be used for adjustments to existing obligations

for the specific fiscal year of the appropriation.

Department of Defense and service officials claim that they need the

unobligated balances to satisfy upward adjustments to obligations and to

fund the foreign currency fluctuation account and the foreign national

employees separation trust fund. By using prior year unobligated balances

to fund these accounts, current year funds are freed up for other purposes.

Irrespective of the use of these funds, our review showed that the prior

years’ unobligated balances continue to increase with each passing year.

For example, between September 1991 and April 1993, the unobligated

balances for fiscal years 1989 through 1992 increased from $320 million to

$1.9 billion—an increase of $81.7 million a month, or about $980 million a

year. This increase indicates that fewer unobligated funds are needed.

On the basis of this, Congress could reduce the fiscal year 1994 O&M

request for the Army by $511.9 million, the Navy by $219.1 million, the Air

Force by $239 million, and the Defense Mapping Agency by $10.3 million.

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Budget Requests

Include a Reserve for

Emerging

Requirements and

Anticipated

Congressional

Reductions

The Air Force’s fiscal year 1994 O&M budget request included 5.3 percent

($1 billion) in anticipation of congressional reductions. In planning for the

execution of the fiscal year 1994 budget, the Air Force advised its

commands to plan for a lesser amount than the amount included in the

budget request. Consequently, the budget execution plans are based on the

assumption that the budget request of $19.8 billion will be reduced by

$1 billion.

The Navy’s fiscal year 1994 O&M budget request was developed based on

requirements identified by the Navy commands. However, the Navy plans

to withhold $200 million as a reserve for emergent requirements. The

commands will be asked to develop budget execution plans based on

$200 million less than the budget request.

Because Congress is being asked to approve budget requests that include

reserves that may be used for unspecified emergent requirements,

Congress may want to reduce the Air Force’s and Navy’s fiscal year 1994

O&M budget requests by $1.2 billion.

Air Force’s and Army’s

Budget Requests Do

Not Reflect

Anticipated Receipts

for Burden Sharing

The Army expects to receive burden-sharing payments from Korea and

Japan totaling about $257.6 million in fiscal year 1994. However, budget

documentation in support of the fiscal year 1994 request does not show

that the Army reduced its O&M budget request to reflect the anticipated

payments. Army officials agreed that the budget presentation documents

do not provide full disclosure of the anticipated burden-sharing

transactions.

The Air Force’s budget request reflects the fact that host countries’

burden-sharing contribution should be about $441 million in fiscal year

1994. Air Force budget officials told us that, on the basis of historical

payment data, the Air Force will probably receive about $269 million

rather than the $441 million. However, the Air Force only reduced its

budget request by $114 million rather than the $269 million it realistically

expects to receive.1

 Its budget request was not reduced by the $269 million

because, in the Air Force’s opinion, if it does not receive the $269 million,

it will have to make up the difference from other O&M accounts.

Using a conservative approach, the two services’ budget requests should

be reduced by $412.6 million—$257.6 million for the Army and

1

The $114 million represents the increase in burden-sharing requirements from fiscal years 1993 to

1994.

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$155 million ($269 million less $114 million) for the Air Force—to

accurately reflect anticipated burden-sharing payments.

Budget Requests for

Spare and Repair

Parts Do Not

Recognize Savings

Available Through

Improved Inventory

Management

Practices

Budget reductions totaling about $2.4 billion are possible in the Army’s,

Air Force’s, Navy’s, and National Guard’s O&M budget requests for spare

and repair parts.

Army The Army’s O&M budget request for fiscal year 1994 could be reduced

$1.5 billion for the following reasons.

• The Army has overstated its wholesale level requirements at two locations

by $1.6 billion because it (1) has not adjusted its war reserve requirements

to reflect its current needs, (2) has included demands in the requirements

determination process that should not be included, (3) has not reduced its

projected needs by the number of serviceable inventory items returned to

the depots, and (4) classified inventory as being needed to meet current

requirements when the inventory should have been classified as economic

retention inventory—inventory not needed to meet current requirements.

The overstated requirements equate to a potential O&M budget reduction of

about $1.1 billion based on a congressionally imposed requirement that the

services could replenish only 70 percent of their wholesale-level sales.

• On-order inventory valued at $364 million is not needed to meet current

operating requirements. Congress could make an appropriate adjustment

as an incentive for the Army to take actions that would reduce the amount

of unneeded inventory.

• An inventory investment of at least $56 million at its retail activities does

not qualify to be stocked at the activities and should be eliminated.

Congress could make an appropriate reduction as an incentive for the

Army to streamline its inventory stocking practices.

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Air Force The Air Force’s O&M budget request could be reduced by about 

$783 million for the following reasons:

• The Air Force has excess inventory valued at $107 million at its retail

activities that the wholesale level is not aware of and therefore cannot

redistribute to other activities that may have a need for the items.

Redistributing the excess items would allow the Air Force to reduce its

procurement of items and thereby reduce its need for O&M funds in fiscal

year 1994.

• The Air Force had not eliminated invalid inventory back orders valued at

$73 million. Eliminating these back orders would reduce the Air Force’s

need for a like amount of inventory that it would otherwise have to

procure.

• The Air Force double counted back order requisitions in its requirements

determination process. Furthermore, the Air Force does not consider

on-hand inventory items at its maintenance depots in determining future

buy requirements. Correction of these deficiencies would allow the Air

Force’s fiscal year 1994 request to be reduced by $203 million.

• The Air Force did not reduce its budget request to reflect terminated

contracts for items due in that are no longer needed. In the past, the Air

Force has been able to free up an average of $400 million annually in stock

fund obligation authority. However, the Air Force did not reduce its

request for stock fund authority by the amount of funds freed up. To

compensate for this, the Air Force’s O&M request can be reduced by up to

$400 million.

Navy The Navy could reduce its fiscal year 1994 O&M request by at least

$3 million if it recorded all the inventory at its retail activities on inventory

records. The Navy does not know that the inventory exists when it does

not keep these records and, therefore, makes unnecessary procurements.

National Guard The National Guard could reduce its fiscal year 1994 O&M request by

$70 million if it used the active Army’s supply system to meet its inventory

needs rather than maintaining its own system of supply points. Eliminating

these supply points would not affect supply responsiveness to the Guard

and would contribute to the Army’s overall efforts to establish a single

supply system.

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Army’s Budget

Request Does Not

Reflect Receipt of

Funds Expected From

Installations Turned

Back to Host

Countries

The Army expects to receive $142.9 million in residual value payments

during fiscal year 1994, and, according to an Army official, it is unsure as

to how these funds will be used when they are received. Additionally, the

anticipated residual payments are not reflected in the President’s budget

as an offset to its appropriation request. Therefore, we believe that the

Army’s O&M appropriation request can be reduced by $142.9 million.

The Army’s budget justification book identified $28.1 million in residual

payments as a source of funds for base support operations. However, the

Army did not reduce its appropriation request to reflect the $28.1 million.

As a result, the Army’s O&M appropriation request can be reduced an

additional $28.1 million.

Furthermore, the Defense Overseas Military Facility Investment Recovery

Account currently contains $3.4 million for residual payments already

received. An additional $5.4 million of payments has been negotiated with

Canada and Italy. The funds in the Defense account can be used as

directed by the Secretary of Defense for repair and maintenance of

facilities in the United States and overseas.

In total, the fiscal year O&M budget request could be reduced by

$179.8 million to reflect the anticipated payments as well as the payments

already received.

Services’ Depot

Maintenance

Requirements Are

Overstated

The services’ requests for depot maintenance in fiscal year 1994 can be

reduced about $306.5 million.

The Air Force overstated its needs by $274.3 million for the following

reasons:

• The Air Force included about 4.4 months of workload carryover from

fiscal year 1993 even though, according to Air Force budget officials, only

a 2.5-month to 3.5-month carryover is needed to ensure a continuation of

operations during the transition from one year to the next. The value of

the excess carryover for 0.9 months is estimated at about $203.4 million.

Air Force officials told us that the fiscal year 1993 carryover is now

estimated at 3.2 months rather than 4.4 months and, therefore, the budget

request should not be reduced. In our opinion, even if the carryover is now

3.2 months, it is still about 0.7 months greater than the minimum amount

needed to provide a smooth transition from one fiscal year to the next. For

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that reason, the budget request can still be reduced approximately the

same amount.

• Funds ($28 million) appropriated in fiscal year 1993 for depot maintenance

on B-52G aircraft will not be used for that purpose. According to Air

Combat Command officials, no depot maintenance will be performed on

the aircraft in either fiscal year 1993 or fiscal year 1994.

• Funds requested for fiscal year 1994 for depot level maintenance of

reparable items ($9.4 million) are not needed. Air Combat Command

officials told us that requirements for five programs, totaling $9.2 million,

have not been identified even though Air Force headquarters included

these funds for the Command in the fiscal year 1994 budget request. For

three other programs, totaling $246,000, the officials could not explain why

the programs were included in the budget.

• The Air Force included $36.6 million for support (maintenance, supply,

and operational testing and evaluation) of the B-2 bombers. The

commands responsible for providing support to the aircraft have budgeted

only $15.7 million, or $20.9 million less than the amount requested for

fiscal year 1994.

• The Air Force included $112.2 million for maintenance on TF30 aircraft

engines. The revised maintenance requirements for the engine are now

$99.6 million, or $12.6 million less than requested.

The Navy’s request can be reduced by $30.2 million because the overhaul

of five ships for which funds were requested has been deferred until fiscal

year 1995.

The Army’s request can be reduced $1.1 million because it routinely

overhauls items at two depots when a lesser level of repair would suffice.

Included in Defense’s fiscal year 1994 O&M budget request are funds for the

U.S. Special Operations Command’s testing of six new coastal patrol boats

that were to enter the inventory in the fiscal year. The request also

included $3.3 million of operations funds for 10 patrol boats, including the

6 new boats that were to enter the inventory. According to a Navy official,

two of the six new patrol boats will not be delivered in fiscal year 1994.

Because two of the patrol boats scheduled for delivery will not be

delivered, testing and operations funds for the boats will not be needed. In

total, we estimate the budget request for fiscal year 1994 can be reduced

about $913,000 ($436,000 for testing and $477,000 for operations).

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Army Units Are Not

Training at the Level

Funded by Congress

Over the past several years, Congress has fully funded Army ground

operating tempo at an annual rate of 800 miles. According to the Army,

this level of training is necessary to maintain its ground forces in a ready

condition. In its fiscal year 1994 request, the Army again asked for funding

at the 800-mile level. Major commands, however, are not funding their

units at this level. For example, USAREUR is funding its units at 600 miles,

and FORSCOM is funding its units at 720 miles. Review of readiness reports

showed that the reduced funding levels had not resulted in units reporting

lower readiness rates. For example, the vast majority of the FORSCOM units

have maintained a readiness posture that allows them to deploy to meet

national security needs.

In view of the fact that the major commands are not funding their units at

the operating tempo level for which Congress provided funds, the fiscal

year 1994 request could be reduced by $226 million—$110 million for

USAREUR and $116 million for FORSCOM.

Services’ Requests for

Flying Hours Exceed

Requirements

The Army’s and Air Force’s flying hour programs can be reduced in fiscal

year 1994 by about $79.8 million. In the Army, we found that the flying

hour requirements were overstated by $67.5 million for the following

reasons:

• The Army’s requirements are $44.7 million less than the amount included

in the Army’s budget request. Army budget officials told us that the

reduction is expected to be achieved through increased efficiencies, such

as improved maintenance procedures and aircraft that require fewer

maintenance hours for each flying hour.

• The Army’s budget request included $10.6 million for flying hours for drug

interdiction efforts, when the Army receives funding for the flying hour

allocation from the Department of Defense’s Drug Interdiction and

Counter Drug appropriation.

• USAREUR plans to fly fewer aircraft than the number used to determine the

budget requirement, and, historically, the Command has not been able to

fly all the hours included in the flying hour program. For these reasons, the

Command’s program is overstated by $12.2 million.

The Air Force’s flying hour program can be reduced by $12.3 million

because headquarters included in the Air Combat Command’s budget

4,133 flying hours that the Command does not plan to fly. The additional

hours were part of the Air Force’s efforts to increase the aircraft crew

ratio for the F-111 aircraft. Command officials told us that they do not plan

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to fly these additional hours because to do so would increase the

utilization rate for the particular aircraft by 30 percent and they believe

such an increase is unrealistic.

Funds for Personnel

on Official Travel Can

Be Reduced

Personnel in a travel status often stay in on-base housing for which they

are charged a fee. Our review showed that personnel staying in Army

transient lodging facilities have been overcharged. With regard to Navy

personnel, we found that they had been allowed to stay in off-base

facilities when on-base facilities were available. In contrast to the policy

followed by the Army and the Navy, Air Force personnel and families

involved in permanent change-of-station situations are housed in

temporary lodging facilities that are supported by appropriated funds.

