a

GAO

United States Government Accountability Office

Report to Congressional Committees

September 2005 GLOBAL WAR ON 

TERRORISM

DOD Should Consider 

All Funds Requested 

for the War When 

Determining Needs 

and Covering 

Expenses

GAO-05-767
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-767.

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and methodology, click on the link above. 

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Pickup at (202) 512-9619 or 

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Highlights of GAO-05-767, a report to 

congressional committees 

September 2005

GLOBAL WAR ON TERRORISM 

DOD Should Consider All Funds 

Requested for the War When Determining 

Needs and Covering Expenses 

In fiscal years 2004 and 2005, DOD received funding for GWOT through both 

funds included in its annual appropriation and supplemental appropriations. 

In fiscal years 2004 and 2005, the military services received about 

$52.4 billion and $62.1 billion, respectively, in supplemental appropriations 

for GWOT (1) military personnel and (2) operation and maintenance 

expenses. The Army, Air Force, and Navy also received in their annual 

appropriations a combined $7.9 billion in fiscal year 2004 and a combined 

$7.6 billion in fiscal year 2005, which DOD described as being intended to 

support GWOT. The military services absorbed the increase into their annual 

appropriations and allocated it based on their judgment of where the funds 

were most needed. DOD’s accounting systems, however, do not separately 

identify these additional appropriations, and there are no reporting 

requirements for DOD to identify to which appropriation accounts the funds 

were allocated; consequently, the military services have lost visibility over 

these funds and do not know the extent to which they are being used to 

support GWOT. Despite having asked for the increase to support GWOT, 

DOD is not explicitly counting these additional funds when considering the 

amount of funding available to cover GWOT expenses. 

For fiscal year 2004, regarding supplemental appropriations for GWOT 

military personnel expenses, the Navy and Marine Corps reported more in 

obligations than they received in supplemental appropriations, while the 

Army and Air Force received more in supplemental appropriations than their 

reported obligations. Each of the services reported more in GWOT operation 

and maintenance obligations than it received in supplemental 

appropriations. To cover the differences (gaps), DOD and the services 

exercised a number of authorities provided them, including transferring 

funds and reducing or deferring planned spending for peacetime operations. 

However, in considering the amount of funding available to cover the gaps, 

DOD did not explicitly take into account the funds provided through its 

annual appropriation that as previously noted it described as for the support 

of GWOT. If DOD had considered these funds, it could have reduced the 

Army’s GWOT gap and eliminated the GWOT gaps of the Air Force and Navy.

For fiscal year 2005, the services’ forecasts of GWOT obligations for the full 

fiscal year as of June 2005 suggest a potential gap of $500 million for military 

personnel for the Air Force and potential gaps of about $2.7 billion and 

about $1 billion, respectively, for operation and maintenance for the Army 

and Air Force. To cover expenses, DOD and the services again plan to take a 

variety of actions, including reprogramming funds and reducing or deferring 

planned spending. However, DOD is again not explicitly considering the 

funds provided through its annual appropriation, which it described as for 

the support of GWOT. If counted in fiscal year 2005, the amounts potentially 

could reduce the Army’s and eliminate the Air Force’s GWOT gaps and 

eliminate the need for reprogramming funds and reducing or deferring 

planned spending. 

To assist the Congress in its 

oversight role, GAO is undertaking 

a series of reviews on the costs of 

operations in support of the Global 

War on Terrorism (GWOT). In 

related work, GAO is raising 

concerns about the reliability of the 

Department of Defense’s (DOD) 

reported cost data and therefore is 

unable to ensure that DOD’s 

reported obligations for GWOT are 

complete, reliable, and accurate. In 

this report, GAO (1) identified 

funding for GWOT in fiscal years 

2004 and 2005, (2) compared 

supplemental appropriations for 

GWOT in fiscal year 2004 to the 

military services’ reported 

obligations, and (3) compared 

supplemental appropriations for 

GWOT in fiscal year 2005 to the 

military services’ projected 

obligations. 

What GAO Recommends

GAO recommends the Secretary of 

Defense adjust future requests for 

supplemental appropriations to 

reflect the additional funds DOD 

received in its annual 

appropriations to support GWOT 

and consider these additional funds 

when assessing how to cover its 

expenses for the war. DOD 

disagreed with GAO’s 

recommendations. Given that 

disagreement and the amount of 

funds available—more than 

$10 billion annually—GAO has 

added a matter for congressional 

consideration regarding directing 

DOD to explain how additional 

GWOT related funding in its annual 

appropriations supports GWOT. 
Page i GAO-05-767 Global War on Terrorism

Contents

Letter 1

Results in Brief 4

Background 7

Funding for GWOT in Fiscal Years 2004 and 2005 Was Provided in 

Annual and Supplemental Appropriations 8

Most Fiscal Year 2004 Supplemental Appropriations for GWOT Were 

Less Than Reported Obligations; However, DOD Is Not Explicitly 

Counting Additional Funds Requested for GWOT in Its Annual 

Appropriation 14

Fiscal Year 2005 Reported Obligations for GWOT Could Exceed 

Supplemental Appropriations, Requiring the Military Services to 

Use Authorities Provided to Them to Cover the Differences 22

Conclusions 29

Recommendations for Executive Action 30

Matter for Congressional Consideration 30

Agency Comments and Our Evaluation 30

Appendixes

Appendix I: Scope and Methodology 37

Appendix II: Comments from the Department of Defense 40

Tables Table 1: Supplemental Appropriations Available to the Military 

Services for GWOT Military Personnel and Operation and 

Maintenance Expenses in Fiscal Years 2004 and 2005 9

Table 2: Annual Appropriations for the Military Services Included 

in Program Budget Decision 736 to Support GWOT in 

Fiscal Years 2004 and 2005 11

Table 3: Military Personnel Fiscal Year 2004 GWOT Supplemental 

Appropriations and Reported Obligations 15

Table 4: Operation and Maintenance Fiscal Year 2004 GWOT 

Supplemental Appropriations and Reported Obligations 15

Table 5: Comparison of the Military Services’ Combined 

Supplemental and Annual Appropriations for Military 

Personnel and Operation and Maintenance for GWOT in 

Fiscal Year 2004 to Reported Obligations 21

Figures Figure 1: Military Services’ Fiscal Year 2005 Reported Obligations 

of GWOT Military Personnel Supplemental 

Appropriations through May 2005 23
Contents

Page ii GAO-05-767 Global War on Terrorism

Figure 2: Military Services’ Fiscal Year 2005 Reported Obligations 

of GWOT Operation and Maintenance Supplemental 

Appropriations through May 2005 25

Abbreviations

DOD Department of Defense

GWOT Global War on Terrorism

LOGCAP Logistics Civil Augmentation Program

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Page 1 GAO-05-767 Global War on Terrorism

United States Government Accountability Office

Washington, D.C. 20548

A

September 28, 2005 Letr

Congressional Committees 

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

the Department of Defense (DOD) with more than $265 billion, as of 

August 2005, in supplemental appropriations to support military operations 

to combat terrorism worldwide. The Congress has also provided funds to 

combat terrorism in DOD’s annual appropriation. Military operations to 

defend the United States from terrorist attacks are known as Operation 

Noble Eagle. Overseas military operations to combat terrorism are known 

as Operation Iraqi Freedom, which takes place in and around Iraq, and 

Operation Enduring Freedom, which takes place principally in Afghanistan. 

These operations are known collectively as the Global War on Terrorism 

(GWOT). 

To assist the Congress in its oversight role, we have conducted under the 

Comptroller General’s statutory authority a series of reviews on the 

reported obligations and funding for military operations in support of 

GWOT1

 and have addressed this report to the congressional committees of 

jurisdiction. Obligations are incurred through actions such as orders 

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

by federal agencies during a given period that will require payments during 

the same or a future period.2

 In July 2004, we issued a report that discussed 

fiscal year 2004 obligations and funding through April 2004.3

 This report 

completes our analysis of fiscal year 2004 and includes our assessment of 

the outlook for fiscal year 2005 obligations and funding for the war as of 

May 2005. In this report, we (1) identified funding for GWOT in fiscal years 

2004 and 2005; (2) compared supplemental appropriations for GWOT in 

fiscal year 2004 to the military services’ reported obligations and, if 

differences occurred, determined the actions DOD and the services took to 

cover them; and (3) compared supplemental appropriations for GWOT in 

1

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

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

(Washington, D.C.: July 21, 2004), and Military Operations: DOD’s Fiscal Year 2003 

Funding and Reported Obligations in Support of the Global War on Terrorism, GAO-04-

668 (Washington, D.C.: May 13, 2004).

