```
Peace Operations: Cost of DOD Operations in Somalia (Chapter Report,
03/04/94, GAO/NSIAD-94-88).

The Defense Department (DOD) has incurred incremental costs of nearly
$885 million for operations in Somalia through the end of fiscal year
1993. According to DOD officials, the transfer of funds necessary to
cover these costs has not harmed normal spending plans. Should such
spending conditions continue for contingency operations, however, DOD
officials say that it could create problems over the long run. Of the
$885 million in incremental costs, DOD is entitled to be reimbursed by
the United Nations for about $124 million. In some cases, DOD would be
allowed to keep the money it received from the United Nations, giving it
access to funds above the amount appropriated for that fiscal year. DOD
would then have access to these funds without any requirement for
further congressional authorization or appropriation.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-94-88
     TITLE:  Peace Operations: Cost of DOD Operations in Somalia
      DATE:  03/04/94
   SUBJECT:  Military intervention
             International cooperation
             Defense appropriations
             Appropriation accounts
             Military operations
             Reimbursements to government
             Logistics
             Military materiel
             Military training
             Budget receipts
IDENTIFIER:  DOD Operation Provide Relief
             DOD Operation Restore Hope
             DOD Operation Continue Hope
             UN Trust Fund for Somalia
             Somalia
             
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Cover
================================================================ COVER

Report to Congressional Committees

March 1994

PEACE OPERATIONS - COST OF DOD
OPERATIONS IN
SOMALIA

GAO/NSIAD-94-88

Peace Operations

Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  GAO - General Accounting Office
  LOA - Letter of Assist
  OSD - Office of the Secretary of Defense
  UNITAF - Unified Task Force
  UNOSOM - U.N.  Operation in Somalia

Letter
=============================================================== LETTER

B-255935

March 4, 1994

The Honorable Sam Nunn
Chairman, Committee on
 Armed Services
United States Senate

The Honorable Ronald V.  Dellums
Chairman, Committee on
 Armed Services
House of Representatives

This report discusses the costs incurred by the Department of Defense
(DOD) in operations in Somalia since fiscal year 1992 and the extent
to which those costs are reimbursable by the United Nations.  It
suggests that the Congress consider whether to (1) continue to allow
DOD to retain any reimbursements in excess of the funds already
appropriated by the Congress, (2) reduce DOD's appropriated funds by
the amount reimbursed by the United Nations, or (3) create an account
to receive the reimbursements for use in funding future contingency
operations. 

We are sending copies of this report to the Chairmen of the House and
Senate Committees on Appropriations, House Committee on Foreign
Affairs, and Senate Committee on Foreign Relations.  We are also
sending copies to the Secretaries of Defense, State, the Army, the
Navy, and the Air Force.  We will also make copies available to
others upon request. 

Please contact me at (202) 512-3504 if you or your staffs have any
questions concerning this report.  Major contributors to this report
are listed in appendix III. 

Richard Davis
Director, National Security
 Analysis

EXECUTIVE SUMMARY
============================================================ Chapter 0

   PURPOSE
---------------------------------------------------------- Chapter 0:1

In response to widespread starvation in Somalia, the United States
provided support for relief efforts as part of three U.N.-sponsored
operations.  After discussions with several congressional committees,
GAO reviewed the costs associated with these operations to determine
(1) what incremental costs\1 the Department of Defense (DOD) incurred
during its operations in Somalia; (2) the impact these operations
have had on DOD's normal spending plans; and (3) what, if any,
reimbursement the United States could expect for expenses incurred
during the Somalia operations and how DOD and the State Department
will share such reimbursement. 

--------------------
\1 As defined by the Omnibus Budget Reconciliation Act of 1990 (P.L. 
101-508), for use during Operation Desert Shield/Storm, incremental
costs are only those costs that would not have been incurred except
for the operation.  DOD is still using this definition. 

   BACKGROUND
---------------------------------------------------------- Chapter 0:2

In April 1992, the United Nations passed a resolution establishing
the U.N.  Operation in Somalia (UNOSOM) to observe prior cease-fire
agreements and provide security to humanitarian relief efforts in
Somalia.  DOD's participation, termed Operation Provide Relief,
provided transportation for Pakistani troops, humanitarian aid
workers, and supplies. 

The situation in Somalia deteriorated, and on December 3, 1992, the
U.N.  Security Council passed Resolution 794, accepting the U.S. 
offer to lead a multinational Unified Task Force (UNITAF) to
establish a secure environment for humanitarian relief operations and
prepare for subsequent transition to U.N.  forces.  At UNITAF's peak
early in 1993, about 26,000 U.S.  troops and about 12,000 troops from
20 other countries were involved.  UNITAF was not a U.N.  operation. 
U.S.  participation in UNITAF was called Operation Restore Hope. 

On March 26, 1993, the United Nations authorized the establishment of
UNOSOM II to maintain the secure environment in Somalia created by
UNITAF, pursue disarmament, and reestablish basic civil institutions. 
Most U.S.  troops from UNITAF were withdrawn by May 4, 1993, when the
UNITAF commander officially turned over command to the UNOSOM II
commander.  DOD participation in support of UNOSOM II has been
designated Operation Continue Hope.  At the peak of U.S. 
involvement, there were about 2,900 logistics troops as a direct part
of UNOSOM II.  In addition, up to approximately 14,000 U.S.  military
personnel in and near Somalia have served in support of UNOSOM II but
under U.S.  command and control and not as part of U.N.  forces.  The
United States will withdraw all but a few hundred military personnel
in noncombat roles by March 31, 1994. 

The United Nations pays countries for providing support through
certain types of agreements.  To pay for support provided to 10
specific countries during UNITAF, the United Nations established the
Trust Fund for Somalia and asked for contributions from member
states.  Other support is provided through Letters of Assist, which
arrange for goods and services to be paid for by the United Nations. 

The United Nations also pays member states participating in U.N. 
operations for providing troops and equipment.  The United Nations
will pay the U.S.  government for the 2,900 logistics troops assigned
to the U.N.  force and whatever equipment the United Nations
requested for the operation.  Since it was not a U.N.  operation, the
United States will not be paid for the troops involved in
UNITAF/Restore Hope; nor will the United States be paid for Continue
Hope forces that are outside of UNOSOM II. 

   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

DOD has incurred incremental costs of almost $885 million for
operations in Somalia through the end of fiscal year 1993, as shown
in table 1.  DOD paid for most of this by a congressionally approved
transfer of funds between its existing appropriations and absorbed
the balance within its normal operating appropriations.  No
additional funds were appropriated to cover these costs. 

According to DOD and service officials, the transfer of funds
necessary to cover DOD Somalia costs has not adversely affected
normal spending plans.  However, should such spending conditions
continue for contingency operations, DOD officials say it could
create mid- to long-term problems. 

