Report to Congressional Committees

United States Government Accountability Office

GAO 

GLOBAL WAR ON 

TERRORISM 

DOD Needs to More 

Accurately Capture 

and Report the Costs 

of Operation Iraqi 

Freedom and 

Operation Enduring 

Freedom 

March 2009 

GAO-09-302 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2009

GLOBAL WAR ON TERRORISM 

DOD Needs to More Accurately Capture and Report 

the Costs of Operation Iraqi Freedom and Operation 

Highlights of GAO-09-302, a report to Enduring Freedom 

congressional committees 

Since September 11, 2001, 

Congress has provided about $808 

billion to the Department of 

Defense (DOD) for the Global War 

on Terrorism (GWOT) in addition 

to funding in DOD’s base budget. 

Prior GAO reports have found 

DOD’s reported GWOT cost data

unreliable and found problems with 

transparency over certain costs. In 

response, DOD has made several 

changes to its cost-reporting

procedures. 

Congress has shown interest in 

increasing the transparency of

DOD’s cost reporting and funding

requests for GWOT. Under the 

Comptroller General’s authority to 

conduct evaluations on his own 

initiative, GAO assessed (1) DOD’s 

progress in improving the accuracy

and reliability of its GWOT cost 

reporting, and (2) DOD’s 

methodology for reporting GWOT

costs by contingency operation. 

For this engagement, GAO 

analyzed GWOT cost data and

applicable guidance, as well as

DOD’s corrective actions. 

What GAO Recommends

GAO is recommending that DOD 

(1) establish a methodology for 

determining what portion of GWOT 

costs is attributable to Operation 

Iraqi Freedom versus Operation 

Enduring Freedom and (2) develop 

a plan and timetable for evaluating

whether certain expenses are 

incremental and should continue to 

be funded outside of DOD’s base

budget. DOD agreed with the first

recommendation and partially 

agreed with the second. 

While DOD and the military services continue to take steps to improve the 

accuracy and reliability of some aspects of GWOT cost reporting, DOD lacks a 

sound approach for identifying costs of specific contingency operations, 

raising concerns about the reliability of reported information, especially on 

the cost of Operation Iraqi Freedom. Specifically, the department has 

undertaken initiatives such as requiring components to sample and validate 

their GWOT cost transactions and launching a new contingency cost-reporting 

system that will automate the collection of GWOT cost data from components’ 

accounting systems and produce a new report comparing reported obligations 

and disbursements to GWOT appropriations data. Also, the military services 

have taken several steps to correct weaknesses in the reliability of their cost 

data. 

Limitations in DOD’s approach to identifying the costs of Operation Iraqi 

Freedom and Operation Enduring Freedom may, in some cases, result in the 

overstatement of costs, and could lead to these costs being included in DOD’s 

GWOT funding requests rather than the base budget. DOD guidance 

emphasizes the importance of accurately reporting the cost of contingency 

operations. However, while the Army and Marine Corps are capturing totals 

for procurement and certain operation and maintenance costs, they do not 

have a methodology for determining what portion of these GWOT costs are 

attributable to Operation Iraqi Freedom versus Operation Enduring Freedom 

and have reported all these costs as attributable to Operation Iraqi Freedom.

In addition, the military services have reported some costs, such as those for 

Navy forward-presence missions, as part of Operation Iraqi Freedom or 

Operation Enduring Freedom, even though they are not directly attributable 

to either operation. In September 2005, DOD expanded the definition of 

incremental costs for large-scale contingencies, such as those for GWOT, to 

include expenses beyond direct incremental costs. This expanded definition 

provides no guidance on what costs beyond those attributable to the 

operation can be considered incremental and reported. Consequently, the 

military services have made their own interpretations as to whether and how 

to include costs not directly attributable to GWOT contingency operations. 

Without a methodology for determining what portion of GWOT costs is 

attributable to Operation Iraqi Freedom or Operation Enduring Freedom, 

reported costs for Operation Iraqi Freedom may be overstated. Furthermore, 

unless DOD reconsiders whether expenses not directly attributable to specific 

GWOT operations should be included as incremental costs, the military 

services may continue to include these expenses as part of Operation Iraqi 

Freedom and Operation Enduring Freedom, reported costs for both 

operations may be overstated, and DOD may continue to request funding for 

these expenses in GWOT funding requests instead of including them as part of

the base budget. Expenses beyond those directly attributable to either 

operation may be more reflective of the enduring nature of GWOT and its cost 

implications should be part of the annual budget debate. To view the full product, including the scope 

and methodology, click on GAO-09-302.

For more information, contact Sharon Pickup, 

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

Letter 1

Results in Brief 5 

Background 7

DOD and the Military Services Continue to Take Steps to Improve 

Some Aspects of the Accuracy and Reliability of GWOT Cost 

Reporting 9

DOD’s Approach to GWOT Cost Reporting Does Not Reliably 

Represent the Costs of Each Contingency Operation 13 

Conclusions 21

Recommendations for Executive Action 21 

Agency Comments and Our Evaluation 22 

Appendix I Scope and Methodology 26 

Appendix II Comments from the Department of Defense 30 

Appendix III GAO Contact and Staff Acknowledgments 32 

Figure 

Figure 1: DOD’s Reported Cumulative GWOT Obligations for Fiscal 

Years 2001 through 2008 by Contingency Operation 15 

Abbrevations 

DFAS Defense Finance and Accounting Service 

DOD Department of Defense 

GWOT Global War on Terrorism

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Page i GAO-09-302 Global War On Terrorism
United States Government Accountability Office

Washington, DC 20548 

 

March 17, 2009 

Congressional Committees 

Since the September 11, 2001, terrorist attacks, the Department of Defense 

(DOD) has been engaged in domestic and overseas military operations in 

support of the Global War on Terrorism (GWOT) around the world. These 

operations include Operation Noble Eagle aimed at defending the United

States homeland against terrorist attacks; Operation Enduring Freedom 

that takes place principally in and around Afghanistan, but also covers 

additional operations in the Horn of Africa, the Philippines, and elsewhere; 

and Operation Iraqi Freedom that focuses principally on Iraq. Congress 

has provided about $808 billion in supplemental and annual appropriations 

for GWOT since 2001, and DOD has reported total GWOT costs of about 

$654.7 billion as of September 2008. For fiscal year 2009, Congress has 

provided DOD with about $65.9 billion for GWOT as of March 2009, and

DOD plans on requesting an additional $75.5 billion for GWOT for the 

remainder of the fiscal year. This is in addition to about $512.7 billion 

already provided in DOD’s base budget for other functions. Obtaining an 

accurate picture of DOD costs is of critical importance given the need to 

evaluate trade-offs and make more effective use of defense dollars in light 

of the nation’s long-term fiscal challenge and the current financial crisis. In

the past, we have reported on the need for DOD to become more 

disciplined in its approach to developing plans and budgets, including 

building more GWOT costs into the base defense budget. 

To meet internal and legislative reporting requirements, DOD compiles 

GWOT cost data and prepares various reports that itemize these costs by 

appropriation account, military service or defense agency, and 

contingency operation.1

 DOD uses these cost data, along with other 

information, internally to evaluate cost trends and formulate GWOT 

funding requests, and externally to inform Congress on the costs of the 

war. Congress uses DOD’s historical cost data to monitor costs, evaluate

funding needs, and to make GWOT-related funding decisions. Over time, 

DOD’s approach to reporting costs and requesting funds for GWOT 

 1

The DOD Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230101 

(September 2007) defines contingency operations as small-, medium-, and large-scale 

campaign–level military operations, including support for peacekeeping operations, major 

humanitarian assistance efforts, noncombatant evacuation operations, and international 

disaster relief efforts. 