Department of Defense policy provides that the O&M of such facilities be

paid for from nonappropriated funds.

The effect of the above actions is that O&M appropriated funds are being

used to subsidize facilities that are intended to be operated and

maintained primarily with nonappropriated funds or that commands are

expending more O&M funds than necessary by allowing personnel to stay in

off-base facilities when they could be housed on-base.

We identified a total of $167.6 million ($148 million for the Army,

$16.3 million for the Navy, and $3.3 million for the Air Force) that could be

reduced from the services’ O&M request for travel funds in fiscal year 1994

if the services adhered to Department of Defense policy regarding fees for

transient lodging facilities.

Funds Requested for

Global Cooperative

Initiatives Can Be

Reduced

The Department of Defense’s fiscal year 1994 O&M budget request includes

$98 million for humanitarian assistance ($48 million) and disaster

assistance ($50 million) as part of the Global Cooperative Initiatives. The

Department has a $100-million revolving fund that was established to

provide up-front funding for providing humanitarian assistance. Therefore,

Congress could reduce the Department’s Global Cooperative Initiatives

request by $98 million.

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Transportation Costs

Paid to Commercial

Transporters Can Be

Reduced

Air Force cargo aircraft flying regular overseas missions have an unutilized

capacity of about 36 percent. At the same time, low-priority Department of

Defense cargo is being transported by commercial surface transportation.

The Department could save $21 million annually in payments to

commercial transporters by using the unutilized capacity on its cargo

aircraft.

Funds Provided for

National Guard Youth

Programs Could Be

Rescinded

The National Guard received $44 million in fiscal year 1993 to conduct the

Civilian Youth Opportunities Pilot Program in 10 states. The National

Guard Bureau planned to ask Congress to expand the program to 

14 states. At the time we finished our field work in August 1993, Congress

had not approved the extension of the program to the additional states.

According to Guard officials, if the program is not extended to the

additional four states, $8.5 million will not be needed in the current fiscal

year.

The National Guard also received $3 million for the Urban Youth Corps

and Youth Conservation Corps. The Guard does not want to establish

these programs in the 10 states that are participating in the Civilian Youth

Opportunities Pilot Program. Instead it plans to request congressional

approval to establish the programs in 11 other states. As of August,

Congress had not approved the Guard’s request to establish the programs

in the other states. According to Guard officials, the program will not be

implemented in the other states, and $3 million will not be needed in the

current fiscal year.

Because Congress has not approved the Guard’s request for the program

changes, Congress could rescind $11.5 million of the fiscal year 1993 funds

appropriated for National Guard youth programs.

Viability of Composite

Wing Concept Is

Questionable

The Air Force plans to obligate about $3.7 million of O&M funds during

fiscal years 1994 through 1996 to establish composite wings (aircraft of

various types) at Mountain Home, Pope, and Moody Air Force bases.

In May 1993, we issued a report that raised concerns about the (1) lack of

analysis supporting the decision to build peacetime force projection

composite wings, (2) relative utility of the mix of aircraft in these wings,

and (3) viability of the concept.

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The Air Force believes that the three force projection composite wings

represent a significant enhancement over current deployment capabilities,

responsiveness, and military effectiveness. Additionally, the Air Force

believes that military judgment and the operations of analogous composite

forces are a sufficient basis for implementing the composite wing concept.

Until the benefits of force projection composite wings have been analyzed

and the above concerns resolved, Congress may not want to approve any

additional funding for the composite wing concept. If so, Congress can

reduce the Air Force’s fiscal year 1994 O&M request by $1.2 million.

Request for Training

Funds Can Be

Reduced

The Air Force and the Army can reduce their fiscal year 1994 O&M budget

requests for pilot training and Reserve Officer Training Corps (ROTC) by

$162.5 million.

The Air Force is training more pilots than it needs and is incurring

unnecessary costs. More pilot candidates are being sent through the

Undergraduate Pilot Training program than are needed to fill available

cockpit assignments. As a result, about half of the pilots completing the

program are temporarily assigned nonflying positions. This is referred to

as “banking” pilots. These banked pilots may remain in nonflying positions

for up to 3 years.

According to the Air Force, 503 pilot candidates who are scheduled to

enter the pilot training program between August 1993 and fiscal year 1995

are expected to be banked. The Air Force will spend $273.7 million to train

these pilots. Of the 503 pilots, 229 will receive their pilot training in fiscal

year 1994 at a cost of $131.1 million. Congress can direct the Air Force to

delay sending the pilot candidates to Undergraduate Pilot Training and

reduce the Air Force O&M budget by the $131.1 million.

In discussing this issue with Air Force officials, they told us that the Air

Force had revised its plans so that all pilot candidates entering

Undergraduate Pilot Training in fiscal year 1994 will have flying positions

upon graduation. The revised plans include assigning a third pilot to

tanker aircraft and increasing the air crew ratio. However, they did not

provide documentation to support these changes. For these reasons, we

believe that the Air Force O&M request can still be reduced.

The Army may also be training more pilots than it needs. The Army plans

to spend $257.4 million in fiscal year 1994 to provide undergraduate

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training to 2,299 pilots and graduate training to 2,122 pilots. In July 1993,

the Army revised its fiscal year 1994 force structure requirements

downward by 693 aircraft—an 11-percent reduction. Accordingly, we

believe that the Army can reduce its pilot training requirements by 11

percent, or about $28.3 million.

With regard to ROTC scholarships, the Air Force has requested an increase

of 164 scholarships in fiscal year 1994 over the fiscal year 1993 baseline of

3,019 scholarships. These additional scholarships will cost about

$3.1 million. The Air Force’s justification for the increase was that 1,600

ROTC graduates would be commissioned into the service in fiscal year 1994

as compared with 1,515 in fiscal year 1993. After the budget was

submitted, the number of ROTC graduates that will be commissioned in

fiscal year 1994 was revised downward to 1,350. The downward trend in

the number of graduates expected to be commissioned does not justify an

increase in the number of scholarships. Therefore, the $3.1 million

increase requested for additional ROTC scholarships will not be needed.

Funds Requested for

Civilian Personnel Are

Overstated

The Army’s, Navy’s, and Air Force’s fiscal years 1994 budget requests for

civilian personnel can be reduced by a total of $305.2 million due to the

following reasons:

• The Army’s budget request for civilian personnel is overstated by

$194 million. Documentation submitted to Congress in support of the

President’s budget showed that the Army had reduced its civilian

personnel requirements to $7.6 billion—$194 million less than the amount

requested in the budget. Although the requirements were reduced, the

total amount of the budget request remained the same. Therefore, the

budget request includes $194 million of budget authority that is not

represented by specific programs.

According to an Army budget official, the difference between the

$7.6 billion and the $7.8 billion is because of timing. The official said that

the President’s budget is due to the Office of the Secretary of Defense and

Congress prior to final adjustments being made to the Army’s data base.

As adjustments occur, disconnects between the President’s budget

submission and justification books increase.

• At the end of fiscal year 1993, the Navy’s O&M civilian personnel end

strength is estimated to be 3,337 personnel less than what was planned

and used to develop the budget request for fiscal year 1994. Whenever the

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actual end strength is less than planned, the following year’s work-year

level is adjusted by one-half of the amount by which the actual number

was lower than the planned number. Accordingly, the fiscal year 1994

work-year level used in determining the budget request was overstated by

1,668.5 work years or about $55 million.

• The Air Force’s request can be reduced by $56.2 million. In the fiscal year

1993 Defense Appropriations Act, Congress included a provision that

reduced the number of overseas civilian personnel positions that could be

funded by 25 percent. The intent of this provision was to encourage

overseas commands to obtain funding from the host country. In fiscal

years 1992 and 1993, the USAFE funded foreign national pay at 70 percent of

the total requirement. In its fiscal year 1994 budget submission, the Air

Force requested funding for 70 percent of USAFE’s foreign national pay

requirement. After the budget submission, the Air Force added

$56.2 million to the USAFE budget to increase its foreign national pay

account to $142.6 million—94.7 percent of the requirement. Because

Congress’ intent seems to be to reduce funding for foreign national

personnel, Congress may want to reduce the Air Force’s budget request by

$56.2 million to return it to the 70-percent level.

All the Funds

Appropriated for

Special Events Are

Not Needed

In fiscal years 1992 and 1993, Congress provided $22 million for

Department of Defense support of international special events such as the

1993 World University Games, the 1994 World Cup Games, and the 1996

Olympics. The Department’s support to these events is supposed to be for

security-related devices, equipment, and services that are unique to the

Department and not available from other sources. However, the types of

equipment provided by the Department—fences, detection devices, and

others—are not unique to the Department and are generally available from

other sources.

Of the $22 million appropriated, the Department expects to spend

$8.8 million by the end of the current fiscal year and about $8.1 million in

fiscal year 1994, leaving an unobligated balance of $5.1 million. No

additional funds were requested by the Department for fiscal year 1994,

but it plans to seek congressional approval to extend the availability of

unobligated funds until they are expended.

Officials responsible for providing Department of Defense support told us

that they do not request reimbursement from event sponsors for the

security equipment and services provided because Congress appropriated

the funds for use in the special events. The officials said, however, that if

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Congress mandated that they seek reimbursement from the event

sponsors, they would do so.

The types of equipment provided by the Department—fences, detection

devices, and others—are not unique to the Department and are generally

available from other sources. Therefore, Congress may want to rescind the

unobligated balance of $5.1 million and consider authorizing the

Department to seek reimbursement from the event sponsors for items

already provided.

Repair and

Maintenance Funds

Requested for a Base

Expected to Be

Closed

In June 1993, the Defense Base Closure and Realignment Commission

identified Plattsburgh Air Force Base for closure. The Air Force’s fiscal

year 1994 budget request included about $3.1 million for major repairs and

minor construction projects at the base. In view of the fact that the base is

scheduled to be closed, Congress may want to reduce the Air Force’s

request for repair and maintenance funds by $3.1 million. The Air Force’s

fiscal year 1994 O&M budget request also included $115.7 million for real

property repair and maintenance at USAFE for utilities, contract

engineering, maintenance and repair, and minor construction. Of this

amount, the Command plans to spend $83 million for these purposes. The

remaining $32.7 million will be used for purposes other than real property

maintenance. Because the Command does not plan to use the funds for the

purposes for which they were budgeted, Congress may want to reduce the

Air Force’s O&M budget by $32.7 million.

O&M Support for

Sound Surveillance

System Exceeds

Needs

The Sound Surveillance System (SOSUS) is an underwater acoustics system

used to track enemy submarines. In fiscal year 1993, $129.4 million of O&M

funds was apportioned to SOSUS.

Our analysis showed that the program manager’s estimated funding level

for the program in fiscal year 1994 was $12.8 million less than what was

included in the budget request. Program officials agreed that the system

was overfunded but said that the funds would be used for unfinanced

requirements. In a May 1993 report, we had previously questioned the

projected O&M funding level for fiscal years 1993 and 1994 in view of the

reduced threat. Program officials told us that although they have

consolidated portions of the system, they planned to upgrade the

technology of the system and were attempting to identify other

requirements for it—such as tracking migrating whales.

Page 15 GAO/NSIAD-93-295BR 1994 DOD Budget
B-249828 

Because all of the funds are not needed to operate and maintain the SOSUS

system, Congress may want to reduce fiscal year 1994 O&M funding for

SOSUS by $12.8 million.

The Value of Flying

Hours and Steaming

Days for Drug

Interdiction Efforts

Are Questionable

Each year the Department of Defense allocates flying hours and steaming

days to the services as part of its effort to interdict drugs entering the

United States. However, the flying hours and steaming days do not

significantly contribute to meeting the training needs of the services. Our

draft report sent to the Department of Defense for comment in

August 1993 concluded that because goals have not been established to

measure the effectiveness of the drug interdiction efforts, it is unclear

whether the additional flying hours and steaming days are making a

proportional increase in the military’s contribution to the war against

drugs.

The Department considered fiscal year 1990 as the optimum level for its

drug interdiction efforts. However, since that time the amount of

resources directed to drug interdiction has continued to increase. We

believe that the number of flying hours and steaming days devoted to drug

interdiction efforts can be reduced to the fiscal year 1990 level. The

proposed reductions would not seriously impair the war on drugs because

it would eliminate flying hours and steaming days that are allocated to

inefficient routine surveillance patrols. Reducing the flying hours and

steaming days to the fiscal year 1990 level would allow Congress to reduce

the amount of resources devoted to such efforts by $78.6 million.

