United States General Accounting Office

GAO Report to Congressional Committees

February 1997 DEFENSE BUDGET

Analysis of Operation

and Maintenance

Accounts for 1985-2001

GAO/NSIAD-97-73

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-275972 

February 28, 1997

The Honorable Pete V. Domenici

Chairman, Committee on the Budget

United States Senate

The Honorable John R. Kasich

Chairman, Committee on the Budget

House of Representatives

The Honorable Herbert H. Bateman

Chairman, Subcommittee on Military Readiness

Committee on National Security

House of Representatives

The Department of Defense’s (DOD) budget request for fiscal year 1997

includes almost $89.2 billion for operation and maintenance (O&M)

accounts. This represents about 37 percent of DOD’s fiscal year 1997 budget

request. DOD estimates that in fiscal year 2001, O&M will represent about

36 percent of its total budget. Because O&M funds represent the largest

share of DOD’s budget, we (1) determined how annual funding relates to

military and civilian personnel levels through fiscal year 2001,

(2) identified overall trends from fiscal years 1985 to 2001, and

(3) identified key drivers (areas in which most money has been budgeted)

through fiscal year 2001.

This report highlights significant information upon which Congress can

focus its future budget deliberations. Throughout the report, we present

some questions raised by reported O&M trends. In addition, we explain the

reasons for major changes in funding due to migrations of funds between

O&M programs and activities. However, we did not inquire into the reasons

for changes in trends and funding differences among the services after

taking the migrations into account. We anticipate that our future work will

address some of the reasons for changes concerning specific programs.

Finally, we did not attempt to determine an appropriate level of O&M

funding.

This review was performed under our basic legislative responsibilities.

However, because of your expressed interest and oversight

responsibilities in the O&M accounts, we are addressing the report to you.

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Background O&M is large, diverse, and widespread. Since 1987, the O&M accounts have

been the largest appropriation group in DOD’s budget and are expected to

remain the largest through fiscal year 2001. O&M is one of six appropriation

groups for DOD.

1

 When compared with the federal budget, DOD’s fiscal year

1997 O&M budget request represents approximately 18 percent of total

federal discretionary spending and is larger than most federal agencies’

fiscal year 1997 budget requests.2

O&M funds support portions of DOD’s readiness and quality-of-life priorities.

This appropriation funds a diverse range of programs and activities that

include salaries and benefits for most civilian DOD employees; depot

maintenance activities; fuel purchases; flying hours; environmental

restoration; base operations; consumable supplies; and health care for

active duty service personnel, dependents of active duty personnel, and

retirees and their dependents. Moreover, each service and DOD agency

spends O&M funds.

Under DOD’s measurement of infrastructure, O&M funds approximately half

of DOD’s infrastructure costs that can be clearly identified in DOD’s Future

Years Defense Program (FYDP).3

 Because DOD wants to decrease

infrastructure costs to help pay for modern weapon systems, it must look

at this appropriation group for some of the intended savings.

Infrastructure comprises activities that provide support services to

mission programs and primarily operate from fixed locations.

O&M funding is affected by civilian and military personnel levels. DOD’s

fiscal year 1997 budget includes funds for about 800,000 civilians and

1.5 million active duty and full-time National Guard and Reserve military

personnel. Civilian personnel levels have a direct effect because the

1

The other appropriations are Military Personnel; Procurement; Research, Development, Test, and

Evaluation; Military Construction; and Family Housing.

2

The Budget Enforcement Act, as amended, categorizes all federal spending as either discretionary or

direct. “Discretionary” programs are funded through annual appropriation acts. Examples of

discretionary spending programs are national defense, education, law enforcement, and space

exploration. “Direct” spending is often referred to as mandatory spending because it flows

automatically from authorizing legislation and is not controlled through appropriations. Examples of

direct spending programs are food stamps, medicare, and federal pensions.

3

In Defense Infrastructure: Budget Estimates for 1996-2001 Offer Little Savings for Modernization

(GAO/NSIAD-96-131, Apr. 4, 1996), we reported that 90 percent of planned direct infrastructure costs

are funded out of three appropriations: O&M (about 50 percent); Military Personnel (about

30 percent); and Research, Development, Test, and Evaluation (about 10 percent).

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majority of civilian salaries and benefits are funded by O&M.

4

 Although O&M

does not fund military pay and allowances, the appropriation group

supports many readiness activities and quality-of-life programs that are

affected by the number of military personnel.

We examined trends in annual O&M funds and personnel levels and

identified the activities funded by O&M appropriations using DOD’s FYDP. The

FYDP is an authoritative record of current and projected force structure,

costs, and personnel levels that have been approved by the Secretary of

Defense. The FYDP displays resources and personnel levels by programs

and activities known as program elements. There are about 3,800 program

elements in the FYDPs between fiscal years 1985 and 2001. We analyzed

FYDP data from several different perspectives: aggregate O&M, federal

budget account structure, DOD organization, DOD’s Infrastructure Category

and Defense Mission Category (DMC) analytical frameworks,5

 and DOD’s

major defense program structure. Each perspective produces a different,

but equally valid, overview.

Results in Brief Total DOD O&M funds, in constant fiscal year 1997 dollars,6

 are projected to

decline at a slower rate than either civilian or military personnel levels

between fiscal years 1985 and 2001. However, beginning in fiscal year

2000, projections show that O&M funds begin to rise at the same time

civilian personnel decline and military personnel remain relatively stable.

Because a significant portion of O&M funds pay for civilian salaries and

benefits, FYDP projections must show an increase in other O&M-funded

programs. Increases for these programs will more than offset the decline

in O&M-funded civilian salaries.

O&M resources are significantly concentrated when grouped by the federal

budget account structure, DOD major defense program, or defense mission

category. Since 1993, approximately 85 percent of the funds are

concentrated in five budget accounts—Navy, Army, Air Force,

Defense-wide, and Defense Health Program. Another data view shows that

three major defense programs receive the majority of annual O&M

4

Approximately 85 percent of DOD civilian payroll costs are paid from O&M appropriations. The

remainder is funded in the Research, Development, Test, and Evaluation; Military Construction; and

Family Housing appropriation accounts.

5

The DMC structure divides DOD programs into three basic categories: major force missions,

Defense-wide missions, and Defense-wide support missions. Within each basic category, missions are

then divided into five additional levels. The third level of detail, the most common, is used in our

analysis. Appendix II describes the DMC structure in greater detail.

6

Throughout this report, funding levels are presented in constant fiscal year 1997 dollars.

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funds—general purpose forces; central supply and maintenance; and

training, medical, and other general purpose activities. Between fiscal

years 1993 and 2001 about 50 percent of annual O&M funds are found in five

of DOD’s mission categories. The five categories are land forces, medical,

naval forces, tactical air forces, and other logistics support. In total, there

are about 30 mission categories during the fiscal year 1993-2001 period.

From an organizational perspective, the military services’ portion of total

annual O&M funds declines.7

 Beginning in fiscal year 1998, the Army is

projected to receive a smaller proportion of annual O&M funds than either

of the other two services or the combined DOD agencies. Even though the

Army will receive the smallest portion of annual O&M funds, this service

will have the second largest active military force and the largest civilian

workforce.8

 The Navy/Marine Corps’ share of annual O&M funds declined

by almost 10 percent prior to fiscal year 1996. In contrast, the Air Force’s

proportion of annual O&M funds changes the least of the three services,

while Air Force military and civilian personnel levels fall significantly over

the fiscal year 1985-2001 period. Only the combined DOD agencies’ share of

annual O&M funds increases between fiscal years 1985 and 2001 because of

the health program funding consolidation into a Defense-wide account.

Regardless of how the O&M budget is analyzed, medical is the only area

where consistent growth occurred. O&M funds for medical activities

increase by 72.8 percent from fiscal years 1985 to 2001. The majority of

these costs are for the health care needs of DOD’s 8.3 million eligible

beneficiaries.

During fiscal years 1985 through 2001, O&M infrastructure funds that can be

clearly identified in the FYDP decline by 22.6 percent and thus mirror total

O&M trends. Despite decreases, O&M continues to fund about half of DOD’s

clearly identifiable infrastructure costs. Thus, if DOD is to identify

significant savings from infrastructure to fund modernization, it must look

to the O&M appropriations.

7

Navy and Marine Corps resources are combined in our organizational analysis.

8

The combined Navy/Marine Corps has the largest active military force and the second largest civilian

workforce. The Air Force has the smallest active military force and smallest civilian workforce. (See

table 2.)

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O&M Has Declined

More Slowly Than

Personnel Levels

Total O&M funding for DOD is projected to decline at a slower rate than

either civilian or military personnel levels between fiscal years 1985 and

2001.9

 Figure 1 shows that, between fiscal years 1985 and 2001, annual O&M

funds are projected to decrease by over 20 percent (from $110.4 billion to

$87.8 billion), and both civilian and military personnel levels are also

projected to decline, but at different rates.

Figure 1: Annual DOD O&M Appropriations and Personnel Levels for Fiscal Years 1985-2001 (Constant 1997 dollars in

billions)

0 

20 

40 

60 

80 

100 

120 

140 

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

O&M value Military personnel Civilian personnel

Dollars Personnel

Note: Military personnel include active military and full-time Guard and Reserve personnel. The

surge in fiscal year 1991 funding was due to an infusion of O&M money for the Army for the

Persian Gulf War.

Source: Our analysis of DOD FYDP data.

9

Personnel levels are as of the end of a fiscal year, or endstrength. Military personnel levels in this

report, unless noted otherwise, include active military and full-time Guard and Reserve personnel.

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Between fiscal years 1985 and 1996, the level of annual O&M funding

declined by 13 percent, from $110.4 billion to $96.0 billion. However, this

decline is projected to end during the 1997 FYDP period (fiscal 

years 1997-2001), and annual O&M funds are projected to increase slightly

in fiscal years 2000 and 2001. Civilian personnel levels have fallen steadily

since fiscal year 1989 and are projected to continue to decline through

fiscal year 2001. This is important because, according to DOD, over

40 percent of annual O&M appropriations fund civilian salaries and benefits.

O&M is projected to increase at the same time that the number of civilians

is projected to decline. This indicates that other O&M-funded programs are

projected to increase to a greater extent than O&M-funded civilian salaries

are projected to decrease.

The number of civilian personnel in DOD has fallen by about 27 percent

between fiscal years 1985 and 1996, from 1.1 million persons to 830,000. By

fiscal year 2001, DOD plans to have 729,000 civilians employed, an

additional 12-percent decline.

Although military personnel levels are projected to fall over the 17-year

period covered by this report, most of the decline occurred prior to fiscal

year 1996. Military personnel levels fell by over 30 percent between the

peak of 2.2 million persons in fiscal year 1987 to 1.5 million in fiscal 

year 1996. After fiscal year 1996, military personnel levels are expected to

decline by only 4 percent. Although military personnel salaries are not

paid by O&M funds, O&M funds a variety of activities and programs that

support military personnel and most readiness-related resources.