Page 1 GAO-09-302 Global War On Terrorism
 

contingency operations has evolved. Since GWOT contingency operations 

began in 2001, DOD has used existing financial-management guidance, 

designed for small-scale contingency operations, to establish policies and 

procedures for estimating the budget and reporting costs. In 2005, DOD 

amended this guidance to include large-scale contingency operations, like 

those in support of GWOT. In contrast to the guidance for small-scale 

contingency operations, the amended guidance for large-scale 

contingencies allows DOD components to include expenses in their cost

reporting beyond direct incremental costs, but provides no guidance on

what costs beyond those attributable to the operation can be considered 

incremental and reported. Incremental costs are defined as additional 

costs to DOD components that would not have been incurred had the 

contingency operation not been supported.2

 DOD has also revised its 

guidance for building GWOT funding requests, beginning with its fiscal 

year 2007 supplemental funding request, directing DOD components to 

include funding needs related to what it characterized as the “longer war 

on terror,” or costs beyond those directly attributable to Operation 

Enduring Freedom and Operation Iraqi Freedom.

3

 DOD’s previous 

guidance for building GWOT funding requests directed components to 

request funding only for the incremental costs above base-budget funding 

needed to support specific forces and capabilities required to execute 

Operation Enduring Freedom and Operation Iraqi Freedom during the 

fiscal year.4

Over the years, we have reported on the need to improve the accuracy and 

reliability of DOD’s cost reporting and transparency of funding requests 

for GWOT, and have made a series of recommendations to the Secretary of

Defense. For example, we previously identified inaccuracies in reported 

costs for GWOT, and noted the lack of a systematic process and sufficient 

management oversight to ensure GWOT cost data are accurately recorded. 

DOD has implemented many of our recommendations, and continues to 

focus greater management attention to improve GWOT cost reporting. 

 2

DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, secs. 230406, 230902, 

and 231403A (September 2007) provide additional information on incremental costs. 

3

Deputy Secretary of Defense Memorandum, Ground Rules and Process for the FY ‘07 

Spring Supplemental (Oct. 25, 2006). Although DOD did not define the “longer war against 

terror,” it stated that these costs could include reconstitution or reset costs for combat 

losses, accelerated wear and necessary repairs to damaged equipment or replacement with 

newer models, and costs to accelerate specific force capability. 

4

In fiscal year 2005, DOD began requesting funding for Operation Noble Eagle in its base 

budget request. 

Page 2 GAO-09-302 Global War On Terrorism
 

More recently, we reported on the lack of transparency of DOD’s funding 

requests for GWOT, raising concerns over DOD’s expansion of allowable 

incremental costs to include costs for longer-term items. Specifically, in 

November 2007, we reported that changes in DOD’s funding guidance 

resulted in billions of dollars being added to DOD’s GWOT funding 

requests for the “longer war against terror,” making it difficult to 

distinguish between the incremental costs to support specific contingency 

operations and longer-term costs typically associated with DOD’s base 

budget.5

 We recommended that DOD issue guidance defining what 

constitutes the “longer war against terror,” identify what costs are related

to that longer war, and build these costs into the base defense budget. 

Although DOD agreed with our recommendations to some extent, as of 

March 2009, it has not yet taken specific action. 

In the past few years, Congress has shown interest in increasing the 

transparency of DOD’s cost reporting and funding requests for GWOT, 

particularly in the amount of detail available on the costs of specific 

contingency operations. In fiscal year 2006, Congress required DOD to 

submit reports of war-related procurement, equipment maintenance, and 

infrastructure costs by contingency operation.6

 In fiscal year 2007, 

Congress required the President, for each fiscal year thereafter, to submit 

full-year estimates of all funds required to support GWOT along with its 

annual budget submission.

7

 More recently, in the Duncan Hunter National 

Defense Authorization Act for Fiscal Year 2009, Congress required that in

any future annual or supplemental budget request, DOD separately display 

any funding requested for military operations in Afghanistan and military 

operations in Iraq, and provide a detailed description of the assumptions 

underlying this funding request for each operation.

8

Ensuring reliability and transparency in DOD’s cost reporting will be 

important as the new administration and Congress evaluate DOD’s funding 

needs for GWOT in fiscal year 2009 and beyond. To assist Congress in its 

oversight role, we assessed (1) DOD’s progress in improving the accuracy 

 5

GAO, Global War on Terrorism: DOD Needs to Take Action to Encourage Fiscal 

Discipline and Optimize the Use of Tools Intended to Improve GWOT Cost Reporting, 

GAO-08-68 (Washington, D.C.: Nov. 6, 2007). 

6

Pub. L. No. 109-163, § 1221 (2006). 

7

Pub. L. No. 109-364, § 1008 (2006). 

8

Pub. L. No. 110-417, § 1502 (2008). 

Page 3 GAO-09-302 Global War On Terrorism
 

and reliability of its GWOT cost reporting, and (2) DOD’s methodology for 

reporting GWOT costs by contingency operation, including the types of 

costs reported for those operations. We prepared this report under the 

Comptroller General’s authority to conduct evaluations on his own 

initiative. 

To assess DOD’s progress in improving the accuracy and reliability of its 

GWOT cost reporting, we analyzed information reported in DOD’s monthly 

Supplemental and Cost of War Execution Report (cost-of-war report)9

 and 

cost data in the military services’ individual accounting systems. We then 

obtained and reviewed guidance issued by DOD and the military services 

regarding data analysis and methods for reporting costs for GWOT. We 

also interviewed key officials from the Office of the Under Secretary of 

Defense (Comptroller), the Defense Finance and Accounting Service 

(DFAS), the Army, Navy, Marine Corps, and Air Force to obtain 

information about specific processes and procedures DOD and the 

military services have undertaken to improve the accuracy and reliability 

of reported GWOT cost information. To assess DOD’s methodology for 

reporting GWOT costs by contingency operation, including the types of 

costs reported for those operations, we analyzed GWOT cost data in 

DOD’s monthly cost-of-war reports, including the source data for those 

reports in the military services’ individual accounting systems. We then 

obtained and reviewed guidance issued by DOD and the military services 

for identifying and reporting GWOT costs by contingency operation. We 

also interviewed officials from the Under Secretary of Defense 

(Comptroller), Army, Navy, Marine Corps, and Air Force to determine how 

they interpreted and implemented this guidance. As previously reported,

we found the data in DOD’s cost-of-war reports to be of questionable 

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

costs for GWOT are complete, reliable, and accurate, and they should 

therefore be considered approximations. Further details about our scope 

and methodology can be found in appendix I. 

We performed our work from January 2008 through March 2009 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

 9

This report identifies monthly and cumulative incremental GWOT costs for the current

fiscal year by appropriation, contingency operation, and military service or defense agency. 