Appropriated Fund

Support for

Nonappropriated

Fund Activities

The Navy included $65 million in its fiscal year 1994 O&M budget request

for support of morale, welfare, and recreation (MWR) programs. This would

free up nonappropriated funds which would be used to fund

(1) construction of MWR facilities, (2) local MWR projects that are not

eligible for funding from the central MWR fund, and (3) MWR projects that do

not generate sufficient revenue to pay the cost of operation.

Specific use of $23.5 million of the $65 million is to pay the salary costs of

971 MWR employees who are to be converted to O&M employees. Many of

these personnel positions are in physical fitness and sport facilities.

Shifting the MWR personnel costs to O&M frees up MWR funds for other

purposes.

Page 16 GAO/NSIAD-93-295BR 1994 DOD Budget
B-249828 

At the present time, the Department of Defense is reviewing MWR projects

to determine which should be funded with O&M funds. As of August 1993,

the Department had not reached a decision. In view of the questionable

nature of the use of O&M funds for MWR projects, Congress may want to

reduce the Navy’s O&M budget request by $65 million.

We discussed the aforementioned issues with responsible program

officials during the course of our review and included their comments

where appropriate. Our objectives, scope, and methodology are described

in appendix II. We plan no further distribution of this report until 15 days

after its issue date, unless you publicly announce its contents earlier. At

that time, we will send copies to the Secretaries of Defense, the Army, the

Navy, and the Air Force; the Director of the Office of Management and

Budget; the Chairmen and Ranking Minority Members of the House and

Senate Committees on Appropriations and on Armed Services; and other

interested congressional committees. Copies will be made available to

others upon request.

This report was prepared under the direction of Mark E. Gebicke,

Director, Military Operations and Capabilities Issues, who may be reached

on (202) 512-5140 if you or your staff have any questions. Other major

contributors to this report are listed in appendix III.

Frank C. Conahan

Assistant Comptroller General

Page 17 GAO/NSIAD-93-295BR 1994 DOD Budget
Contents

Letter 1

Appendix I 

Potential Budget

Reduction Issues

22

Prior Year Unobligated Funds 22

Navy Budget Reserve 24

Air Force Budget Reserve 24

Army Burden Sharing 25

Air Force Burden Sharing 25

Army Operating and War Reserve Requirements for Spare Parts 26

Army Excess On-Order Items 27

Army Inventories at the Retail Level 28

Air Force Inventories at the Retail Level 28

Air Force Invalid Back Orders 29

Air Force Duplicate Back Orders 29

Air Force Excess On-Order Items 30

Navy Unrecorded Inventories 31

National Guard Reduced Inventories 31

Army Residual Value Payments 32

Air Force Maintenance Workload Carryover 33

Air Force Cancellation of B-52G Maintenance 34

Air Force Depot Maintenance Requirements 34

Air Force B-2 Maintenance Support 35

Air Force TF30 Engine Maintenance 35

Navy Deferred Ship Maintenance 36

Army Depot Maintenance 37

DOD Coastal Patrol Boats 38

Army Operating Tempo at U.S. Army Europe 38

Army Reduced OPTEMPO at Forces Command 40

Army Flying Hour Program 40

Air Force Flying Hour Program 41

Army Travel Funds 42

Navy Travel Funds 44

Air Force Travel Funds 44

DOD Humanitarian and Disaster Assistance 45

Air Force Unused Cargo Capacity 46

National Guard Youth Programs 47

Air Force Composite Wings 47

Air Force Pilot Training 48

Army Pilot Training 49

Air Force Reserve Officer Training Corps Scholarship 50

Page 18 GAO/NSIAD-93-295BR 1994 DOD Budget
Contents

Army Civilian Pay 50

Navy Civilian Pay 51

Air Force Civilian Pay 52

DOD’s Reduced Funding for Special Events 53

Air Force Real Property Maintenance at Plattsburgh 54

Air Force Real Property Maintenance at USAFE 54

Navy Undersea Surveillance 54

DOD Counter-Drug Operating TEMPO 55

Navy Support for MWR Activities 56

Appendix II 

Objectives, Scope,

and Methodology

57

Appendix III 

Major Contributors to

This Report

58

Tables Table 1: Potential Reductions and Rescissions to the Fiscal Year

1994 O&M Budget Request by Service and Program Category

2

Table I.1: Unobligated Balances of the Services and the Defense

Mapping Agency

23

Table I.2: Unneeded Wholesale-Level Inventory by Inventory

Control Point

27

Table I.3: Fiscal Year 1994 Air Force O&M Budget Request for

TF30 Engine Maintenance

36

Table I.4: Revised TF30 Engine Maintenance Requirements 36

Table I.5: Ship Maintenance Changes for Fiscal Year 1994 37

Table I.6: Potential Reduction in Fiscal Year 1994 Ground

OPTEMPO Budget Request

39

Table I.7: Overstated Real Property Maintenance requirements at

USAFE

54

Page 19 GAO/NSIAD-93-295BR 1994 DOD Budget
Contents

Abbreviations

DOD Department of Defense

FORSCOM U.S. Forces Command

GAO General Accounting Office

IUSS Integrated Undersea Surveillance System

MWR morale, welfare, and recreation

NATO North Atlantic Treaty Organization

O&M operation and maintenance

OPTEMPO operating tempo

ROTC Reserve Officer Training Corps

SOSUS Sound Surveillance System

TDY temporary duty

UPT undergraduate pilot training

USAFE United States Air Forces, Europe

USAREUR United States Army, Europe

Page 20 GAO/NSIAD-93-295BR 1994 DOD Budget
Page 21 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix I 

Potential Budget Reduction Issues

Prior Year

Unobligated Funds

Unobligated balances change continuously as adjustments are made to

prior year obligations. These adjustments include increases or decreases

in travel costs, utility estimates, price changes, contractor defaults, and

foreign currency fluctuations. The unobligated balances of operation and

maintenance (O&M) appropriations that have expired (usually after 1 year)

are not available for new obligations and may be used only for

adjustments to existing obligations for the specific fiscal year of the

appropriation. For example, the funds from fiscal year 1991 may be used

only to accommodate an increase to a fiscal year 1991 obligation. The

unobligated balances may be carried forward for 5 years for adjustments.

Results of Analysis Our review shows that the unobligated balances for the Army, the Navy,

the Air Force, and the Defense Mapping Agency are $1.9 billion. Although

the services claim they need unobligated balances to satisfy upward

adjustments to obligations and to fund the foreign currency fluctuation

account and the foreign national employees separation trust fund, our

analysis shows that unobligated balances have been increasing rather than

decreasing. For example, at the end of fiscal year 1990, the Navy had

$322,000 of fiscal year 1989 funds that were unobligated. At the end of

fiscal year 1991, the unobligated balance of the fiscal year 1989

appropriation had increased from $322,000 to $45.79 million. This trend

continued through the end of fiscal year 1992 when the unobligated

balance was $88.08 million. The balance at the end of April 1993 (the most

recent figure available) was $113.24 million. Table I.1 shows that the

unobligated balances of all the services follow this trend.

Page 22 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix I 

Potential Budget Reduction Issues

Table I.1: Unobligated Balances of the

Services and the Defense Mapping

Agency Fiscal year

Dollars in millions

Service/agency 1989 1990 1991 1992 Total

Army

Sept. 1990 0 $19.81 a a $19.81

Sept. 1991 $71.43 19.81 $121.79 a 213.03

Sept. 1992 149.86 121.58 285.54 $127.78 684.76

Apr. 1993 142.75 132.58 535.28 212.88 1,023.49

Air Force

Sept. 1990 12.00 0 a a 12.00

Sept. 1991 12.00 47.00 0 a 59.00

Sept. 1992 35.00 72.00 0 0 107.00

Apr. 1993 106.20 98.86 185.35 46.96 437.37

Navy

Sept. 1990 0.32 214.02 a a 214.34

Sept. 1991 45.79 31.31 41.30 a 118.40

Sept. 1992 88.08 53.60 113.90 51.32 306.90

Apr. 1993 113.24 86.99 190.65 74.39 465.27

Defense Mapping Agency

Sept. 1990 b 0.01 a a 0.01

Sept. 1991 b 0.67 0.01 a 0.68

Sept. 1992 b 3.21 2.89 0.04 6.14

Apr. 1993 b 7.05 8.70 1.23 16.98

aNot applicable.

bData not provided.

Unobligated balances are increasing because more obligations are

adjusted downward than upward when the obligations are liquidated.

While it is impossible to predict the actual increases and decreases in the

unobligated balances of a prior year’s appropriations, it seems unlikely

that the services will need the unobligated balances to meet upward

adjustments of obligations. Therefore, Congress could reduce the Army’s

fiscal year 1994 request by $511.9 million, the Air Force’s request by

$239 million, the Navy’s request by $219.1 million, and the Defense

Mapping Agency’s request by $10.3 million. The annual reduction totals

$980.3 million.

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Appendix I 

Potential Budget Reduction Issues

Navy Budget Reserve Historically, the Navy holds in reserve about 1 percent of its O&M budget

appropriations, which would be approximately $220 million in fiscal year

1993. The Navy withholds these funds for unexpected requirements that

may arise during the budget year. The Navy’s O&M budget request,

however, does not indicate that any funds will be held in reserve. Instead,

the request is based on requirements identified by the Navy commands.

Results of Analysis The Navy’s fiscal year 1994 O&M budget request of $20 billion could be

reduced by $200 million. The Navy, based on requirements identified by

the Navy’s commands, plans to withhold $200 million as a reserve for

emergent requirements. In effect, the Congress is being asked to approve a

budget request which includes about $200 million in a reserve account for

unanticipated requirements.

Congress should have the benefit of full disclosure for the funds it

authorizes and appropriates. If during the year the Navy has $200 million

in unexpected requirements, Congress should have the opportunity to

assist the Navy in deciding how to fund these unplanned needs.

Air Force Budget

Reserve

The Air Force expected Congress and the Department of Defense (DOD) to

reduce its fiscal year 1994 budget request and therefore developed budget

execution plans in anticipation of congressional budget reductions.

According to Air Force officials, if the congressional and DOD reductions

are less than the 5.3 percent withheld by the Air Force headquarters, the

Air Force will use the additional funds to offset unfunded requirements at

its commands based on their priorities.

Results of Analysis The Air Force’s fiscal year 1994 budget request of $19.8 billion could be

reduced by $1 billion. In anticipation of congressional and DOD reductions

to its budget request, the Air Force withheld 5.3 percent of the amount

requested for fiscal year 1994 and instructed its commands to develop

their budget execution plans based on $18.8 billion—$1 billion less than

the budget request. Because the Air Force plans to execute its fiscal year

1994 O&M programs based on a funding level of $18.8 billion, it apparently

believes that it can function without the extra $1 billion it has requested.

Page 24 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix I 

Potential Budget Reduction Issues

Army Burden Sharing U.S. allies such as Japan, Korea, and the North Atlantic Treaty

Organization nations contribute to the cost of mutual defense.

Contributions come in the form of cash, contributions in kind, and

exclusions of taxes, customs duties, and fees on local purchases and

activities of U.S. forces.

Results of Analysis The Army’s fiscal year 1994 O&M budget request of $16 billion could be

reduced by $257.6 million. This reduction includes anticipated burden

sharing payments of $117.8 million from Japan and $139.8 million from

Korea.

According to Army budget office officials, the Army expects to receive

$117.8 million in burden-sharing payments in fiscal year 1994 based on a

negotiated agreement with the government of Japan. The Army, however,

did not reduce its fiscal year 1994 O&M budget request by $117.8 million.

The Army also expects to receive $139.8 million from the Republic of

Korea in fiscal year 1994. Since 1988, the Republic of Korea has provided

direct cost-sharing support to the United States and in fiscal year 1991

agreed to assume, by fiscal year 1995, one-third of the costs of maintaining

U.S. forces stationed in Korea. Negotiations for the 1994 payment will not

begin until fiscal year 1994.

Army officials contend that the anticipated burden-sharing payments were

considered in arriving at the amount requested in the budget. However, the

officials agreed that the budget documents do not fully disclose the

burden-sharing transactions.

Air Force Burden

Sharing

The Air Force assumed in its fiscal year 1994 O&M budget request that it

will receive $441 million in burden-sharing contributions from U.S. allies.

However, historically, host nations do not contribute the full assumed

burden-sharing amount. Therefore, DOD is working with the Department of

State to seek new burden-sharing arrangements with the allies. As a result

of these discussions, the Air Force reduced its budget request for fiscal

year 1994 by $114 million to reflect an increase in burden-sharing

contributions.

Results of Analysis Air Force officials believe that it is unlikely the allies will contribute

$441 million for burden sharing. They believe a more reasonable figure is

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Appendix I 

Potential Budget Reduction Issues

$269 million—$146 million for foreign national pay, $109 million for real

property maintenance, and $14 million for utilities.