2

Department of Defense Financial Management Regulation, 7000.14-R, vol. 1, Definitions, 

p. xvii (December 2001).

3

See GAO-04-915.
Page 2 GAO-05-767 Global War on Terrorism

fiscal year 2005 to the services’ projected obligations. Where it appeared 

that obligations may exceed the supplemental appropriations provided in 

fiscal year 2005, we sought to identify the actions DOD and the services 

plan to take to cover the gaps. For purposes of this report, the term “gap” 

refers to comparisons between funds provided in supplemental 

appropriations and DOD’s reported GWOT obligations—specifically to 

instances where DOD’s reported GWOT obligations exceed the 

supplemental appropriations provided to the department during the fiscal 

year. Because operational conditions on the ground can vary substantially 

during the fiscal year, DOD’s actual funding needs may be more or less than 

the amount initially estimated or received. As we discuss in this report, 

DOD may address these differences (gaps) by using its annual 

appropriations. There is no indication, however, that DOD incurred any 

Antideficiency Act violations.

We limited our review to the obligation of funds appropriated for military 

personnel and operation and maintenance, for both active and reserve 

forces of the Army, Air Force, Navy, and Marine Corps, because they 

represented the majority of the funds obligated in fiscal years 2004 and 

2005, about 90 percent in each year. We did not review the obligation of 

funds for investment, which are used for procurement; military 

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

To identify funding DOD describes as intended for GWOT, we reviewed 

applicable annual and supplemental DOD appropriations in fiscal years 

2004 and 2005. To compare supplemental appropriations provided to the 

military services for GWOT to reported obligations in both fiscal years 2004 

and 2005, we reviewed applicable supplemental appropriations and 

compared them to the reported amounts obligated by each service. To 

identify DOD’s reported GWOT obligations,4

 we used DOD’s Supplemental 

and Cost of War Execution Reports, which report DOD’s monthly and 

cumulative GWOT obligations, and analyzed these data. These reports were 

called the Consolidated Department of Defense Terrorist Response Cost 

Reports through December 2004, and renamed beginning in January 2005. 

We excluded classified programs from our review, because obligations for 

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

Execution Reports. To determine actions taken by DOD and the services to 

cover any identified gaps between reported obligations and supplemental 

4

DOD’s financial systems only capture total obligations, and the services use various 

management information systems to identify incremental obligations and to estimate costs.
Page 3 GAO-05-767 Global War on Terrorism

appropriations for GWOT, we held discussions with DOD representatives 

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

Army, Air Force, Navy, and Marine Corps.

We have previously reported concerns regarding DOD’s oversight and cost 

reporting of funds appropriated for contingency operations. For example, 

in May 2004 we reported that DOD’s cost reporting for GWOT included 

large amounts of funds that have been reported as obligated in 

miscellaneous categories and thus provide little insight on how those funds 

have been spent,5

 and in April 2003 we reported that DOD’s ability to track 

the use of funds appropriated for GWOT has varying limitations depending 

on the appropriation.6

 In response, DOD has taken a number of steps to 

improve its oversight and cost reporting of funds appropriated for 

contingency operations. These actions include revising the Department of 

Defense Financial Management Regulation in January 2005 to include 

new cost reporting categories that refine the reporting of obligations 

previously reported as miscellaneous.

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

reported in the Supplemental and Cost of War Execution Reports. In 

related work,7 we have reported these data to be of questionable reliability. 

For example, we found financial management systems with acknowledged 

weaknesses, a lack of systematic processes to ensure accurate data entry, 

failure to use actual data when it was available, and improperly categorized 

costs. Therefore, we are unable to ensure that DOD’s reported obligations 

for GWOT are complete, reliable, and accurate. Consequently, the gaps we 

identify between supplemental appropriations and DOD’s reported 

obligations may not reliably reflect true differences between supplemental 

appropriations and obligations and therefore should be considered 

approximations. Despite the uncertainty about the obligation data, we are 

reporting the information because it is the only data available on overall 

GWOT costs and so the only way to approach an estimate of the costs of 

the war. Also, despite the uncertainty surrounding the true dollar figure for 

5

See GAO-04-668.

6

GAO, Defense Budget: Tracking of Emergency Response Funds for the War on Terrorism, 

GAO-03-346 (Washington, D.C.: Apr. 30, 2003).

7

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

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

2005).
Page 4 GAO-05-767 Global War on Terrorism

obligations, these data are used to advise the Congress on the cost of the 

war. As such, obligation data provided in this report reflect DOD reported 

obligations, however unreliable those reports may be. 

We conducted our review from November 2004 through August 2005 in 

accordance with generally accepted government auditing standards.

Results in Brief In fiscal years 2004 and 2005, DOD received funding to support GWOT in 

both its annual appropriation and in supplemental appropriations provided 

during those years. The military services received about $52.4 billion and 

about $62.1 billion in fiscal years 2004 and 2005, respectively, in 

supplemental appropriations for GWOT military personnel and operation 

and maintenance expenses. At the same time, DOD requested that the 

Army, Air Force, and Navy receive a combined increase of about 

$7.9 billion in fiscal year 2004 and a combined increase of about $7.6 billion 

in fiscal year 2005 in their annual appropriations, which DOD said would be 

for support of GWOT. The military services absorbed the increase into their 

annual appropriations and allocated it based on their judgment of where 

the funds were most needed. DOD’s accounting systems, however, do not 

separately identify these additional appropriations and there are no 

reporting requirements for DOD to identify to which appropriation 

accounts the funds were allocated; consequently, the military services have 

lost visibility over these funds and do not know the extent to which they 

are being used to support GWOT. Despite having asked for the increase to 

support GWOT, DOD is not explicitly counting these additional funds when 

considering funding for GWOT. 

In fiscal year 2004, the difference between supplemental appropriations 

available to the military services for GWOT military personnel and 

operation and maintenance expenses compared to reported obligations 

varied by service. For military personnel, the Navy and Marine Corps 

reported more in obligations than they had received in supplemental 

appropriations, resulting in differences or gaps of about $40 million and

$30 million, respectively. Both the Army and Air Force received 

supplemental appropriations that exceeded their reported obligations for 

military personnel and the two services used these funds to cover 

operation and maintenance expenses related to GWOT, transferring 

$801 million and $113 million, respectively. For operation and maintenance, 

each of the military services reported more in obligations than it received 

in supplemental appropriations. The Army reported the largest gap, about 

$4.3 billion, while the Air Force and Navy reported gaps of $579 million and 
Page 5 GAO-05-767 Global War on Terrorism

about $618 million, respectively. The Marine Corps reported the smallest 

gap, about $195 million. Some service representatives noted that the gaps 

represented a small percentage of their annual military personnel and 

operation and maintenance appropriations. To cover the gaps, the Office of 

the Under Secretary of Defense (Comptroller) and the services exercised a 

number of authorities provided to them, including transferring funds and 

reducing or deferring planned spending for peacetime operations. For 

example, DOD covered about $3 billion of the gap though transfers from 

the services’ working capital funds, while the military services deferred a 

portion of their equipment and depot maintenance activities; various 

procurement actions; infrastructure projects; and other activities, such as 

training, until fiscal year 2005 or later. However, DOD did not explicitly 

take into account the funds provided through its annual appropriation that 

it intended for support of GWOT. If counted in fiscal year 2004, these 

amounts could have reduced the Army’s GWOT gap, allowing it to defer 

fewer activities, and eliminated the GWOT gaps of the Air Force and Navy. 