Page 4 GAO-09-302 Global War On Terrorism
 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

While DOD and the military services continue to take steps to improve the 

accuracy and reliability of some aspects of GWOT cost reporting, DOD 

lacks a sound approach for identifying costs of specific contingency

operations, raising concerns about the reliability of reported information, 

especially on the cost of Operation Iraqi Freedom. The department has 

undertaken several initiatives to improve the accuracy and reliability of its 

GWOT cost data. For example, in February 2008, DOD began requiring its 

components to statistically sample and validate their fiscal year 2008 

GWOT cost transactions on a quarterly basis, beginning with the first 

quarter of fiscal year 2008. According to DOD officials, the new 

procedures have enabled components to find errors and take corrective 

action, thereby improving the reliability of reported cost data. In addition, 

in October 2008, DOD launched a new contingency cost reporting system 

called the Contingency Operations Reporting and Analysis System, which 

automates the collection of elements of GWOT cost data from 

components’ accounting systems and generates a new monthly report 

comparing reported obligations and disbursements to GWOT 

appropriations data. The military services have also taken steps to correct 

weaknesses in the reliability of their GWOT cost data. For instance, during 

the course of our work, we found the Army was misusing internal cost 

codes to track and report costs for GWOT contingency operations. The 

Army has addressed these issues for fiscal year 2009 by revising its costcode structure and eliminating cost codes that commands have misused in 

the past. Because efforts to implement some of these initiatives are still in

the early stages, their effect on the reliability of GWOT cost reporting is 

uncertain. 

Results in Brief 

While DOD has reported significant costs for Operation Iraqi Freedom and 

Operation Enduring Freedom, limitations in its approach for identifying 

the costs of these operations may, in some cases, result in the 

overstatement of costs, and could lead to these costs being included in 

DOD’s GWOT funding requests rather than the base budget. The DOD 

Financial Management Regulation emphasizes the importance of 

accurately reporting the cost of contingency operations. Furthermore, it 

states that actual costs should be reported, but when actual costs are not 

available, DOD components are required to establish and document an 

auditable methodology for capturing costs. As of September 2008, DOD 

had reported costs of about $508.4 billion for Operation Iraqi Freedom and 

about $118.2 billion for Operation Enduring Freedom. However, we found 

that reported costs for Operation Iraqi Freedom may be overstated due to

Page 5 GAO-09-302 Global War On Terrorism
 

weaknesses in DOD’s methodology for reporting its GWOT costs by 

contingency operation. While the Army and Marine Corps capture totals 

for procurement and certain operation and maintenance costs, they do not 

have a methodology for determining what portion of these GWOT costs 

are attributable to Operation Iraqi Freedom versus Operation Enduring 

Freedom. Rather, they reported all these costs as attributable to Operation 

Iraqi Freedom. In addition, the military services have reported some costs, 

such as those for Navy forward-presence missions, as part of Operation 

Iraqi Freedom or Operation Enduring Freedom even though they are not 

directly attributable to either operation. In September 2005, DOD 

expanded the definition of incremental costs for large-scale contingencies, 

such as those conducted as part of GWOT, to include expenses beyond 

direct incremental costs. As we reported in 2005,10 this expanded definition

is problematic because it provides no guidance on what costs beyond 

those attributable to the operation can be considered incremental and

reported. In the absence of additional guidance, the military services have 

made their own interpretations or determinations as to whether and how 

to include costs not directly attributable to GWOT contingency operations, 

and those criteria vary. For example, in fiscal year 2008 the Marine Corps 

reported about $1.4 billion in costs for procurement and operation and 

maintenance for an initiative to increase the overall end strength of the 

Marine Corps as part of Operation Iraqi Freedom, while the Air Force 

included about $464 million in “long war/reconstitution” operation and 

maintenance costs as part of Operation Iraqi Freedom. Without a 

methodology for determining what portion of total GWOT costs is 

attributable to Operation Iraqi Freedom or Operation Enduring Freedom, 

reported costs for Operating Iraqi Freedom may be overstated. 

Furthermore, we continue to believe that unless DOD reconsiders whether 

expenses not directly attributable to specific GWOT contingency 

operations should be included as incremental costs, the military services 

may continue to include these expenses as part of Operation Iraqi 

Freedom and Operation Enduring Freedom, and reported costs for both 

operations may be overstated. In addition, DOD may continue to request 

funding for these expenses as part of these operations instead of building 

that funding into the base budget. 

 10GAO, Global War on Terrorism: DOD Needs to Improve the Reliability of Cost Data and 

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

2005). 

Page 6 GAO-09-302 Global War On Terrorism
 

To improve the transparency and reliability of DOD’s reported obligations 

for GWOT by contingency operation, we recommend that the Secretary of 

Defense direct the Under Secretary of Defense (Comptroller) to (1) ensure 

DOD components establish an auditable and documented methodology for 

determining what portion of GWOT costs is attributable to Operation Iraqi 

Freedom versus Operation Enduring Freedom when actual costs are not 

available, and (2) develop a plan and timetable for evaluating whether 

expenses not directly attributable to specific GWOT contingency 

operations are incremental costs and should continue to be funded outside

of DOD’s base budget. DOD agreed with the first recommendation and 

partially agreed with the second. 

DOD contingency operations, such as those in support of GWOT, can 

involve a wide variety of activities such as combating insurgents, training 

the military forces of other nations, and conducting small-scale 

reconstruction and humanitarian relief projects. Volume 12, chapter 23 of

the DOD Financial Management Regulation, 7000.14-R establishes 

financial policies and procedures for contingency operations and generally 

guides the DOD components’ spending by defining what constitutes 

incremental costs and by providing examples of eligible incremental 

costs.11 The costs incurred for contingency operations include the pay of 

mobilized reservists, as well as the special pays and allowances for 

deployed personnel,12 such as imminent danger pay and foreign duty pay; 

the cost of transporting personnel and materiel to the theater of operation

and supporting them upon arrival; and the operational cost of equipment 

such as vehicles and aircraft, among many other costs. Costs that are 

incurred regardless of whether there is a contingency operation, such as 

the base pay of active duty military personnel, are not considered 

incremental and therefore are funded in DOD’s base budget. 

Background 

DOD reports its GWOT-related costs in terms of obligations, which are 

incurred through actions such as orders placed, contracts awarded, 

 11DOD refers to the military operations in support of GWOT as contingency operations, 

although vol. 12, ch. 23 of the DOD Financial Management Regulation, 7000.14-R 

specifically states that the regulation does not address wartime activities. Nonetheless,

DOD and military service officials use this regulation to guide GWOT budgeting, cost 

reporting, and spending. 

12Servicemembers who are assigned, deployed, or traveling on temporary duty to certain 

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

pay. 37 U.S.C. § 310 (a) (2) (D).

Page 7 GAO-09-302 Global War On Terrorism
 

services received, or similar transactions. When obligations are incurred, 

the DOD components enter them into their individual accounting systems. 

An obligation entry may include a number of different identifiers, 

including information such as funding source and the contingency 

operation, and the category of cost as determined by the individual 

component. Volume 12, chapter 23 of the DOD Financial Management 

Regulation directs components to capture contingency costs within their 

existing accounting systems and at the lowest possible level of 

organization.

13 Individual obligation data that are coded as being in support 

of GWOT are recorded and sent through the component’s chain of 

command where they are aggregated at successively higher command 

levels. 

In a series of reports,14 we have identified numerous problems in DOD’s 

processes for recording and reporting obligations, raising significant 

concerns about the overall reliability of DOD’s reported obligations. In 

addition, DOD’s financial management has been on GAO’s list of high-risk 

areas requiring urgent attention and transformation since 1995. Factors 

affecting the reliability of DOD’s reported obligations include longstanding deficiencies in hundreds of nonintegrated financial management 

systems requiring manual entry of some data in multiple systems, and the 

lack of a systematic process to ensure that data are correctly entered into 

those systems. On its own initiative and in response to our 

recommendations, DOD has placed greater management focus on 

weaknesses in GWOT cost reporting, such as establishing additional 

procedures for analyzing variances in reported obligations and disclosing 

underlying reasons for significant changes. In addition, DOD established a 

Senior Steering Group in February 2007, including representatives from 

DOD, DFAS, and the military services, in an effort to standardize and 

improve the GWOT cost-reporting process and to increase management 

attention to the process.15 In conjunction with the Senior Steering Group, a 

GWOT Cost-of-War Project Management Office was established to monitor 

 13DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230702 

(September 2007). 