Of the almost $885 million in incremental costs incurred through
fiscal year 1993, DOD is entitled to be reimbursed by the United
Nations for at least $123.6 million for expenses incurred during
UNITAF and UNOSOM II.  DOD has been paid $27.5 million for expenses
incurred in the support of other nations during UNITAF, and the
United Nations has been billed for $43.7 million in self- sustainment
costs and $44.2 million for support provided to the United Nations
during UNOSOM II.  The United Nations has yet to be billed for $3.8
million in UNOSOM II costs.  DOD has received $2.7 million, of an
estimated $4.4 million for troop reimbursements for UNOSOM II.  There
is no estimate as yet for equipment payments to DOD. 

In some circumstances, DOD would be allowed to retain the money it
receives from the United Nations, giving it access to funds above the
amount appropriated for that fiscal year.  DOD would then have access
to these funds without any requirement for further congressional
authorization or appropriation. 

   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4

      DOD INCURRED SUBSTANTIAL
      INCREMENTAL COSTS FOR
      SOMALIA OPERATIONS
-------------------------------------------------------- Chapter 0:4.1

Table 1 summarizes DOD's incremental costs for operations in Somalia
through fiscal year 1993.

                                     Table 1
                     
                        DOD Incremental Costs for Somalia
                        Operations From April 1992 Through
                                  September 1993

                              (Dollars in millions)

                  Incremen      Amount
                       tal  reimbursab
Description          costs   le to DOD  Notes
----------------  --------  ----------  ----------------------------------------
Provide Relief/      $20.1        None  Reimbursement waived by acting Secretary
 UNOSOM I                                of State.
 (April 1992
 through April
 1993)
Restore Hope/        692.2        None  This was not a U.N.-led operation and
 UNITAF                                  was, therefore, not reimbursable by the
 (December 1992                          United Nations.
 through April
 1993)
Continue Hope/        94.7      $ 43.7  $43.7 million in self-sustainment has
 UNOSOM II                               been billed; an additional $46.6
 (May 1993                               million of the total $94.7 million is
 through                                 not reimbursable since these costs were
 September 1993)                         incurred by U.S. troops not involved in
                                   4.4   the U.N. operation.

                                         $4.4 million in estimated U.N. payment
                                 To be   for DOD's share of troop payments.
                            determined
                                         Unknown amount due for contingent-
                                         owned equipment.
DOD support           75.5        75.5  $27.5 million received from Trust Fund
 provided by                             for Somalia.
 agreement
 to United                               $44.2 million for Letters of Assist has
 Nations                                 been billed; $7.1 million in payment
 (December 1993                          has been received as of January 1994.
 through
 September 1993)                         $3.8 million for Letters of Assist has
                                         not been billed.
Support provided       2.4        None  Cross-service agreements provide for
 to                                      sharing support between nations, with
 other countries                         reimbursement usually coming in the
 through                                 form of assistance-in-kind instead of
 cross-service                           cash.
 agreements
================================================================================
Total               $884.9      $123.6
--------------------------------------------------------------------------------
Note:  Some of the operations overlap. 

For the first operation, Provide Relief, DOD incurred $20.1 million
in costs, primarily for airlift of humanitarian workers, aid, and
Pakistani troops.  The acting Secretary of State, in consultation
with the Secretary of Defense, waived U.N.  reimbursement for
services to UNOSOM, as allowed under section 7 of the U.N. 
Participation Act.  Therefore, DOD absorbed the entire $20.1 million
within its normal operating appropriations. 

DOD officials estimated that $750 million would be spent on Operation
Restore Hope during fiscal year 1993.  To pay for these costs, the
services used money allocated to programs with less immediate funding
needs and future quarters until the Congress allowed DOD to transfer
the $750 million from the procurement and research and development
appropriations to its operations and maintenance and military
personnel appropriations to cover the amounts paid from those
accounts.  The actual incremental costs totaled $692.2 million. 
Money left after Restore Hope costs were paid was applied to unfunded
operations, such as Provide Relief. 

DOD estimated that the incremental costs for Operation Continue
Hope/UNOSOM II for May through September 1993 were $94.7 million.  Of
this amount, DOD incurred costs of $46.6 million for U.S.  troops
that are not part of UNOSOM II.  The services absorbed the costs
through their normal operating appropriations or offset them against
the funds that were transferred for Operation Restore Hope.  An
estimated $4.4 million in incremental personnel costs will be
reimbursed by the United Nations.  The balance of $43.7 million for
self-sustainment has been billed to the United Nations.  DOD and the
services have not yet estimated the fiscal year 1994 costs for the
operation, which is ongoing and changing. 

      DOD SPENDING PLANS WERE NOT
      ADVERSELY AFFECTED
-------------------------------------------------------- Chapter 0:4.2

Service and DOD officials said that operations in Somalia have not
significantly disrupted normal spending plans.  According to DOD and
service officials, the continued expenditure of training and
infrastructure support funds on unplanned and unfunded contingency
operations could have an adverse impact on readiness in the future. 
DOD officials expressed concern that, with regard to combat forces,
participation in peacekeeping operations may degrade unit combat
readiness.  However, peacekeeping activities may give those with
noncombat skills, such as logistics, an opportunity to practice and
enhance those skills. 

      SOME OF DOD'S INCREMENTAL
      COSTS WILL BE REIMBURSED BY
      THE UNITED NATIONS
-------------------------------------------------------- Chapter 0:4.3

DOD is entitled to at least $123.6 million in reimbursements from the
United Nations and the U.N.-held Trust Fund for Somalia.  Of this,
almost $75.5 million in reimbursable costs were incurred by the
military services under contractual agreements in support of the
United Nations and others for UNITAF and UNOSOM II.  Of this amount,
DOD has billed the Trust Fund for Somalia for $27.5 million for
support provided to 10 countries participating in UNITAF.  These
bills were paid in late October 1993.  The remaining $48 million is
for equipment purchases and transport services.  These were provided
to the United Nations through Letters of Assist during UNOSOM II. 
DOD has billed the United Nations for about $44.2 million of this
amount and, as of January 1994, has been paid $7.1 million. 

The United Nations will reimburse the United States for
sustainment--food, water, and fuel--costs for U.S.  troops assigned
to the UNOSOM II force from May through September 1993, which the
United States was incurring until the U.N.  operation could sustain
all participating troops.  The United States billed the United
Nations for the entire $43.7 million in January 1994. 

The U.S.  government is also entitled to U.N.  reimbursement for
providing troops and equipment for UNOSOM II.  DOD seeks only to
recover its incremental costs for personnel of $248 per person per
month for imminent danger, foreign duty, and family separation pays
and other incremental costs of $70 per month per person for clothing,
personal equipment, and weapon and the maintenance costs required to
refurbish equipment used in UNOSOM II from these payments.  The
United States is due an estimated $15 million in total troop payments
for May through September 1993, of which $4.4 million is DOD's
incremental personnel costs.  The remaining $10.6 million is
available to be applied toward the U.S.  assessment for peacekeeping
operations.  There is no estimate for equipment payments. 

      QUESTIONS SURROUNDING USE OF
      POTENTIAL U.N. 