For fiscal year 2005, our analysis of reported obligations through May 2005 

and the military services’ forecasts for the full fiscal year as of June 2005 

suggest that in some appropriations accounts the military services’ 

reported obligations for the war could exceed their supplemental 

appropriations. This could require them to again use other authorities 

provided to them to cover the differences. Our projections suggest the 

services should have sufficient supplemental appropriations for military 

personnel expenses, but that there could be gaps for operation and 

maintenance expenses for the Army and the Marine Corps. The services’ 

more detailed forecasts suggest a gap for military personnel expenses for 

the Air Force of about $500 million, and gaps for operation and 

maintenance expenses for the Army and Air Force of about $2.7 billion and 

about $1 billion, respectively. Based on its midyear budget review, the 

Marine Corps believes that its current supplemental appropriations for the 

war will be sufficient to cover its reported obligations. To cover any gaps, 

DOD and the services plan to take a variety of actions, based on authorities 

provided to them, including reprogramming funds and reducing or 

deferring planned spending for peacetime operations. For example, in May 

2005 more than $800 million was reprogrammed from the military 

personnel accounts of the Air Force, Navy, Marine Corps, and Army 

National Guard to meet the Army’s GWOT needs, while the Air Force has 

begun taking steps to decrease its peacetime flying hours and reduce or 

defer current year depot maintenance activities. However, DOD is again not 

explicitly considering the funds provided in its annual appropriation, which 

it described as having been requested to support GWOT. If counted in fiscal 
Page 6 GAO-05-767 Global War on Terrorism

year 2005, the amounts potentially could reduce the Army’s and eliminate 

the Air Force’s GWOT gaps and eliminate the need for reprogramming 

funds and reducing or deferring planned spending. As a result, the services 

continue to take actions that affect peacetime operations and run the risk 

of producing a large “bow wave” of higher spending pressures into the 

future.

To improve the visibility and accountability of DOD’s use of funds for 

GWOT, we recommend that in future requests for supplemental 

appropriations, the Secretary of Defense adjust such requests to reflect the 

additional funding DOD requested and received in its annual 

appropriations to support GWOT and provide the Congress with an 

explanation of these adjustments. We further recommend that in 

addressing any future GWOT funding needs the Secretary consider the 

additional GWOT funding provided through the department’s annual 

appropriation when assessing how to cover expenses for the war and 

document its decisions.

In written comments on a draft of this report, DOD did not concur with our 

recommendations. Regarding our recommendation that the Secretary of 

Defense adjust future supplemental appropriations requests to reflect the 

additional funding DOD requested and received in its annual 

appropriations to support GWOT and explain these adjustments to the 

Congress, DOD stated that its supplemental appropriations request 

accounts for all relevant adjustments to the annual appropriation bill. In 

fact, as stated in our report, although the Office of the Under Secretary of 

Defense (Comptroller) sought to adjust the department’s supplemental 

appropriations request for fiscal year 2005 to reflect the additional funds 

DOD received in its annual appropriations that DOD identified as 

supporting GWOT, none of the military services provided the information 

requested. Instead, it was the Office of Management and Budget that 

actually made the adjustment in preparing the President’s fiscal year 2005 

supplemental appropriations request. We therefore believe that our 

recommendation has merit and have retained it. However, since DOD does 

not agree and the amount of funds available is substantial—more than 

$10 billion annually—we have added a matter for congressional 

consideration to consider directing DOD, when it submits future 

supplemental appropriations requests, to provide an explanation of how 

such requests reflect the additional funding DOD requested and received in 

its annual appropriations to support GWOT. With respect to our 

recommendation that the Secretary of Defense also consider the additional 

GWOT funding provided through DOD’s annual appropriations in 
Page 7 GAO-05-767 Global War on Terrorism

addressing any future GWOT funding needs, DOD commented that it 

considers all funding provided through the department’s annual 

appropriation when addressing how to cover expenses for the war. We 

recognize that DOD reviews all available funding authorities when 

determining how to cover GWOT needs. However, since DOD has lost 

visibility of the funds provided through its annual appropriation that it 

requested to support GWOT, there is no documentation regarding how the 

department took these funds into account or whether it was applying the 

entire amount to cover its GWOT needs. We therefore continue to believe 

our recommendation has merit and have retained it, including expanding it 

to recommend that DOD also document its decisions. DOD’s comments 

and our evaluation are discussed in detail in a later section of this report 

and the department’s comments are reprinted in appendix II.

Background About 90 percent of the costs associated with GWOT fall into two 

accounts—military personnel and operation and maintenance. Military 

personnel funds provided to support GWOT cover the pay and allowances 

of mobilized reservists as well as special payments or allowances for all 

qualifying military personnel, both active and reserve, such as Imminent 

Danger Pay and Family Separation Allowance. Operation and maintenance 

funds provided to support GWOT are used for a variety of purposes, 

including transportation of personnel, goods, and equipment; unit 

operating support costs; and intelligence, communications, and logistics 

support. 

We have reported on several occasions, including in 1999 and 2003, that 

estimating the cost of ongoing military operations is difficult.8

 This is 

because operational requirements can differ substantially during the fiscal 

year from what was assumed in preparing budget estimates. The result can 

be that operations can cost more or less than originally estimated. If 

operations cost more than originally estimated, DOD may use a number of 

authorities provided to it, including transferring and reprogramming funds 

and reducing or deferring planned spending for peacetime operations, to 

meet its needs. DOD uses “transfer authority” to shift funds between 

appropriation accounts, for example, between military personnel and 

8

GAO, Military Operations: Some Funds for Fiscal Year 1999 Contingency Operations 

Will Be Available for Future Needs, GAO/NSIAD-99-244BR (Washington, D.C.: Sept. 21, 

1999), and Military Operations: Fiscal Year 2003 Obligations Are Substantial, but May 

Result in Less Obligations Than Expected, GAO-03-1088 (Washington, D.C.: Sept. 17, 2003).
Page 8 GAO-05-767 Global War on Terrorism

operation and maintenance. Transfer authority is granted by the Congress 

to DOD usually pursuant to specific provisions in authorization or 

appropriation acts.9

 The ability to shift funds within a specific 

appropriation account, like operation and maintenance, is referred to as 

“reprogramming.” In general, DOD does not need statutory authority to 

reprogram funds within an account as long as the funds to be spent would 

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

reprogramming does not violate any other specific statutory requirements 

or limitations. For example, DOD could reprogram operation and 

maintenance funds originally appropriated for training to cover increased 

fuel costs because both uses meet the general purpose of the operation and 

maintenance account, as long as the shift does not violate any other 

specific statutory prohibition or limitation. 

Funding for GWOT in 

Fiscal Years 2004 and 

2005 Was Provided in 

Annual and 

Supplemental 

Appropriations

In fiscal years 2004 and 2005, the military services received about 

$52.4 billion and about $62.1 billion, respectively, in supplemental 

appropriations for GWOT military personnel and operation and 

maintenance expenses. The Army, Air Force, and Navy also received funds 

for GWOT through their annual appropriations. However, DOD and the 

military services have lost visibility over these funds provided through 

annual appropriations, including knowing how much, if any, was used to 

support GWOT in fiscal years 2004 and 2005. 

Supplemental 

Appropriations for GWOT

As shown in table 1, DOD received funding through supplemental 

appropriations to support GWOT in both fiscal years 2004 and 2005.

9

An example of specific transfer authority is found in Section 8006 of the Department of 

Defense Appropriations Act, 2004 (Pub. L. No. 108-87 (Sept. 30, 2003)), which allows DOD to 

transfer excess cash balances from the Defense Working Capital Fund to the operation and 

maintenance appropriations in amounts as determined by the Secretary with the approval of 

the Office of Management and Budget.
Page 9 GAO-05-767 Global War on Terrorism

Table 1: Supplemental Appropriations Available to the Military Services for GWOT 

Military Personnel and Operation and Maintenance Expenses in Fiscal Years 2004 

and 2005

Source: GAO analysis of Pub. L. No. 108-106, Pub. L. No. 108-287, Pub. L. No. 109-13, and Iraqi Freedom Fund transfers appropriated 

in Pub. L. No. 108-106 and Pub. L. No. 108-11.