The officials said that the Air Force reduced its budget request by

$114 million as a matter of practicality.1

 To illustrate, if the Air Force

develops its O&M budget assuming full contributions from the allies and

receives less, the Air Force is forced to take money from other O&M

accounts to make up the difference. According to Air Force officials, it is

more practical to use the anticipated burden-sharing estimate

($269 million) for supporting the O&M budget requirements.

In view of the fact that the Air Force expects to receive $269 million in

burden sharing and has already reduced its request by $114 million,

Congress could reduce the O&M budget request by $155 million, the

difference between $269 million and $114 million.

Army Operating and

War Reserve

Requirements for

Spare Parts

The Army inventory of spare parts at the wholesale level includes

operating stock and war reserve stock. War reserves are items needed to

replace combat equipment losses after a war starts. Operating inventory

consists of spare parts required to meet day-to-day needs in a peacetime

environment. Together war reserve and operating requirements are

referred to as the approved force acquisition objective. In addition to

approved force acquisition objective inventory, the Army also maintains

economic and contingency retention-level inventory.

Results of Analysis Our review at two Army national inventory control points showed that

spare and repair parts requirements needed to meet current operating and

war reserve needs were overstated by $1.6 billion.2

 These overstatements

resulted because (1) war reserve requirements had not been adjusted to

reflect the defense planning guidance, (2) the demand base for

determining requirements included nonrecurring demands when only

recurring demands should have been considered, (3) items in a serviceable

condition that were returned to depots were not offset against demands

used in forecasting requirements, and (4) inventory that should have been

shown as retention-level inventory was instead shown as being needed to

meet current operating requirements.

1

The $114 million represents the incremental increase in assumed burden sharing from fiscal years

1993 to 1994.

2

Army Inventory: Current Operating and War Reserve Requirements Can be Reduced

(GAO/NSIAD-93-119, Apr. 14, 1993).

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Appendix I 

Potential Budget Reduction Issues

Overstated requirements do not necessarily result in the inventory being

overstated by a like amount. However, the fact that the requirements are

overstated would allow the Army to procure inventory up to the

requirements levels. Therefore, Congress could reduce the Army’s request

for spare and repair parts by $1.1 billion3

 to preclude the Army from

buying up to the requirements level.

Army Excess

On-Order Items

Wholesale-level inventories are managed by five inventory control points.

Inventory above the approved force acquisition objective is considered as

unneeded to meet current operating and war reserve requirements. As of

September 30, 1992, the Army’s wholesale inventory amounted to

$19.1 billion, of which $4 billion exceeded the objective.

Results of Analysis According to the Army’s budget stratification reports, of the $4 billion in

wholesale inventory that is not needed, about $364 million of the inventory

is on order and due in or is awaiting contract award by the inventory

control points (see table I.2). These inventory items are procured with

revolving funds, not O&M funds. Nevertheless, the large amount of

unneeded inventory is an indication that the amount of funds made

available to procure spare and repair parts may be too high. Congress

could make an appropriate adjustment as an incentive for the Army to

take actions that would reduce the amount of unneeded inventory on

order.

Table I.2: Unneeded Wholesale-Level

Inventory by Inventory Control Point

(as of September 30, 1992) 

Dollars in thousands

Inventory control point On contract

Awaiting

contract Total

Armament, Munitions, and Chemical

Command

$29,004 $6,702 $35,706

Aviation and Troop Command 71,948 15,660 87,608

Communications-Electronics Command 62,005 4,734 66,739

Missile Command 77,638 8,317 85,955

Tank-Automotive Command 74,988 12,989 87,977

Total $315,583 $48,402 $363,985

Note: On-order inventory includes inventory that is under contract to be delivered and planned

procurements awaiting contract award.

3

The amount of the proposed reduction is based on a rate of 70 percent that Congress authorized in

fiscal year 1993 for replenishing wholesale-level stock.

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Appendix I 

Potential Budget Reduction Issues

Army Inventories at

the Retail Level

The Army’s authorized inventories at retail-level activities—installations,

divisions, and other units—total about $4 billion in nondemand- and

demand-based items. Nondemand-based items are not stocked based on

the frequency of demand but rather are stocked at management’s

discretion. An item must be requested at least nine times during a

12-month period to be stocked at the retail level as a demand-based item.

Once a demand-based item is stocked, it must be requested at least three

times a year to continue to stock it.

Results of Analysis Our review at six Army divisions showed that the divisions were

maintaining about $29 million in inventory items categorized as

demand-based items, even though the items did not meet the prerequisite

criteria—three requests a year.4

 Also, the quantity of items stocked was

excess to the Army’s needs. For example, inventory items valued at about

$112 million had inventory turnover rates of less than three times during

the year, even though Army policy indicates that demand-based items

should turn over eight times a year.5

 Therefore, the investment in

inventory was at least twice what it needed to be to meet the Army’s

needs. Congress may want to reduce the Army’s request for spare parts by

at least $56 million as an inducement for the retail-level activities to

streamline their inventory stocking practices. The proposed reduction

assumes that it would take 2 years for the divisions to reduce their stock

levels to the appropriate level.

Air Force Inventories

at the Retail Level

The Air Force supply system has a wholesale level and a retail level. Air

Force policies require wholesale item managers to have visibility over

retail-level assets so that they can (1) reduce or eliminate procurements

when retail activities have excess items and (2) improve operational

readiness by redistributing items directly from retail activities that have

excesses to those that have shortages. Air Force automated systems

usually give wholesale managers visibility over relatively high-cost items

that are returned to wholesale depots for repair but not over consumable

items and low-cost equipment managed through the Systems and General

Support Divisions of the Air Force Stock Fund. Visibility over these items

is limited to periodic reports of excess.

4

Army Inventory: Divisions’ Authorized Levels of Demand-Based Items Can Be Reduced

(GAO/NSIAD-93-09, Oct. 20, 1992).

5

Army policy allows divisions to maintain an inventory level equal to 45 days of supply. This stock

level, in effect, means that the inventory items should turn over eight times a year.

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Appendix I 

Potential Budget Reduction Issues

Results of Analysis We reported that Air Force retail-level activities had about $107 million of

excess inventory on order that the wholesale level was not aware of.6

 As a

result, excess items have not been distributed to other activities that may

have had a need for them. Limited visibility over retail excess inventory is

illustrated by the fact that the wholesale level has been buying items,

valued at $32 million, that were excess at the retail activities. Congress

could reduce the Air Force’s request for spare parts by $107 million

because the excess parts could be redistributed to other retail-level

activities having a need for the items and therefore reduce procurement of

these items.

Air Force Invalid Back

Orders

When units make requisitions that cannot be filled, the item is placed on a

back order. If it is later determined that the requisitioned material is not

needed but the requisition is not canceled, the item continues to be shown

as a valid need.

Results of Analysis An ongoing assignment has shown that the Air Force could reduce its need

for O&M funding to buy spare parts by at least $73 million if it canceled

invalid back orders. The Air Force units do not do a good job of validating

their outstanding back orders for repair parts. On a sample basis, we

found that outstanding requisitions for items valued at $73 million were, in

fact, no longer needed by the units that submitted the original requisitions.

As a result, the Air Force’s need for O&M funds to buy these items could be

reduced by that amount.

Air Force Duplicate

Back Orders

The Air Force manages about 400,000 aircraft consumable items ranging in

cost from a few cents to thousands of dollars each. For fiscal year 1993,

the Air Force forecasted requirements for consumable items valued at

about $4.5 billion. To satisfy this requirement, the Air Force is buying or

plans to buy $1.8 billion of consumable items. The remainder will be

satisfied by assets already on hand.

In July 1991, we recommended that the Air Force achieve procurement

savings by (1) eliminating the double counting of requirements on back

order and (2) considering on-hand depot maintenance assets in its

6

Air Force Logistics: Improved Redistribution of Retail Inventories Needed (GAO/NSIAD-91-165,

July 10, 1991).

Page 29 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix I 

Potential Budget Reduction Issues

procurement computations.7 The Senate Appropriations Committee stated

in its report on the fiscal year 1992 Department of Defense Appropriations

Act that it expected the Air Force to implement our recommendations.

Results of Analysis Contrary to directions of the Senate Appropriations Committee, the Air

Force did not change its consumable items requirements determination

process. If these changes had been made, the Air Force could have

reduced its requirements by $508 million and its procurement by

$203 million.8

 Therefore, Congress may want to consider offsetting the

$203 million procurement savings that could have been achieved against

the Air Force’s fiscal year 1994 O&M budget request.

Air Force Excess

On-Order Items

The Air Force Materiel Command and its five air logistics centers use

standard computerized systems to compute material requirements. Each

computation cycle, these systems identify on-order material that exceed

requirements. Item managers review these computations and, after

correcting any errors, perform an analysis to determine whether it is more

economical to terminate orders or to accept delivery of the material.

When the Air Force terminates a contract for material not needed, it

notifies the contractor to stop production and determine final settlement

charges. However, negotiating final settlement charges can take 1 to 2

years. At that time, the Air Force deobligates contract funds that will not

be needed to cover the settlement charges. The stock fund is reimbursed

by O&M funds for the purchase of aircraft items. These deobligated funds

are available to the Air Force to satisfy other procurement requirements.

Results of Analysis Our draft report has concluded that the Air Force is terminating more

on-order items no longer needed, but it is not making use of the increased

availability of deobligated funds from contract terminations to reduce its

annual stock fund budget and is not determining the impact on O&M

funding requests. The Air Force deobligated about $400 million in stock

funds in fiscal years 1991 and 1992. When the Air Force seeks annual stock

fund obligation authority, it does not consider the additional obligation

authority that is created by contract terminations. Because Air Force units

7

Air Force Requirements: Requirement Computations for Aircraft Consumable Items Can Be Improved

(GAO/NSIAD-91-201, July 10, 1991).

8

Air Force Requirements: Cost of Buying Aircraft Consumable Items Can Be Reduced by Millions

(GAO/NSIAD-93-38, Nov. 18, 1992).

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Appendix I 

Potential Budget Reduction Issues

use O&M funds to procure items from the stock fund, Congress may wish to

consider reducing the Air Force’s O&M request by $400 million and having

the stock fund transfer a like amount to the service’s O&M account.

Navy Unrecorded

Inventories

The Navy prohibits its depots from accumulating material that is not

recorded on inventory records. Unrecorded material results when

maintenance personnel retain material that was issued, but not used, to

complete repair jobs. Unrecorded inventory weakens internal controls and

results in waste when additional material is purchased to meet other

requirements that could have been met with the unrecorded material.

Results of Analysis We reported that Navy wholesale-level depots had about $3 million in

inventory that was not recorded on its inventory records and therefore

was not available for issue to customers.9

 In addition, there was an

immediate need for $392,000 of the unrecorded inventory by Navy

customers. Until that inventory is recorded on inventory records, requests

for like items will have to be purchased even though the request could be

met from the unrecorded inventory. Therefore, the Navy’s request for

spare parts could be reduced by $3 million to reflect the fact that more

inventory is available for issue than Navy management officials are aware

of.

National Guard

Reduced Inventories

The Army National Guard maintains about $215 million in retail inventory

at its 54 U.S. Property and Fiscal Offices. This inventory is used to fill

requests from individual Guard units and maintenance activities. However,

in fact, about 70 percent of the Guard’s requisitions are sent to the Army’s

wholesale-level depots to be filled because the Guard either is not

authorized to stock the requested items or the Guard does not have the

items in stock.

Results of Analysis The Guard’s inventory needs could be met by the active Army’s supply

system. The majority of the Guard’s requisitions are already filled directly

by the Army, and the majority of the requisitions are not high priority.

9

Navy Supply: Excess Inventory Held at the Naval Aviation Depots (GAO/NSIAD-92-216, July 22, 1992).

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We already recommended that the Guard’s separate level of inventory be

eliminated.10 This would reduce the Army’s investment in inventory by

$215 million. The reduced inventory investment would be a one-time

savings that would probably take 3 years to realize. Therefore, Congress

could reduce the Guard’s O&M request by at least $70 million. This

reduction could serve as an incentive for the Guard to take the actions

necessary to achieve a more efficient way of meeting its supply needs.

Army Residual Value

Payments

Residual value is a negotiated amount that a host country will pay the

United States for U.S. investments in the construction or major

improvement of facilities that have been used by the United States and are

being returned to the host country.

Results of Analysis The Army expects to receive $142.9 million in residual value payments

during fiscal year 1994, and, according to an Army official, it is unsure as

to how these funds will be used when they are received. Because the Army

could neither identify requirements for the $142.9 million, and because

requirements are not reflected in the President’s budget as an offset to its

appropriation request, we believe that the Army’s O&M appropriation

request can be reduced by $142.9 million.