      REIMBURSEMENTS
-------------------------------------------------------- Chapter 0:4.4

DOD could receive at least $123.6 million in U.N.  reimbursements in
fiscal year 1994.  These reimbursements would be primarily for
equipment and services and for funds DOD spent in fiscal year 1993
and would be in addition to the amount the Congress appropriated for
fiscal year 1994.  Depending on the timing of such reimbursements and
the statutory authority under which the payments would be received,
DOD could be authorized to deposit these payments into its currently
available appropriation accounts.  DOD could use these funds for the
same purposes as the accounts into which they were deposited without
any requirement for further congressional action. 

As a general rule, without specific authority to the contrary,
payments agencies receive from outside sources, including
reimbursements for goods or services provided by the agency, must be
deposited in the Treasury as miscellaneous receipts.  Section 607 of
the Foreign Assistance Act, however, allows U.N.  reimbursements for
goods and services, as well as for Trust Fund support, to be credited
to DOD's existing appropriation accounts if received within 180 days
after the end of the fiscal year in which the goods or services were
delivered.  These amounts remain available to the agency for the same
purposes as the appropriations to which they are credited.  However,
section 607 of the act does not authorize DOD to retain payments
received after the 180-day time period has expired.  There are no
similar time limits that apply to U.N.  payments received under
section 630 of the act, such as the troop payments. 

   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 0:5

While existing legislation allows DOD to retain U.N.  reimbursements
under certain circumstances, any reimbursement DOD receives from the
United Nations in fiscal year 1994 or in subsequent fiscal years for
troops, goods, or services, would be over the level of congressional
appropriations for those fiscal years.  Given the significant level
of reimbursements involved, the Congress may wish to consider whether
(1) DOD should continue to have access to these reimbursements as
currently allowed by the Foreign Assistance Act and, if so, whether
the 180-day time limit for retaining any reimbursements received
under section 607 of that act should be revised; (2) an amount equal
to the reimbursements should be rescinded from DOD's current
appropriations, if DOD is allowed to retain the reimbursements; or
(3) it should create an account into which these U.N.  reimbursements
could be deposited for use in funding future DOD contingency
operations. 

   AGENCY COMMENTS AND GAO'S
   EVALUATION
---------------------------------------------------------- Chapter 0:6

DOD and the Department of State generally agree with the contents of
this report; however, DOD does not believe that amounts equal to U.N. 
reimbursements should be rescinded because the reimbursements allow
DOD to execute previous congressionally approved programs.  DOD
noted, and GAO agreed, that under section 607 of the Foreign
Assistance Act, the Congress has given DOD authority to accept
reimbursement for goods and services provided to certain
international organizations. 

GAO raises this matter not because it advocates denying DOD access to
U.N.  reimbursements, but because of (1) the large amount of
reimbursements due DOD and (2) the fact that these reimbursements are
in addition to amounts appropriated by the Congress.  In addition, as
discussed in the report, DOD presently only has access to U.N. 
reimbursements if they are received within 180 days from the end of
the fiscal year in which the goods and services were delivered. 
However, DOD may not always receive reimbursements within the
statutory period, in which case the reimbursement would be deposited
in the general fund of the U.S.  Treasury and be unavailable to DOD. 
GAO believes that all of the above factors merit a reexamination of
U.N.  reimbursements, including considering whether (1) the access to
such reimbursements should continue and (2) the limited period for
receiving reimbursements should be revised. 

Appendixes I and II, respectively, contain DOD's and the State
Department's comments and GAO's response. 

INTRODUCTION
============================================================ Chapter 1

In January 1991, the President of Somalia, Mohammed Siad Barre, was
overthrown after 3 years of civil war.  With no functioning
government following Barre's ouster, violence and internal conflict
continued.  The clan-based groups that once cooperated to fight Barre
began to combat each other.  Political upheaval and the displacement
of thousands of Somalis, along with the poor harvest in 1991, created
an environment of starvation and violence. 

   DOD PARTICIPATION IN SOMALIA
   OPERATIONS
---------------------------------------------------------- Chapter 1:1

For several years, the United States and the United Nations, as well
as private relief organizations, have participated in humanitarian
efforts to help the starving population of Somalia.  As the country
became torn by civil war and continued factional fighting, these
relief organizations found it increasingly difficult to both deliver
aid to Somalia and distribute it inland once it arrived.  In April
1992, the United Nations arranged for a tenuous cease-fire among the
factions and the Security Council authorized deployment of military
forces under a peacekeeping mandate pursuant to its Resolution 751. 
This deployment was meant to help protect relief efforts in Somalia
and was called the U.N.  Operation in Somalia (UNOSOM).  Department
of Defense (DOD) efforts to support UNOSOM, called Operation Provide
Relief, were in the form of transport for supplies, workers, and
Pakistani troops. 

It soon became apparent that, although some U.N.  forces had deployed
to the area, starvation and lawlessness continued, and the situation
in Somalia deteriorated further.  Raids by armed militia continued to
hamper relief efforts.  The United States responded to this situation
with an offer to establish and lead a multinational coalition that
would provide sizeable military forces to secure the central and
southern regions of Somalia so that famine relief could be
effectively delivered.  The U.N.  Security Council accepted this
offer and passed Resolution 794 on December 3, 1992, authorizing the
Unified Task Force (UNITAF), though the subsequent operation would be
under U.S.  rather than U.N.  control.  Participation in this
operation was considered voluntary, and member states were not
assessed for its costs by the United Nations. 

UNOSOM continued to provide humanitarian aid, but the principal focus
of efforts in Somalia now shifted to the U.S.-led UNITAF.  DOD called
U.S.  participation in UNITAF Operation Restore Hope.  The mission of
UNITAF/Restore Hope was to establish, by any means necessary, a
secure environment for humanitarian relief and prepare for transition
to U.N.  forces.  The United States deployed about 26,000 troops at
the operation's peak (mostly Marines and Army troops) and secured the
participation of about 12,000 troops from 20 other countries. 

During Operation Restore Hope, DOD provided food, water, and other
support to coalition forces participating in UNITAF, since many
contingents arrived without the supplies to fully sustain themselves. 
About $2.4 million in support was provided to some coalition forces
through cross-service agreements.  These agreements allow for support
to be shared between nations with reimbursements made through
assistance-in-kind rather than cash.  DOD also provided construction
services and general logistical support through a private contractor. 

In March 1993, the Security Council authorized, by Resolution 814,
the establishment of UNOSOM II, a peacemaking operation that was
intended to maintain the secure environment created by UNITAF as U.S. 
troops departed Somalia.  In addition, UNOSOM II was to aid Somalia
in creating a more stable infrastructure, encourage national
political reconciliation, and help to rebuild the Somali system for
administering justice.  Member states were expected to pay their
assessed share of the estimated budget for the operation.\1 Command
of the area was turned over to the UNOSOM II commander on May 4,
1993.  The United Nations planned that UNOSOM II would eventually
comprise about 28,000 troops from a number of participating
countries.  The United States deployed 2,900 military logistics
personnel to participate in UNOSOM II, as authorized by section 628
of the Foreign Assistance Act of 1961. 