Because personnel levels decline at a faster rate than annual O&M funding

levels, annual O&M funds when allocated per person (military and civilian)

are projected to increase by about 20 percent over the fiscal 

year 1985-2001 period, as shown in figure 2.10

10Per person values, unless noted otherwise, are per a combination of active military, full-time Guard

and Reserve personnel, and DOD civilians.

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Figure 2: Per Person Annual O&M Funding for Fiscal Years 1985-2001 (Constant 1997 dollars in thousands)

0 

10 

20 

30 

40 

50 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Source: Our analysis of DOD FYDP data.

O&M funding per person increased from $33,100 to $40,400 between fiscal

years 1985 and 1996, a 21.9-percent increase. Although O&M funding per

person is projected to decline in fiscal years 1997 and 1998, it is expected

to increase by 4.2 percent after fiscal year 1998 to $39,700 per person in

fiscal year 2001.

A small portion of the increase in O&M funding per person may be a result

of DOD’s transferring functions previously performed in house to outside

providers. Our analysis of DOD’s budget documents shows that the

purchase of goods and services through contracts or from other federal

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agencies uses over half of DOD’s annual O&M funds. The amount of

contracting paid by O&M funds is projected to increase slightly between

fiscal years 1988 and 1997.

The following are some questions raised by the trend information

presented in this section:

Why are O&M funds not projected to decline during the period

covered by the 1997 FYDP when civilian personnel levels decrease

and military personnel levels stabilize?

How will outsourcing impact O&M costs in the out-years, that is,

after fiscal year 1997?

O&M Funding Is

Concentrated When

Viewed by the Federal

Budget Account

Structure

O&M budget accounts are organized in two ways, by service and program.

The 11 service-oriented accounts include funding for multiple programs

and activities for specific-service, Defense-wide, and the services’ National

Guard and Reserve programs.11 The number of service budget accounts

remained stable at 11 from fiscal years 1985 to 2001. In contrast, the

number of program accounts grew from 4 in fiscal years 1985 to 1989 and

peaked at 11 in fiscal years 1993, 1994, and 1997.12 Projections show that

between fiscal years 1998 and 2001, DOD will have 10 program accounts.

Congress created the largest program account, the Defense Health

Program, in fiscal year 1993. DOD moved all defense health care resources

from the service and Defense-wide accounts to this account. As a share of

total annual O&M funds, the Defense Health Program budget account is

projected to grow from 10.6 percent in fiscal year 1993 to 11.8 percent in

fiscal year 2001.

Most program accounts were created to increase visibility for certain

efforts or respond to unique needs. For example, the Former Soviet Union

Threat Reduction budget account was created in fiscal year 1994 to help

several newly independent states destroy weapons of mass destruction;

11The 11 service accounts are: Navy, Air Force, Army, Defense-wide, Air National Guard, Army

National Guard, Marine Corps, Air Force Reserve, Army Reserve, Navy Reserve, and Marine Corps

Reserve.

12In fiscal year 1985, the four program accounts were Claims-Defense, Court of Military

Appeals-Defense, National Board for Promotion Rifle Practice, and Defense Environmental

Restoration Fund. In fiscal year 1997, the 11 program accounts are Defense Health Program; Drug

Interdiction and Counter-Drug Activities; Former Soviet Union Threat Reduction; Office of the

Inspector General; Overseas Humanitarian, Disaster, and Civic Aid; Payment to Kaho’olawe Island

Fund; Court of Military Appeals-Defense; and separate Environmental Restoration accounts for

Defense, Navy, Army and Air Force.

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store and transport the weapons to be destroyed; and reduce the risk of

proliferation. Funds for this account peaked at $439 million in fiscal 

year 1995 and are projected to decline to $395 million in fiscal 

year 2001. The program accounts without the Defense Health Program

represent a small share of O&M funds, from less than one-tenth of a percent

in fiscal year 1989 to a peak of almost 3 percent in fiscal year 1999.

The O&M budget accounts vary in size. From fiscal years 1985 to 1992,

approximately 90 percent of O&M funds are concentrated in four budget

accounts: Navy, Army, Air Force, and Defense-wide. This concentration

(approximately 85 percent) continues through fiscal year 2001 with the

addition of one account—Defense Health Program. Table 1 shows the

concentration of resources by budget account for fiscal year 1996.

Table 1: Summary of O&M Budget

Accounts for Fiscal Year 1996 Constant 1997 dollars in thousands

Budget account title

Fiscal year 1996

total obligational

authority

Cumulative

percentage of

total

O&M, Navy $21,893,235 22.8

O&M, Army 19,819,719 43.5

O&M, Air Force 19,225,690 63.5

O&M, Defense-wide 10,416,978 74.4

Defense Health Program 10,378,416 85.2

Other budget accounts 14,221,691 100.0

Total $95,955,729

Note: Other budget accounts are seven service accounts (Air National Guard, Army National

Guard, Marine Corps, Air Force Reserve, Army Reserve, Navy Reserve, and Marine Corps

Reserve) and eight program accounts (Defense Environmental Restoration, Drug Interdiction and

Counter-Drug Activities; Former Soviet Union Threat Reduction; Office of the Inspector General;

Payment to Kaho’olawe Island Fund; Overseas Humanitarian, Disaster, and Civic Aid; Summer

Olympics; and Court of Military Appeals-Defense).

Source: Our analysis of DOD FYDP data.

DOD has considerable discretion in budgeting for and carrying out O&M

activities. Unlike the military personnel appropriation accounts, which are

primarily composed of entitlements,13 most O&M spending is not set by law.

However, the O&M program accounts receive an annual appropriation

separately. As a practical matter, this means that funding levels for these

specific programs are set by law. For example, in fiscal year 1996,

13See Defense Budget: Trends in Active Military Personnel Compensation Accounts for 1990-97

(GAO/NSIAD-96-183, July 9, 1996).

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Congress appropriated $50 million for the program account, Overseas

Humanitarian, Disaster, and Civic Aid.

The fact that DOD has discretion over most O&M funds does not mean that

O&M funds are available without any controls. O&M funds can only be

obligated for authorized programs and purposes and are available for one

fiscal year unless a longer period of availability is specified. Further, in

annual authorization and appropriation acts, Congress can impose

direction to carry out particular activities or programs and can limit or

prohibit spending for other activities. Finally, although reprogramming of

funds within an appropriation is permitted, DOD has committed itself to

seek congressional approval before reprogramming $10 million or more in

an O&M account.

The following is a question raised by the trend information presented in

this section:

Should other budget accounts be created to increase visibility for

O&M-funded programs?

Major Shifts in Funds

Occur Among the

Services and

Combined DOD

Agencies

Prior to fiscal year 1992, the three services received about 90 percent of

O&M funds, and DOD agencies received approximately 10 percent.14 During

this period, the Navy/Marine Corps’ share of O&M funds declined the most,

by almost 6 percent, while the Air Force’s annual share decreased by less

than 2 percent. The significant decrease in the Navy/Marine Corps’ portion

of annual O&M funds occurred even though the Navy/Marine Corps’ civilian

personnel levels declined by 5 percent less than the Air Force and the

Navy/Marine Corp’s military personnel levels grew slightly over this

period.15 Only the Army experienced an increase in its share of annual O&M

funds. Between fiscal years 1985 and 1990, the Army’s portion of funding

increased by 4 percent, while Army military personnel levels fell by almost

3 percent and Army civilian personnel levels fell by about 9 percent. The

Army received an additional increase of 5 percent in its share of annual

O&M funds between fiscal years 1990 and 1991, but this surge in fiscal 

year 1991 funding was due to an infusion of O&M money for the Army for

the Persian Gulf War.

14Annual O&M funds for the three services include the funding for their respective Guard and Reserve

units.

15In this section, service military personnel levels do not include service personnel assigned to DOD

agencies.

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After fiscal year 1991, DOD centralized funding for health programs into a

Defense-wide O&M appropriation by shifting the funds for the program

from the services’ O&M appropriations. This change caused a significant

increase in the total annual O&M funds provided to the combined DOD

agencies. In fiscal year 1992, Defense-wide O&M was almost 20 percent of

total DOD O&M funding. In fiscal year 1996, O&M funding became almost

equally proportional among the three services and the combined DOD

agencies. Defense-wide appropriations remain at about one-quarter of

total annual O&M appropriations through fiscal year 2001.

Although the proportion of O&M funds received by each of the three

services declined after fiscal year 1991, the Army’s share declined the

most. Beginning in fiscal year 1998, the Army will annually receive the

smallest portion of O&M funds. By fiscal year 2001, the Army is expected to

receive less than 23 percent of total annual O&M funds, while the

Navy/Marine Corps and the Air Force will each get approximately

26 percent of total O&M funds. Figure 3 shows the changes in O&M funding

distribution in fiscal years 1985, 1992, 1996, and 2001.

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Figure 3: Percentage of DOD’s Annual

O&M Funding Allocated by Operating

Organization in Fiscal Years 1985,

1992, 1996, and 2001

9.6%

28.2%

26.8%

35.4%

1985

19.2%

24.8%

27.4%

28.7%

1992

24.6% 24.5%

24.4% 26.5%

1996

26.1% 25.1%

22.9% 25.9%

2001

Defense agencies Air Force Army Navy/Marine Corps

Note: Annual percentages may not add to 100 due to rounding.

Source: Our analysis of DOD FYDP data.

The Navy/Marine Corps’ annual portion of O&M funds continued to decline

after fiscal year 1991 and by fiscal year 1996 fell to 26.5 percent, almost

10 percent lower than the portion of funding in fiscal year 1985. The level

of Navy/Marine Corps military personnel fell almost 10 percent less than

the other two services, while Navy/Marine Corps civilian personnel levels

fell by almost 30 percent, similar to the Army. After fiscal year 1996, the

portion of O&M funding provided to the Navy/Marine Corps is projected to

remain between 25.9 and 26.5 percent, while military personnel levels fall

by 5 percent and civilian personnel levels decrease by 15 percent.

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The Air Force’s proportion of annual O&M funds changed the least of the

three services. Although the Air Force’s share of O&M funds fell by about

2 percent between fiscal years 1991 and 1992, the Air Force’s annual

portion of O&M funds are planned to remain between 24.6 and 27.6 percent

for the fiscal year 1993 through 2001 period. During this period, both Air

Force civilian and military personnel levels are projected to decline by 19

and 17 percent, respectively.

Of the three services, the Air Force has the highest O&M cost per military

and civilian person. As shown in table 2, even though the Air Force had

fewer active military, full-time Guard, Reserve, and civilian personnel than

either the Army or the Navy/Marine Corps, the Air Force’s O&M cost per

person in fiscal year 1996 was more than $46,000 per person compared

with about $31,000 per person for the Navy/Marine Corps and the Army.