Notes: Fiscal years 2004 and 2005 supplemental appropriations data exclude funding for classified 

programs. Fiscal year 2005 supplemental appropriations data are through August 2005. 

To pay for the military personnel and operation and maintenance costs of 

GWOT in fiscal year 2004, the Congress appropriated about $52.4 billion to 

DOD. Of the $52.4 billion, the Congress provided the military services 

about $50.4 billion in the Emergency Supplemental Appropriations Act for 

Defense and for the Reconstruction of Iraq and Afghanistan, 2004.10 In 

addition, the services used $120 million of the funds provided in late fiscal 

year 2004 through Title IX of the Department of Defense Appropriations 

Act, 2005.11

DOD also transferred about $1.9 billion from funds originally appropriated 

to the Iraqi Freedom Fund. The Iraqi Freedom Fund provides 2-year funds 

that can be transferred to the services’ accounts for additional expenses for 

ongoing military operations in Iraq, operations authorized by the

Dollars in millions

Source Available in fiscal year 2004

Available in fiscal year

2005

Supplemental 

appropriations

Pub. L. No. 108-106 $50,352 --

Pub. L. No. 108-287 120 $17,251

Pub. L. No. 109-13 -- 44,504

Iraqi Freedom Fund 

transfers

1,941 348

Total $52,413 $62,103

10Pub. L. No. 108-106 (Nov. 6, 2003).

11Pub. L. No. 108-287, Title IX (Aug. 5, 2004). DOD was provided $25 billion through Title IX 

of the Department of Defense Appropriations Act, 2005, of which about $17.4 billion was 

provided for military personnel and operation and maintenance expenses. These funds were 

available for use in fiscal years 2004 and 2005.
Page 10 GAO-05-767 Global War on Terrorism

Authorization for Use of Military Force,12 and other operations and related 

activities in support of GWOT. Of the $1.9 billion, about $860 million was 

provided through the Emergency Wartime Supplemental Appropriations 

Act, 2003,13 while about $1.1 billion was provided through the Emergency 

Supplemental Appropriations Act for Defense and for the Reconstruction 

of Iraq and Afghanistan, 2004.14

For fiscal year 2005, the military services had about $62.1 billion available 

to pay for the military personnel and operation and maintenance costs of 

GWOT. Of this, the Congress appropriated about $44.5 billion through the 

Emergency Supplemental Appropriations Act for Defense, the Global War 

on Terror, and Tsunami Relief, 2005.15 The military services also had the 

remaining balance—about $17.3 billion—that was provided through Title 

IX of the Department of Defense Appropriations Act, 2005, and was 

available for obligation in fiscal year 2005 to help pay for the military 

personnel and operation and maintenance costs of GWOT. In addition, as of 

July 2005, DOD had transferred about $348 million from funds originally 

appropriated to the Iraqi Freedom Fund.

Some Annual 

Appropriations Described 

by DOD as for GWOT

In addition to funds DOD received through supplemental appropriations 

for GWOT, beginning in fiscal year 2003, the administration increased 

DOD’s annual appropriation request by more than $10 billion per year. DOD 

described these funds as being intended to support GWOT. According to a 

representative from the Office of the Under Secretary of Defense 

(Comptroller), in December 2001 the President directed that his annual 

budget submission for DOD be increased by about $10 billion annually to 

support GWOT. Consequently, Program Budget Decision 736, entitled 

Continuing the War on Terrorism and dated January 31, 2002, was 

approved by the Under Secretary of Defense (Comptroller). Program 

Budget Decision 736 provided for increasing DOD’s annual budget request 

in the amount of more than $10 billion per year plus inflation in fiscal years 

2003 through 2007 to enhance the department’s efforts to respond to, or 

protect against, acts or threatened acts of terrorism against the United 

12Pub. L. No. 107-40 (Sept. 18, 2001).

13Pub. L. No. 108-11, Title I, ch. 3 (Apr. 16, 2003).

14Pub. L. No. 108-106 (Nov. 6, 2003).

15Pub. L. No. 109-13 (May 11, 2005).
Page 11 GAO-05-767 Global War on Terrorism

States. According to a DOD representative, unless action is taken to reduce 

these funds in future budgets, Program Budget Decision 736 provides for a 

permanent increase of about $10 billion per year plus inflation to DOD’s 

annual budget request to support military operations in the war on 

terrorism. 

As shown in table 2, in fiscal years 2004 and 2005, the Army, Air Force, and 

Navy received additional funds in their annual appropriations—a total of 

about $7.9 billion in fiscal year 2004 and about $7.6 billion in fiscal year 

2005—which DOD described as for support of military operations in the 

war on terrorism. According to DOD representatives, the Marine Corps did 

not receive an increase to its annual appropriation through Program 

Budget Decision 736.

Table 2: Annual Appropriations for the Military Services Included in Program Budget 

Decision 736 to Support GWOT in Fiscal Years 2004 and 2005

Source: GAO analysis of DOD data.

Note: GAO did not audit these data.

Under Program Budget Decision 736, a number of DOD programs were to 

receive increases in their proposed annual budgets in both fiscal years 2004 

and 2005.16 For example, in fiscal year 2004, Program Budget Decision 736 

indicates that about $2.1 billion was for counterterrorism and force 

protection efforts, about $1.2 billion for combat air patrols over U.S. cities, 

and about $600 million for such things as depot maintenance and spare 

parts. Program Budget Decision 736 indicates funds were to be provided to 

these programs and others in fiscal years 2005 through 2007 as well. 

According to representatives of the Office of the Under Secretary of 

Dollars in millions

Military service Available in fiscal year 2004

Available in fiscal year

2005

Army $1,331.7 $1,268.0

Air Force 3,506.4 3,512.3

Navy 3,013.1 2,818.1

Total $7,851.2 $7,598.4

16Program Budget Decision 736 also indicates some funds were provided to the Department 

of Energy.
Page 12 GAO-05-767 Global War on Terrorism

Defense (Comptroller), some of the funds in Program Budget Decision 

736 were intended to cover costs associated with Operation Noble Eagle 

while others were intended to cover costs associated with Operation 

Enduring Freedom. 

For fiscal years 2004 and 2005, an Office of the Under Secretary of Defense 

(Comptroller) representative stated the additional funds provided through 

Program Budget Decision 736 were in the military services’ various 

appropriations accounts. However, the Office of the Under Secretary of 

Defense (Comptroller) has no specific information about which programs 

or activities actually received the funds or how they were eventually 

expended, including whether they were used in support of GWOT. Once the 

services received these additional funds, they allocated them to their 

appropriations accounts based on their judgment of where the funds were 

most needed. DOD’s accounting systems do not separately identify which 

appropriations accounts received these funds, and there are no reporting 

requirements for DOD to identify to which appropriation accounts the 

funds were allocated. While the military services also stated they received 

their share of the Program Budget Decision 736 funds as part of their fiscal 

year 2004 and fiscal year 2005 annual appropriations and that some of the 

funds were used for war-related expenses, they too could not identify 

which programs or activities received the funds and could not document 

what portion of these funds were used for war-related expenses. As a 

result, although DOD requested these funds to support GWOT, DOD and 

the military services cannot be certain that they were actually used to 

support GWOT-related activities.17

In developing the fiscal year 2005 request for supplemental appropriations 

to support GWOT, DOD took steps to adjust the request to reflect the 

receipt of funds provided through Program Budget Decision 736. In a 

November 2004 memorandum requesting that all DOD components provide 

their GWOT supplemental appropriations estimates for fiscal year 2005, the 

Office of the Under Secretary of Defense (Comptroller) stated the 

following with respect to funds that had already been provided through 

Program Budget Decision 736:

17Although DOD requested the funds associated with Program Budget Decision 736 to 

enhance the department's efforts to combat terrorism, the Congress did not legally restrict 

DOD from using them for non-GWOT activities.
Page 13 GAO-05-767 Global War on Terrorism

• Funding for GWOT missions previously added to the baseline budget 

(e.g., Program Budget Decision 736, Continuing the War on Terrorism) 

should be explicitly identified as a reduction to funding requests in 

those areas, as appropriate.