14GAO-05-882; GAO, Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are

Within Funding Levels and Significant Multiyear Procurement Funds Will Likely

Remain Available for Use in Fiscal Year 2007, GAO-07-76 (Washington, D.C.: Nov. 13,

2006); and GAO-08-68. 

15Deputy Secretary of Defense Memorandum, Improvement of Global War on Terror 

(GWOT) Cost of War Reporting (Feb. 26, 2007). 

Page 8 GAO-09-302 Global War On Terrorism
 

work performed by auditing agencies and to report possible solutions and 

improvements to the Senior Steering Group. It is tasked with leading 

initiatives in improving the credibility, transparency, and timeliness of 

GWOT cost reporting. DOD’s efforts are ongoing and we have continued to

monitor its progress as GWOT cost reporting has evolved. 

DOD and the military services continue to take steps to improve some 

aspects of the accuracy and reliability of GWOT cost reporting. Some 

examples are discussed below. Because efforts to implement some of 

these initiatives are still in the early stages, their effect on the reliability of 

GWOT cost reporting is uncertain. 

DOD has undertaken several initiatives to improve the accuracy and 

reliability of its GWOT cost data. First, to promote the goal of continually 

improving its cost-of-war processes and reports, in February 2008, DOD 

required its components to statistically sample and validate their fiscal 

year 2008 GWOT obligation transactions on a quarterly basis beginning

with the first quarter of fiscal year 2008.16 DOD also required its 

components to review randomly sampled non-GWOT obligations to 

determine whether the transactions were properly classified as non-GWOT 

versus GWOT. According to DFAS officials, the new requirement has 

improved the reliability of reported GWOT obligations because DOD 

components are taking actions to improve their GWOT cost reporting 

procedures and are making corrections when errors such as missing or 

illegible supporting documentation, missing codes, and miscoded 

transactions are found. DFAS plans to include a requirement to review and 

DOD and the Military 

Services Continue to 

Take Steps to Improve 

Some Aspects of the 

Accuracy and 

Reliability of GWOT 

Cost Reporting 

DOD Has Several Ongoing 

Initiatives to Improve 

Accuracy and Reliability of 

GWOT Cost Data 

 16Office of the Under Secretary of Defense (Comptroller) Memorandum, Continued

Improvement to Contingency Operations Reporting (Feb. 15, 2008). 

Page 9 GAO-09-302 Global War On Terrorism
 

validate GWOT obligation data in an update to volume 3, chapter 8 of the 

DOD Financial Management Regulation.

17

Second, DOD is initiating a new contingency cost-reporting system in 

fiscal year 2009 called the Contingency Operations Reporting and Analysis 

System. DOD’s goals are to automate the collection of GWOT cost data 

from DOD components and improve the timeliness of cost-of-war 

reporting. This system pulls elements of GWOT transaction data directly

from DOD components’ accounting systems into its data store.18 Limited 

features of the system became available for use in October 2008 and it 

should be fully operational by September 2009. Upon completion of the 

project, this system should allow DOD and external users to have a 

consolidated location to view and analyze data for the cost of war, disaster 

relief, and all other contingencies. Users will have access through a Web 

browser and should be able to filter data and perform various analyses. 

Previously, the DOD components individually gathered and manually 

entered their GWOT cost data monthly into a template provided by DFAS 

for cost-of-war reporting. According to DFAS officials, the new system is

designed to ensure better reliability and eliminate the possibility of manual

errors. 

Third, DFAS is issuing a redesigned monthly cost-of-war report through 

the Contingency Operations Reporting and Analysis System, starting in 

fiscal year 2009, to replace DOD’s monthly Supplemental and Cost of War 

Execution Report, which was provided to external customers, including 

Congress, the Office of Management and Budget, and GAO.19 The first new 

cost-of-war report, commonly referred to as the Contingency Operations 

Status of Funds Report, was issued in December 2008 and covered costs 

 17DOD, Financial Management Regulation, 7000.14-R, vol. 3, ch. 8, sec. 080401 (June 2005) 

requires that funds holders conduct a triannual review of commitments and obligations.

During these reviews, officials are to review commitment and obligation transactions for 

timeliness, accuracy, and completeness. 

18As of January 2009, the Contingency Operations Reporting and Analysis System can 

automatically pull operation and maintenance obligation data for the Army, Air Force,

Marine Corps, and U.S. Special Operations Command. In addition, the system can 

automatically pull military personnel obligation data for the Army Reserve and Army 

National Guard, and procurement nonammunition obligation data for the Marine Corps. 

19The Supplemental Cost of War and Execution Report replaced the Consolidated DOD 

Terrorist Cost Response Report issued from September 2001 through December 2004. DOD

has prepared reports on the obligations incurred for its involvement in GWOT since fiscal 

year 2001. 

Page 10 GAO-09-302 Global War On Terrorism
 

for October 2008. According to DOD, this redesigned report should 

improve transparency over GWOT costs by comparing appropriated 

GWOT supplemental and annual funding to reported obligations and 

disbursements. The previous cost-of-war report displayed obligations 

(both monthly and cumulative by fiscal year) by appropriation, 

contingency operation, and DOD component, but did not compare 

obligations to appropriated funding. 

Military Services Have 

Taken Actions to Correct 

Weaknesses in the 

Reliability of GWOT Cost 

Data 

The military services have also taken actions to correct weaknesses in the 

reliability of their GWOT cost data. Examples for each of the services are 

discussed below. Since these actions have only recently been

implemented, their effect on the reliability of GWOT cost reporting is 

uncertain. 

We found that the Marine Corps was not reporting obligations in 

descriptive cost categories in the DOD Supplemental and Cost of War 

Execution Report as required in volume 12, chapter 23 of the DOD 

Financial Management Regulation,

20 which DOD established to provide 

better transparency over reported costs. Specifically, the Marine Corps 

was reporting obligations in the miscellaneous category of “other supplies 

and equipment” rather than the more descriptive cost categories. We 

brought this issue to the attention of both DFAS and the Marine Corps 

office responsible for submitting monthly cost data to DFAS. Marine Corps 

officials acknowledged the absence of the data and indicated that they

would attempt to provide further breakdown of the Marine Corps’ 

reported obligations in future reports. In June 2008, the Marine Corps 

revised its cost-reporting procedures to provide further breakdown of 

reported obligations for “other supplies and equipment” in DOD’s cost-ofwar reports. In addition, Marine Corps officials told us that in May 2008

they streamlined their cost-of-war reporting by centralizing their GWOT 

cost data-gathering and reporting procedures. Prior to this time, 

commands would individually submit their monthly GWOT cost data to 

Marine Corps headquarters. According to Marine Corps officials, the new 

procedures have improved the visibility and reliability of reported costs 

across the service, especially at the command level. 

Marine Corps 

 20DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230406 

(September 2007). 

Page 11 GAO-09-302 Global War On Terrorism
 

We found that the Air Force was reporting some operation and 

maintenance obligations in the miscellaneous cost categories for “other 

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

rather than reporting these obligations in the more descriptive cost 

categories that DOD had established. We brought this issue to the 

attention of both DFAS and the Air Force office responsible for submitting

monthly cost-of-war data to DFAS. In response, the Air Force and DFAS 

revised the Air Force’s cost-reporting procedures so that costs could only 

be reported in the more descriptive cost categories. 