The Army had approximately 152,000 more military and about 76,000 more

civilians than the Air Force but received $100 million less in O&M funds in

fiscal year 1996.

Table 2: O&M Funding and Personnel

Levels in Fiscal Year 1996 by Service

Service

Fiscal year

1996 O&M

fundinga

Active militaryb and

full-time Guard and

Reserve personnel Civilians

O&M funding

per personc

Air Force $23.6 324,904 183,357 $46.5

Army 23.5 477,403 259,462 31.8

Navy/Marine

Corps $25.4 576,495 239,961 $31.1

aIn billions of fiscal year 1997 dollars.

bActive military does not include personnel assigned to DOD agencies.

cIn thousands of fiscal year 1997 dollars.

Source: Our analysis of DOD FYDP data.

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The following are some questions raised by the trend information

presented in this section:

What factors contribute to the major shifts in funds among the

services and combined DOD agencies (even after taking into account

the DOD health care funding migrations)? Specifically,

• Why is the Army’s share of annual O&M funds declining?

• What causes the Air Force to have the highest per person O&M costs

among the three services?

O&M Funding of

Direct Infrastructure

Is Projected to

Decline Slightly

Using the FYDP, DOD has identified program elements that fund

infrastructure activities. DOD refers to these program elements as “direct

infrastructure.” O&M funds about 50 percent of direct infrastructure during

the fiscal year 1985-2001 period. DOD assigned each infrastructure program

element to one of the following eight categories on the basis of the

program’s activities: acquisition infrastructure; installation support;

central command, control, and communications; force management;

central logistics; central medical; central personnel; and central training.

These categories are described in appendix I.

There are parts of infrastructure that DOD cannot identify using the FYDP.

According to DOD officials, this is about 20 to 25 percent of DOD’s total

infrastructure funding and mostly represents logistics purchases that

cannot be identified specifically. Funding for logistics purchases would

likely come from O&M appropriations. Therefore, the proportion of total

DOD infrastructure funded by O&M is clearly greater than 50 percent.

During fiscal years 1985 through 2001, direct infrastructure O&M funds

decline by 22.6 percent, similar to total O&M trends. As shown in figure 4,

O&M funding of direct infrastructure programs decreases after fiscal 

year 1991.

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Figure 4: Direct Infrastructure Funded by O&M Appropriations for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

20 

40 

60 

80 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Source: Our analysis of DOD FYDP data.

This decline was primarily in the central logistics infrastructure category

when the Defense Business Operations Fund was created.16 Moreover, the

central logistics category received 35 percent less O&M funds in fiscal year

1992 than in fiscal year 1991, in part, due to the conclusion of the Persian

16The Defense Business Operations Fund is a revolving fund. Activities financed by the Fund provide

goods and services such as depot maintenance, spare parts, and supplies in exchange for

reimbursement of total costs incurred in delivering the goods or services. When the Defense Business

Operations Fund revolving fund was created, functions like depot maintenance and supply

management were no longer directly funded. Each of the Fund’s customers (that is, the services and

some defense agencies) now pay the Fund the cost of providing the goods and services to them. While

the funding has been consistently provided in O&M appropriations, the funding for these activities has

migrated to the customers of the Fund goods and services. The Defense Business Operations Fund has

been replaced by four service-specific revolving funds.

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Gulf War. Despite these reductions, this category accounted for about

27 percent of the total value of direct infrastructure in fiscal year 1992.

When O&M funding for the central logistics infrastructure category is

excluded, as shown in figure 5, O&M funding of direct infrastructure

actually increased between fiscal years 1985 and 1996.

Figure 5: Direct Infrastructure—Excluding Central Logistics—Funded by O&M Appropriations for Fiscal Years 1985-2001

(Constant 1997 dollars in billions)

0 

10 

20 

30 

40 

50 

60 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Source: Our analysis of DOD FYDP data.

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Large increases occurred in four infrastructure categories: central medical;

central command, control, and communications; central personnel; and

acquisition infrastructure. The increase in central medical O&M funding had

the largest impact because in fiscal year 1985 central medical accounted

for 15 percent of total direct infrastructure (without central logistics) and,

by fiscal year 1996, central medical’s portion had grown to over

20 percent.

DOD projects a slight decrease, about 3 percent, in O&M-funded direct

infrastructure (with and without central logistics) between fiscal 

years 1997 and 2001. Most of this decline is projected to occur in the

installation support, force management, acquisition infrastructure, and

central personnel infrastructure categories.

The following are some questions raised by the trend information

presented in this section:

What causes the projected out-year increases in O&M-funded direct

infrastructure (fiscal years 2000 and 2001)?

Where will DOD get savings in infrastructure to pay for

modernization?

How will DOD’s modernization plans affect future O&M levels?

O&M Funds Are

Concentrated in Three

Major Defense

Programs, and Only

One of

Those—Training,

Medical, and Other

General Purpose

Activities—Increased

Another way to analyze the changes and components of O&M funding is to

aggregate FYDP data by DOD’s major defense programs. For its own force

programming and budgeting purposes, DOD organizes the defense budget

into program elements that consist of collections of weapons, manpower,

and support equipment. Program elements are grouped into 11 major

defense programs. Each major defense program reflects a force mission or

support mission of DOD and contains the resources needed to achieve an

objective or plan.

Three major defense programs—general purpose forces; central supply

and maintenance; and training, medical, and other general purpose

activities—receive the majority of annual O&M funding. In fiscal year 1996,

these three programs were allocated 65 percent of DOD’s O&M funds.

Figure 6 shows that of the three programs, only the training, medical, and

other general purpose activities program’s annual funding has continued

to increase over the fiscal year 1985-2001 period.

Page 17 GAO/NSIAD-97-73 Defense Budget
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Figure 6: Annual DOD Operation and Maintenance Appropriations for Three Major Defense Programs in Fiscal Years

1985-2001 (Constant 1997 dollars in billions)

0 

10 

20 

30 

40 

50 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

General purpose forces Central supply and maintenance

Training, medical and other activities

Dollars

Source: Our analysis of DOD FYDP data.

The training, medical, and other general purpose activities program’s

annual share of O&M appropriations increased by almost $4 billion between

fiscal years 1985 and 1996 to about $19 billion. DOD plans to maintain this

level of O&M funding for this program through fiscal year 2001. O&M funding

per person for training, medical, and other general purpose activities has

almost doubled over the fiscal year 1985-2001 period;17 most of this growth

occurred prior to fiscal year 1996.

17Funding per person is per all military (active and full-time Guard and Reserve) and all DOD civilians.

Page 18 GAO/NSIAD-97-73 Defense Budget
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O&M funding for the general purpose forces program is projected to fall by

28 percent between fiscal years 1985 and 2001. This corresponds to the

decline in DOD’s overall force level. The O&M funding per person assigned to

this program is expected to generally remain between $25,000 and $30,000

per person over the entire fiscal year 1985 to 2001 period.

Central supply and maintenance O&M funding declined significantly

(by 34 percent) between fiscal years 1991 and 1992 when the Defense

Business Operations Fund was created. Many of this program’s supply,

maintenance, and service activities were no longer directly funded, and

the funds to pay for the goods and services provided by the program’s

activities were allocated to the customers (e.g., strategic and general

purpose forces programs) of these services. The decline in program

funding continued through fiscal year 1997, albeit at a slower rate, and is

projected to remain fairly stable at about $12 billion annually until fiscal

year 2001.

Of the remaining eight major defense programs, the next two

largest—(1) command, control, communications, intelligence, and space

and (2) Guard and Reserve forces—are projected to receive approximately

$10 billion and $8 billion, respectively, in annual O&M funds over the fiscal

year 1985-2001 period. (See fig. 7.)

Page 19 GAO/NSIAD-97-73 Defense Budget
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Figure 7: Annual DOD O&M Appropriations for Command, Control, Communications, Intelligence, and Space and for Guard

and Reserve Forces for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Intelligence and communications Guard and Reserve forces

Dollars

Source: Our analysis of DOD FYDP data.

Even with the downsizing of the force, the annual level of O&M funding for

both of these programs has remained fairly constant over the entire

17-year period covered by this report. For the Guard and Reserve program,

full-time personnel levels increased by almost 11,000 people over the fiscal

year 1985-1996 period, yet part-time Guard and Reserve personnel levels

declined by over 170,000 persons over the same period. Both full-time and

part-time personnel numbers are projected to decline through 2001. Even

though the command, control, communications, intelligence, and space

program’s annual O&M funding level has not changed significantly

throughout the fiscal year 1985-2001 period, its level of annual O&M funding

per person associated with this program has increased by 30 percent over

Page 20 GAO/NSIAD-97-73 Defense Budget
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these 17 years. Most of this increase in O&M funding per person occurred

prior to fiscal year 1995.

The following are some questions raised by the trend information

presented in this section:

What factors cause the training, medical, and other general

purpose activities program funding to increase steadily while

military and civilian personnel levels decrease?

Why is central supply and maintenance O&M funding not declining

in the out-years (after fiscal year 1997) if DOD is improving the

efficiency of these activities by using privatization and

outsourcing?

Why has the command, control, communications, intelligence, and

space program’s O&M funding not declined over time as DOD has

downsized?

Why has the Guard and Reserve forces program’s O&M funding not

declined as the overall force level has declined?

Why did the level of full-time Guard and Reserve personnel

increase when part-time personnel declined by 170,000 prior to

fiscal year 1996?

O&M Funds Are

Concentrated From a

Defense Mission

Category Perspective

Partitioning total O&M funds using DOD’s DMC analytical framework shows

that funding is concentrated among a few categories. From fiscal 

years 1985 to 2001, five mission categories received and are projected to

receive about 50 percent of O&M funding. Between fiscal years 1993 and

2001, the five largest categories are land forces, medical, naval forces,

tactical air forces, and other logistics support. In total, there are about

30 mission categories during the fiscal year 1993-2001 period. Figure 8

compares funding for different fiscal years for these five defense mission

categories.18

18Definitions for the five categories are included in appendix II.

Page 21 GAO/NSIAD-97-73 Defense Budget
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Figure 8: Comparison of Annual O&M Funding for Fiscal Year 1996 Five Highest Dollar Defense Mission Categories

(Constant 1997 dollars in billions)

0 

4 

8 

12 

16 

1985 1990 1995 2001

Fiscal year

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Land forces Medical Naval forces

Tactical air forces AAAA AAAA AAAA AAAA

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Other logistics support

Dollars

Source: Our analysis of DOD FYDP data.

Among the five largest categories in fiscal year 1996, medical is the only

category that experiences real growth—from $5.9 billion in fiscal 

year 1985 to $10.2 billion in fiscal year 2001, a 72.8-percent increase. Most

of the growth in medical occurs prior to fiscal year 1997, and the majority

of these costs are for health care needs. In contrast, the naval forces

category experiences the largest decline in real terms—from $15.2 billion

in fiscal year 1985 to $8.4 billion in 2001, a 44.6-percent decrease.