DOD's effort in support of UNOSOM II was called Operation Continue
Hope.  Under this operation, DOD also had about 1,100 troops from the
10th Mountain Division, under U.S.  command, as a quick reaction
force to assist U.N.  forces.  In October 1993, the President sent
additional ground troops into Somalia, under U.S.  command, and
ordered Marines and Navy ships to offshore positions as
reinforcements.  As of November 1993, U.S.  military personnel in and
near Somalia totaled almost 14,000, in addition to the 2,900 troops
assigned to the U.N.  operation.  In accordance with the President's
decision of October 7, 1993, all but a few hundred military personnel
will be withdrawn from Somalia by March 31, 1994.  These personnel
will remain to assist in the protection of the U.S.  Liaison Office. 

--------------------
\1 The United States is assessed 30.4 percent of each U.N. 
peacekeeping operation's budget.  As of December 1993, the United
States owes $156 million to the United Nations for peacekeeping
assessments. 

   UNITED NATIONS PROVIDES
   REIMBURSEMENT FOR SOME
   PARTICIPATION IN SOMALIA
   OPERATIONS
---------------------------------------------------------- Chapter 1:2

In operations for Somalia, the United Nations agreed to pay
governments for providing support to the United Nations under
different types of agreements.  The United States provided assistance
through these agreements under the authority of section 607 of the
Foreign Assistance Act.  In addition, support was provided through
the Trust Fund for Somalia, which used contributions from member
states totaling $105 million, to reimburse governments for the
assistance necessary to field the contingents from 10 specific
countries as part of UNITAF.  Another type of agreement is a Letter
of Assist, whereby goods and services are requested from a government
and paid for by the United Nations. 

In addition to paying for specific goods and services, and in return
for participating in specific U.N.-led peacekeeping operations, the
United Nations reimburses member nations for the costs they incur
when fielding troops and equipment.  As authorized under section 630
of the Foreign Assistance Act, the U.S.  government will be
reimbursed by the United Nations for the use of the 2,900 logistics
troops assigned to the U.N.  force, based on the established payment
rates.  The United States will not receive this payment for troops
participating in UNITAF/Restore Hope, as this was a U.S.-led
operation. 

Prior to deployment, the United Nations requests each participating
country to bring certain types and amounts of ground equipment.  The
United Nations estimates the total value of equipment in the
operation and budgets for payments of 20 percent of that value each
year, for up to 5 years.  It bases the actual payments on an estimate
of the difference in value of the equipment between the time it
arrived and the time it departs an operation.  The United Nations
reimburses for aircraft and ships based on hourly rates and actual
usage.  The U.S.  government will, therefore, receive some payment
for the value of its equipment brought by the 2,900 logistics troops
that are part of UNOSOM II.  Since other U.S.  military personnel are
under direct U.S.  command and control and not part of UNOSOM II,
neither the use of these troops nor their equipment is subject to
reimbursement by the United Nations.  Also, the United States will
not receive this payment for equipment used in UNITAF/Restore Hope,
since this was not a U.N.-led operation. 

   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

After discussions with several congressional committees, we
determined that a review of the costs associated with U.S. 
participation in U.N.  Somalia operations would be useful.  Our
objectives were to determine (1) what incremental costs DOD incurred
during operations in Somalia; (2) the impact these operations have
had on DOD's normal spending plans; and (3) what, if any,
reimbursement the United States could expect for expenses incurred
during the Somalia operations and how DOD and the State Department
will share such reimbursement. 

To review cost and troop participation information for Somalia
operations, we interviewed officials and reviewed cost reports at the
Office of the Secretary of Defense (OSD), Office of the Comptroller;
the Budget Offices for the Army, Air Force, and Marine Corps; the
10th Mountain Division Headquarters, Fort Drum, New York; and the 1st
Marine Expeditionary Force Headquarters, Camp Pendleton, California. 

We interviewed officials at the OSD Office of the Comptroller and the
State Department's Bureau of International Organizations Affairs and
the Permanent Mission of the United States to the United Nations and
reviewed documents from these offices.  Our purpose was to review the
tracking and billing at the United Nations for DOD assistance and the
procedures for receipt of U.N.  payments to the U.S.  government for
in-kind assistance and troop/equipment usage. 

To review the U.N.  budget process for peacekeeping and the policies
for paying bills, we interviewed officials at the Field Operations
Division, United Nations; the Permanent Mission of the United States
to the United Nations; and the Ford Foundation. 

To assess whether DOD will be able to receive and use the payments
from the United Nations and how these payments may be divided between
DOD and the State Department, we reviewed applicable legislation and
interviewed officials at both DOD and the State Department. 

We conducted our review between March 1993 and January 1994 in
accordance with generally accepted government auditing standards. 

THE COST OF DOD OPERATIONS IN
SOMALIA AND EFFECT ON NORMAL
SPENDING PLANS
============================================================ Chapter 2

DOD has incurred incremental costs\1 of almost $885 million for
operations in Somalia through the end of fiscal year 1993.  (See
table 1 in executive summary.) This includes DOD's incremental costs
for its operations, as well as reimbursable expenses DOD incurred in
support of the United Nations and other nations, which are discussed
in chapter 3.  DOD paid for these operations by moving funds within
and between its existing appropriations.  According to DOD officials,
this movement did not adversely affect DOD's normal spending plans. 

--------------------
\1 As defined by the Omnibus Budget Reconciliation Act of 1990 (P.L. 
101-508) for use during Operation Desert Shield/Storm, incremental
costs are only those costs that would not have been incurred except
for the operation.  DOD is still using this definition. 

   COSTS OF DOD'S OPERATIONS IN
   SOMALIA COULD APPROACH $1
   BILLION
---------------------------------------------------------- Chapter 2:1

U.S.  military personnel participated in three different operations
in Somalia--Provide Relief, Restore Hope, and Continue Hope. 
Operations Provide Relief and Restore Hope ran concurrently, with
different missions.  Operation Continue Hope began when the other two
operations ended in May 1993 and is ongoing. 

      OPERATION PROVIDE RELIEF
-------------------------------------------------------- Chapter 2:1.1

From April 1992 through April 1993, DOD spent $20.1 million--$9.3
million in fiscal year 1992 and $10.8 million in fiscal year 1993--to
support Operation Provide Relief.  This support consisted mainly of
airlift for humanitarian supplies and workers and Pakistani troops
participating in UNOSOM I.  The services have had to absorb most of
these costs. 

To pay for some of the $9.3 million in fiscal year 1992 costs, DOD
reimbursed the Air Force for almost $3.6 million from funds for
global disaster relief established by section 8105A of the fiscal
year 1992 Defense Appropriations Act.  The remaining $5.7 million
from fiscal year 1992 and the $10.8 million for fiscal year 1993 had
to be absorbed by the services within their normal operations and
maintenance appropriations. 

As allowed by section 7 of the U.N.  Participation Act (22 U.S.C. 