The Army’s O&M budget can be reduced by an additional $28.1 million

because it did not reduce its appropriation request by $28.1 million in

residual value funds it anticipates receiving. The Army’s budget

justification book identified the $28.1 million as a source of funds for base

support operations. However, the Army did not reduce its appropriation

request to reflect the $28.1 million. As a result, the Army’s O&M

appropriation request can be reduced by $28.1 million.

Additionally, DOD officials told us that there is currently $3.4 million in the

DOD Overseas Military Facility Investment Recovery Account11 and that an

additional $5.4 million of payments has been negotiated with Canada and

Italy. Congress may want to direct the Secretary of Defense to use the

$8.8 million to offset its fiscal year 1994 O&M requirements.

10National Guard: Using the Army’s Supply System Will Reduce the Guard’s Inventory Investment

(GAO/NSIAD-93-25, Dec. 9, 1992).

11Residual value payments made by host countries are deposited in the DOD Overseas Military Facility

Investment Recovery Account. The use of these funds is limited to facility maintenance and repair at

military installations in the United States and outside the United States if the Secretary of Defense

anticipates the installations will be used for a long period.

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Air Force

Maintenance

Workload Carryover

DOD industrial funds are used to finance the operations of industrial and

commercial-type activities that provide common services within DOD. The

Air Force’s depot maintenance industrial fund financed about $3.8 billion

in depot maintenance services through in-house and contract services in

fiscal year 1992. The workload carryover in this fund, which was about

$800 million at the end of fiscal year 1987, is projected to be $1.5 billion at

the end of fiscal year 1993. The carryover equals the estimated cost to

complete ongoing work plus the cost of funded work that has not been

started.

Results of Analysis Air Force officials stated that some carryover work is needed to ensure a

continuous flow of work from one year to the next. Although the Air Force

did not provide a precise estimate of the required carryover, officials

estimated the requirement at 2.5 months to 3.5 months of the average

annual revenue (about $4.1 billion for fiscal year 1993). Using projected

revenue and projected carryover, carryover at the end of fiscal year 1993

will represent about 4.4 months of work.

According to Air Force officials, the most revenue is generated in

September. Also, funds remaining at the end of a fiscal year are obligated

to the depot maintenance industrial fund to avoid letting the funds expire,

even though the work will not be done until a later fiscal year.

In fiscal year 1993, the House Armed Services Committee (H. Rept. 527,

102nd Congress) took the position that there was little point in providing

funds for work that would not be accomplished in the fiscal year for which

they are appropriated. Previously in 1982, the House Appropriations

Committee stated that the funding provided to industrial fund customers

should be consistent with the industrial funds’ ability to do the work.

Even after allowing for a carryover of 3.5 months, the depot maintenance

industrial fund will have about $290.5 million more than required to ensure

continuous operations. Since about 70 percent of the revenue for the fund

is from the Air Force O&M account (either directly or indirectly through the

stock fund), Congress could reduce the Air Force O&M budget request by at

least $203.4 million (70 percent of $290.5 million). This amount represents

the 0.9-month carryover that is excess to the projected requirement to

ensure continuous operations and that will be funded by the Air Force’s

O&M account.

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In commenting on this matter, Air Force officials told us that the fiscal

year 1993 carryover is now estimated at 3.2 months rather than 4.4 months

and, therefore, the budget request should not be reduced.

In our opinion, even if the carryover is now 3.2 months, it is still about 

0.7 months greater than the minimum amount needed to provide a smooth

transition from one fiscal year to the next. For that reason, the budget

request can still be reduced approximately the same amount.

Air Force

Cancellation of B-52G

Maintenance

The B-52 has been a substantial element in the Air Force’s bomber

inventory since 1959. Two versions are in service today: the B-52G and the

B-52H. The B-52H, an improved version of the B-52G, has an increased

range and improved defensive armament. With the deployment of the

more technically advanced B-1 bomber and the development of the B-2A,

the role of the B-52 is declining. The Air Force plans to retire the B-52G at

the end of fiscal year 1994 and retain the B-52H.

Results of Analysis In fiscal year 1993, Congress appropriated about $28 million for program

depot maintenance for the B-52G. According to Air Force officials,

program depot maintenance is not planned for B-52Gs in fiscal years

1993-94, and the $28 million will be used to meet other maintenance

requirements. Since the Air Force has no plans to do program depot

maintenance on the B-52G in fiscal year 1993, the $28 million could be

rescinded or offset against the Air Force’s fiscal year 1994 O&M request.

Air Force Depot

Maintenance

Requirements

The Air Force included $9.4 million in its fiscal year 1994 O&M budget

request for depot maintenance programs for the Air Combat Command.

However, the Command did not include these programs for the budget

amounts in its budget execution plans for fiscal year 1994.

Results of Analysis Air Combat Command officials told us that even though the Air Force

included $9.2 million in the budget request for five of the program

elements for depot-level reparable maintenance, the Command has not

identified maintenance requirements for these funds. In addition,

Command officials could not explain why the President’s budget included

funding for the other three program elements totaling $246,000. As a result,

it does not plan to use the funds for the purposes for which they were

budgeted. Since the Air Combat Command has not identified a depot

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maintenance requirement for the $9.4 million, Congress could reduce the

Air Force’s O&M budget by a corresponding amount.

Air Force B-2

Maintenance Support

The Air Force will take delivery of its first four operational B-2 bombers in

fiscal year 1994. The Air Force requested $36.6 million in its fiscal year

1994 O&M budget to support the B-2 aircraft (maintenance, supply, and

operational test and evaluation). These costs will be incurred by the Air

Combat Command, the Air Force Materiel Command, and the Air Force

Operational Test and Evaluation Center.

Results of Analysis Although the Air Force has requested $36.6 million to support the B-2

during fiscal year 1994, the Air Force commands have budgeted only

$15.7 million for fiscal year 1994 for support of the B-2. Therefore,

Congress could reduce the Air Force’s fiscal year 1994 O&M budget by

$20.9 million.

Air Force TF30

Engine Maintenance

Production of the F-111 aircraft began in the mid-1960s, and the Air Force

plans to maintain some F-111s in the active inventory until 2017. Because

of problems experienced with the F-111F TF30-111 engines during

Operation Desert Storm, the Air Force plans to remanufacture the engine.

The TF30-109 engines are being repaired under the two-level maintenance

program being established in fiscal year 1993. Under this program,

intermediate-level maintenance will be moved from bases to depots.

Results of Analysis The Air Force’s fiscal year 1994 O&M budget request includes $112.2 million

to support maintenance on TF30 engines. However, revised fiscal year

1994 maintenance requirements show that the Air Force plans to use only

$99.6 million—$12.6 million less than the figure in the budget request. Air

Staff officials agreed that funds for specific program requirements may

change after budget submissions. They said, however, that any funds not

needed for the TF30 program could be used for unfunded requirements.

Tables I.3 and I.4 show the breakout of the maintenance funding requested

and the revised maintenance requirements.

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Table I.3: Fiscal Year 1994 Air Force

O&M Budget Request for TF30 Engine

Maintenance

Dollars in millions

Maintenance

Number of

engines Funding

Minor 17 $5.8

Remanufacture 117 90.4

Contingencies a 0.9

Two-level maintenance 41 15.1

Total 175 $112.2

aUnknown.

Table I.4: Revised TF30 Engine

Maintenance Requirements Dollars in millions

Maintenance

Number of

engines Funding

Minor 0 0

Remanufacture 103 $79.6

Contingencies a 0.9

Two-level maintenance 52 19.1

Total 155 $99.6

aUnknown.

Because the Air Force has requested funds not needed, Congress could

reduce the Air Force’s fiscal year 1994 O&M request by $12.6 million.

Navy Deferred Ship

Maintenance

The ship depot maintenance program finances the overhaul of naval ships

and other maintenance activities. Ships are scheduled for depot-level

maintenance in advance of their arrival dates. One reason for advanced

scheduling is so that material can be ordered and on hand when the ship

arrives at the shipyard.

Results of Analysis The Navy’s fiscal year 1994 O&M request includes $30.2 million for

maintenance of ships whose scheduled maintenance has been canceled or

rescheduled to fiscal year 1995, as shown in table I.5.

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Table I.5: Ship Maintenance Changes

for Fiscal Year 1994 Dollars in millions

Ship Status Amount

AD 37 Rescheduled $5.7

LKA 114 Canceled 4.9

LPD 7 Rescheduled 6.0

LSD 43 Rescheduled 5.2

SSN 672 Rescheduled 8.4

Total $30.2

Since the funds are not needed for the ships for which they were

budgeted, Congress could reduce the Navy’s O&M budget request by

$30.2 million. Ship maintenance officials at the Pacific Fleet agreed that

the fiscal year 1994 funds are no longer needed for the maintenance of

these specific ships. However, they said the Fleet could use the funds to

reduce backlogged maintenance.

Army Depot

Maintenance

Depot repair programs generally consist of three categories: overhaul,

inspection and repair, and modernization and conversion. Overhaul

programs involve the complete rebuilding of a weapon system or major

component. Inspection and repair programs involve inspecting an item

and repairing only what is needed. Modernization and conversion

programs involve changing and upgrading systems and components to

meet specific needs.

Results of Analysis In 1992, we reported that items were being routinely overhauled at two

Army maintenance depots even when a lesser level of repair would have

sufficed.12 The items were not inspected to determine what repairs were

necessary. Instead, they were submitted for complete overhauls. One of

the depots performed a limited test and found that it could reduce

maintenance costs by $1.1 million annually if it inspected items and

performed only those repairs that were necessary to return the items to

service.

Although we could not project the results of our review Army-wide, the

conditions found at the two depots could be a systemic problem

throughout the Army. Therefore, the Committee could reduce the Army’s

request for depot maintenance funds in fiscal year 1994 by at least

12Army Maintenance: Savings Possible by Stopping Unnecessary Depot Repairs (GAO/NSIAD-92-176,

May 5, 1992).

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$1.1 million as an incentive for the Army to use its maintenance resources

more prudently.

DOD Coastal Patrol

Boats

The U.S. Special Operations Command, a unified command, is responsible

for training, maintaining, and providing special operations forces to

support contingency plans developed by five regionally oriented

commands. To this end, the Command buys and supports a variety of

equipment, including Navy boats and ships.

Results of Analysis Congress could reduce the U.S. Special Operations Command’s fiscal year

1994 O&M budget request by $913,000. According to budget documents, the

Command was to receive 6 patrol boats in fiscal year 1994, bringing the

total number to 10. However, according to a Navy official, two of these

boats will not be delivered in fiscal year 1994. The Command’s budget

included $1.3 million to complete tests on the patrol coastal boats. These

tests are required prior to their participation in fleet exercises or taskings.

Therefore, the fiscal year 1994 request for these tests could be reduced

$436,000.

Furthermore, the Command included $3.3 billion for boat operations.

Because operating costs for boats entering the fleet during the fiscal year

are included based on one-half year’s annual operating cost and because

two of the planned 10 ships will not arrive until after fiscal year 1994, the

Command’s budget could be reduced $477,000.

Army Operating

Tempo at U.S. Army

Europe

Costs for ground operating tempo (OPTEMPO) include certain fixed costs

and the costs of fuel and spare parts associated with operating tactical

vehicles and other military equipment at a specified usage rate (miles or

hours) in order to achieve or sustain a prescribed level of readiness. The

Department of the Army calculates the amount necessary to operate its

vehicles and equipment using its Training Resource Model, which

multiplies the cost per unit of usage by the number of authorized pieces of

equipment and then by the number of miles or hours. For example, if fuel

and spare parts cost $1.50 per mile and a command has 1,000 vehicles that

it plans to operate 500 miles each during the year, the estimated ground

cost for the vehicles is $750,000.

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Results of Analysis Our review indicated that the fiscal year 1994 budget for OPTEMPO for U.S.

Army, Europe (USAREUR) could be reduced by $109.8 million. The potential

reduction comprises two separate aspects: (1) a $62.4-million potential

reduction based on unit drawdown estimates and (2) a $47.4-million

potential reduction based on different training levels.

OPTEMPO Costs Associated

With Unit Drawdowns

USAREUR documentation states that unit-level collective training ceases 

180 days prior to a unit’s estimated departure date. The President’s budget

and USAREUR’s stated requirements did not consider about $62.4 million in

reductions in OPTEMPO resulting from USAREUR units leaving Europe in fiscal

year 1994. Our analysis of the variable costs ($252 million) associated with

ground OPTEMPO and the unit’s estimated departure dates showed that

OPTEMPO costs could be reduced by $62.4 million. We reduced these

variable costs by either 100 percent, 75 percent, 50 percent, or 25 percent

based on whether the unit will depart the theater in the first, second, third,

or fourth quarter of the fiscal year.