Figure 9 shows the distribution of fiscal year 1996 O&M funding by defense

mission category. Eight categories make up 71 percent of O&M funding

Page 22 GAO/NSIAD-97-73 Defense Budget
B-275972 

($68.4 billion), and each category is greater than $5.1 billion. Remaining

resources, $27.6 billion or 28.8 percent, reside in 22 categories and funding

ranges from slightly more than $5 billion (intelligence) to $4.7 million

(federal agency support). FYDP projections show that resources remain

concentrated in the same eight categories for fiscal years 1997 through

2001.

Figure 9: Percentage of Fiscal Year

1996 O&M Funding Allocated by

Defense Mission Category Land forces (14.31%)

Medical (10.67%)

Naval forces (9.92%)

Tactical air forces (8.91%)

Other (28.77%)

Training (6.04%)

Mobility forces (6.07%)

Departmental (6.96%) Other logistics support (8.36%)

Note: Other defense mission categories are intelligence; strategic offense; maintenance

operations; supply operations; other personnel support; communications; personnel acquisition;

special operations forces; geophysical sciences; strategic defense; counterdrug support; space

launch support; information management; international support; strategic command, control and

communications; general purpose support; security and investigative functions; command and

control; nuclear weapons support; individuals; undistributed adjustments; and federal agency

support. Total shares exceed 100 percent due to rounding.

Source: Our analysis of DOD FYDP data.

Our analysis of the eight categories with the highest dollar values in fiscal

year 1996 shows that from fiscal years 1985 to 2001, three categories

(medical, mobility forces, and departmental) are projected to grow and

five categories (naval forces, other logistics support, training, land forces,

and tactical air forces) are projected to decline. However, as shown in

table 3, these overall trends are not consistent over the 17-year period.

Page 23 GAO/NSIAD-97-73 Defense Budget
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Table 3: Summary of Changes in O&M

Funds for Eight Highest Dollar Defense

Mission Categories in Fiscal Year 1996

Constant 1997 dollars in billions; change in percentages

Defense mission

category

Fiscal year

1996 funding

Fiscal years

1985-96 change

Fiscal years

1996-2001

change

Fiscal years

1985-2001

change

Land forces $13.73 1.63 –23.48 –22.24

Medical 10.24 73.21 –0.25 72.77

Naval forces 9.52 –37.48 –11.34 –44.57

Tactical air forces 8.55 –2.76 –9.11 –11.62

Other logistics

support 8.02 –13.10 –13.21 –24.58

Departmental 6.68 13.17 –5.24 7.24

Mobility forces 5.82 54.55 –5.85 45.51

Training 5.79 –21.35 –2.84 –23.58

Source: Our analysis of DOD FYDP data.

For example, the medical category increased by 73.2 percent between

fiscal years 1985 and 1996 but is projected to decline between fiscal 

years 1996 and 2001. In the land forces category, there is a slight increase

between fiscal years 1985 and 1996 but a substantial decrease projected

for the fiscal year 1996-2001 period. Although projections show that all

categories will decrease in real terms from fiscal years 1996 to 2001,

medical’s projected decrease is insignificant. Appendix II provides a

detailed analysis of trends and per person costs for the fiscal year 1996

eight highest dollar categories: land forces, medical, naval forces, tactical

air forces, other logistics support, departmental, mobility forces, and

training.

A similar concentration emerges when distributing annual O&M funds by

DMCs for the 11 service budget accounts throughout the 17-year period. For

example, in fiscal year 1996, over 55 percent of each account’s O&M funds

are concentrated in three defense mission categories. The three largest

dollar categories differ for each service budget account. For example, in

fiscal year 1996 Defense-wide’s three largest categories were intelligence,

departmental, and other personnel support and received about 61 percent

of total funding. In contrast, the Army’s three largest dollar categories

were land forces, training, and other logistics support and received about

70 percent of total funding. Table 4 shows the distribution of fiscal 

year 1996 O&M funds by DMCs for the O&M, Navy budget account. O&M, Navy

has and is projected to have the largest share of annual O&M funds

Page 24 GAO/NSIAD-97-73 Defense Budget
B-275972 

compared with the other budget accounts—except in fiscal year 1991. O&M,

Army was the largest budget account in fiscal year 1991.

Table 4: Total Fiscal Year 1996 O&M,

Navy Budget Account Funds by

Defense Mission Category

Constant 1997 dollars in thousands

Defense mission category

Total obligational

authority

Cumulative

percentage of

total funding

Naval forces $8,950,562 40.88

Other logistics support 2,366,699 51.69

Maintenance operations 1,619,407 59.09

Tactical air forces 1,447,081 65.70

Training 1,311,518 71.69

Strategic offense 1,297,196 77.62

Departmental 1,054,886 82.43

Other categories 3,845,887 100.00

Total obligational authority $21,893,235

Note: Fourteen categories make up the other categories: supply operations; mobility forces;

intelligence; land forces; communications; other personnel support; personnel acquisition;

geophysical sciences; security and investigative functions; strategic command, control, and

communications; international support; strategic defense; individuals; command and control.

Source: Our analysis of DOD FYDP data.

Page 25 GAO/NSIAD-97-73 Defense Budget
B-275972 

The following are some questions raised by the trend information

presented in this section:

What factors contribute to the significant decline in the naval

forces category between fiscal years 1985 and 2001?

What factors are projected to contribute to the substantial decline

in the land forces category during the fiscal year 1996-2001 period?

What factors contribute to the projected real decline during the

fiscal year 1996-2001 period for medical, departmental, and

mobility forces? (In contrast, these categories experienced

substantial real growth during the fiscal year 1985-96 period.)

Can analyzing trends in concentrated O&M areas help DOD in future

budget plans?

Selected Activities

and Programs Show

Varying Trends

We analyzed trends of three O&M programs—the Defense Health Program

(O&M budget account), environmental spending, and base operating

support—because of congressional interest and relevance in DOD’s effort

to reduce infrastructure costs. DOD’s health care system is considered a

critical quality-of-life issue. The Defense Health Program budget account

emerged in the fiscal year 1993 President’s Budget to centralize O&M health

care resources. Prior to fiscal year 1993, the resources were located in the

service and DOD-wide budget accounts. This budget account differs from

the DMC medical in that the account does not include resources for medical

contingency hospitals and medical readiness units. For fiscal year 1997,

DOD estimates that 8.3 million beneficiaries are eligible to use the Defense

Health Program. Figure 10 shows that trend data for this budget account

remains relatively stable, a 1.1-percent real decline during fiscal years 1993

through 2001. However, in the fiscal year 1997 FYDP, DOD projected a

7.2-percent real decline between fiscal years 1996 and 1997. Discussions

with a DOD official indicated that fiscal year 1997 health care funds were

reduced by the Office of Secretary of Defense during preparation of the

fiscal year 1997 President’s Budget submission.

Page 26 GAO/NSIAD-97-73 Defense Budget
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Figure 10: Defense Health Program Funding for Fiscal Years 1993 through 2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

1993 1994 1995 1996 1997 1998 1999 2000 2001

Fiscal year

Total funds

Dollars

Source: Our analysis of DOD FYDP data.

The DOD’s environment-related programs that we analyzed are the Defense

Environmental Restoration Program, environmental compliance,

environmental conservation, and pollution prevention programs.19 Annual

O&M funding for these environment-related programs more than doubled

19The Defense Environmental Restoration Program funds the investigation and cleanup of hazardous

substances and waste, demolition and removal of unsafe buildings, and research of technology that

could reduce hazardous wastes in the future. Environmental compliance funds DOD actions to sustain

compliance with federal, state, and local environmental laws. Environmental conservation funds

activities that protect or rehabilitate natural and cultural resources in DOD lands and waters. Pollution

prevention is any action that will reduce or eliminate future pollutants of the environment from DOD

operations.

Page 27 GAO/NSIAD-97-73 Defense Budget
B-275972 

between fiscal years 1991 and 1996, as shown in figure 11.20 Over 

90 percent of the funds for these environment-related programs in fiscal

year 1996 was for the Defense Environmental Restoration Program and

environmental compliance. By fiscal year 2001, the level of O&M funding for

DOD’s environment-related programs is projected to decline by 23 percent

from its fiscal year 1996 peak of $3.3 billion. Most of this decline is due to a

planned 25-percent decrease in Defense Environmental Restoration

Program O&M funds and a projected 18-percent decrease in funding for

environmental compliance programs.

Figure 11: Annual DOD O&M Funding for Environment-Related Programs for Fiscal Years 1991-2001 (Constant 1997 dollars

in billions)

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

3.0 

3.5 

1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Environment-related programs are the Defense Environmental Restoration Program,

environmental compliance, environmental conservation, and pollution prevention.

Source: Our analysis of DOD FYDP data.

20Fiscal year 1991 was the first year funding was clearly identified for environmental compliance.

Specific program elements for pollution prevention and environmental conservation appeared in fiscal

years 1993 and 1994, respectively.

Page 28 GAO/NSIAD-97-73 Defense Budget
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Base operations and maintenance activities are required to sustain mission

capability, quality-of-life, and workforce productivity.21 Funding for these

programs is found throughout DOD, in both force and support missions,

and was analyzed at the FYDP program element level for this report. 

Figure 12 shows that overall annual funding for base operations and

maintenance activities has declined since fiscal year 1985.

21These activities are base operations (including family and child support programs), base

communications, and real property maintenance (maintenance and repair, minor construction, real

property services, non-Defense Environmental Restoration Program environmental activities, and

installation engineering).

Page 29 GAO/NSIAD-97-73 Defense Budget
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Figure 12: Annual DOD O&M Funding for Base Operations and Maintenance Activities for Fiscal Years 1985-2001 (Constant

1997 dollars in billions)

0 

10 

20 

30 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Includes base operations, child and family centers, base communications, and real

property maintenance and support.

Source: Our analysis of DOD FYDP data.

The level of O&M funds these programs received decreased by 16 percent

between fiscal years 1985 and 1996 and is projected to decline by an

additional 18 percent by 1999. Most of the falloff in earlier years is due to a

decrease in O&M funding for real property maintenance and support

activities, while after fiscal year 1994 the level of O&M funds provided

annually to base operations activities decreases, as shown in figure 13. In

fiscal years 2000 and 2001, base operations and maintenance activities are

projected to receive a slight increase (2 percent) in annual O&M funds as a

Page 30 GAO/NSIAD-97-73 Defense Budget
B-275972 

result of an increase in funding of real property maintenance and support

activities.

Figure 13: Annual DOD O&M Funding for Selected Base Operations and Maintenance Activities for Fiscal Years 1985-2001

(Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

14 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Base operations activities Base communications Real property maintenance

Dollars

activities

Note: Base operations activities include child and family centers.

Source: Our analysis of DOD FYDP data.