Air Force 

Our analysis of the fiscal year 2008 Army obligation data showed that the

Army was misusing certain accounting codes to capture costs for GWOT 

contingency operations. Army officials told us that commands were 

incorrectly using these codes to record costs for activities that were not 

adequately funded in the base budget such as contracts for security guards

and other anti-terrorism force-protection measures for facilities and 

installations located outside of the continental United States.21

Consequently, almost $2 billion in obligations for operation and 

maintenance was included in DOD’s cost-of-war report for costs that may 

not be directly attributable to GWOT contingency operations. In addition, 

the Army reported about $220 million in GWOT obligations for operation

and maintenance costs associated with its modular restructuring 

initiative.22 Army officials told us that the Army modular restructuring 

initiative is not an incremental cost and therefore should not have been 

included in the cost-of-war report. The Army has addressed these issues 

for fiscal year 2009 by revising its cost code structure and eliminating cost 

codes that commands have misused in the past. 23

Army

During the course of our work, we found that the Navy lacked a 

centralized and documented process for its GWOT cost reporting. For 

example, Navy headquarters had little visibility over how lower-level 

Navy

 21The Army gathers GWOT obligation data by codes called Functional Cost Accounts. 

Functional Cost Accounts are used for capturing obligations for particular operations,

natural disasters, or high-visibility programs. DFAS uses these codes to pull Army 

obligation data for the Contingency Operations Reporting and Analysis System. 

22The Army’s modular restructuring initiative began in 2004 as part of the overall Army 

transformation initiative. See GAO, Force Structure: Better Management Controls Are 

Needed to Oversee the Army’s Modular Force and Expansion Initiatives and Improve

Accountability for Results, GAO-08-145 (Washington, D.C.: Dec. 14, 2007).

23The revised Army cost codes are included within DFAS-IN Manual 37-100-09 (reference 

2.b.), the standard Army accounting-classification manual. 

Page 12 GAO-09-302 Global War On Terrorism
 

commands record and report their GWOT costs. Moreover, the Navy’s 

cost-reporting process relied on the use of several computer-operated 

spreadsheets that required manual data input. The Navy also did not have 

formal guidance for GWOT cost reporting. In addition, our prior work had 

revealed that the Navy’s Atlantic Fleet and Pacific Fleet used different 

approaches for allocating a ship’s normal operating costs and GWOT 

costs.24 In September 2008, the Navy issued formal guidance for GWOT 

cost reporting in response to weaknesses in internal controls for 

contingency cost reporting that were identified as a result of its quarterly 

validations of GWOT obligation transactions. According to the Navy, the

new guidance will increase the visibility of its costs, standardize its costreporting process for contingency operations, and increase the ability to 

audit its financial systems. Further, beginning in fiscal year 2008, the

Atlantic Fleet and Pacific Fleet began using the same cost model for 

calculating how much of a ship’s total operating costs should be allocated

to GWOT. This cost model estimates a ship’s GWOT operating costs by the 

number of days that it is deployed in support of a military operation. 

According to the Navy, this cost model is part of a broader initiative to 

improve and coordinate financial management processes at both the 

Atlantic Fleet and Pacific Fleet. 

Although DOD has taken steps to improve certain aspects of its GWOT 

cost reporting, its approach to identifying the costs of specific operations 

has, in some cases, resulted in the overstatement of costs, particularly for 

Operation Iraqi Freedom, and in other cases, for both contingencies. Since 

2001, DOD has reported significant costs in support of Operation Iraqi 

Freedom and Operation Enduring Freedom. However, we found that 

reported costs for Operation Iraqi Freedom may be overstated due to 

weaknesses in DOD’s methodology for reporting its GWOT costs by 

contingency operation. Furthermore, the military services have reported

some costs that are not directly attributable to the support of either 

Operation Iraqi Freedom or Operation Enduring Freedom. 

DOD’s Approach to 

GWOT Cost Reporting 

Does Not Reliably 

Represent the Costs 

of Each Contingency 

Operation 

 24GAO-05-882. 

Page 13 GAO-09-302 Global War On Terrorism
 

As of September 2008, DOD had reported total obligations of about $654.7 

billion for GWOT, including about $508.4 billion, or 78 percent, for 

Operation Iraqi Freedom, about $118.2 billion, or 18 percent, for Operation 

Enduring Freedom, and about $28.1 billion, or 4 percent, for Operation 

Noble Eagle.25 As figure 1 shows, since fiscal year 2001, Operation Iraqi 

Freedom has accounted for the largest amount of total reported 

obligations among these three operations. However, DOD’s reporting of 

costs for GWOT does not reliably represent the costs of contingency

operations, for reasons discussed below. 

DOD Has Reported 

Significant Costs for 

Operation Iraqi Freedom 

and Operation Enduring 

Freedom

 25We are unable to ensure that DOD’s reported obligations for GWOT are complete, 

reliable, and accurate, and they should therefore be considered approximations. 

Page 14 GAO-09-302 Global War On Terrorism
 

Figure 1: DOD’s Reported Cumulative GWOT Obligations for Fiscal Years 2001 

through 2008 by Contingency Operation 

0

20

40

60

80

100

120

140

160

180

2008

$162.4

2007

$139.8

2006

$98.4

2005

$84.8

2004

$71.3

2003

$68.6

2002

$29.1

2001

$0.2

Operation Iraqi Freedom

Operation Enduring Freedom

Operation Noble Eagle

$28.1

$118.2

$508.4

Dollars (in billions)

Reported GWOT obligations per fiscal year

Source: GAO analysis of DOD data.

Notes: Operation Iraqi Freedom began in fiscal year 2003; therefore, no obligations were reported in 

fiscal years 2001 and 2002 for this operation. Reported GWOT obligations generally reflect costs 

reported in DOD’s cost-of-war reports. However, the fiscal year 2002 and 2003 figures include about 

$20.1 billion that, according to DOD officials, was war-related but not reported in DOD’s cost-of-war 

reports. GAO has assessed the reliability of DOD’s obligation data and found significant problems, 

such that these data may not accurately reflect the true dollar value of GWOT obligations. Obligation 

figures may not add due to rounding. 

Weaknesses Exist in DOD’s 

Methodology for Reporting 

GWOT Costs by 

Contingency Operation 

We found that reported costs for Operation Iraqi Freedom may be 

overstated due to weaknesses in DOD’s methodology for reporting its 

GWOT costs by contingency operation. Volume 12, chapter 23 of the DOD 

Financial Management Regulation emphasizes the importance of cost 

reporting and requires DOD components to make every effort possible to 

Page 15 GAO-09-302 Global War On Terrorism
 

capture and accurately report the cost of contingency operations.26

Furthermore, this regulation states that actual costs should be reported,

but when actual costs are not available, DOD components are required to 

establish and document an auditable methodology for capturing costs.27

While the Army and Marine Corps are capturing totals for procurement 

and certain operation and maintenance costs, they do not have a 

methodology for determining what portion of these GWOT costs is 

attributable to Operation Iraqi Freedom versus Operation Enduring 

Freedom. For example, both military services reported their GWOT costs 

for procurement and certain operation and maintenance activities as costs 

exclusively attributable to Operation Iraqi Freedom, although a portion of 

these costs are attributable to Operation Enduring Freedom. In fiscal year 

2008: 

• The Army reported about $30.2 billion in GWOT procurement 

obligations as costs tied to Operation Iraqi Freedom and none as part 

of Operation Enduring Freedom, even though, according to Army 

officials, some of these costs were incurred in support of Operation 

Enduring Freedom. These reported obligations include both non-resetrelated and reset-related procurement for items such as aircraft, 

munitions, vehicles, communication and electronic equipment, combat 

support, up-armored High Mobility Multipurpose Wheeled Vehicles, 

and countermeasures for improvised explosive devices.28

• The Army reported obligations of about $8 billion for operation and 

maintenance associated with reset for Army prepositioned stocks, 

depot maintenance, recapitalization, aviation special technical 

inspection and repair, and field maintenance as part of Operation Iraqi 

Freedom but none for Operation Enduring Freedom, even though, 

according to Army officials, some of these costs were incurred in 

support of Operation Enduring Freedom. 