OPTEMPO Costs Associated

With Different Training Levels

In prior years, the Army has maintained that ground OPTEMPO should be

funded at the 800-mile level in order for units to maintain full readiness

rates, and Congress has fully funded this requirement. However, since

February 1993, USAREUR has been funding its units at a 600-mile level in

order to make funds available for other purposes.

We examined readiness reports of units training at the 600-mile level and

found that these units were reporting full readiness rates. USAREUR officials

stated, however, that readiness cannot be sustained at the 600-mile level

and in the long term, they intend to train at the 800-mile level during fiscal

year 1994. If USAREUR units trained at the 600-mile level in fiscal year 1994,

as it has since February 1993, USAREUR’s ground operating tempo could be

reduced another $47.4 million, as shown in table I.6.

Table I.6: Potential Reduction in Fiscal

Year 1994 Ground OPTEMPO Budget

Request

Dollars in thousands

Description Amount

USAREUR training budget at 800-mile level $457,999

Potential reduction attributed to drawdown 62,476

Subtotal 395,523

USAREUR training budget at 600-mile level after drawdown 348,095

Potential reduction after drawdown $47,428

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Army Reduced

OPTEMPO at Forces

Command

The Army’s fiscal year 1994 O&M budget request includes $1.16 billion for

ground OPTEMPO at Forces Command (FORSCOM). Army headquarters

officials estimate this amount would fund ground OPTEMPO at the

traditional readiness benchmark of 800 miles. FORSCOM officials estimate

that an OPTEMPO level of 720 to 800 miles allows units to achieve readiness

levels in the C1 to C2 range. They consider units reporting C1, C2, or C3

ready to deploy.13

Results of Analysis Because FORSCOM units report deployable levels of readiness with a ground

OPTEMPO program estimated at 720 to 730 miles, Congress could reduce

OPTEMPO funds for the Command. A fiscal year 1994 ground OPTEMPO levels

of 720 miles equates to $1.044 billion, or $116 million less than the Army’s

budget request. As of August 1993, FORSCOM resource management officials

had estimated that Army headquarters would provide additional funding

for FORSCOM’s fiscal year 1993 ground OPTEMPO, resulting in a program

funded at the level of 720 to 730 miles. During most of fiscal year 1993,

Army headquarters funded ground OPTEMPO at FORSCOM at about 660 miles.

Our analysis of readiness levels reported quarterly by FORSCOM units from

January 1991 through June 1993 showed that the vast majority of units

reported deployable levels of readiness and that readiness levels had not

decreased during fiscal year 1993.

Army Flying Hour

Program

The costs of the Army’s flying hour program include the cost of fuel and

repair parts for its rotary- and fixed-wing aircraft. For fiscal year 1994, the

Army requested $829.4 million for its flying hour program. Included in this

amount is $117.6 million for USAREUR’s program for 114,810 flying hours.

Results of Analysis The Army plans to allocate $784.7 million of the $829.4 million requested

to its commands. An Army official attributes the $44.7-million difference

between the amount requested and the amount it plans to allocate to

expected increased efficiency in O&M of the Army’s flying hour program.

We believe that the $44.7 million represents a potential reduction to the

fiscal year 1994 O&M budget. Also included in the Army’s budget request is

$10.6 million for flying hours in connection with its drug interdiction

program. This $10.6 million represents an additional potential reduction

13Commanders’ assessment of a unit’s training readiness is reported as a “C” rating, ranging from C-1 to

C-4, that represents an estimate of the number of days needed for a unit to be fully trained in all

mission-essential tasks.

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because DOD has a separate appropriation that is to be used to fund the

Army’s drug interdiction program.

In addition, USAREUR’s flying hour program can be reduced by $12.2 million.

This reduction consists of (1) a $4.5-million potential reduction based on

USAREUR’s historic training levels and (2) a $7.7-million potential reduction

based on USAREUR’s plan to fly fewer aircraft than the number used in

determining the amount in the Army’s budget request.

Past Levels of Flying Hour

Training

USAREUR’s flying hour documentation showed that since fiscal year 1990,

USAREUR flew fewer hours per month than the rate shown in the President’s

budget. Based on USAREUR’s detailed flying hour information, we computed

a weighted average of the flying hours executed per month for each type

of aircraft. Combining this with cost and aircraft density information, we

determined that USAREUR had a flying hour requirement of $113.1 million,

or $4.5 million less than included in the President’s budget for USAREUR.

Aircraft Attached to Units

Affected by Drawdown

The President’s budget and USAREUR’s stated requirement for flying hours

did not consider 107 aircraft attached to units that are scheduled to leave

Europe during fiscal year 1994. USAREUR documentation states that all

withdrawing units will cease unit-level collective training 180 days prior to

the estimated departure date. If the amount included in the President’s

budget had been computed based on the reduced number of aircraft, the

flying hour program could have been reduced $19 million.

USAREUR officials told us that pilots attached to deactivating units still

require training and that USAREUR will require about $5 million for pilot

proficiency. Accordingly, we are recommending a reduction of

$7.7 million, not the full $19 million as described above. This allows the

$5 million needed for pilot proficiency in fiscal year 1994 and recognizes

$6.3 million, which represents USAREUR’s pro rata share of the $44.7 million

proposed reduction due to expected efficiencies in maintenance and

operations.

Air Force Flying Hour

Program

The Air Force’s fiscal year 1994 O&M budget request of $23 million to

accommodate a crew ratio change for selected fighter aircraft from 1.25 to

1.40 could be reduced by $12.3 million. According to Air Force officials,

this increase is justified because (1) Desert Storm operations required a

crew ratio of approximately 2.0 to meet 24-hour flying taskings and

approximately 1.6 to meet one-half-day flying taskings and (2) force

structure reductions eliminate the flexibility of using untasked crew to

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augment for crews in combat and other contingencies. In line with the

increased ratio, the Air Force programmed 4,133 additional Air Combat

Command flying hours for the F-111 aircraft. This increased the Command

O&M budget by $12.3 million based on the projected F-111 flying cost of

$2,984 per flying hour.

Results of Analysis Although the Command supports the increased crew ratio, it does not plan

to increase the flying hours for the F-111 in fiscal year 1994. It believes the

gradual increase in the number of pilots can be accommodated for 1 year

without a flying hour increase. In addition, it believes that a 30-percent

increase in the utilization rate for the F-111 is not realistic for fiscal year

1994. Congress may want to reduce the Air Force O&M budget by 

$12.3 million because the planned increased crew ratio will not result in

additional flying hours at the Air Combat Command.

Army Travel Funds The Army has on-base housing to lodge personnel in a travel status. Some

of the facilities known as transient lodging are deemed mission-essential

and are used by personnel who are on temporary duty (TDY) for training or

other purposes. The transient housing facilities are largely supported with

O&M appropriated funds that come from the transient personnel who are

charged a fee for using the facilities. Lodging rates for TDY facilities are

established at minimum levels to provide for amenities not authorized by

appropriated funds. Commanders have the authority to redesignate the

use of these facilities when they are no longer needed.

Most bases have guest houses that are used mainly as interim lodging for

military personnel and their dependents making a permanent

change-of-station transfer. These facilities are not mission-essential and

are part of the Army’s morale, welfare, and recreation (MWR) fund. Base

commanders can set guest charges to generate profits for use by other

MWR activities.

In a 1990 report,14 we reported that some Army installations overcharged

the travelers and their home commands an estimated $70 million for

transient housing and used the excess charges to subsidize other MWR

activities that are paid for from nonappropriated funds. We recommended

that the Army return the excess charges to the O&M account or repay them

to the U.S. Treasury.

14Army Housing: Overcharges and Inefficient Use of On-Base Lodging Divert Training Funds

(GAO/NSIAD-90-241, Sept. 28, 1990).

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Results of Analysis In a recent report,15 we reported that the Army has not repaid the

overcharges that have accumulated from inflated transient housing fees.

As of October 1991, the amount had increased to $157 million. The Army

then stopped the practice of diverting funds to MWR nonappropriated

accounts and transferred $34 million to a separate account for transient

housing. Therefore, we believe that the excess charges of $123 million

($157 million less the $34 million) that were diverted to and remain in the

MWR nonappropriated account can be transferred from the MWR account

and be used as an offset to the Army’s fiscal year 1994 O&M budget request.

Transient lodging charges continue to be inflated, and as of March 31,

1993, the transient housing account balance had increased to $40 million.

Army officials said that although it is contrary to DOD policy to inflate

transient housing fees, base commanders have kept the lodging rates

higher to reduce the impact of appropriated funding reductions that

support transient housing.

According to the officials, reducing the lodging fee to a more reasonable

level should result in annual reductions of about $20 million. They said

that the savings can be realized by policy and procedural changes that

(1) direct commanders to reduce and cap lodging service charges,

(2) allow for the transfer of excess funds from installation accounts, and

(3) preclude and control the practice of commanders to double budget for

the same item in both appropriated and nonappropriated accounts. In view

of the estimated reduction in lodging fees currently being paid out of O&M

funds, we believe that the fiscal year 1994 O&M budget request should be

reduced by an additional $20 million.

During our review of Army transient housing, we also found that two

commanders were redesignating TDY facilities to guest houses and then

sending TDY personnel to the converted facilities in order to generate funds

for other MWR functions. The Army corrected this practice in the United

States. However, Army housing utilization and classification reports show

that some USAREUR commanders redesignated TDY facilities to guest houses

when, in fact, TDY facilities were still needed.

Army housing officials said that the Command should not have reclassified

the TDY facilities to subsidize other MWR activities. As a result, these

officials estimate that TDY personnel were overcharged an estimated

15Army Housing: Overcharges for On-Base Lodging Have Not Been Repaid

(GAO/NSIAD-93-188, Aug. 3, 1993).

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$5 million. Congress may want to reduce the Army’s O&M request for fiscal

year 1994 by $5 million to reflect the reduced need for O&M funds.

Navy Travel Funds The Navy spends millions of dollars each year housing transient personnel

who are on official travel status. During our 1991 review of Navy housing,16

 we found that Navy travel costs are higher than necessary due to

inadequate management controls that allow the use of more expensive

off-base lodging when on-base housing is available. In our report, we

recommended that the Navy measure the extent to which travel costs have

been affected by authorizing off-base lodging when facilities on base were

available.

Results of Analysis In 1992, the Naval Audit Service identified $16.3 million of annual O&M

costs that could be avoided if the Navy strengthens its policies concerning

the authorization of off-base lodging. The Navy revised its polices.

However, the Navy does not plan to reduce the amount budgeted for travel

until fiscal year 1995, even though a Navy housing official acknowledged

that lower travel costs will be incurred during fiscal years 1993 and 1994 if

this new policy is followed.

In view of the above, Congress may want to reduce the Navy’s fiscal year

1994 O&M budget request by $16.3 million to reflect the savings available by

implementing the Navy’s lodging policy. Also, if the Navy adheres to this

new policy, future budgets should reflect corresponding savings.

Air Force Travel

Funds

The Air Force operates temporary lodging facilities for airmen and officers

undergoing a permanent change of station, individuals visiting service

members stationed at the installation, reservists on various types of duty

or in a non-duty status, retirees, and others. These facilities are similar to

efficiency apartments and are designed to house families for up to 30 days.

The Air Force is the only service that designates temporary lodging

facilities as mission-essential facilities and maintains them primarily with

appropriated funds. According to the Air Force, 33 percent of the

occupants of these facilities receive appropriated fund reimbursement for

the lodging fee charged.

16Navy Housing: Transient Lodging Operations Need Effective Management Control

(GAO/NSIAD-92-27, Oct. 3, 1991).

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According to Air Force regulation, when the mission of the Air Force

requires a service member to make a permanent change of station, and the

member and his/her authorized dependents cannot immediately obtain

permanent government or private housing at the new station, the Air

Force may use appropriated funds to help support facilities housing the

member and dependents until permanent housing is reasonably available.

Results of Analysis The Air Force policy contradicts an August 1987 DOD report to a

congressional committee on the recategorization of MWR activities. In its

report, DOD designated temporary lodging facilities in support of official

travel as Category A (mission sustaining) and other types of temporary

lodging facilities as Category C (enhanced community support) or

Category D (business). Category C was eliminated in 1990, and all

temporary lodging facilities not in support of official travel were classified

as Category D. Category A activities are supported almost entirely by

appropriated funds, while Category D activities receive very limited

appropriated fund support.

Neither the Army nor the Navy provide appropriated fund support for

facilities used to house permanent change-of-station families. The Air

Force has housed families involved in a permanent change of station in

Category C and D facilities, but unlike the other services, the Air Force

uses appropriated funds to maintain the temporary facilities.