• Component requests must consider that that some funding is already in 

the baseline accounts. Program Budget Decision 736 provided funds for 

antiterrorism, continental United States combat air patrols, and force 

protection. The components’ submissions should show the total 

requirement and note the level of funding already in the baseline for this 

purpose. The supplemental request will net out the available funding. 

In the November 2004 memorandum the Office of the Under Secretary of 

Defense (Comptroller) further stated that the emergency supplemental 

appropriations request will address the incremental costs above the 

baseline funding needed to support specific forces and capabilities 

required to execute Operation Iraqi Freedom, Operation Enduring 

Freedom, and portions (to be determined) of Operation Noble Eagle. DOD 

described Operation Noble Eagle as including defending the United States 

from airborne attacks and maintaining U.S. air sovereignty. This operation 

had been included in the supplemental appropriations request for fiscal 

year 2004. 

None of the military services provided the information requested in the 

November 2004 memorandum and instead the services requested funds for 

Operation Noble Eagle. Service budget representatives told us that 

Program Budget Decision 736 funds were considered as base program (e.g., 

annual appropriations) issues and not supplemental candidates. According 

to service budget representatives, they requested funds for Operation 

Noble Eagle in fiscal year 2005 that were in addition to the funds provided 

through Program Budget Decision 736. For example, the Navy requested 

$53.3 million for incremental requirements above its baseline request. The 

Army requested more than $1 billion in incremental requirements above its 

baseline. However, in preparing the fiscal year 2005 supplemental 

appropriations budget request, the Office of Management and Budget did 

not include Operation Noble Eagle in the President’s budget request 

because funds had already been included in DOD’s annual appropriation, as 

described in Program Budget Decision 736. 
Page 14 GAO-05-767 Global War on Terrorism

Most Fiscal Year 2004 

Supplemental 

Appropriations for 

GWOT Were Less Than 

Reported Obligations; 

However, DOD Is Not 

Explicitly Counting 

Additional Funds 

Requested for GWOT 

in Its Annual 

Appropriation

In fiscal year 2004, the difference between supplemental appropriations 

available to the military services for GWOT military personnel and 

operation and maintenance expenses compared to reported obligations 

varied by service. For military personnel, the Navy and Marine Corps 

reported more in obligations than they received in supplemental 

appropriations, while for operation and maintenance each of the military 

services reported more in obligations than it received in supplemental 

appropriations. To cover the differences (gaps), DOD and the military 

services took several actions, including transferring funds and reducing or 

deferring planned spending for peacetime operations. In the case of the 

Army and Air Force, which each received supplemental appropriations that 

exceeded its reported obligations for military personnel, this included 

transferring $801 million and $113 million, respectively, to cover their 

GWOT operation and maintenance expenses. In some instances, these 

actions reduced DOD’s flexibility to cover potential gaps in fiscal year 2005. 

DOD did not explicitly take into account the GWOT funds provided through 

its annual appropriation that DOD requested for GWOT to help cover the 

gaps. If it had taken these funds into account it could have reduced the 

Army’s GWOT gap, eliminated the GWOT gaps of the Air Force and Navy, 

and been able to defer fewer activities.

Difference between 

Reported GWOT 

Obligations and Fiscal Year 

2004 Supplemental 

Appropriations for GWOT 

Varied by Service

Within the military personnel accounts, as shown in table 3, the Navy and 

Marine Corps reported more obligations in support of GWOT than they 

received in supplemental appropriations. However, these reported gaps 

were a relatively small portion of the services’ annual military personnel 

appropriations. For example, the Navy’s reported gap of $40.4 million 

represents less than 1 percent of its annual military personnel 

appropriation. In fiscal year 2004, both the Army and Air Force received 

supplemental appropriations that exceeded their reported obligations for 

military personnel. The Army and Air Force used these funds to cover 

operation and maintenance expenses related to GWOT, as discussed below.
Page 15 GAO-05-767 Global War on Terrorism

Table 3: Military Personnel Fiscal Year 2004 GWOT Supplemental Appropriations and Reported Obligations

Source: GAO analysis of Pub. L. No. 108-106, Iraqi Freedom Fund transfers appropriated in Pub. L. No. 108-106 and Pub. L. No. 108-11, 

and the Consolidated Department of Defense Terrorist Response Cost Report as of September 30, 2004.

Notes: GAO assessed the reliability of DOD’s obligations data and found that while the data we report 

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

reflect the true dollar value of GWOT obligations. Additionally, computed differences do not take into 

account GWOT funds requested in annual appropriations. Gaps are in parentheses.

Within the operation and maintenance accounts, as shown in table 4, in 

fiscal year 2004 each of the military services reported more in GWOT 

obligations than it received in supplemental appropriations. The Army 

reported the largest gap, about $4.3 billion, while the Air Force and Navy 

reported gaps of $579 million and about $618 million, respectively. The 

Marine Corps reported the smallest gap, about $195 million. 

Table 4: Operation and Maintenance Fiscal Year 2004 GWOT Supplemental Appropriations and Reported Obligations

Source: GAO analysis of Pub. L. No. 108-106, Iraqi Freedom Fund transfers appropriated in Pub. L. No. 108-106 and Pub. L. No. 108-11, 

and the Consolidated Department of Defense Terrorist Response Cost Report as of September 30, 2004. 

Notes: GAO assessed the reliability of DOD’s obligations data and found that while the data we report 

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

reflect the true dollar value of GWOT obligations. Additionally, computed differences do not take into 

account GWOT funds requested in annual appropriations. Numbers may not subtract due to rounding. 

Gaps are in parentheses.

Dollars in millions

Military personnel Army Air Force Navy Marine Corps

Total supplemental 

appropriations for GWOT

$12,858.9 $3,384.7 $816.1 $888.6

Obligations reported 11,972.0 3,272.0 856.5 918.3

Difference $886.9 $112.7 $(40.4) $(29.7)

Dollars in millions

Operation and Maintenance Army Air Force Navy Marine Corps

Total supplemental 

appropriations for GWOT

$25,603.5 $5,552.8 $1,936.3 $1,371.9

Obligations reported 29,907.7 6,131.8 2,554.7 1,566.9

Difference $(4,304.2) $(579.0) $(618.4) $(195.1)
Page 16 GAO-05-767 Global War on Terrorism

Variety of Actions Were 

Taken to Cover the Military 

Services’ GWOT Gaps in 

Fiscal Year 2004 

To cover the military services’ gaps between reported fiscal year 2004 

obligations and supplemental appropriations, the Office of the Under 

Secretary of Defense (Comptroller) and the military services used a 

number of authorities provided to them, including transferring funds and 

reducing or deferring planned spending for peacetime operations. While 

involving hundreds of millions or sometimes billions of dollars, in 

discussing the actions taken to cover the gaps, some service 

representatives noted that the gaps represented a small percentage of their 

annual appropriations. Within the services’ annual operation and 

maintenance accounts we found that the gaps varied by service, ranging 

from a low of 1.7 percent of the Air Force’s annual operation and 

maintenance appropriation to a high of 13.7 percent of the Army’s annual 

operation and maintenance appropriation. In the services’ annual military 

personnel accounts, all the gaps were less than 1 percent of their annual 

military personnel appropriations. However, DOD did not explicitly take 

into account the funds provided through its annual appropriations that it 

intended for support of GWOT. As discussed earlier, since DOD’s 

accounting systems do not separately identify the portion of the 

department’s annual appropriations that were described as having been 

requested to support GWOT and there are no reporting requirements for 

DOD to identify to which appropriation accounts the funds were allocated, 

the military services have lost visibility over these funds and do not know 

the extent to which they are being used to support GWOT. Consequently, 

despite having asked for the increase, DOD is not explicitly counting these 

additional funds when considering funding for GWOT and alternatively 

took actions that affected its peacetime operations, which may create 

spending pressures in fiscal year 2005 and later.