287d-1(b)), the acting Secretary of State, using authority delegated
by the President under Executive Order No.  10206 and in consultation
with the Secretary of Defense, waived reimbursement for support
provided to the United Nations during this operation.  The decision
to waive reimbursement was based on a U.N.  request for assistance
and the related determination by the acting Secretary of State that
it was consistent with the national interest to comply without
seeking reimbursement.  Therefore, costs incurred during this
operation remained the responsibility of the service directed to
accomplish the task assigned. 

      OPERATION RESTORE HOPE
-------------------------------------------------------- Chapter 2:1.2

OSD officials reported that, as of the end of April 1993, which was
essentially the end of the operation, $692.2 million had been
obligated for Restore Hope.  These obligations included the
sustainment costs, such as food, water, and fuel, for the U.S. 
troops deployed to the operation, as well as transportation of
personnel and equipment.  They also included incremental payroll
costs for military personnel stationed in the area.  Each service
member was paid a total of $248 per month above salary for imminent
danger pay, foreign duty pay, and, if applicable, family separation
pay. 

Most of the support for the operation was drawn from the services'
operations and maintenance appropriations.  Initially, to cover costs
for the operation, the services were able to reallocate funds from
programs with less immediate funding needs and borrow against future
quarterly budget allocations.  Some scheduled training exercises were
canceled and others were postponed, if possible.  Services were
required to capture and report all operation-related obligations to
the OSD Comptroller.  Our review of a limited number of obligation
documents for purchase of material and equipment determined that they
were directly related to the operation and charged to the appropriate
accounting designation. 

DOD estimated the incremental cost of Operation Restore Hope to be
$750 million.  This total was developed early in the operation from
estimates provided by the services and revised by OSD, based on
available information.  In April 1993, the Secretary of Defense
submitted a plan to the House and Senate Committees on Appropriations
and on Armed Services to transfer funds to cover the estimated
incremental cost of $750 million from current procurement and
research and development appropriations to operations and maintenance
and military personnel appropriations.  Funding was taken from
several programs, including the Strategic Defense Initiative and
National Guard aircraft.  In July 1993, the Congress enacted
legislation (P.L.  103-50) that was consistent with the DOD-proposed
transfer and did not provide DOD with any additional funding for the
operation.  Since Operation Restore Hope cost less than the estimated
$750 million, the remaining funds from the transfer were applied to
other unfunded operations, such as Operation Provide Relief. 

      OPERATION CONTINUE HOPE
-------------------------------------------------------- Chapter 2:1.3

OSD estimates incremental costs of $94.7 million for fiscal year 1993
for Operation Continue Hope and U.S.  participation in UNOSOM II. 
These costs were absorbed by the services within their normal
operations and maintenance appropriations or covered by some of the
unexpended money left from Restore Hope, which was applied to these
additional costs. 

The costs include (1) $46.6 million predominantly for the quick
reaction force in country to assist forces in UNOSOM II, (2) $43.7
million in self-sustainment for the 2,900 U.S.  troops assigned to
the United Nations as part of the UNOSOM II force, and (3) $4.4
million in incremental personnel costs.  DOD is eligible for
reimbursement from the United Nations for the entire cost of this
self-sustainment and billed the United Nations for the total in
January 1994.  DOD will also be reimbursed for the incremental
personnel costs. 

The United States is eligible for reimbursement because guidelines
for the U.N.  Operation in Somalia direct that each nation come
prepared to sustain its troops until the United Nations has
established the necessary infrastructure to cover operational
requirements.  This is normally assumed to be a limited period--not
more than 60 days.  Occasionally, it is extended, as has happened in
Somalia.  The United Nations will then resupply each nation. 

OSD and the services have not yet estimated the fiscal year 1994
costs for the operation, which is ongoing and changing.  The Army had
estimated costs for the 1,100 quick reaction force troops to be $45.8
million; however, this estimate was done late in fiscal year 1993 and
was overtaken by events.  Since that time, some troops were
redeployed, additional troops were sent into the area, and now most
troops are being redeployed.  Therefore, it is difficult to
accurately estimate what costs might be incurred. 

   DOD REPORTS THAT SPENDING PLANS
   WERE NOT ADVERSELY AFFECTED BY
   MOVING MONEY TO PAY FOR SOMALIA
   OPERATIONS
---------------------------------------------------------- Chapter 2:2

OSD and the services were able to reallocate funds from programs with
less immediate funding needs and use money allocated to future
quarters.  According to DOD officials, this did not seem to adversely
affect the normal spending plans established through the budget and
appropriations cycle.  However, the same officials are concerned that
readiness may suffer if funding continues to be taken from training
and infrastructure support. 

After the yearly Defense Appropriations Act is passed by the
Congress, the Office of Management and Budget apportions the funds,
and the DOD Office of the Comptroller allocates the apportioned
amounts to each service by quarter.  Under 31 U.S.C.  1515(b), an
agency may request access to funds that would otherwise be
apportioned for future quarters of the fiscal year if this is
necessary to respond to emergencies.  This allows the budget offices
some flexibility to fund large unanticipated emergencies, such as
Operation Restore Hope, if they occur early enough in the fiscal
year.  Since the operation began in the first quarter of fiscal year
1993, the services had access to almost the entire year's
apportionments and were able to use future quarters' allocations to
cover initial obligations for Restore Hope. 

Some services canceled scheduled training exercises and postponed
others in the early phase of Operation Restore Hope.  These
cancellations were made in part because the troops scheduled for the
training were being deployed to the operation, although the immediate
need for funds was also a factor.  In some instances, other troops
were substituted for those originally scheduled. 

The impact of peacekeeping operations on readiness, however, is
mixed.  With regard to combat forces, Army officials have expressed
some concern that participating in peacekeeping operations may
degrade unit combat readiness because of the inability to practice
individual and collective warfighting skills.  In addition, DOD
officials noted that soldiers require reorientation when shifting
from a peacekeeping environment, which requires restraint in the use
of force, to a traditional warfighting role. 

On the other hand, peacekeeping activities provide opportunities for
those with skills other than warfighting, such as logistics, to
practice and enhance these skills.  However, in commenting on a draft
of this report, DOD noted that logistics training being provided in
operations such as Restore Hope does not substitute completely for
the training that would result from a prepared training exercise.  In
the latter, the combat support and combat services support elements
would work with combat forces as they would in high intensity combat
operations. 

Service officials expressed concerns regarding the mid- to long-term
effects of transferring appropriations in order to provide funding
for unplanned operations; Somalia is only one of several such
operations now underway.  In a budget presentation, the commanding
general of one major Army command stated that any diversion of funds
will undermine a commander's program even if the funds are reimbursed
later; without timely reimbursement, the ability to perform critical
training or infrastructure support tasks is permanently lost.  DOD
officials noted that the transfer of funds from other appropriations
accounts to operations and maintenance may interfere with long-term
efforts to upgrade or modernize equipment, thus degrading readiness. 