 26DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230904B 

(September 2007).

27DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230904C1 and 

230904C2 (September 2007). 

28DOD defines reset as actions to restore units to a desired level of combat capability, 

including maintenance and supply activities that restore and enhance equipment that was 

destroyed, damaged, stressed, or worn out beyond economic repair due to combat 

operations by repairing, rebuilding, or procuring replacement equipment. 

Page 16 GAO-09-302 Global War On Terrorism
 

• The Marine Corps reported $3.9 billion in procurement obligations as 

costs tied to Operation Iraqi Freedom but none as part of Operation 

Enduring Freedom, even though, according to Marine Corps officials, 

some of these costs were incurred in support of Operation Enduring 

Freedom. As in the case of the Army, these reported obligations 

include non-reset-related and reset-related procurement for various 

items. 

• The Marine Corps reported obligations of about $1.1 billion for 

operation and maintenance for “reconstitution/resetting the force” as 

part of Operation Iraqi Freedom but none for Operation Enduring 

Freedom, even though, according to Marine Corps officials, some of 

these costs were incurred in support of Operation Enduring Freedom. 

The reason military service officials gave for not separating equipmentrelated costs between the two operations was that it was difficult to do so. 

Army officials told us that when actual costs cannot be clearly attributed 

to Operation Iraqi Freedom or Operation Enduring Freedom, they report 

all of these costs as part of Operation Iraqi Freedom since it is viewed as 

the larger of the two operations in terms of costs and funding. Marine 

Corps officials stated that they did not always know where GWOT 

equipment purchased with procurement appropriations ultimately went. 

These officials told us that they believed that the vast majority of the 

equipment was delivered to Iraq since, prior to April 2008, the bulk of 

Marine Corps forces had been deployed to Iraq in support of Operation 

Iraqi Freedom. While this assumption could be generally correct, without 

data on where equipment was delivered it is unclear what costs were 

incurred to support each operation. We observed that the command 

responsible for the acquisition and sustainment of war-fighting equipment 

for the Marine Corps did not have a cost code for Operation Enduring 

Freedom. As a result, all of the Marine Corps’ reported obligations for 

procurement and equipment-related operation and maintenance expenses 

were being coded in support of Operation Iraqi Freedom. Without a 

methodology for determining what portion of total GWOT obligations is 

attributable to Operation Iraqi Freedom or Operation Enduring Freedom, 

reported costs for Operating Iraqi Freedom may be overstated and cost 

information for both operations will remain unreliable. 

Page 17 GAO-09-302 Global War On Terrorism
 

The military services have included some costs that are not directly 

attributable to the support of Operation Iraqi Freedom or Operation 

Enduring Freedom in their reported GWOT obligations. According to the 

DOD Financial Management Regulation, costs incurred beyond what was 

reasonably necessary to support a contingency operation cannot be 

deemed incremental expenses, since such costs are not directly 

attributable to support of the operation.29 However, in September 2005, 

DOD expanded the definition of incremental costs for large-scale 

contingencies, such as those conducted as part of GWOT, to include 

expenses beyond direct incremental costs. We believe that this expanded 

definition is problematic because it provides no guidance on what 

expenses beyond those attributable to a specific operation can be 

considered incremental costs and reported or what expenses are due to 

the changed security environment since 9/11 and should be funded and 

accounted for as part of the base budget. In the absence of additional 

guidance, the military services have made their own interpretations or 

determinations as to whether and how to include expenses not directly 

attributable to GWOT contingency operations, and those criteria vary. As a 

result, we found several examples of costs that the military services have 

reported that are not directly attributable to the support of either 

Operation Iraqi Freedom or Operation Enduring Freedom. It is unclear 

whether these expenses continue to meet the definition of incremental 

costs of contingency operations or should be funded and accounted for as 

part of DOD’s base budget. Some examples follow: 

The Marine Corps reported about $1.4 billion in obligations for 

procurement and operation and maintenance in fiscal year 2008 in support 

of Grow the Force—a long-term force-structure initiative—as part of 

Operation Iraqi Freedom. Grow the Force is an initiative that was 

announced by the President in January 2007 to increase the active duty 

end-strength of the Army and Marine Corps. According to Marine Corps 

strategic guidance, this increase in force structure will provide the Marine 

Corps with additional resources needed to fight what the Marine Corps 

refers to as the “long war.” The guidance outlines the Marine Corps’ 

strategic plan for force employment to meet the need for 

counterinsurgency and building partnership capacity in support of the 

National Defense Strategy and multinational efforts in the “Global War on 

Terrorism/Long War.” The Marine Corps established a cost code for 

Military Services Have 

Reported Some Costs That 

Are Not Directly 

Attributable to Operation 

Iraqi Freedom or 

Operation Enduring 

Freedom

Marine Corps 

 29DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230902 and sec. 

231403A (September 2007). 

Page 18 GAO-09-302 Global War On Terrorism
 

capturing Grow the Force costs. A Marine Corps official told us that they 

reported all obligations in support of Grow the Force as part of Operation 

Iraqi Freedom because, prior to April 2008, the majority of Marines 

deployed overseas were stationed in Iraq. Marine Corps officials at 

commands we visited told us that examples of their commands’ reported 

obligations for operation and maintenance in support of Grow the Force 

included civilian labor and infrastructure costs for bases and facilities 

located inside the United States. These officials further stated that these 

costs were necessary to accommodate the increased size of the force. 

Similarly, at one Marine Corps command, we found reported GWOT costs 

for the repair and renovation of sites and facilities located within the 

United States for the purpose of improving security against terrorism. 

Marine Corps officials at this command said that these security initiatives 

included costs for such items as barbed wired fences, automatic vehicle 

gates, automobile barricades, and security cameras. These officials further 

stated that Marine Corps headquarters instructed them to code these costs 

as part of Operation Iraqi Freedom. The Marine Corps reported about 

$42.4 million in obligations for operation and maintenance for these 

security costs in fiscal year 2008. 

The Air Force established a code for capturing “long war/reconstitution” 

operation and maintenance costs based on changes in DOD’s funding 

guidance for GWOT requests in fiscal year 2007.

30 Air Force guidance 

defines “long war” costs as all incremental costs related to the war on 

terror beyond costs strictly limited to Operation Iraqi Freedom and 

Operation Enduring Freedom. These costs include reconstitution/reset 

costs for combat losses, accelerated wear and necessary repairs to 

damaged equipment or replacement to newer models when existing 

equipment is no longer available or economically feasible, and costs to 

accelerate specific force capabilities to carry out GWOT. Among the costs 

included in this code are forward-presence deployments or what the Air 

Force calls Theater Security Packages, which is a forward-basing concept 

involving both bombers and select fighter aircraft that is conducted in the 

Pacific Command area of responsibility. Air Force officials told us that 

because there is no category to report recurring or longer-term costs 

separately from established GWOT contingency operations, they report 

long war costs, including costs related to Theater Security Packages, as 

Air Force 

 30The Air Force developed its “long war” code based upon the Deputy Secretary of Defense 

Memorandum, Ground Rules and Process for the FY ‘07 Spring Supplemental (Oct. 25, 

2006) that expanded the ground rules for DOD’s GWOT requests to include costs related to 

the “longer war against terror.” 