The Air Force estimates that it will spend $4.9 million in O&M funds on

temporary lodging facilities in fiscal year 1994. Because 33 percent of the

usage of these facilities ($1.6 million) would be reimbursed by

appropriated funds, the remaining two-thirds ($3.3 million) required to

maintain these facilities should be paid out of MWR funds rather than O&M

funds. Therefore, Congress may want to reduce the Air Force’s fiscal year

1994 O&M budget request by $3.3 million.

DOD Humanitarian

and Disaster

Assistance

In recent natural disasters such as Hurricanes Andrew and Iniki and

Typhoon Omar, the armed forces played a major role in providing

humanitarian and disaster relief assistance. Providing this assistance cost

the forces several hundred million dollars. However, DOD will be

reimbursed by the Federal Emergency Management Agency for the costs

incurred.

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Potential Budget Reduction Issues

Results of Analysis DOD’s fiscal year 1994 O&M budget request of $98 million for humanitarian

assistance ($48 million) and disaster relief assistance ($50 million) could

be denied. These amounts are included as part of the Global Cooperative

Initiatives. Our work on recent disasters, namely Hurricanes Andrew and

Iniki and Typhoon Omar, showed that DOD expects to be reimbursed for

the expenses incurred for humanitarian and disaster assistance provided

during these operations.

DOD also has a $100-million revolving fund that was established to provide

up-front funding for humanitarian assistance. However, there is a lack of

clarity within DOD concerning the circumstances under which the fund can

be used, that is, domestic and/or international disaster assistance. As a

result, little use has been made of the fund. Because DOD is reimbursed for

domestic disaster assistance that it provides and a revolving fund already

exists, Congress may wish to direct DOD to use this fund for all

humanitarian assistance efforts where it can be established that the fund

will be reimbursed. If Congress agrees, it can reduce the Global

Cooperative Initiatives request by $98 million.

Air Force Unused

Cargo Capacity

DOD equips and operates a military airlift capability during peacetime that

provides training to meet military requirements during war and

contingencies. DOD policy provides that the services will use this airlift

capability for overseas movement of goods and materiel when it is

available. Such use helps offset the cost of airlift readiness training,

thereby reducing DOD’s overall transportation costs.

Results of Analysis We have reported that DOD could better coordinate its cargo shipments

with available capacity—particularly for lower priority shipments—and

save $21 million annually in payments to commercial transportation

carriers.17 Air Force cargo aircraft flying regular overseas missions

continue to operate with substantial amounts of unfilled capacity—about

36 percent. At the same time, large quantities of lower priority DOD cargo

was transported overseas by commercial surface transportation at

substantial cost.

17Military Airlift: Greater Use of Peacetime Airlift Cargo Capacity Would Reduce Costs

(GAO/NSIAD-92-263, Sept. 16, 1992).

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Potential Budget Reduction Issues

National Guard Youth

Programs

In fiscal year 1993, Congress provided $44 million for the Civilian Youth

Opportunities Pilot Program and $3 million for the Urban Youth Corps and

the Youth Conservation Corps. These programs were established under

the authority provided in Public Law 102-484. The authorizing legislation

limits the programs to 10 states.

Results of Analysis There is a potential to rescind a total of $11.5 million from the National

Guard’s fiscal year 1993 budget for these programs.

The Guard received $44 million to conduct the Civilian Youth

Opportunities Pilot Program in 10 states. According to representatives of

the National Guard Bureau, there are sufficient funds to expand the

program to 14 states, and the National Guard is requesting congressional

approval to expand the fiscal year 1993 program to 4 additional states.

According to a National Guard Bureau official, because Congress did not

consider expanding the programs, $8.5 million of program funds are

available for recision.

The National Guard also received $3 million for the Urban Youth Corps

and the Youth Conservation Corps. The Guard does not want to establish

these programs in the 10 states that are participating in the Civilian Youth

Opportunities Pilot Program. Instead, it is requesting congressional

approval to establish these programs in 11 other states. According to a

National Guard Bureau official, because Congress did not consider this

request, there are $3 million of program funds available for recision.

Air Force Composite

Wings

The Air Force is establishing composite wings composed of various types

of aircraft at Mountain Home Air Force Base, Idaho, and Pope Air Force

Base, North Carolina. It is also considering establishing a third wing at

Moody Air Force Base, Georgia. The purpose for establishing composite

wings is to test the conceptual validity of placing a variety of aircraft types

and capabilities at one base under one commander.

To establish the two composite wings, the Air Force plans to spend

$143 million and, as of December 31, 1992, had obligated $27.2 million

($24.5 million for O&M and $2.7 million for military construction). Of the

remaining $116 million,18 the Air Force plans to obligate about $3.7 million

18The figure includes costs for Pope Air Force Base, Mountain Home Air Force Base, and the

Environmental Impact Statement and design costs for Moody Air Force Base. The total does not

include future beddown costs for Moody.

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Potential Budget Reduction Issues

of O&M funds during fiscal year 1994 through fiscal year 1996 ($700,000 at

Mountain Home and Pope and $3 million at Moody).

Results of Analysis In May 1993,19 we concluded that insufficient analysis was performed

before deciding to build force projection composite wings in the United

States. The specific concerns related to (1) lack of analysis supporting the

decision to build peacetime force projection composite wings, (2) relative

utility of the mix of aircraft in these wings, and (3) the viability of the

concept. For example, the Air Force has not established clear criteria

validating the concept, nor has it determined all the costs associated with

these wings. The report recommended that the Secretary of Defense take

no further steps to implement the force projection composite wings until

the additional analysis had been conducted.

The Air Force did not concur with our recommendations and stated that it

believes that the three force projection composite wings represent a

significant enhancement over current deployment capabilities,

responsiveness, and military effectiveness. Additionally, the Air Force

maintained that military judgment and the operations of analogous

composite forces are a sufficient basis for implementing the composite

wing concept.

Because of the aforementioned issues, Congress may wish to not authorize

or appropriate $1.2 million of O&M funds, one-third of the O&M funds to be

obligated from fiscal year 1994 through fiscal year 1996, until the benefits

of force projection composite wings have been analyzed and the

unanswered questions resolved.

Air Force Pilot

Training

As part of U.S. efforts to draw down its military forces, the Air Force is

reducing the number of pilots in its force structure. By fiscal year 1995, the

Air Force projects that it will need approximately 15,300 pilots, down from

about 22,300 in fiscal year 1989.

Air Force pilot candidates receive two types of pilot training. First, they

learn to fly during the 1-year Undergraduate Pilot Training (UPT) program.

Second, they receive advanced flight training for 2 to 8 months on a

particular weapon system. Pilots who complete this training are fully

qualified on a weapon system and are then assigned to an operating air

19Air Force Organization: More Assessment Needed Before Implementing Projection Composite Wings

(GAO/NSIAD-93-44, May 5, 1993).

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Potential Budget Reduction Issues

squadron. The Air Force makes a substantial investment in the training of

its pilots, spending about $500,000 per pilot in the UPT program and about

$800,000 per pilot in weapon system training.

Results of Analysis The Air Force’s fiscal year 1994 budget request for the UPT program can be

reduced by $131.1 million. According to our draft report sent to DOD for

comment in August 1993, the Air Force is training more pilots than it needs

and incurring costs unnecessarily. More pilot candidates are being sent

through the UPT program than there are cockpit assignments available. As

a result, about half of the pilots completing the program are temporarily

assigned to nonflying positions (or “banked”) before entering weapon

system training. These banked pilots may remain in their nonflying

positions for up to 3 years.

According to the Air Force, 503 pilot candidates who are scheduled to

enter the UPT program between August 1993 and September 1995 are

expected to be banked. The Air Force will spend $131.1 million to send 229

of these pilots to UPT training in fiscal year 1994. We believe the Air Force

should delay the entry of these pilot candidates into the UPT program until

a sufficient number of cockpit assignments become available in operating

air squadrons to absorb new pilots. Therefore, Congress may want to

reduce the Air Force O&M budget by the $131.1 million it will cost to send

the 229 pilot candidates to UPT in fiscal year 1994.

In discussing this issue with Air Force officials, they told us that the Air

Force had revised its plans so that all pilot candidates entering UPT in fiscal

year 1994 will have flying positions upon graduation. The revised plans

include assigning a third pilot to tanker aircraft and increasing the air crew

ratio. However, they did not provide documentation to support these

changes. For these reasons, we believe that the Air Force O&M request can

still be reduced.

Army Pilot Training The Army provides basic and advanced flight training to pilots for both its

rotary-wing and fixed-wing fleets. The number of aircraft and force

structure are key factors in determining the number of pilots to be trained.

Basic flight training, known as undergraduate training, is entry-level

training usually completed on a UH-1 aircraft. Graduate, or advanced flight

training, is used to train Army aviators on systems more advanced than the

UH-1, such as the UH-60 Black Hawk or the AH-64 Apache.

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Potential Budget Reduction Issues

Results of Analysis The Army’s fiscal year 1994 budget request could be reduced by

$28.3 million. The Army plans to spend $257.4 million in fiscal year 1994 to

provide undergraduate training to 2,299 pilots and to provide graduate

training to 2,122 pilots. The number of pilots to be trained is based in part

on the number of aircraft expected to be in the fleet in fiscal year 1994.

The number of pilots to be trained and the Army’s budget request is based

on the January 1992 estimate of force structure and aircraft levels for

fiscal year 1994.

Since the Army submitted its budget, a new aircraft level and force

structure plan has been developed. The new fiscal year 1994 plan, dated

July 1993, calls for 693 fewer aircraft, a decrease of 11 percent, from the

force structure anticipated when the training budget was prepared.

Therefore, the number of pilot candidates could be reduced by a

corresponding amount, and the fiscal year 1994 O&M budget request could

be reduced by $28.3 million.

Air Force Reserve

Officer Training Corps

Scholarship

Air Force officers come from four sources: the Air Force Academy, the

Reserve Officer Training Corps (ROTC), the Officer Training Squadron, and

the Airmen Education and Commissioning Program. ROTC, the largest

source of Air Force officers, supplements academic education with

military education and training at over 147 colleges across the country.

Results of Analysis The fiscal year 1994 budget request could be reduced by $3.1 million. The

fiscal year 1994 O&M ROTC account reflects an increase of $3.1 million for

164 scholarships in addition to the fiscal year 1993 baseline of 3,019

scholarships. The Air Force justification for its fiscal year 1994 budget

estimate was that 1,600 ROTC graduates will be commissioned into the

service in fiscal year 1994 as compared to 1,515 in fiscal year 1993. After

the budget was submitted, the fiscal year 1993 figure decreased to 1,350

graduates due to the drawdown within the ROTC program. Since the ROTC

program is downsizing to reflect overall trends at DOD, we believe the Air

Force is not justified in requesting an increase to augment the ROTC

program.

Army Civilian Pay The Army’s fiscal year 1994 O&M budget request totaled $20.3 billion for

direct and reimbursable program authority. The $20.3 billion includes

$7.8 billion to pay full-time, part-time, and intermittent U.S. civilian and

direct-hire foreign national employees. Of the $7.8 billion, $5.7 billion is to

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Potential Budget Reduction Issues

be funded from the Army’s O&M appropriation as direct programming

authority, and the remaining $2.1 billion is to be funded from anticipated

reimbursements to the O&M account.

Results of Analysis Our review disclosed that the Army’s budget request for civilian personnel

could be reduced by $194 million because the Army expects actual civilian

personnel costs to be less than the amount requested in the President’s

budget. At the time the President’s budget was submitted to the Congress,

the Army requested funding authority of $7.8 billion for civilian personnel.

However, documentation subsequently submitted to Congress to support

the President’s budget showed that the Army had reduced its requirements

to $7.6 billion—a reduction of $194 million. Although the civilian pay

accounts were reduced, the total amount of the budget request remained

the same—$20.3 billion. Therefore, the budget request includes

$194 million of budget authority that is not represented by specific

programs.

According to an Army budget official, the difference in civilian pay

between the $7.6 billion and the $7.8 billion stated in the President’s

budget submission is because of a timing difference. The official said that

the President’s budget, which includes personnel data, is due to the Office

of the Secretary of Defense and Congress prior to final adjustments being

made to the Army’s data base. As adjustments occur, disconnects between

the President’s budget submission and justification books increase. He

also said that he could not tell us to what other accounts the $194 million

in civilian pay was reallocated because the budget system does not keep

track of individual budget decision changes. Since the civilian pay account

was overstated and there is no audit trail on how and where the funds

were reallocated, Congress could reduce the Army’s budget request by

$194 million.