   CONCLUSIONS
---------------------------------------------------------- Chapter 2:3

Operations in Somalia have cost DOD almost $885 million during fiscal
years 1992 and 1993.  Of this amount, over $123.6 million should be
reimbursed by the United Nations.  Initially, DOD and the services
had to absorb these costs in their normal operating budgets. 
However, the costs were, for the most part, covered by transferring
funds from other DOD accounts into the operations and maintenance
account, or they will be reimbursed by the United Nations.  This did
not adversely affect the services' normal spending plans. 

Continued disruptions in DOD's spending plans, untimely
reimbursements from both within and outside DOD, and the transfer of
funds between accounts may, in the long run, undermine readiness. 
Also, there is concern that participation in peacekeeping operations
could degrade unit combat readiness because of unique factors that do
not allow for normal warfighting training. 

DOD IS TO BE REIMBURSED BY THE
UNITED NATIONS FOR TROOPS, GOODS,
AND SERVICES
============================================================ Chapter 3

The United States is entitled to two categories of reimbursements
from the United Nations for participating in Somalia operations:  (1)
goods and services provided under specific agreements and (2) the
general use of U.S.  troops and equipment.  The United Nations has
not yet paid DOD for all the bills submitted for goods and services. 
The U.S.  government should also receive payment from the United
Nations for the participation of its troops and equipment in UNOSOM
II.  The manner in which the money paid for troop participation and
equipment usage may be shared by the Department of State and DOD is
established in a written understanding between the two departments. 

   THE UNITED NATIONS OWES DOD
   MONEY FOR GOODS AND SERVICES
---------------------------------------------------------- Chapter 3:1

During UNITAF and UNOSOM II, DOD provided assistance, in the form of
goods and services, to the United Nations and participating
countries; the United Nations will directly reimburse DOD for these
costs.  Such assistance, totaling about $75.5 million, was provided
in two ways:  support defined and paid for by the Trust Fund for
Somalia during UNITAF and support provided through Letters of Assist
during UNOSOM II. 

      TRUST FUND FOR SOMALIA
-------------------------------------------------------- Chapter 3:1.1

U.N.  Security Council Resolution 794 led to the establishment of the
Trust Fund for Somalia to provide support for some countries that
would otherwise not be able to participate in UNITAF due to financial
hardship.  Since UNITAF was not under the United Nations, the fund
was meant to serve as the only source of reimbursement for assistance
provided to participants.  The fund was financed by monetary
contributions from member nations to reimburse countries for
clothing, rations, equipment, and other goods and services that they
had provided to 10 eligible countries during UNITAF operations.  The
10 countries were Botswana, Egypt, Morocco, Turkey, Zimbabwe,
Nigeria, Tunisia, Jordan, India, and Pakistan. 

The United Nations is responsible for managing the fund, and an ad
hoc panel was established to oversee the implementation of the fund's
guidelines.  The panel consists of a representative from Japan, which
contributed $100 million of the fund's $105 million total; the United
States, which contributed the largest share of troops, goods, and
services to UNITAF; and the U.N.  Secretary General.  In recognition
of the large U.S.  troop and logistics contribution to UNITAF, at
least 85 percent of the Trust Fund monies were reserved for U.S. 
claims.  The United States concluded an agreement with the United
Nations under the authority of section 607 of the Foreign Assistance
Act of 1961 to provide goods and services for reimbursement under the
guidelines of the Trust Fund and for DOD to be the executive agent
for the United States.  This agreement stated that the United Nations
would pay bills within 30 days after their receipt.  Though the fund
was established for UNITAF-related reimbursement, the donors have
indicated that should any money remain in the fund after UNITAF bills
are paid, it may be made available for use in UNOSOM II under the
Trust Fund's original guidelines and U.N.  Security Council
resolutions. 

DOD presented certified bills to the Trust Fund in June 1993 for
$9.79 million and in August 1993 for $17.75 million, for a total of
$27.54 million for reimbursement for support it provided under the
agreement.  This amount was paid on October 21, 1993, 1 month after
the end of fiscal year 1993, the year in which the goods and services
were delivered. 

As a general rule, in the absence of specific statutory authority to
the contrary, reimbursements and other types of payments agencies
receive from outside sources must be deposited into the Treasury as
miscellaneous receipts (31 U.S.C.  3302(b)).  Section 607 of the
Foreign Assistance Act of 1961, however, allows payments agencies
receive from foreign governments or international organizations for
goods and services to be credited to the appropriate currently
available appropriations account, if received within 180 days of the
end of the fiscal year in which the goods or services were delivered. 
These amounts remain available to the agency for the same purposes as
the original appropriation.  In accordance with this authority, DOD
transferred the $27.54 million received from the United Nations into
the fiscal year 1994 accounts that correspond to the fiscal year 1993
accounts that had been used to make the original payments.  The funds
were transferred as follows:  almost $14 million to the other
procurement, Army, appropriation account; $3.7 million to the
operations and maintenance, Army account; $1.4 million to the
operations and maintenance, Marine Corps account; and $8.4 million to
the Defense Business Operations Fund for transportation. 

      LETTERS OF ASSIST
-------------------------------------------------------- Chapter 3:1.2

During its operations, including UNOSOM II, the United Nations needs
to fill planned and unexpected requirements for equipment and
services peculiar to the operation.  To do this, the United Nations
uses Letters of Assist (LOA), which are specific agreements under
which member countries are paid to provide needed goods and services
to the United Nations.  LOAs drawn up between DOD and the United
Nations specifically define a requirement, the delivery and payment
terms, and other necessary information.  DOD has provided the United
Nations such items as armored personnel carriers, maps, riot control
gear, and transport services through LOAs.  According to DOD
officials, as with the support provided through the Trust Fund,
support provided through LOAs are authorized by section 607 of the
Foreign Assistance Act. 

DOD and the United Nations agreed on 19 individual LOAs for UNOSOM II
in fiscal year 1993 that total $48 million.  Except in special
circumstances, the United Nations does not prepay for support
provided through LOAs, but reimburses based on completion of the
terms of the agreement.  DOD submitted the first bill to the United
Nations on July 30, 1993.  As of January 1994, the United Nations has
been billed for $44.2 million for LOAs that have been fully executed. 
The United Nations has paid $7.1 million of this amount as of January
1994.  DOD will submit bills to the United Nations for the remaining
$3.8 million.  However, since DOD does not have an automated system
for generating bills, it takes time to gather and consolidate data
and create the bills to forward to the United Nations. 

As is true of reimbursements from the Trust Fund for Somalia,
payments to DOD under the LOAs are also covered by section 607 of the
Foreign Assistance Act.  Accordingly, DOD will be able to retain and
spend these payments if they are received within 180 days of the end
of the fiscal year in which the goods and services were provided. 
However, section 607 does not authorize DOD to retain payments
received after this time period has elapsed.  Therefore, LOAs must be
fully executed, and bills for items delivered under them in fiscal
year 1993 must be submitted to the United Nations so that DOD can
receive the U.N.  payments before March 30, 1994. 