Page 19 GAO-09-302 Global War On Terrorism
 

part of Operation Iraqi Freedom since it is the largest operation. The Air 

Force reported about $464 million in long-war costs for fiscal year 2008. 

The Navy reported costs for forward-presence missions as part of GWOT 

contingency operations even though the Navy routinely deploys its forces 

around the globe in peacetime as well as wartime. As these GWOT 

contingency operations have evolved over time, it has become increasingly 

difficult to determine what costs can be deemed as incremental expenses 

in support of these operations from costs that would have been incurred 

whether or not these contingency operations took place, such as ship 

operating costs for the Navy. For example, the Atlantic and Pacific surface 

commands, which are responsible for managing the Navy’s surface ships, 

reported obligations for costs associated with ship operations and port 

visits for ships deployed on forward-presence missions in the Western 

Pacific. Navy officials told us that some of these ships are stationed out of

Hawaii, Japan, and Guam and operate near Malaysia, the Philippines, and 

Thailand. According to Navy officials, these ships are spending more time 

at sea and visiting more foreign ports in an effort to provide additional 

presence in support of GWOT. In 2008, Navy officials stated that Navy 

guidance expanded the definition of incremental costs in support of 

Operation Enduring Freedom to include those costs associated with forces 

operating in the Southern Command area of responsibility. We found that 

the Atlantic and Pacific surface commands reported obligations for ship 

operating costs and port visit costs for ships deployed on humanitarian 

missions in Central and South America. Navy officials said that ships 

deployed on humanitarian missions have visited countries such as El 

Salvador and Peru. These officials told us that the Navy considers the 

humanitarian missions to be GWOT-related because they benefit the 

security of the United States by spreading goodwill and reducing the 

expansion of terrorism in foreign nations. Costs for these missions are 

included within the Atlantic and Pacific surface commands’ ship operating 

costs for GWOT, which according to our analysis represented about 21 

percent (about $875 million) of the Atlantic Fleet and Pacific Fleet’s total 

GWOT reported obligations for operation and maintenance (about $4.2 

billion) in fiscal year 2008.31

Navy

 31As previously discussed, because the Navy uses a cost model to estimate how much of a 

ship’s total operating costs should be allocated to GWOT, we are unable to identify the 

specific costs tied to these forward-presence missions. 

Page 20 GAO-09-302 Global War On Terrorism
 

Until DOD reconsiders whether expenses not directly attributable to 

specific GWOT contingency operations are incremental costs, the military 

services may continue to include these expenses as part of Operation Iraqi 

Freedom and Operation Enduring Freedom. Furthermore, reported costs 

for both operations may be overstated and costs not directly attributable 

to either operation may continue to be included in DOD’s GWOT funding 

requests rather than the base budget.

In light of the nation’s long-term fiscal challenge and the current financial

crisis, DOD will need a more disciplined approach to budgeting and 

evaluating trade-offs as it continues to support ongoing operations and 

prepares for future threats. As the department prepares additional GWOT 

funding requests for military operations in support of Operation Iraqi 

Freedom and Operation Enduring Freedom, reliable and transparent cost 

information will be of critical importance in determining the future 

funding needs for each operation. However, DOD’s approach to cost 

reporting does not reliably represent the costs of these contingency

operations. Although DOD has reported significant costs for Operation 

Iraqi Freedom and Operation Enduring Freedom, the cost for Operation 

Iraqi Freedom may be overstated, since DOD does not have a methodology 

to determine what portion of its total reported GWOT obligations for 

procurement and certain operation and maintenance costs is attributable 

to each operation. Furthermore, it is difficult to determine whether some 

expenses not directly attributable to Operation Iraqi Freedom and 

Operation Enduring Freedom are actually incremental costs and incurred 

to support those operations. Expenses beyond those directly attributable 

to either operation may be more reflective of the enduring nature of 

GWOT and the United States’ changed security environment since 9/11 and 

thus should be part of what DOD would request and account for as part of 

its base budget. Due to the enduring nature of GWOT, its cost implications 

should be part of the annual base budget debate, especially in light of the 

competing priorities for an increasingly strained federal budget. 

In order to improve the transparency and reliability of DOD’s reported 

obligations for GWOT by contingency operation, we recommend that the 

Secretary of Defense direct the Under Secretary of Defense (Comptroller) 

to (1) ensure DOD components establish an auditable and documented 

methodology for determining what portion of GWOT costs is attributable 

to Operation Iraqi Freedom versus Operation Enduring Freedom when 

actual costs are not available, and (2) develop a plan and timetable for 

evaluating whether expenses not directly attributable to specific GWOT 

Conclusions 

Recommendations for 

Executive Action 

Page 21 GAO-09-302 Global War On Terrorism
 

contingency operations are incremental costs and should continue to be 

funded outside of DOD’s base budget.

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

recommendation and partially agreed with our second recommendation. 

The department’s comments are discussed below and are reprinted in 

appendix II. 

Agency Comments 

and Our Evaluation 

DOD agreed with our recommendation that it ensure its components 

establish an auditable and documented methodology for determining what

portion of GWOT costs is attributable to Operation Iraqi Freedom versus 

Operation Enduring Freedom when actual costs are not available. In its 

comments, DOD noted that it believes its components, for the most part, 

have established formal guidance to strengthen internal controls and 

capture all costs associated with Operation Iraqi Freedom and Operation 

Enduring Freedom from within their accounting systems. However, DOD 

noted that the DOD Financial Management Regulation does include 

guidance for DOD components to develop auditable methodologies, and 

when actual cost by operation is not available, its components are 

required to internally document the methodology used to develop a 

derived estimate of the cost.32 DOD stated that it intends to strengthen the 

guidance in its Financial Management Regulation to require an annual 

review of the methodologies used to allocate these costs. DOD believes 

this action will help promote reasonable cost allocations and consistent 

cost-of-war reporting throughout the department. 

DOD partially agreed with our second recommendation that it develop a 

plan and timetable for evaluating whether expenses not directly 

attributable to specific GWOT contingency operations are incremental 

costs and should continue to be funded outside of DOD’s base budget. 

DOD noted that it has been reporting contingency costs for several years 

and its objective is to include all incremental costs attributable to the war 

effort. DOD also stated that, as part of its continuing efforts to improve 

both budgeting and reporting of war costs, it collaborated with the Office 

of Management and Budget to refine the criteria used for determining 

where costs will be budgeted, either in the base or contingency budgets, 

and ultimately reported. DOD noted that it will use the refined criteria to 

 32DOD, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23, sec. 230904C1 and 

230904C2 (September 2007). 

Page 22 GAO-09-302 Global War On Terrorism
 

inform the development of portions of the fiscal year 2009 Overseas 

Contingency Operations Supplemental Request and the full fiscal year 

2010 Overseas Contingency Operations Request, which has not yet been 

submitted to Congress. As a result, we have not yet been able to evaluate 

DOD’s actions to assess whether they meet the intent of our 

recommendation, but will review these actions when the budget requests 

are finalized and submitted to Congress. 

We are sending copies of this report to interested congressional 

committees; the Secretary of Defense; the Under Secretary of Defense 

(Comptroller); and the Director, Office of Management and Budget. In 

addition, the report is also available at no charge on the GAO Web site at 

http://www.gao.gov. 