Page 31 GAO/NSIAD-97-73 Defense Budget
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The following are some questions raised by the trend information

presented in this section:

Why is funding for environmental-related programs expected to

decline between fiscal years 1996 and 1997? What factors cause

environmental projections to be considerably lower than prior-year

spending (since fiscal year 1993)?

What factors cause O&M base operating support projections to

increase after fiscal year 1999?

What impact has the Base Realignment and Closure decisions had

on base operations and maintenance costs?

Why are annual base operations O&M funding levels cyclical?

Why are real property maintenance funding levels not expected to

decline in the fiscal year 1997-2001 period?

Agency Comments In oral comments, DOD agreed with the report and offered points of

clarification. Specifically, DOD said that O&M funding per person is an

inappropriate measure to assess future O&M requirements. In our report,

we analyzed O&M trends in a number of different ways, including annual

O&M on a per person basis. We believe each measure of O&M funding

produces a different, but equally insightful and appropriate, overview.

Furthermore, we did not attempt to determine an appropriate level of O&M

funding.

DOD noted that answering the questions following each section requires an

understanding of the significant accounting changes that have occurred

since fiscal year 1981. DOD recommended that future O&M analysis use

normalized FYDP data. (Normalized FYDP data account for the movement of

funds whether inside the O&M accounts or to and from other appropriation

accounts.) We attempted to obtain the department’s normalized database

but at the time of our review it was unavailable. Moreover, we recognize

that there are significant accounting changes that impacted DOD’s O&M

accounts. We discuss some of the changes in our report and structured our

analysis to minimize their impact.

Scope and

Methodology

To identify trends in annual O&M appropriations and personnel levels and

to determine the programs and activities funded by O&M, we analyzed data

Page 32 GAO/NSIAD-97-73 Defense Budget
B-275972 

contained in DOD’s FYDP. The FYDP is the most comprehensive and

continuous source of current and historical defense resource data. We

used funding and personnel data from the historical FYDP update

(June 1995) for fiscal years 1985-1993, the fiscal year 1996 FYDP for fiscal

year 1994 data, and the fiscal year 1997 FYDP for fiscal years 1995-2001.

Historical FYDP data reflects actual (1) total obligational authority for

programs and (2) personnel levels. We adjusted the nominal dollars to

constant fiscal year 1997 dollars using 1997 DOD inflation indices for O&M

costs. Since DOD had not yet released its revised FYDP database that adjusts

FYDP data for known accounting and program changes since fiscal 

year 1975, while we were conducting our work, we were unable to

normalize the data for these changes. We do note in the report where these

changes have impacted the trends.

We analyzed the FYDP data by DOD’s major defense programs, federal

budget account structure, and operating organization. To aid in the

identification and classification of the components that affect annual O&M

funding levels, we also evaluated the FYDP data using two analytical tools

developed by DOD—the DMC and the Infrastructure Categories. The DMC

structure is used to analyze FYDP data in terms of a mission-oriented view

of DOD resources rather than a service-specific program view, and the

infrastructure categories structure aids in the analysis of the resources

required to support the combat forces. We did not verify DOD’s allocation

of program elements in its DMC and Infrastructure Category analytical

tools.

In addition, we interviewed officials in the following DOD offices: Office of

the DOD Comptroller, Office of the Under Secretary of Defense (Personnel

and Readiness), Office of the Under Secretary of Defense (Acquisition and

Technology), Office of Program Analysis and Evaluation, and the Office of

Reserve Affairs. We also met with officials from the Institute for Defense

Analyses. We reviewed our prior reports, pertinent reports by the

Congressional Budget Office, Congressional Research Service, DOD, the

Institute for Defense Analyses, and others.

Our work was conducted from June 1996 to January 1997 in accordance

with generally accepted government auditing standards.

We are providing copies of this report to appropriate congressional House

and Senate committees; the Secretaries of Defense, the Air Force, the

Page 33 GAO/NSIAD-97-73 Defense Budget
B-275972 

Army, and the Navy; and the Director, Office of Management and Budget.

We will also provide copies to other interested parties upon request.

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

(202) 512-3504. Major contributors to this report were Robert Pelletier,

Edna Thea Falk, and Deborah Colantonio.

Richard Davis

Director, National Security

 Analysis

Page 34 GAO/NSIAD-97-73 Defense Budget
Page 35 GAO/NSIAD-97-73 Defense Budget
Contents

Letter 1

Appendix I 

Categories of Defense

Infrastructure

40

Appendix II 

Analysis of Eight

Defense Mission

Categories

42

Land Forces 42

Medical 46

Naval Forces 50

Tactical Air Forces 55

Other Logistics Support 60

Departmental 63

Mobility Forces 68

Training 71

Tables Table 1: Summary of O&M Budget Accounts for Fiscal Year 1996 9

Table 2: O&M Funding and Personnel Levels in Fiscal Year 1996

by Service

13

Table 3: Summary of Changes in O&M Funds for Eight Highest

Dollar Defense Mission Categories in Fiscal Year 1996

24

Table 4: Total Fiscal Year 1996 O&M, Navy Budget Account

Funds by Defense Mission Category

25

Table II.1: DMC Structure for Training 42

Figures Figure 1: Annual DOD O&M Appropriations and Personnel Levels

for Fiscal Years 1985-2001

5

Figure 2: Per Person Annual O&M Funding for Fiscal Years

1985-2001

7

Figure 3: Percentage of DOD’s Annual O&M Funding Allocated by

Operating Organization in Fiscal Years 1985, 1992, 1996, and 2001

12

Figure 4: Direct Infrastructure Funded by O&M Appropriations

for Fiscal Years 1985-2001

15

Figure 5: Direct Infrastructure—Excluding Central

Logistics—Funded by O&M Appropriations for Fiscal Years

1985-2001

16

Figure 6: Annual DOD Operation and Maintenance

Appropriations for Three Major Defense Programs in Fiscal Years

1985-2001

18

Page 36 GAO/NSIAD-97-73 Defense Budget
Contents

Figure 7: Annual DOD O&M Appropriations for Command,

Control, Communications, Intelligence, and Space and for Guard

and Reserve Forces for Fiscal Years 1985-2001

20

Figure 8: Comparison of Annual O&M Funding for Fiscal Year

1996 Five Highest Dollar Defense Mission Categories

22

Figure 9: Percentage of Fiscal Year 1996 O&M Funding Allocated

by Defense Mission Category

23

Figure 10: Defense Health Program Funding for Fiscal Years 1993

through 2001

27

Figure 11: Annual DOD O&M Funding for Environment-Related

Programs for Fiscal Years 1991-2001

28

Figure 12: Annual DOD O&M Funding for Base Operations and

Maintenance Activities for Fiscal Years 1985-2001

30

Figure 13: Annual DOD O&M Funding for Selected Base

Operations and Maintenance Activities for Fiscal Years 1985-2001

31

Figure II.1: Annual Land Forces O&M Funds and Personnel

Levels for Fiscal Years 1985-2001

43

Figure II.2: Percentage of Annual Land Forces O&M Funds

Allocated by Federal Budget Account for Fiscal Years 1985-2001

44

Figure II.3: Annual Land Forces O&M Funds by Mission for Fiscal

Years 1985-2001

46

Figure II.4: Annual Medical O&M Funds for Fiscal Years

1985-2001

48

Figure II.5: Annual Medical O&M Costs Per Eligible Beneficiary

for Fiscal Years 1985-2001

49

Figure II.6: Defense Health Program Beneficiaries for Fiscal

Years 1989-2001

50

Figure II.7: Annual O&M Funding for Naval Forces for Fiscal

Years 1985-2001

52

Figure II.8: Percentage of DOD’s Annual O&M Funding Allocated

by Naval Forces Activities for Selected Fiscal Years

53

Figure II.9: Annual O&M Funding for Active Naval Forces

Allocated by Activity for Fiscal Years 1985-2001

54

Figure II.10: Per Person Annual O&M Funding for Selected Active

Naval Force Activities for Fiscal Years 1985-2001

55

Figure II.11: Annual Tactical Air Forces O&M Funds and

Personnel Levels for Fiscal Years 1985-2001

57

Figure II.12: Annual Tactical Air Forces O&M Funds by Service

Missions for Fiscal Years 1985-2001

58

Figure II.13: Annual Tactical Air Forces O&M Funds by Mission

Activities for Fiscal Years 1985-2001

60

Page 37 GAO/NSIAD-97-73 Defense Budget
Contents

Figure II.14: Annual O&M Funding for Selected Other Logistics

Support Activities for Fiscal Years 1985-2001

62

Figure II.15: Per Person Annual Operation and Maintenance

Funding for Selected Other Logistics Support Activities

63

Figure II.16: Annual O&M Funding for Departmental Mission

Activities for Fiscal Years 1985-2001

65

Figure II.17: Annual O&M Funding for Departmental Mission

Activities That Support the Active Military for Fiscal Years

1985-2001

66

Figure II.18: Per Person Annual O&M Funding for Departmental

Mission Activities That Support the Active Military

68

Figure II.19: Annual Mobility Forces O&M Funds for Fiscal Years

1985-2001

69

Figure II.20: Annual Mobility Forces O&M Funds by Mission for

Fiscal Years 1985-2001

70

Figure II.21: Percentage of Fiscal Year 1996 Airlift Forces O&M

Funds Allocated by Mission

71

Figure II.22: Annual O&M Funding for Training for Fiscal Years

1985-2001

72

Figure II.23: Annual O&M Funding for Selected Training Mission

Activities for Fiscal Years 1985-2001

73

Figure II.24: Annual O&M Funding by Service for Active Military

Training Mission Activities for Fiscal Years 1985-2001

75

Figure II.25: Per Person Annual O&M Funding for Training

Activities for Fiscal Years 1985-2001

77

Figure II.26: Per Person Annual O&M Funding by Service for

Active Military Training Activities for Fiscal Years 1985-2001

78

Abbreviations

DMC Defense Mission Category

DOD Department of Defense

FYDP Future Years Defense Program

O&M Operation and Maintenance

Page 38 GAO/NSIAD-97-73 Defense Budget
Page 39 GAO/NSIAD-97-73 Defense Budget
Appendix I 

Categories of Defense Infrastructure

Installation support consists of activities that furnish funding, equipment,

and personnel to provide facilities from which defense forces operate.

Activities include construction planning and design, real property

maintenance, base operating support, real estate management for active

and reserve bases, family and bachelor housing, supply operations, base

closure activities, and environmental programs.

Acquisition infrastructure consists of all program elements that support

program management, program offices, and production support, including

acquisition headquarters, science and technology, and test and evaluation

resources. This category includes earlier levels of research and

development, including basic research, exploratory development, and

advanced development.

Central logistics consists of programs that provide support to centrally

managed logistics organizations, including the management of material,

operation of supply systems, maintenance activities, material

transportation, base operations and support, communications, and minor

construction. This category also includes program elements that provide

resources for commissaries and military exchange operations.