Navy Civilian Pay The civilian personnel costs are developed using a work-year cost factor

for work years as derived from the end strength on board at the end of the

prior fiscal year, which is adjusted for additions and reductions to be

implemented during the current fiscal year. For example, the fiscal year

1994 personnel costs are based on the budgeted fiscal year 1993 end

strength adjusted for programmed changes in fiscal year 1994.

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Potential Budget Reduction Issues

Results of Analysis Because the fiscal year 1993 end strength will be less than planned, the

Navy’s 1994 O&M budget could be reduced by $55 million. Based on a

review of the Navy’s O&M civilian personnel staffing pattern for fiscal year

1993, we estimate that the Navy will have 3,337 fewer personnel on board

at the end of the fiscal year than its planned end strength. Whenever the

actual end strength is less than the planned, the following year’s work year

level is adjusted by one-half of the amount by which the actual differed

from the planned. Accordingly, the fiscal year 1994 work-year level used in

determining the budget request was overstated by 1,668.5 work years or

about $55 million. Navy officials, in commenting on the overstated

work-year level, said that $7.7 million of the $55 million should be applied

to the Bureau of Naval Medicine’s budget.

Air Force Civilian Pay Congress included a provision in the fiscal year 1993 Defense

Appropriations Act that, according to DOD, reduced the number of

overseas civilian personnel positions that could be funded by 25 percent.

The intent of this provision was to encourage overseas commands to

obtain funding for the remaining personnel positions from the host

country. The reduction applied to foreign national civilian personnel as

well as U.S. civilian personnel. Although the provision only covered fiscal

year 1993, Congress is still interested in the issue of foreign national

personnel.

Results of Analysis The Air Force’s fiscal year 1994 budget request of $142.6 million could be

reduced by $56.2 million. During fiscal year 1992 and fiscal year 1993, the

U.S. Air Force, Europe, (USAFE) funded foreign national pay at 70 percent

of the total requirement. In its fiscal year 1994 budget submission, the Air

Force requested $92.4 million for the USAFE’s foreign national

pay—70 percent of the requirement.

After the budget submission, the Air Force added $56.2 million to the

budget to increase its foreign national pay account to $142.6 million,

94.7 percent of the requirement. In view of the fact that Congress’ intent

seems to be to reduce funding for foreign national personnel, it may want

to reduce the Air Force’s budget request back to the 70-percent level. If so,

the budget request can be reduced as an incentive for the Command to

seek funds for foreign national payroll from the host country.

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Potential Budget Reduction Issues

DOD’s Reduced

Funding for Special

Events

The Assistant Secretary of Defense (Force Management and Personnel) is

responsible for managing DOD’s support to international special events.

The goal of DOD and the event organizers is to ensure security and safety of

all participants, volunteers, spectators, and visiting dignitaries. DOD

possesses many security-related assets that can assist communities in

staging a safe and secure event.

Congress has provided funds to DOD in support of these events. The focus

of DOD support is to loan event organizers security-related assets, such as

communications and physical security equipment, when resources are not

available from another public or private source. In essence, DOD was to be

the source of last resort. Additionally, DOD provides advice and training to

event organizers and law enforcement planners.

Results of Analysis At least $5.1 million in prior years’ appropriations could be rescinded. In

fiscal years 1992 and 1993, Congress appropriated $22 million for DOD

support of international special events.20Of the $22 million, DOD anticipates

spending $8.8 million by the end of fiscal year 1993, leaving an unobligated

balance of $13.2 million. Rather than requesting additional appropriations

for fiscal year 1994, DOD plans to seek congressional approval to extend

the availability of unobligated money into fiscal year 1994.

Officials in the Special Events office said that they do not request

reimbursement from event sponsors because Congress appropriated the

funds for use in the special events. Also, it is questionable that DOD is the

source of last resort for some of the equipment and services, such as

fences and detection devices, provided because these items do not appear

to be unique to DOD.

Congress may want to rescind $5.1 million of the prior years’

appropriations—the difference between the $13.2 million unobligated

balance in fiscal year 1993 and the estimated expenses in fiscal year

1994—because this amount is not needed for estimated expenses through

fiscal year 1994. Congress may also wish to require DOD to seek

reimbursement from event sponsors for those services and equipment

items, such as fences and detection devices, provided by DOD that are not

unique to DOD.

20Public Law 102-396, section 9104, gave DOD the authority to carry over 1992 money through fiscal

year 1993.

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Potential Budget Reduction Issues

Air Force Real

Property Maintenance

at Plattsburgh

Repair and maintenance funds are to be used for major repairs and minor

construction projects. The Air Force’s budget request for fiscal year 1994

included $3.1 million for such projects at Plattsburgh Air Force Base, New

York. In June 1993, the Defense Base Closure and Realignment

Commission identified Plattsburgh Air Force Base as one of the bases to

be closed.

Results of Analysis Our analysis showed that the Air Force had included major repairs and

minor construction projects in its fiscal year 1994 request for repair and

maintenance projects totaling $3.1 million at Plattsburgh. Because the

base is scheduled for closure, Congress could reduce the Air Force’s

request for repair and maintenance funds by $3.1 million.

Air Force Real

Property Maintenance

at USAFE

Real property maintenance funding is used to pay the day-to-day costs of

operating, maintaining, and repairing military facilities. The Air Force’s

fiscal year 1994 O&M budget request included $115.7 million for real

property maintenance activities at USAFE.

Results of Analysis Our review showed that USAFE’s real property maintenance requirements

were overstated by $32.7 million, as shown in table I.7.

Table I.7: Overstated Real Property

Maintenance Requirements at USAFE Dollars in millions

Activity

Budget

request Requirement

Potential

reduction

Utilities $57.8 $56.1 $1.7

Contract engineering,

maintenance, repair, and minor

construction

39.2 15.6 23.6

Leases 18.7 11.3 7.4

Total $115.7 $83.0 $32.7

As a result, Congress could reduce USAFE’s funding for real property

maintenance activities by $32.7 million.

Navy Undersea

Surveillance

The Navy’s Integrated Undersea Surveillance System and one of its

components, the Sound Surveillance System (SOSUS), is an acoustic sensor

program that collects and processes undersea acoustic data. The system’s

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Appendix I 

Potential Budget Reduction Issues

primary purpose is to detect enemy submarine movements. In fiscal year

1993, $129.4 million of O&M funds were apportioned to SOSUS.

Results of Analysis Our analysis showed that, based on the current actual and planned

execution of the program for fiscal years 1993 and 1994, $10.1 million in

fiscal year 1993 and $12.8 million in fiscal year 1994 are in excess of

program needs. SOSUS program officials agreed that the program was

overfunded but said that the funds were needed for other unfunded

requirements.

In May 1993, we questioned the need for the current and future funding

levels requested for SOSUS. We recommended reductions in the program

based on a reduced level of threat.

The Navy plans to operate and maintain SOSUS capability at a level higher

than we had recommended because the Navy plans to upgrade the system

with enhanced technology and targets identification capability.

Additionally, the Navy plans to use the system to perform new functions,

such as tracking migrating whales.

In view of the above, Congress may want to reduce the Navy’s fiscal year

1994 O&M request by $12.8 million.

DOD Counter-Drug

Operating TEMPO

Since fiscal year 1989, DOD has been the lead agency for detecting and

monitoring air and maritime shipments of illegal drugs in transit to the

United States. Funds are appropriated to the DOD Drug Interdiction and

Counter Drug activity and transferred to the Army, Navy, and Air Force.

DOD is requesting $1.1 billion in fiscal year 1994. A portion of these funds is

used to conduct surveillance missions in support of civilian law

enforcement agencies that interdict drug traffickers.

Results of Analysis Based on our analysis, we believe that DOD’s counter-drug OPTEMPO request

included in the appropriation for the Drug Interdiction and Counter Drug

activity can be reduced by $78.6 million. Such a reduction would bring the

level of OPTEMPO funding for the Army, Air Force, and Navy to the 1990

level. Our draft report evaluating the Air Force and the Navy concludes

that counter-drug flying hours and steaming days are not providing a

reasonable return on investment. Since 1990, DOD’s funding for OPTEMPO

has more than doubled. Although OPTEMPO has become one of the most

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Potential Budget Reduction Issues

expensive initiatives in the national drug control strategy, the interdiction

effort it supports is not working, and the estimated flow of cocaine in the

United States remains appreciably undiminished. Furthermore, despite

DOD’s claims to the contrary, we have found that counter-drug operations

do not provide equivalent training for the Air Force’s and the Navy’s

primary defense mission.

The proposed reductions would not seriously impair the drug war because

it would eliminate flying hours and steaming days that are allocated to

inefficient routine surveillance patrols. In addition, we believe that such a

reduction would not seriously impair military readiness because the

reduction would eliminate flying hours and steaming days that have to be

duplicated to meet training requirements.

Navy Support for

MWR Activities

MWR programs are established to enhance the morale and well-being of

military personnel, their dependents, and eligible civilian personnel. MWR

programs categorized as mission essential are funded primarily with

appropriated funds and some nonappropriated funds. Other MWR programs

are funded with larger shares of nonappropriated funds. DOD is in the

process of reviewing the various MWR programs to determine which should

be funded with appropriated and nonappropriated funds.

Results of Analysis The Navy included $65 million in its fiscal year 1994 O&M budget request to

support MWR programs. The $65 million will free up nonappropriated

funds, which would be used to fund construction of MWR facilities, local

MWR projects not eligible for funding from the central MWR fund, and MWR

projects that do not generate sufficient funds to pay the cost of operation.

Of the $65 million of O&M funds, $23.5 million will be used to pay 971 MWR

employee positions currently paid from nonappropriated funds. Some of

the positions to be paid for from O&M funds should be paid with

nonappropriated funds because the major beneficiaries of the services

received are dependents and other eligible personnel.

Because of the aforementioned, Congress may want to reduce the Navy’s

request for $65 million to fund MWR programs until DOD determines what

MWR projects should be supported with appropriated funds.

Page 56 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix II 

Objectives, Scope, and Methodology

This review is one of a series that examines defense budget issues. Our

objective was to assess the adequacy of the justifications for certain O&M

accounts included in the Army’s, the Navy’s, the Air Force’s, the National

Guard’s, and DOD’s O&M budget requests for fiscal year 1994 and to

determine whether the programs should be funded in the amounts

requested.

Our review approach consisted of interviews with program and budget

officials responsible for managing the programs and/or preparing the

budget requests; review and analysis of financial, budget support, and

program documents related to the O&M issue being reviewed; analysis of

prior year funding levels and expenditures to identify trends; and review of

recently issued GAO reports and ongoing assignments to identify O&M issues

that could affect the fiscal year 1994 budget requests.

Our review was performed at Army, Navy, Air Force, National Guard, and

DOD headquarters; U.S. Forces Command; USAREUR; U.S. Army Training and

Doctrine Command; Atlantic Fleet; Pacific Fleet; USAFE; Air Combat

Command; Oklahoma City Air Logistics Center; and Air Force Materiel

Command. We performed our review from March to August 1993 in

accordance with generally accepted government auditing standards.

Page 57 GAO/NSIAD-93-295BR 1994 DOD Budget
Appendix III 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Norman J. Rabkin, Associate Director

Robert J. Lane, Assistant Director

Richard Dasher, Evaluator-in-Charge

Carole F. Coffey, Evaluator

Alan M. Byroade, Evaluator

Merrie C. Nichols-Dixon, Evaluator-in-Charge

Maria J. Santos, Evaluator

Atlanta Regional

Office

Harry F. Jobes, Site Senior

Troy D. Thompson, Evaluator

Cincinnati Regional

Office

Bruce D. Fairbairn, Regional Assignment Manager

Leonard L. Benson, Evaluator

European Office Elliott C. Smith, Assignment Manager

Inez M. Azcona, Site Senior

Jose M. Pena, III, Evaluator

George A. Taylor, Jr., Site Senior

Neyla Arnas, Evaluator

Kansas City Regional

Office

Virgil N. Schroeder, Regional Assignment Manager

Denise M. Wempe, Regional Assignment Manager

Tommy J. Patterson, Evaluator

Gary L. Nelson, Evaluator

Los Angeles Regional

Office

Harold D. Reich, Evaluator

James D. Nolan, Evaluator

Norfolk Regional

Office

Hugh E. Brady, Jr., Regional Assignment Manager

Thomas A. Pantelides, Evaluator-in-Charge

Robert K, Aughenbaugh, Evaluator

Julie C. Washington, Evaluator

Raul S. Cajulis, Evaluator

Craig A. Hall, Evaluator

Brenda M. Waterfield, Site Senior

Susan J. Schildkret, Evaluator

(703000) Page 58 GAO/NSIAD-93-295BR 1994 DOD Budget
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