   U.N.  PAYMENT FOR TROOP AND
   EQUIPMENT PARTICIPATION
---------------------------------------------------------- Chapter 3:2

The United Nations pays each participating government for the use of
its troops and equipment in a U.N.  operation.  The United States
will, therefore, be paid for the 2,900 military logistics personnel
and the equipment they operate as part of UNOSOM II.  However, these
payments may come long after the United States ends its
participation. 

      DISPOSITION OF U.N.  TROOP
      PAYMENTS
-------------------------------------------------------- Chapter 3:2.1

Section 628 of the Foreign Assistance Act provides the authority for
the United States to detail or assign personnel to international
organizations such as the United Nations.  Section 630 of the act
provides that any reimbursement the United States receives for such
personnel may be credited to either the original appropriation used
to make the payment or the corresponding currently available
appropriation or be applied against the U.S.  share of the expenses
of the international organizations involved.  The statute does not
establish any time limit during which the reimbursement must be
received.  The United Nations uses a fixed rate of payment for all
troops serving in U.N.  operations.  The payment the U.S.  government
receives for the 2,900 troops that are part of UNOSOM II will be
based on the set U.N.  payment rates of $988 per person per month for
regular infantry, $1,279 per person per month for specialists, and
$70 per person per month for wear and tear on personal clothing,
gear, and weapon. 

While the U.S.  government will receive the full U.N.  troop
reimbursement, DOD is interested in recovering only its incremental
cost of $318 per person per month.  This amount includes $248 per
person per month in imminent danger, foreign duty, and family
separation pays associated with sending troops to Somalia.  It also
includes $70 per person per month for personal clothing, gear, and
weapon. 

According to both State Department and DOD officials, there is a
written understanding between the Department of State and DOD on the
division of U.N.  payments for troop participation.  Since DOD claims
only those personnel-related costs that are incremental in nature
($318 per person per month), the understanding would allocate the
difference between these incremental costs and the U.N.  payment for
troop participation to the State Department as an offset to U.S. 
peacekeeping assessments.  This understanding is included in a draft
Presidential Review Directive outlining policies for U.S. 
participation in peacekeeping activities. 

The State Department has estimated that, for the 5-month period
ending September 1993, the United Nations could owe the U.S. 
government a total of $15 million for troop participation in UNOSOM
II.  Of this amount, it is estimated that DOD's incremental personnel
costs could be $4.4 million, which would leave $10.6 million to be
offset against the U.S.  peacekeeping assessment.  The United States
has now received a check from the United Nations for $11.9 million\1
for payment of U.S.  troop participation in UNOSOM II through August
1993.  To reimburse DOD for its incremental costs and credit the
remaining amount properly to the U.S.  assessment, the State
Department returned this check to the United Nations, asking instead
that the United Nations send DOD a check for $2.7 million and credit
the U.S.  peacekeeping assessment for $9.2 million. 

--------------------
\1 This total also includes a very small amount for U.S. 
participation in the United Nations Transitional Authority in
Cambodia. 

      CONTINGENT-OWNED EQUIPMENT
-------------------------------------------------------- Chapter 3:2.2

At the start of an operation, the United Nations requests that each
participating country bring specific types and amounts of equipment
for use in the operation.  According to DOD officials, section 607 of
the Foreign Assistance Act provides the authority for DOD to provide
this equipment on a reimbursable basis.  The value of
contingent-owned equipment is the basis for determining how much the
United Nations pays for the use of this equipment. 

DOD is currently determining the value of the equipment operated by
the 2,900 U.S.  troops now part of UNOSOM II.  These troops deployed
with more equipment than the United Nations requested, since the Army
has specific requirements for unit equipment that exceed U.N. 
requirements.  The United Nations does not pay for the use of
equipment it did not request. 

The written understanding between the Department of State and DOD
allows DOD to retain all payments for equipment, so that DOD can
recover its incremental costs for refurbishing the equipment used in
UNOSOM II.  Since this equipment is provided under the authority of
section 607 of the Foreign Assistance Act, the payment must be
received within 180 days of the end of the fiscal year in which the
equipment was provided.  If payment is received after this time, it
appears that DOD would be unable to retain and spend the money. 

   CONCLUSIONS
---------------------------------------------------------- Chapter 3:3

DOD could receive at least $123.6 million in reimbursements from the
United Nations for operations in Somalia.  Of this amount, DOD has
received $37.3 million in payments owed by the United Nations and
could receive at least an additional $86.3 million.  These
reimbursements would be for equipment, services, and other support
provided primarily in fiscal year 1993.  To the extent the
reimbursements are received within the authorized time frame, they
can be deposited into DOD's existing appropriations accounts for
fiscal year 1994 and expended, without any requirement for further
congressional action.  Accordingly, these reimbursements could be
expended by DOD in addition to the funds the Congress has
appropriated for fiscal year 1994. 

   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 3:4

While existing legislation allows DOD to retain U.N.  reimbursements
under certain circumstances, any reimbursement DOD receives from the
United Nations in fiscal year 1994 or subsequent years for troops,
goods, or services would be above the level of congressional
appropriations for those fiscal years.  Given the significant level
of reimbursements involved, the Congress may wish to consider whether
(1) DOD should continue to have access to these reimbursements as
currently allowed by the Foreign Assistance Act and, if so, whether
the 180-day time limit for retaining any reimbursements received
under section 607 of that act should be revised; (2) an amount equal
to the reimbursements should be rescinded from DOD's current
appropriations, if DOD is allowed to retain the reimbursements; or
(3) it should create an account into which these U.N.  reimbursements
could be deposited for use in funding future DOD contingency
operations. 

   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 3:5

DOD and the Department of State generally agreed with the contents of
this report; however, DOD disagreed with the matters suggested for
congressional consideration.  DOD noted, and we agreed, that under
section 607 of the Foreign Assistance Act, the Congress has given DOD
authority to accept reimbursement for goods and services to certain
international organizations.  DOD does not believe that amounts equal
to U.N.  reimbursements should be rescinded because the
reimbursements simply allow DOD to execute previous congressionally
approved programs. 

We have raised this matter not because we advocate denying DOD access
to U.N.  reimbursements, but because of (1) the large amount of
reimbursements due DOD and (2) the fact that these reimbursements are
in addition to amounts appropriated by the Congress.  In addition, as
discussed in the report, DOD presently only has access to U.N. 
reimbursements if they are received within 180 days from the end of
the fiscal year in which the goods and services were delivered. 
However, DOD may not always receive reimbursements within the
statutory period, in which case the reimbursement would be deposited
in the general fund of the U.S.  Treasury and be unavailable to DOD. 
We believe that all of the above factors merit a reexamination of
U.N.  reimbursements, including considering whether the (1) access to
such reimbursements should continue and (2) the limited period for
receiving reimbursements should be revised.  We have revised the
matters for congressional consideration to clarify the options
available to the Congress. 

The State Department's comments emphasize that voluntary
contributions and assessments of member states provide the United
Nations with the funds with which it reimburses countries that
participate in peacekeeping operations.  We recognize that
assessments and voluntary contributions are the principal sources of
U.N.  funds.  Our discussion of the U.N.'s sources of funds is
limited because the scope of this report as described in chapter 1 is
(1) DOD's incremental costs, (2) the impact operations in Somalia
have had on DOD's normal spending plans, and (3) reimbursements the
United States could expect. 