Central training consists of program elements that provide resources for

virtually all non-unit training, including training for new personnel,

aviation and flight training, military academies, officer training corps,

other college commissioning programs, and officer and enlisted training

schools.

Central medical consists of programs that furnish funding, equipment, and

personnel that provide medical care to active military personnel,

dependents, and retirees. Activities provide for all patient care, except for

that provided by medical units that are part of direct support units.

Activities include medical training, management of the medical system,

and support of medical installations.

Central personnel consists of all programs that provide for the recruiting

of new personnel and the management and support of dependent schools,

community, youth, and family centers, and child development activities.

Other programs supporting personnel include permanent

change-of-station costs, personnel in transit, civilian disability

compensation, veterans education assistance, and other miscellaneous

personnel support activities.

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Categories of Defense Infrastructure

Command, control, and communications consists of programs that

manage all aspects of the command, control, and communications

infrastructure for DOD facilities; information support services; mapping and

charting products; and security support. This category includes program

elements that provide nontactical telephone services, the General Defense

Intelligence Program and cryptological activities, the Global Positioning

System, and support of air traffic control facilities.

Force management consists of all programs that provide funding,

equipment, and personnel for the management and operation of all the

major military command headquarters activities. Force management also

includes program elements that provide resources for Defense-wide

departmental headquarters, management of international programs,

support to other defense organizations and federal government agencies,

security investigative services, public affairs activities, and criminal and

judicial activities.

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Analysis of Eight Defense Mission

Categories

This appendix describes operation and maintenance (O&M) funding and

military and civilian personnel trends in detail for eight defense mission

categories (DMC) for fiscal years 1985 through 2001. In fiscal year 1996, the

eight categories were the highest dollar missions and represented

71 percent of O&M funds.

With assistance from the Institute for Defense Analyses, Department of

Defense (DOD) developed the DMC structure to display (by mission) funds,

personnel, and forces programmed in the Future Years Defense Program

(FYDP). The DMC framework is multitiered with each tier progressively

more detailed. For example, the first tier divides DOD programs into three

basic categories: major force missions, Defense-wide missions, and

Defense-wide support. These three programs are subdivided into five

additional levels of detail. One of these levels is the training category.

Table II.1 illustrates an example of the DMC structure for training.

Table II.1: DMC Structure for Training

Defense mission category code Defense mission category title

3 Defense-wide support missions

32 Personnel support

322 Training

3221 Military personnel training

32210 Military personnel training

32210A Military personnel training, active

Source: DOD.

Our analysis of the eight categories aggregates O&M funds and personnel

data at various levels of detail to provide comprehensive and useful

information.

Land Forces For the land forces category, O&M funds consist of Army and Marine Corps

division increments, non-divisional combat units, tactical support units,

base operations and management headquarters, and operational support;

Army systems support; and Army special mission forces. Total land forces

O&M funds decrease more slowly than military and civilian personnel

assigned to this category between fiscal years 1985 and 2001 as shown in

figure II.1. O&M funds decrease by 22.2 percent, with most of the decline

projected to occur between fiscal years 1996 and 2001. In contrast,

between fiscal years 1985 and 2001 military and civilian personnel levels

decline by 34.4 and 36.5 percent, respectively. Between fiscal years 1996

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and 2001 military personnel decrease by an additional 4.6 percent, while

civilians decrease by less than 1 percent. Annual per person costs increase

from $16,865 in fiscal year 1985 to $20,114 in fiscal year 2001, a

19.3-percent increase.

Figure II.1: Annual Land Forces O&M Funds and Personnel Levels for Fiscal Years 1985-2001 (Constant 1997 dollars in

billions)

0 

5 

10 

15 

20 

25 

0 

100,000 

200,000 

300,000 

400,000 

500,000 

600,000 

700,000 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Total O&M land forces dollars Military personnel

Civilian personnel

Dollars Personnel

Note: Personnel levels are active military, full-time Guard and Reserve, and civilians assigned to

the land forces category. Civilian personnel levels reflect those paid with O&M funds.

Source: Our analysis of DOD FYDP data.

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As expected, the Army has the largest share of total annual O&M funds for

land forces. From fiscal years 1985 to 2001, the Army has and is projected

to have about 67 to 80 percent of total annual O&M funds. 

Figure II.2 shows annual land forces O&M funds by federal budget account

for fiscal years 1985 through 2001. Infusion of O&M funds for the Persian

Gulf War contributed to the Army’s higher share of O&M land forces funds

in fiscal year 1991.

Figure II.2: Percentage of Annual Land Forces O&M Funds Allocated by Federal Budget Account for Fiscal Years 1985-2001

0%

20%

40%

60%

80%

100%

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Army Army National Guard

Navy/Marine Corps Army/Navy/Marine Corps Reserve

Percentage of annual total

Source: Our analysis of DOD FYDP data.

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When funds are grouped by missions within land forces, base operations

and management headquarters is the largest category from fiscal years

1985 to 2001. This category supports real property maintenance, base

communications, and base operations and management headquarters at

fixed Army and Marine Corps installations. When compared with the other

three land forces mission categories,1

 as shown in figure II.3, the base

operations and management headquarters category experiences the

largest decline, a 37.4-percent decrease from fiscal years 1985 to 2001.

Most of the decline takes places after fiscal year 1991.

1

The three other land forces categories are Army increments and Marine ground forces, Army special

mission forces, and support activities. Army increments and Marine ground forces consist of Army

divisions and the non-divisional combat increment and units and Marine divisions and the

non-divisional combat increment. Support activities consist of Army and Marine tactical support

increments and operational support and Army systems support.

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Figure II.3: Annual Land Forces O&M Funds by Mission for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Base operations/management headquarter Support activities

Army divisions/Marine ground forces Army special mission forces

Dollars

Source: Our analysis of DOD FYDP data.

Medical The medical category provides funds for care for active duty personnel,

retired military personnel, and dependents. The fiscal year 1997

President’s Budget estimates that 8.3 million beneficiaries are eligible to

use the health care program in fiscal year 1997. Unlike the Defense Health

Program budget account, the medical category includes funds for

programs related to medical contingency hospitals and medical readiness.

Another difference is that the medical category does not include funds for

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health personnel training;2 however, the Defense Health Program budget

account has funds for education and training programs.

Total medical O&M funds are projected to increase from $5.9 billion to

$10.2 billion or by 72.8 percent between fiscal years 1985 and 2001.

Although projections show that the fiscal year 1997-99 funding will be

slightly lower than in fiscal year 1996, medical O&M funds will begin to rise

starting in fiscal year 2000. Moreover, the fiscal year 2001 FYDP projection

almost matches the fiscal year 1996 level.

When funds are grouped by missions within the medical category,

hospitals and other medical activities is the largest category between fiscal

years 1985 through 2001. Trends for the hospital and other medical

activities category mirror those of total medical O&M funds. O&M funds for

the base operations and management headquarters category also grow

between fiscal years 1985 and 2001, a 69.8-percent increase. Unlike the

hospital category, which declines slightly between fiscal years 1996 and

2001, O&M funds for base operations and management headquarters

increase by 12.1 percent during this period. Figure II.4 compares the

trends in funding for hospitals and other medical activities, base

operations and management headquarters, and overall medical category.

2

Funds for the Uniformed Services University of the Health Sciences are part of the medical category.

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Figure II.4: Annual Medical O&M Funds for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Total O&M medical dollars Hospitals/other medical activities

Base operations/management headquarter

Dollars

Source: Our analysis of DOD FYDP data.

Figure II.5 shows that medical costs per eligible beneficiary will increase

by 86 percent between fiscal years 1985 and 2001. Further, the fiscal 

year 2001 projected cost per eligible beneficiary of $1,223 nearly matches

the fiscal year 1996 level of $1,229.

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Figure II.5: Annual Medical O&M Costs Per Eligible Beneficiary for Fiscal Years 1985-2001 (Constant 1997 dollars)

0 

200 

400 

600 

800 

1,000 

1,200 

1,400 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Costs per eligible beneficiary

Dollars

Note: Per eligible beneficiary costs were calculated using the Office of Secretary of Defense

(Health Affairs) beneficiary data from the fiscal year 1997 President’s Budget for fiscal 

years 1989-2001. Beneficiary information for fiscal years 1985-1988 is based on Office of

Secretary of Defense (Health Affairs) estimates.

Source: Our analysis of DOD FYDP data.

Although the total number of eligible beneficiaries is projected to decline

between fiscal years 1989 and 2001, starting in fiscal year 1995, the total

number of retirees and their dependents exceed the total number of active

duty military personnel and their dependents (see fig. II.6). Between fiscal

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years 1989 and 2001, retirees and their dependents increase by

16.7 percent, whereas active duty military personnel and their dependents

decrease by 26.5 percent.

Figure II.6: Defense Health Program Beneficiaries for Fiscal Years 1989-2001

0 

1,000,000 

2,000,000 

3,000,000 

4,000,000 

5,000,000 

6,000,000 

1989

1991

1993

1995

1997

1999

2001

Fiscal year

Active duty personnel/their dependents Retirees/their dependents

Beneficiaries

Note: Beneficiary information is based on Office of Secretary of Defense (Health Affairs) data from

the fiscal year 1997 President’s Budget.

Source: Our analysis of DOD FYDP data.

Naval Forces The naval forces defense mission category consists of mission forces

(submarines, surface combat ships, amphibious forces, service forces,

mine warfare forces, maritime patrol, undersea surveillance forces, and

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Categories

sea based anti-submarine warfare air forces); fleet support (combat and

logistics support, ordnance disposal forces, tactical communications,

shore intermediate maintenance, and aircraft support squadrons); other

operational support (command activities; sea control operational

headquarters; and intelligence, communications, command, and control

activities); and base operations and management headquarters.

Annual O&M funding levels for naval forces is projected to decline by

45 percent between fiscal years 1985 and 2001, as shown in figure II.7. This

decline was primarily caused by a 48-percent reduction in O&M funds for

mission activities. Although mission activities funds have decreased, 

figure II.8 shows that mission activities still receive about 60 percent of

O&M funding.

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Figure II.7: Annual O&M Funding for Naval Forces for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

14 

16 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Source: Our analysis of DOD FYDP data.

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Figure II.8: Percentage of DOD’s

Annual O&M Funding Allocated by

Naval Forces Activities for Selected

Fiscal Years

66.9%

13.0% 2.8%

17.3%

1985

61.2%

7.9%

4.8%

26.2%

1996

63.2%

7.6%

4.7%

24.5%

2001

Mission Fleet support Other support Base operations

Note: Annual percentages may not add to 100 due to rounding.

Source: Our analysis of DOD FYDP data.

Almost all of the O&M funding for this category is for the active forces and,

within active naval forces, the majority of O&M funding is for mission force

activities. As shown in figure II.9, most of the decrease between fiscal

years 1985 and 1996 in active naval forces O&M funds was for mission

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activities, although the fleet support programs’ O&M funding levels have

declined as well over the same period.