Military Service Actions to 

Address Fiscal Year 2004 GWOT 

Needs

Each of the military services projected a gap between reported obligations 

and supplemental appropriations at its midyear budget review. Service 

representatives told us these projected gaps were reduced over the course 

of fiscal year 2004 by reviewing their GWOT requirements and, in some 

instances, seeking to reduce or defer planned spending. With respect to the 

GWOT gaps faced by the services in fiscal year 2004, we were told the 

following:

• For fiscal year 2004, the Army’s reported obligations in its operation and 

maintenance account exceeded its supplemental appropriations by 

about $4.3 billion, substantially less than the $10.9 billion it had 

projected in the account at its midyear budget review. To cover the 

$4.3 billion, DOD and the Army took a number of actions, including 
Page 17 GAO-05-767 Global War on Terrorism

using internal resources and passing the remaining amount on to the 

Army’s major commands to be absorbed by reducing or deferring 

planned peacetime spending to meet its GWOT needs. More specifically, 

to cover the Army’s gap, the Under Secretary of Defense (Comptroller) 

transferred about $3 billion from the working capital funds18 of the 

Army, Air Force, and Navy—including $1.3 billion from the Army, about 

$1.5 billion from the Air Force, and $200 million from the Navy. In 

addition, about $801 million was transferred from the Army’s military 

personnel account to help cover the gap in the Army’s operation and 

maintenance account, while about $500 million was transferred from 

other DOD-wide accounts. The major Army commands absorbed the 

remainder. For example, to cover its portion of the gap, the Army 

Materiel Command reprioritized or deferred about $184 million in depot 

maintenance until fiscal year 2005 for such programs as the Patriot and 

Hellfire missile systems. It also reduced or deferred the number of 

available training hours for some of its nondeployed units. However, 

Army Materiel Command representatives told us that in some instances, 

the training hours they deferred to help cover the fiscal year 2004 gap 

were deferred until fiscal year 2006.

• The Air Force’s gap in its operation and maintenance account of about 

$579 million was substantially less than the $1.5 billion it had projected 

in the two accounts at its midyear budget review. To cover the

$579 million gap, the Air Force took a number of actions, including 

transferring $113 million in funds available in its overall military 

personnel appropriation account, decreasing peacetime flying hours, 

reducing depot maintenance, and deferring facility sustainment 

restoration and modernization projects until fiscal year 2005. The Air 

Force’s major commands also absorbed a portion of the gap. For 

example, the Air Combat Command absorbed its share of the GWOT 

gap, about $92 million, by reducing or deferring its fiscal year 2004 

peacetime spending. Approximately $46 million, or half of the Air 

Combat Command’s $92 million share of the gap, was covered by 

reducing its peacetime flying hour program by about 6,800 hours. While 

reducing its peacetime flying hours helped the Air Combat Command 

18A working capital fund is a revolving fund that relies on sales revenue rather than direct 

congressional appropriations to finance its operations. Customers, in this case, the military 

services, use appropriated funds, primarily operation and maintenance appropriations, to 

finance orders placed with a working capital fund. Working capital funds are intended to 

generate sufficient revenue to cover full operational costs and operate on a break-even basis 

over time, that is, neither to make a profit nor incur a loss.
Page 18 GAO-05-767 Global War on Terrorism

cover its portion of the gap, Air Combat Command representatives told 

us the reduced training opportunities created a training backlog, which 

could affect pilot readiness for future combat missions.

• The Navy’s combined gap for fiscal year 2004 of about $659 million in its 

military personnel and operation and maintenance accounts was less 

than its midyear projection of $931 million. To cover the $659 million 

gap, the Navy canceled some peacetime spending, including various 

nonreadiness operation and maintenance spending and various 

infrastructure projects. Of the Navy’s major commands, the Atlantic 

Fleet and Pacific Fleet absorbed the largest share of the gap for fiscal 

year 2004. For example, the Atlantic Fleet absorbed about $110 million 

by reducing air operations and ship depot maintenance activities. Navy 

budget representatives noted that the gap represented about 1 percent 

of the total baseline funding available for aircraft operations and ship 

depot maintenance for the Navy in that fiscal year. In addition, the Navy 

canceled or deferred procurement actions for the MH-60R Seahawk 

helicopter, V-22 Osprey, F/A-18 Hornet, and Joint Tactical Radio System.

• The Marine Corps’ combined gap in its military personnel and operation 

and maintenance appropriations accounts of about $225 million for 

GWOT in fiscal year 2004 was also less than the $446 million projected 

at its midyear budget review. To cover the $225 million gap, the Marine 

Corps reduced or deferred spending in noncritical areas, such as facility 

improvements. The Navy provided the Marine Corps with funds from its 

base operating support and facilities sustainment restoration and 

modernization appropriations accounts and with $121 million that was 

transferred to the Navy from the U.S. Transportation Command’s 

Working Capital Fund. According to Marine Corps representatives, a 

portion of the gap was also absorbed by the Marine Corps’ annual 

military personnel and operation and maintenance appropriations 

accounts. 

The Navy provided us a detailed discussion of the process used in 

addressing gaps. A Navy budget representative said that the Navy analyzed 

its entire $116.8 billion in baseline funding (which includes both the 

original $114 billion baseline and the added $2.8 billion for Program Budget 

Decision 736 initiatives) as potential financing sources for its GWOT needs. 

According to the Navy representative the Navy’s internal analysis first 

looked at funding flexibility in baseline programs resulting from changes in 

current year execution. For example, certain baseline program 

requirements change from year to year as a result of development issues, 
Page 19 GAO-05-767 Global War on Terrorism

schedule and implementation delays, manufacturing problems, changes in 

requirements or inventory levels, and labor disputes. The accumulated 

value of those changes in a given execution year, such as fiscal year 2004, 

may have made any financial resources excess to fiscal year 2004 

requirements available to fund GWOT needs. Although their specific 

identification as such would be lacking, they stated that previously 

baselined Program Budget Decision 736 requirements could have been 

included, by implication, as part of those deliberations. For example, by the 

end of fiscal year 2004, based on delayed execution, about $136 million was 

reallocated from base infrastructure support, maintenance, and repair19 to 

fund Operation Iraqi Freedom costs. If insufficient funding sources were 

identified as part of an execution analysis, then it would be necessary to 

make affirmative decisions about reducing baseline programs to fund the 

balance of the GWOT needs. Those reductions, for the most part, had 

subsequent programmatic and financial impacts. Those changes required 

to support the increased GWOT needs were monitored and approved by the 

Office of the Under Secretary of Defense (Comptroller) staff during their 

annual budget and execution reviews. Some of the changes were 

recoverable (such as specific procurement and depot maintenance items 

considered deferrable and that could be funded with a subsequent year's 

money) and some changes were nonrecoverable (items considered 

nondeferrable current expenses, where the performance period has lapsed, 

but for which a subsequent year's funding is now available to fully meet 

that year’s requirements). For example, of the Navy and Marine Corps’ 

approximately $1.6 billion in absorbed costs in all appropriation accounts 

for the Department of the Navy ($1.4 billion was for Navy items, 

$200 million was for Marine Corps items), nearly 40 percent of the fiscal 

year 2004 requirements were considered recoverable with subsequent 

year’s funding. This included $200 million for drawing down the Navy 

Working Capital Fund, which was included in the Navy’s fiscal year 2005 

supplemental appropriations request. 

As previously discussed, DOD used the military services’ working capital 

funds as a source of cash to provide funds for GWOT expenditures in fiscal 

year 2004. DOD’s working capital funds finance the operations of two 

fundamentally different types of support organizations: stock fund 

activities, which provide spare parts and other items to military units and 

other customers, and industrial activities, which provide depot 

19The $136 million was initially provided as part of baseline funding for physical security 

improvements. 
Page 20 GAO-05-767 Global War on Terrorism

maintenance, research and development, and other services, such as those 

provided by the Defense Financial Accounting Service, Defense 

Information Systems Agency, Defense Commissary Agency, and U.S. 

Transportation Command. In fiscal year 2004, DOD transferred about 

$3 billion from the military services’ working capital funds to help cover the 

Army’s gap between reported obligations and supplemental appropriations.