If you or your staff have any questions regarding this report, please 

contact me at (202) 512-9619 or pickups@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this report. GAO staff who made major contributions to this 

Sharon Pickup 

report are listed in appendix III. 

lities and Management 

Director 

Defense Capabi

Page 23 GAO-09-302 Global War On Terrorism
 

List of Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Kent Conrad 

Chairman 

The Honorable Judd Gregg 

Ranking Member 

Committee on the Budget 

United States Senate 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable John M. McHugh 

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John M. Spratt, Jr. 

Chairman 

The Honorable Paul Ryan 

Ranking Member 

Committee on the Budget 

House of Representatives 

Page 24 GAO-09-302 Global War On Terrorism
 

The Honorable John P. Murtha 

Chairman 

The Honorable C. W. Bill Young 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Page 25 GAO-09-302 Global War On Terrorism
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To accomplish this review, we obtained and reviewed copies of the 

October 2007 through September 2008 monthly Department of Defense 

(DOD) Supplemental and Cost of War Execution Reports from the Office 

of the Undersecretary of Defense (Comptroller) to identify reported 

Global War on Terrorism (GWOT) obligations by contingency operation

and appropriation account for the military services. We focused our 

review on the obligations reported for military personnel, operation and 

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

Force, both active and reserve forces, as these data represent the largest 

amount of GWOT costs. 

As we have previously reported, we have found the data in DOD’s 

Supplemental and Cost of War Execution Reports to be of questionable 

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

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

should therefore be considered approximations. In addition, DOD has 

acknowledged that systemic weaknesses with its financial management 

systems and business operations continue to impair its financial 

information. Despite the uncertainty about DOD’s obligation data, we are 

using this information because it is the only way to approach an estimate 

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

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

cost of the war. 

To assess DOD’s progress in improving the accuracy and reliability of its 

GWOT cost reporting, we analyzed GWOT obligation data in DOD’s 

monthly Supplemental and Cost of War Execution Reports as well as the 

military services’ individual accounting systems. These systems included 

the Army’s Standard Financial System, the Navy’s Standard Accounting 

and Reporting System, the Marine Corps’ Standard Accounting, Budgeting 

and Reporting System, and the Air Force’s Commanders Resource 

Information System. We analyzed GWOT obligation data from these 

accounting systems to better understand the military services’ GWOT costreporting procedures and how they used these data to report costs in 

DOD’s monthly Supplemental and Cost of War Execution Reports. We 

then obtained and reviewed guidance issued by DOD and the military 

services regarding data analysis and methods for reporting obligations for 

GWOT. We also interviewed key officials from the Office of the Under 

Secretary of Defense (Comptroller), the Defense Finance and Accounting 

Service, the Army, Navy, Marine Corps, and Air Force to obtain 

information about specific processes and procedures DOD and the 

military services have undertaken to improve the accuracy and reliability 

of reported GWOT cost information. 

Page 26 GAO-09-302 Global War On Terrorism
Appendix I: Scope and Methodology 

To assess DOD’s methodology for reporting GWOT costs by contingency

operation, including the types of costs reported for those operations, we 

analyzed GWOT obligation data in DOD’s monthly Supplemental and Cost 

of War Execution Reports, including the source data for those reports in 

the military services’ individual accounting systems. As previously 

discussed, these systems included the Army’s Standard Financial System, 

the Navy’s Standard Accounting and Reporting System, the Marine Corps’ 

Standard Accounting, Budgeting and Reporting System, and the Air 

Force’s Commanders Resource Information System. We analyzed GWOT 

obligation data from these accounting systems to determine how the 

military services captured costs for specific contingency operations, 

including the types of costs they included as part of these contingency

operations. We then obtained and reviewed guidance issued by DOD and 

the military services for identifying and reporting GWOT obligations by 

contingency operation. We also interviewed key officials from the Office 

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

Corps, and Air Force to determine how they interpreted and implemented 

this guidance. 

We interviewed DOD representatives regarding GWOT obligations, policy, 

guidance, and funding for fiscal year 2008 and the reliability of cost 

reporting in the following locations:

A • Headquarters, Department of the Army, Washington, D.C. rmy • U.S. Army Installation Management Command Headquarters,

Arlington, Virginia 

• Army Materiel Command, Ft. Belvoir, Virginia 

• Headquarters, U.S. Army Forces Command, Ft. McPherson, Georgia 

• U.S. Army Central Command, Ft. McPherson, Georgia 

• U.S. Army Installation Management Command, Southeast Region, Ft. 

McPherson, Georgia 

• Headquarters, First Army, Ft. Gillem, Georgia 

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

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

• Commander, Navy Installations Command Headquarters, Washington, 

D.C. 

• Commander, U.S. Fleet Forces Command, Norfolk, Virginia 

• Commander, Naval Air Forces, U.S. Fleet Forces Command, Norfolk, 

Virginia 

• Commander, Naval Surface Forces, U.S. Fleet Forces Command, 

Norfolk, Virginia 

• Commander, Submarine Forces, U.S. Fleet Forces Command, Norfolk, 

Virginia 

Page 27 GAO-09-302 Global War On Terrorism
Appendix I: Scope and Methodology 

• Commander, Navy Expeditionary Combat Command, Norfolk, Virginia 

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

• Commander, Submarine Forces, U.S. Pacific Fleet, Pearl Harbor, 

Hawaii 

• Commander, Naval Air Forces, U.S. Pacific Fleet, San Diego, California 

• Commander, Naval Surface Forces, U.S. Pacific Fleet, San Diego, 

California 

• Commander, Navy Reserve Forces Command, New Orleans, Louisiana 

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

• U.S. Marine Corps Forces Command, Norfolk, Virginia 

• Marine Corps Systems Command, Quantico, Virginia 

• U.S. Marine Corps Forces Central Command, MacDill Air Force Base, 

Florida 

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

• 1st Marine Expeditionary Force, Camp Pendleton, California 

• Marine Corps Base Camp Pendleton, Camp Pendleton, California 

• Marine Corps Installations West, Camp Pendleton, California 

• Marine Forces Reserve, New Orleans, Louisiana 

A • Department of the Air Force, Headquarters, Washington, D.C. ir Force • Air Force Air Combat Command, Langley Air Force Base, Virginia 

• 1st Fighter Wing, Langley Air Force Base, Virginia 

• Headquarters, Air National Guard, Arlington, Virginia 

• Pacific Air Forces, Hickam Air Force Base, Hawaii 

• Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio 

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

D.C. 

Office of the Secretary of 

Defense 

Defense Finance and • Defense Finance and Accounting Service, Indianapolis, Indiana 

Accounting Service 

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

• U.S. Central Command, MacDill Air Force Base, Florida 

• U.S. Special Operations Command, MacDill Air Force Base, Florida 

Office of Management and • Office of Management and Budget, Washington, D.C. 

Budget 

We performed our work from January 2008 through March 2009 in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

Page 28 GAO-09-302 Global War On Terrorism
Appendix I: Scope and Methodology 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

Page 29 GAO-09-302 Global War On Terrorism
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense 

of Defense 

Page 30 GAO-09-302 Global War On Terrorism
Appendix II: Comments from the Department 

of Defense 

Page 31 GAO-09-302 Global War On Terrorism
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 32 GAO-09-302 

Appendix III: GAO Contact and Staff 

Acknowledgments 

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

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

Richard Geiger; Susan Ditto; Linda Keefer; Ron La Due Lake; Deanna 

Laufer; Lonnie McAllister; Eric Petersen; and Joseph Rutecki made key 

contributions to this report. 

Global War On Terrorism

GAO Contact 

Acknowledgments 

(351155) 
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