Figure II.9: Annual O&M Funding for Active Naval Forces Allocated by Activity for Fiscal Years 1985-2001 (Constant 1997

dollars in billions)

0 

2 

4 

6 

8 

10 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Mission activities Fleet support

Other operational support Navy base operations/support

Dollars

Source: Our analysis of DOD FYDP data.

The level of O&M funding per person associated with active naval force

mission activities has decreased from its 1985 value, as shown in 

figure II.10, but most of this decline occurred by fiscal year 1990. Between

fiscal years 1996 and 2001, the O&M funds per person is expected to decline

by only 5 percent. The level of O&M funding per person for base operations

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activities (the second largest activity within the naval forces mission)

remains relatively stable throughout the fiscal year 1985-2001 period.

Figure II.10: Per Person Annual O&M Funding for Selected Active Naval Force Activities for Fiscal Years 1985-2001

(Constant 1997 dollars in thousands)

0 

10 

20 

30 

40 

50 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Mission activities Base operations/support

Dollars

Note: Per person costs for mission programs are for all personnel (active military, civilians,

full-time reserve) associated with the active force mission activity DMCs. Per person costs for

base operations is for all personnel (active military, civilians, full-time reserve) associated with all

active naval force activities.

Source: Our analysis of DOD FYDP data.

Tactical Air Forces O&M funds for the tactical air forces category consists of air-to-air combat

squadrons; air-to-ground combat squadrons; defense suppression forces;

tactical reconnaissance squadrons; tactical command, control, and

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Categories

communications; tanker/cargo squadrons; other tactical air warfare forces;

non-strategic nuclear tactical forces; operations support; and base

operations and management headquarters support activities.

Like aggregate O&M trends, total tactical air forces O&M funds decrease at a

slower rate than military and civilian personnel assigned to this category

between fiscal years 1985 and 2001. (See fig. II.11.) During the fiscal year

1985-2001 period, O&M funds decrease by 11.6 percent, with most of the

decline projected to occur between fiscal years 1996 and 2001. In contrast,

most of the decline in both military and civilian personnel levels occurs

between fiscal years 1985 and 1996, a respective 34.4-percent and

24.6-percent decrease. Further, projections show that the fiscal year 2001

level of $7.8 billion slightly exceeds the fiscal year 1997 level. Annual per

person costs increase from $29,911 in fiscal year 1985 to $41,211 in fiscal

year 2001, a 37.8-percent increase.

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Figure II.11: Annual Tactical Air Forces O&M Funds and Personnel Levels for Fiscal Years 1985-2001 (Constant 1997

dollars in billions)

0 

2 

4 

6 

8 

10 

0 

50,000 

100,000 

150,000 

200,000 

250,000 

300,000 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Total O&M tactical air forces dollars Military personnel

Civilian personnel

Dollars Personnel

Note: Personnel levels are active military, full-time Guard and Reserve, and civilians assigned to

the tactical air forces category. Civilian levels reflect those paid with O&M funds.

Source: Our analysis of DOD FYDP data.

When funds are grouped by service missions within the tactical air forces

category, as shown in figure II.12, from fiscal years 1985 to 2001, the Air

Force is the largest category and experiences the smallest percentage

change in funding, a 5.9-percent decrease, when compared with the Navy

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and Marine Corps categories.3 The Navy tactical air forces category

experiences the largest decline, a 35.9-percent decrease between fiscal

years 1985 and 2001. Most of the decline occurs between fiscal years 1985

and 1996.

Figure II.12: Annual Tactical Air Forces O&M Funds by Service Missions for Fiscal Years 1985-2001 (Constant 1997 dollars

in billions)

0 

2 

4 

6 

8 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Air Force Navy Marine

Dollars

Source: Our analysis of DOD FYDP data.

3

The service missions include funds for their respective Guard and Reserve components.

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In the tactical air forces mission category, when funds are grouped by

primary mission, other tactical support, and base operations and

management headquarters, funds for each category decline between fiscal

years 1985 and 2001. (See fig. II.13.) However, these overall trends are not

consistent over the 17-year period. Between fiscal years 1985 and 1996,

base operations and management headquarters is the only mission activity

that grows, a 5.5-percent increase.4

 However, projections show that the

base operations and management headquarters category will experience a

19.4-percent decrease in funds between fiscal years 1996 and 2001. For the

other tactical support category,5

 funds decrease by 6.7 percent between

fiscal years 1985 and 1996; however, this decrease is nearly canceled by

the projected growth between fiscal years 1996 and 2001, a 5.3-percent

increase. Funding levels for primary missions decrease in both periods6

 by

5.3 percent between fiscal years 1985 and 1996 and by 8.7 percent between

fiscal years 1996 and 2001.

4

Base operations and management headquarters fund real property maintenance, base

communications, base operations and management headquarters at installations with a primary

mission of supporting tactical air forces and management headquarters at major commands

worldwide.

5

Examples of other tactical support mission activities are airwing staff flying, readiness (training)

squadrons, and aviation support.

6

Examples of primary mission activities are air-to-air combat, air-to-ground combat, and defense

suppression (tactical electronic warfare).

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Figure II.13: Annual Tactical Air Forces O&M Funds by Mission Activities for Fiscal Years 1985-2001 (Constant 1997 dollars

in billions)

0 

2 

4 

6 

8 

10 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Total O&M tactical air forces dollars Primary mission 

Base operations/management headquarter Other tactical support

Dollars

Source: Our analysis of DOD FYDP data.

Other Logistics

Support

The other logistics support mission includes the following activities:

logistics base operations and management headquarters, and

miscellaneous logistics support activities such as industrial preparedness,

second destination transportation, administrative support, printing plants

and laundries, and information automation.

Annual O&M funding for other logistics support mission activities fell to

$5.3 billion in fiscal year 1996 from its peak of $8.7 billion in fiscal 

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year 1987, as shown in figure II.14. (The surge in fiscal year 1991 O&M

funding for this mission was an anomaly caused by a $2.3 billion infusion

of funds for Army and Air Force second destination transportation

programs most probably for Persian Gulf War efforts.7

 The following year,

fiscal year 1992, O&M funding for these programs decreased by more than

$2.7 billion and is projected to continue to decline at a slow steady rate

through fiscal year 2000.) The other decreases are due to consistent annual

declines in O&M funding of logistics base operations and headquarters

activities. The declines in base operations had a significant impact on

other logistics support O&M funding because base operations activities

account for about 35 percent of total annual other logistics support funds.

Overall, other logistics support O&M funds fell by 34 percent between fiscal

years 1985 and 1996 but are expected to remain relatively stable through

fiscal year 2001.

7

Second destination transportation programs include costs for commercial land, sea, or air

transportation, including contract service, movements by through bills of lading and the rental and

lease of transportation equipment and service not available on a tariff basis from common carriers,

and funds for reimbursement of continental U.S. port terminals.

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Figure II.14: Annual O&M Funding for Selected Other Logistics Support Activities for Fiscal Years 1985-2001 (Constant

1997 dollars in billions)

0 

2 

4 

6 

8 

10 

12 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Our analysis excludes funding of Defense Environmental Restoration Program; logistics

support to research and development, procurement, and military construction; Defense Logistics

Agency; and stock fund revenue offsets.

Source: Our analysis of DOD FYDP data.

By fiscal year 2001, O&M funding per person for other logistics support

activities is expected to be at about the same level as it was in fiscal 

year 1985, as shown in figure II.15. If the surge in fiscal year 1991 funding

is ignored, O&M funding per person is planned to remain between $2,330

and $2,660 per person for the entire fiscal year 1985-2001 period.

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Figure II.15: Per Person Annual Operation and Maintenance Funding for Selected Other Logistics Support Activities

(Constant 1997 dollars in thousands)

0 

1 

2 

3 

4 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Per person costs are per all active military, full-time Guard and Reserve, and DOD civilians.

Our analysis of the other logistics support mission excludes funding of Defense Environmental

Restoration Program; logistics support to research and development, procurement, and military

construction; Defense Logistics Agency; and stock fund revenue offsets.

Source: Our analysis of DOD FYDP data.

Departmental The departmental mission includes a wide range of department-wide

service support activities such as the Army’s Adjutant General,

publications centers, and postal service agency; the Navy’s accounting and

finance center and its petroleum reserve; and the Air Force’s audit agency,

Intelligence Service, and its finance and accounting center. The mission

also includes department-wide activities such as public affairs, personnel

administration, service support to the Office of the Secretary of Defense

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and other defense agencies, Washington Headquarters Services, and the

Office of Economic Adjustment.8

O&M funding levels for the departmental mission have grown since fiscal

year 1985. Between fiscal years 1985 and 1996, O&M funding for

departmental activities grew by 16 percent, and most of this growth

occurred after fiscal year 1991. Much of the growth between fiscal 

years 1991 and 1996 was due to significant fluctuations in funding for

programs assigned to this mission. For example, Washington Headquarters

Services’ annual O&M funding level grew almost threefold between fiscal

years 1994 and 1995 from $169 million to $498 million, remained at this

high level in fiscal year 1996, but is projected to decline to $185 million in

fiscal year 1997, where its annual funding level is expected to remain

through fiscal year 2001.9

 Other programs in the departmental mission

only have had O&M funding in selected years, such as the Defense-wide

administrative maintenance and repair program. O&M funding for this

program appears only in fiscal years 1992 and 1993 for $563 million and

$1.9 billion, respectively.

O&M funding for the departmental mission decreases by 5 percent between

fiscal years 1996 and 2001. This slight decline in the mission’s funding

levels reflects the relative stability in annual O&M funding levels for most of

the large programs contained in this mission, such as service-wide support

(not otherwise accounted for),10 Office of the Secretary of Defense

management headquarters, and Defense Contract Audit Agency activities.

Figure II.16 shows the trend in O&M funding for departmental mission

activities during the fiscal year 1985-2001 period.

8

The program elements for Foreign Currency Fluctuations, although categorized by DOD as a part of

this mission, were excluded from this analysis. These are resources for a transfer fund account that

was established to maintain the budgeted level of operations and thereby eliminate substantial gains

and losses caused by fluctuations in foreign currency exchange rates that vary substantially from those

used in preparing budget submissions. The O&M values contained in these program elements vary

significantly from year to year. These changes are not a result of a variation in the level of resources

that support a departmental activity and therefore were excluded from the analysis.

9

The Washington Headquarters Services program includes funding for the equipment, facilities and

other associated costs for the functions, which provide administrative and operating support to the

Office of the Secretary of Defense and other DOD activities.

10This program is a compilation of numerous miscellaneous support programs such as the Army’s

Legal Services Agency, Naval History Center, and the Air Force Safety Agency.

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Figure II.16: Annual O&M Funding for Departmental Mission Activities for Fiscal Years 1985-2001 (Constant 1997 dollars in

billions)

0 

2 

4 

6 

8 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Does not include funds for foreign currency fluctuation program elements.