While such transfers from the services’ working capital funds helped DOD 

cover its fiscal year 2004 gap, the transfers have left few working capital 

funds available to be used in fiscal year 2005. For example, to help cover 

the Army’s operation and maintenance gap, about $980 million was 

transferred from the U.S. Transportation Command’s Transportation 

Working Capital Fund during fiscal year 2004. This transfer was made 

possible due to a surplus of transportation charges collected from the 

military services by the U.S. Transportation Command during the year. 

However, a U.S. Transportation Command representative told us the 

transfers have left the fund’s balance below the minimum goal of 

$517 million.20 Specifically, with the transfer of almost $1 billion in fiscal 

year 2004 to help cover the Army’s operation and maintenance gap, as of 

July 2005, there was only $168 million remaining in the fund, well below the 

minimum goal for the year. Further, the representative stated that the 

projected fund balance for the end of fiscal year 2005 is about $231 million, 

still below the minimum goal. 

DOD Did Not Explicitly 

Account for Funds Provided 

through Its Annual 

Appropriation That It 

Described as for GWOT 

When Determining How to 

Cover Its Fiscal Year 2004 

Gaps

In determining how to cover the gaps between the services’ supplemental 

appropriations and reported GWOT obligations for military personnel and 

operation and maintenance expenses, DOD did not explicitly take into 

account the almost $7.9 billion in funds the Army, Air Force, and Navy 

received in their annual appropriations through Program Budget Decision 

736 to help fund GWOT. This includes $1.3 billion received by the Army, 

$3.5 billion received by the Air Force, and $3 billion received by the Navy. If 

counted in fiscal year 2004 and applied to the services’ military personnel 

and operation and maintenance accounts, these amounts could have 

reduced the Army’s need to transfer funds from other activities and 

eliminated the GWOT gaps for the Air Force and the Navy, as shown in 

table 5. However, the services acknowledge that they have lost visibility 

20See Department of Defense Financial Management Regulation, 7000.14-R, vol. 2B, ch. 9, 

para. 090103. The minimum goal represents 7 to 10 days of operational costs and cash 

adequate to meet 6 months of capital disbursements.
Page 21 GAO-05-767 Global War on Terrorism

over the Program Budget Decision 736 funds after fiscal year 2003 and do 

not know whether any of the funds were used in support of GWOT.

Table 5: Comparison of the Military Services’ Combined Supplemental and Annual Appropriations for Military Personnel and 

Operation and Maintenance for GWOT in Fiscal Year 2004 to Reported Obligations

Source: GAO.

Notes: GAO assessed the reliability of DOD’s obligations data and found that while the data we report 

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

reflect the true dollar value of GWOT obligations. Gaps are in parentheses. GAO did not audit these 

data.

We discussed our analysis with DOD representatives at each of the 

services’ budget offices, who disagreed with our depiction of Program 

Budget Decision 736. These representatives believed that our analysis 

should take into account the fact that the funds provided through Program 

Budget Decision 736 were included in DOD’s baseline budget and therefore 

were already taken into account when considering funds available for 

GWOT. Service budget representatives made the following observations 

regarding the Program Budget Decision 736 funds: 

• Once merged into those baseline budgets, full justification for funding is 

provided in the annual President’s budget request. For example, 

increased funding for additional security personnel and physical 

security equipment were merged with existing program lines and not 

subsequently separately identified as to how they were initially funded 

or sustained over the years. 

• Once the Program Budget Decision 736 funds were in the baseline 

budget, they were not in support of specific contingency operations, for 

which the Department of Defense Financial Management Regulation, 

Volume 12, Chapter 23, Contingency Operations, requires separate 

documentation and execution tracking, and no such requirement exists 

for “baselined” funds, other than the annual justification exhibits. That 

Dollars in millions

Military personnel and operation and maintenance Army Air Force Navy Marine Corps

Supplemental appropriations for GWOT $38,462.4 $8,937.5 $2,752.4 $2,260.5

Annual appropriations for GWOT 1,331.7 3,506.4 3,013.1 0.0

Total supplemental and annual appropriations for GWOT $39,794.1 $12,443.9 $5,765.5 $2,260.5

Total obligations reported 41,879.7 9,403.8 3,411.2 2,485.2

Difference $(2,085.6) $3,040.1 $2,354.3 $(224.7)
Page 22 GAO-05-767 Global War on Terrorism

is, Chapter 23 only requires reporting incremental costs (costs not 

already in the baseline), and not total costs.

• Subsequent to Program Budget Decision 736 additional requirements 

were placed on the services fiscal year 2004-2009 spending program 

without accompanying funds. To meet these requirements service 

budget representatives said that they looked in part to the funds 

provided in Program Budget Decision 736. 

We recognize that DOD’s annual budget submissions include justification 

for all the department’s activities, including those funded through Program 

Budget Decision 736. However, the funds provided through Program 

Budget Decision 736 were identified as being in support of GWOT. While 

service budget representatives noted that the documentation and tracking 

requirements contained in the Department of Defense Financial 

Management Regulation, Volume 12, Chapter 23, Contingency Operations, 

do not apply to the funds provided through Program Budget Decision 736, 

we believe that DOD should have been tracking these funds in light of their 

connection to GWOT. While the services’ budget representatives told us 

that they took the funds provided through Program Budget Decision 736 

into account in addressing GWOT funding needs, we note that once these 

funds were merged into the services’ baseline budgets visibility was lost so 

there is no assurance as to how the funds were taken into account or used. 

Fiscal Year 2005 

Reported Obligations 

for GWOT Could 

Exceed Supplemental 

Appropriations, 

Requiring the Military 

Services to Use 

Authorities Provided to 

Them to Cover the 

Differences

Our analysis of the military services’ reported obligations for the first 8 

months of fiscal year 2005 and the military services’ forecasts as of June 

2005 of full fiscal year 2005 costs suggest the services’ military personnel 

and operation and maintenance GWOT obligations could exceed available 

supplemental appropriations for the war in some accounts. Our projections 

of reported GWOT obligations through May 2005 suggest the services 

should have sufficient supplemental appropriations for military personnel 

expenses in fiscal year 2005 but that there could be gaps for operation and 

maintenance expenses for the Army and the Marine Corps. The services’ 

more detailed forecasts suggest a gap for military personnel expenses for 

the Air Force of about $500 million, and gaps for operation and 

maintenance expenses for the Army and Air Force of about $2.7 billion and 

about $1 billion, respectively. The Marine Corps expects its supplemental 

appropriations will be sufficient to cover its GWOT costs. To cover any 

gaps and meet its GWOT needs, DOD and the services plan to take a variety 

of actions, including reprogramming funds from annual appropriations and 

reducing or deferring planned spending for peacetime operations. 
Page 23 GAO-05-767 Global War on Terrorism

Supplemental 

Appropriations for GWOT 

Military Personnel Costs in 

Fiscal Year 2005 Should Be 

Sufficient for All Services 

Except for the Air Force

Our assessment of reported obligations in fiscal year 2005 through May 

2005 suggests that the military services should have sufficient 

supplemental appropriations for military personnel expenses in fiscal year 

2005. As figure 1 shows, with 8 months, or about 67 percent, of the fiscal 

year gone, the Marine Corps has obligated 46 percent of its available 

supplemental appropriations; the Army 54 percent; and the Air Force and 

Navy 58 percent each. 

Figure 1: Military Services’ Fiscal Year 2005 Reported Obligations of GWOT Military 

Personnel Supplemental Appropriations through May 2005

Notes: May 2005 represents 67 percent of the fiscal year. Reported obligations include those from 

both the active and reserve components. GAO assessed the reliability of DOD’s obligations data and 

found that while the data we report reflect the data used by DOD to advise the Congress on the cost of 

the war, they may not accurately reflect the true dollar value of GWOT obligations. Additionally, 

computed differences do not take into account GWOT funds requested in annual appropriations. 

Dollars are in thousands.

Source: GAO analysis of DOD data.