Both DOD and the State Department provided technical comments, which
we have incorporated into the report as appropriate. 

(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
============================================================ Chapter 3

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

The following are GAO's comments on the Department of Defense's
letter dated February 10, 1994. 

   GAO COMMENTS
---------------------------------------------------------- Chapter 3:6

1.  We have revised the report to reflect this information. 

2.  Although DOD anticipates payment within the 180-day limit,
whether the United Nations will pay these bills within this period
cannot be predicted. 

3.  DOD will have access to these payments only if they are received
within the 180-day limit established in section 607 of the Foreign
Assistance Act.  Although the cost of restoring contingent-owned
equipment will be incurred after it is returned to the United States,
the 180-day limit is based on the fiscal year in which the equipment
is provided, not the year in which it is refurbished. 

4.  We have revised the matters for congressional consideration to
more clearly state our position.  This issue is also discussed in the
agency comments section of chapter 3. 

(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
STATE
============================================================ Chapter 3

(See figure in printed edition.)

(See figure in printed edition.)

See comment 1. 

See comment 3. 

See comment 4. 

See comment 5. 

(See figure in printed edition.)

See comment 1. 

See comment 7. 

See comment 9. 

See comment 1. 

(See figure in printed edition.)

See comment 10. 

See comment 2. 

See comment 10. 

(See figure in printed edition.)

See comment 2. 

See comment 1. 

See comment 12. 

See comment 13. 

See comment 1. 

See comment 14. 

See comment 15. 

(See figure in printed edition.)

See comment 2. 

See comment 18. 

See comment 1. 

(See figure in printed edition.)

See comment 16. 

See comment 1. 

See comment 1. 

(See figure in printed edition.)

See comment 19. 

See comment 20. 

(See figure in printed edition.)

The following are GAO's comments on the Department of State's letter
dated February 7, 1994. 

   GAO COMMENTS
---------------------------------------------------------- Chapter 3:7

1.  We have revised the report to reflect this information. 

2.  Our report includes the essence of the State Department's
suggested change. 

3.  We have amended table 1 to reflect this information, but do not
believe the suggested revisions to the table's format would improve
its clarity. 

4.  We have revised the report to reflect this information, but have
updated the numbers and provided greater detail. 

5.  This is a military issue and has been revised based on DOD
comments. 

6.  We have revised the report to reflect this information.  However,
DOD does not characterize its incremental cost of $70 per month for
personal clothing, gear, and weapon as "the U.N.  allowance for
clothing and personal equipment" as stated in the State Department's
comments. 

7.  The United States assessment for peacekeeping operations is
discussed in chapter 1. 

8.  The goods and services, as well as the support provided under the
Trust Fund for Somalia, were provided under the authority of section
607 of the Foreign Assistance Act, not the U.N.  Participation Act. 
Therefore, we believe there is no need to make reference to the U.N. 
Participation Act.  Also, we continue to believe that reimbursements
made under the authority of section 607 of the Foreign Assistance Act
must be received within the statutory time limit included in that
section if DOD is to retain the reimbursements. 

9.  We do not agree with the State Department's characterization of
the discussion on statutory time limits as "not particularly relevant
here." See comment 19 for further discussion. 

10.  We have revised the report to reflect this information. 
However, as discussed in the agency comments section of chapter 3, we
believe that a detailed discussion of how U.N.  peacekeeping
operations are funded is outside the scope of this report. 

11.  United Nations documents state that the United Nations budgets
for contingent owned equipment at a rate of 20 percent per year for 5
years and discussions with officials from the United Nations and the
Permanent Mission of the United States to the United Nations
confirmed this information.  Also, since the agreements for
operations in Somalia were concluded prior to 1994, any new payment
arrangements do not affect U.S.  reimbursements. 

12.  We have revised the report to indicate that consultation with
the Secretary of Defense did occur. 

13.  As of January 1994, there have been no payments received from
the United Nations for these costs. 

14.  We have revised the report to reflect this information but have
updated the amount of reimbursement. 

15.  The report discusses bills submitted to the United Nations. 
These bills, totaling $44.2 million, were submitted in June, August,
October, and December 1993 and January 1994.  As of February 8, 1994,
DOD has only received $7.1 million in reimbursement for the June
bill. 

16.  As discussed in the agency comments section of chapter 3, we
believe that a detailed discussion of how U.N.  peacekeeping
operations are funded is outside the scope of this report. 

17.  While we agree that the United Nations Participation Act allows
the receipt of payments, we do not believe that discussion of the act
is appropriate at this point, since the report is discussing support
provided under section 607 of the Foreign Assistance Act.  Also, we
continue to believe that reimbursements made under the authority of
section 607 must be received within the statutory time limit included
in that section if DOD is to retain the reimbursements. 

18.  While we agree that support can be provided to the United
Nations through several statutes, the report is discussing support
provided under section 607 of the Foreign Assistance Act.  Therefore,
we believe this to be the relevant statutory cite. 

19.  We do not agree with the State Department's proposed language
for three reasons.  First, the agreement with the United Nations is a
contractual agreement and any amendment, such as adding a requirement
that the United Nations pay interest on any reimbursements received
after the statutory time limit contained in section 607 of the
Foreign Assistance Act had expired, would not become effective unless
it was agreed to by both DOD and the United Nations.  We have seen no
indication that the United Nations would agree to such an amendment. 
Second, our interpretation of the statutory language in section 607
(a)(2) and its legislative history leads us to conclude that
authority to retain reimbursements received after the 180-day time
limit has expired only applies to assistance provided through the
Agency for International Development appropriations, provided the
other statutory conditions such as the payment of interest and other
requirements are satisfied.  Third, as a matter of policy, we
question whether the United States would charge the United Nations
interest, particularly since the United States is in arrears on
payment of its assessment for peacekeeping operations. 

20.  We believe that our discussion in the matters for congressional
consideration lays out the options available to the Congress.  With
regard to the State Department's suggested changes, we have revised
the first option to include whether the statutory time limit in
section 607 of the Foreign Assistance Act should be revised if DOD is
to be allowed to retain reimbursements.  Also, we believe the State
Department is incorrect in asserting that option 3 is "already the
case." DOD does not deposit any reimbursements from the United
Nations into a separate account for use in future contingencies.  To
our knowledge, no such DOD account exists. 

MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
------------------------------------------------------- Appendix III:1

Steven Sternlieb, Assistant Director
Ann Borseth, Evaluator-in-Charge
William Cawood, Senior Evaluator
Joseph Kirschbaum, Evaluator

   OFFICE OF GENERAL COUNSEL
------------------------------------------------------- Appendix III:2

Alan Belkin, Senior Attorney

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