Source: Our analysis of DOD FYDP data.

Seventy-five percent of O&M funds for the departmental mission support

the active military, and the remaining 25 percent of O&M funds for this

mission are for departmental activities that support the National Guard

and Reserve. Figure II.17 shows that O&M funding for departmental

activities that support the active military generally remained between

$4.0 billion and $4.5 billion prior to fiscal year 1993 and are projected to

remain between $4.5 billion and $5.0 billion for the fiscal year 1996-2001

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period. Since the programs that caused the fluctuations in the overall

departmental mission’s O&M funding levels between fiscal years 1991 and

1996, such as the Washington Headquarters Service, support the active

military, these same programs caused the fluctuations shown in figure

II.17. O&M funding for departmental missions that support the active

military are projected to decline between fiscal years 1996 and 2001 by

about 4 percent, only slightly less than the 5-percent decline in the overall

departmental mission’s O&M funding level during the same period.

Figure II.17: Annual O&M Funding for Departmental Mission Activities That Support the Active Military for Fiscal Years

1985-2001 (Constant 1997 dollars in billions)

0 

1 

2 

3 

4 

5 

6 

7 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Does not include funds for foreign currency fluctuation program elements.

Source: Our analysis of DOD FYDP data.

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O&M funding per person for departmental missions that support the active

military has grown by over 50 percent between fiscal years 1985 and 1996

as shown in figure II.18.11 As the amount of O&M funds provided to the

large departmental programs grew between fiscal years 1991 and 1996, the

number of active military personnel fell and the civilians associated with

the departmental activities that support the active military declined. After

fiscal year 1996, the level of O&M funds allocated to each person for this

mission is projected to remain virtually unchanged through fiscal 

year 2001.

11Per person values are per all active military and the full-time Guard and Reserve and DOD civilian

personnel associated with active military departmental mission programs.

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Figure II.18: Per Person Annual O&M Funding for Departmental Mission Activities That Support the Active Military

(Constant 1997 dollars in thousands)

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

3.0 

3.5 

4.0 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Note: Per person values are per all active military and the full-time Guard and Reserve and DOD

civilian personnel associated with active military departmental mission programs.

Source: Our analysis of DOD FYDP data.

Mobility Forces O&M funds for the mobility forces category consist of programs and

activities for multimode and intermodal lift forces,12 airlift forces, sealift

forces, and land mobility forces. As shown in figure II.19, between fiscal

years 1985 and 2001, total O&M funds for the mobility forces category

increase from almost $3.8 billion to $5.5 billion, or by 45.5 percent. Most of

the increase occurs between fiscal years 1985 and 1996, a 54.6-percent

increase. Among the eight categories in our analysis, this category has the

12During the fiscal year 1985-2001 period, multi- and intermodal lift forces have O&M funds only in

fiscal year 1986.

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second largest percentage change in funding during the fiscal 

year 1985-2001 period.

Figure II.19: Annual Mobility Forces O&M Funds for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Dollars

Source: Our analysis of DOD FYDP data.

When funds are grouped by missions within mobility forces, between

fiscal years 1985 and 2001, airlift forces is the largest category funded by

direct O&M appropriations. (See fig. II.20.) The surge in fiscal year 1994 O&M

funds was for airlift base operations. Throughout the 17-year period, land

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mobility forces O&M funds increase from $871 thousand in fiscal year 1985

to almost $653 million in fiscal year 2001 and have the largest percentage

change in funding when compared with sealift and airlift forces.

Figure II.20: Annual Mobility Forces O&M Funds by Mission for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

1 

2 

3 

4 

5 

6 

7 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Airlift forces Sealift forces

Land mobility/multi-intermodal lift

Dollars

Source: Our analysis of DOD FYDP data.

When funds are grouped by missions within airlift forces, during the fiscal

year 1985-2001 period, military intertheater airlift has the largest

percentage change in funding (225.6 percent) when compared with other

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airlift forces missions. Moreover, starting in fiscal year 1996, military

intertheater airlift is projected to have the largest share of annual airlift

forces O&M funds. Military intertheater airlift is comprised of active,

National Guard, and Reserve airlift squadrons and support activities.

Figure II.21 shows the distribution of total fiscal year 1996 O&M funds by

mission within airlift forces. Projections show that, for the fiscal 

year 1997-2001 period, each airlift forces category share of annual O&M

funding closely mirror the fiscal year 1996 share.

Figure II.21: Percentage of Fiscal Year 1996 Airlift Forces O&M Funds Allocated by Mission

Military intertheater airlift (37.78%)

Aeromedical airlift (0.31%)

Airlift command, control, communications (0.72%)

Airlift rescue and recovery (2.78%)

Base ops/management headquarters (13.89%)

Airlift operational support (21.18%)

Military intratheater airlift (23.34%)

Source: Our analysis of DOD FYDP data.

Training The training defense mission category consists of all military personnel

training, civilian personnel training, flight training, intelligence skill

training, health personnel training, and training base operations and

management headquarters.

Figure II.22 shows that the O&M funding level for the training mission

decreased by 22 percent between fiscal years 1985 and 1993 and is

projected to remain fairly level through fiscal year 2001. If O&M funding for

training base operations and management headquarters is removed from

the overall O&M funding level of the training mission as shown in 

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figure II.22, the amount of O&M funds provided to this mission is projected

to decrease by only 14 percent between fiscal years 1985 and 2001. Military

personnel training and flight training activities receive over 85 percent of

the remaining annual O&M funds for this mission.

Figure II.22: Annual O&M Funding for Training for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)

0 

2 

4 

6 

8 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Training mission Training without base operations

Dollars

Source: Our analysis of DOD FYDP data.

Much of the decline through fiscal year 1993 was for training base

operations and management headquarters activities. Base operations and

management headquarters activities have received and are planned to

continue to receive the largest portion of annual O&M funds for this mission

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category, although its portion of the training mission’s O&M funds has

declined.

Figure II.23 shows that military personnel training (mostly general skills

training and support of the training establishment) has declined as the

active force declined, and funding for this activity is planned to remain

fairly constant from fiscal year 1996 to 2001 when military personnel levels

are projected to stabilize. O&M funding for flight training activities (mostly

undergraduate pilot training), though, has not changed much over the 17

years covered by this report.

Figure II.23: Annual O&M Funding for Selected Training Mission Activities for Fiscal Years 1985-2001 (Constant 1997

dollars in billions)

0 

1 

2 

3 

4 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Military personnel Training base operations Flight

Dollars

training and management training

Source: Our analysis of DOD FYDP data.

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Since civilian and Guard and Reserve personnel training accounts for a

very small portion of the total training mission, we focused our analysis of

O&M funding for the mission by service on active military personnel

training only. As displayed in figure II.24, the Army has received and plans

to continue to receive more annual training mission O&M funds than either

the Air Force or the Navy/Marine Corps, although the Army’s share of

annual O&M funds for this mission has decreased along with its force

structure. The Army is projected to receive 35 percent fewer annual

training O&M funds in fiscal year 2001 than it received in fiscal year 1985.

This decline is due mostly to planned declines in military personnel

training (general skills training) and training base operations and

management headquarters. The only Army training area that received an

infusion of O&M funds in the fiscal year 1985 to 1996 period was flight

training, but after fiscal year 1996, funds for this training are projected to

decline by almost 7 percent. For the projected period through fiscal 

year 2001, only the military personnel training area is expected to receive

an increase in O&M funds.

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Figure II.24: Annual O&M Funding by Service for Active Military Training Mission Activities for Fiscal Years 1985-2001

(Constant 1997 dollars in billions)

0 

1 

2 

3 

4 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Army Air Force Navy/Marine Corps

Dollars

Source: Our analysis of DOD FYDP data.

Figure II.24 also shows that O&M training funds for the Navy/Marine Corps

and the Air Force have declined between fiscal years 1985 and 1996 in

concert with declines in their force structure, but similar to the Army,

funding levels are expected to remain fairly stable in the out-years.

Between fiscal years 1985 and 1996, the Navy/Marine Corps O&M training

mission funds decreased by 24 percent and the Air Force’s funding level

decreased by 16 percent. After fiscal year 1996, O&M funding for the

Navy/Marine Corps training base operations is projected to continue to

decrease. However, O&M funding for Navy/Marine Corps military

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personnel, flight, and intelligence skill training is expected to grow. Flight

training is the only area that is planned to receive an increase (12 percent)

in O&M funds for the Air Force during the fiscal year 1996 through 2001

period.

O&M funding for the training mission per full-time military and DOD civilians

declined by 8 percent between fiscal years 1985 and 1993, but after fiscal

year 1993 grew annually through fiscal year 1996, as presented in 

figure II.25. It is projected to remain stable after fiscal year 1996 until fiscal

years 2000 and 2001 when funding per person will increase by

approximately 2 percent per year.

If base operations and management headquarters is removed from overall

O&M funding of the training mission, the O&M funding per full-time military

and DOD civilians remained fairly stable at about $1,200 per year through

fiscal year 1993, when it began to increase annually. The level of O&M

funding per person is projected to increase to over $1,400 by fiscal 

year 2001.

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Figure II.25: Per Person Annual O&M Funding for Training Activities for Fiscal Years 1985-2001 (Constant 1997 dollars in

thousands)

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

3.0 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Total training Training without base operations

Dollars

Note: Per person funding levels are per all active military, full-time Guard and Reserve, and DOD

civilians.

Source: Our analysis of DOD FYDP data.

Figure II.26 shows that the pattern of O&M funding per person for the

training mission for each service’s active military differs. The O&M funding

level per person for active Air Force training grew the most (over

30 percent) between fiscal years 1985 and 1996 and peaked at $3,300 per

person by fiscal year 1996. Our analysis of FYDP data shows that this level

of funding per person is projected to be reached again in fiscal years 1998

and 2001. Although the O&M funding for training per active Army military

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person fell to its lowest level in fiscal year 1994, it increased annually

during fiscal years 1995 and 1996, and will increase annually again in fiscal

years 2000 and 2001, when it will peak at $4,500 per person. The

Navy/Marine Corps O&M funding per person for active military training fell

by 15 percent between fiscal years 1985 and 1993 but is projected to

increase annually through fiscal year 1997, and fall slightly in fiscal 

year 1998, when it will increase about 1 percent per year again until it

reaches $2,600 per year in fiscal year 2000.

Figure II.26: Per Person Annual O&M Funding by Service for Active Military Training Activities for Fiscal Years 1985-2001

(Constant 1997 dollars in thousands)

0 

1 

2 

3 

4 

5 

1985 1987 1989 1991 1993 1995 1997 1999 2001

Fiscal year

Army Air Force Navy/Marine Corps

Dollars

Note: Per person funding levels are per all active military in the specified service and the civilians

and full-time Guard and Reserve personnel associated with the active military training DMCs.

Source: Our analysis of DOD FYDP data.

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(701094) Page 79 GAO/NSIAD-97-73 Defense Budget
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