0

10

20

30

40

50

60

70

80

90

100

Supplemental appropriations remaining 

Reported obligations through May 2005

Marine

Corps

Army Air Force Navy

Percentage of total

Military services

Percentage 

of fiscal year 

elapsed

$732,603

$331,925 $966,216

$8,018,669
Page 24 GAO-05-767 Global War on Terrorism

Projections of GWOT 

Obligations through May 

2005 Suggest Supplemental 

Appropriations for Some 

Operation and Maintenance 

Accounts Are Not Likely to 

Be Sufficient 

Our assessment of reported obligations within the military services’ 

operation and maintenance accounts through May 2005 suggests that the 

supplemental appropriations provided to the services for GWOT should be 

sufficient for the Air Force and Navy but not for the Army and Marine 

Corps. As shown in figure 2, the percentage of available supplemental 

appropriations obligated in the services’ operation and maintenance 

accounts as of May 2005, ranged from 49 percent for the Navy and 52 

percent for the Air Force to 71 percent for the Army and the Marine Corps. 

We recognize that funds are not obligated equally each month throughout 

the fiscal year. However, we believe that the further into the fiscal year the 

closer to 100 percent obligations should be relative to appropriations if all 

appropriated funds are likely to be obligated. Consequently, given these 

obligation rates, we believe that if the Army and Marine Corps continue to 

obligate funds at the current rate or higher, their reported obligations 

within the operation and maintenance accounts could exceed available 

supplemental appropriations in fiscal year 2005, requiring them to use 

other authorities provided to them to cover the difference. However, as 

discussed below, the Air Force believes it will have an operation and 

maintenance gap, while the Marine Corps believes it will have sufficient 

funds for operation and maintenance.
Page 25 GAO-05-767 Global War on Terrorism

Figure 2: Military Services’ Fiscal Year 2005 Reported Obligations of GWOT 

Operation and Maintenance Supplemental Appropriations through May 2005

Notes: May 2005 represents 67 percent of the fiscal year. Reported obligations include those from 

both the active and reserve components. GAO assessed the reliability of DOD’s obligations data and 

found that while the data we report reflect the data used by DOD to advise the Congress on the cost of 

the war, they may not accurately reflect the true dollar value of GWOT obligations. Additionally, 

computed differences do not take into account GWOT funds requested in annual appropriations. 

Dollars are in thousands.

Fiscal Year 2005 Midyear 

Budget Review Forecasts of 

the Military Services

Each of the military services completed a midyear budget review for the 

Office of the Under Secretary of Defense (Comptroller), including a 

forecast of its full fiscal year 2005 GWOT needs. The Army concluded that 

it would not have sufficient supplemental appropriations to cover its 

projected GWOT operation and maintenance obligations, while the Air 

Force indicated its combined military personnel and operation and 

maintenance obligations would exceed available supplemental 

appropriations. With respect to the Army’s and Air Force’s midyear budget 

review projections:

Source: GAO analysis of DOD data.

0

10

20

30

40

50

60

70

80

90

100

Supplemental appropriations remaining 

Reported obligations through May 2005

Marine

Corps

Army Air Force Navy

Percentage of total

Military services

Percentage 

of fiscal year 

elapsed

$1,890,806

$1,703,931 $3,105,783

 $22,081,935
Page 26 GAO-05-767 Global War on Terrorism

• The Army forecast a GWOT gap of about $2.7 billion in its operation and 

maintenance account, of which a large component—about $1 billion—is 

attributed to higher fuel costs due to, among other things, the increase 

in June 2005 of DOD’s composite fuel rate from $56.28 per barrel to 

$73.08. Other components of the forecasted gap include support of the 

Army’s modular force initiative;21 higher spending in the second half of 

fiscal year 2005 as compared to the first half, resulting from deferred 

spending early in the fiscal year; and higher spending on recruiting and 

retention efforts, primarily for the Army Reserve. According to the 

Army, the modular force initiative and its reconstitution and reset 

efforts are being treated as GWOT costs in fiscal year 2005.

• The Air Force forecast a GWOT gap of about $500 million in its military 

personnel account and about $1 billion in its operation and maintenance 

account, for a total gap of about $1.5 billion. Air Force representatives 

attributed the gap in its military personnel account primarily to having 

higher-than-anticipated end-strength levels, and stated that the $1 billion 

gap in its operation and maintenance account is to replenish the 

Transportation Working Capital Fund, which was drawn down last year 

to help cover the Army’s fiscal year 2004 GWOT gap. Regarding the 

projected military personnel gap, Air Force representatives stated that 

funds were subsequently transferred to pay for prior obligations at 

higher-than-anticipated end-strength levels. Since then, the Air Force 

has corrected the end-strength imbalance and expects to be within end 

strength for GWOT during the remainder of the fiscal year. As a result of 

these actions, Air Force representatives no longer project a military 

personnel gap for GWOT in fiscal year 2005. 

The Navy projected a small gap of about $36 million for GWOT at the time 

of its midyear budget review, which it has since covered with cost savings 

from shifting the bulk of its transportation of equipment and supplies from 

air to sea. The Marine Corps indicated that its supplemental appropriations 

should be sufficient to cover reported GWOT obligations for fiscal year 

2005. In considering the services’ midyear budget reviews, our analysis of 

21The Army’s modular force initiative, which has been referred to as the largest Army 

reorganization in 50 years, encompasses the Army’s total force—active Army, National 

Guard, and Army Reserve—and directly affects not only the Army’s combat units, but 

related support and command and control. The foundation of the Army modular force 

initiative is the creation of brigade combat teams—brigade-sized units that will have a 

common organizational design and will increase the pool of available units for deployment.
Page 27 GAO-05-767 Global War on Terrorism

the Navy and Marine Corps GWOT obligations indicates substantial under 

execution in the Navy’s operation and maintenance account and the Marine 

Corps’s military personnel account. In response, the Navy stated that it 

expects its rate of obligating GWOT funds to increase toward the end of 

fiscal year 2005 due to, among other things, providing additional support in 

theatre and on the ground in Iraq as part of Joint Sourcing.22 According to a 

Navy representative, the Navy had about 5,000 personnel stationed on the 

ground in Kuwait, Iraq, and Afghanistan at the end of fiscal year 2004. By 

the end of fiscal year 2005, the Navy plans to have about 8,500 personnel in 

theatre with the additional personnel having begun to deploy in May 2005. 

The Marine Corps stated it expects to obligate an additional $220 million in 

military personnel funds due to the new death gratuity benefit, while 

another $265 million in military personnel funds will be used to replenish 

the Marine Corps’s annual appropriation for funds reprogrammed earlier in 

the fiscal year to buy additional body-armor and other equipment to 

counter the use of improvised explosive devices in Iraq. 

DOD Plans to Take a Variety 

of Actions to Address Its 

Fiscal Year 2005 GWOT 

Needs

To cover the forecasted GWOT needs for fiscal year 2005, DOD, the Army, 

and the Air Force have identified a number of steps they plan to take. These 

include exercising a number of authorities provided to them, such as 

transferring and reprogramming funds from annual appropriations and 

reducing or deferring planned spending for peacetime operations. 

The Army, the service with the largest forecasted gap in its operation and 

maintenance account, plans to take a variety of actions to meet its fiscal 

year 2005 GWOT funding needs. Some actions include taking steps to 

transfer or reprogram funds. For example, DOD reprogrammed more than 

$800 million in funds in May 2005 from the military personnel accounts of 

the Air Force,23 Navy, Marine Corps, and Army National Guard, and 

$250 million from the Army’s Working Capital Fund, to the Army to meet 

urgent GWOT needs. Other actions the Army plans to take to help fund 

GWOT in fiscal year 2005 involve reducing or deferring current costs. For 

22Joint Sourcing refers to the use of Navy and Air Force personnel to support and meet the 

requirements of the Army. Personnel provided through Joint Sourcing include medical, 

supply, logistics, intelligence, and security personnel; construction battalions; military 

police; and others.

23Although the Air Force reported a projected gap in supplemental appropriations for 

military personnel through the end of the fiscal year, some funds were reprogrammed from 

the Air Force to prevent the Army from running out of operating funds in May 2005.. 
Page 28 GAO-05-767 Global War on Terrorism

example, the Army reports that it has been able to reduce its fiscal year 

2005 Logistics Civil Augmentation Program (LOGCAP)24 contract costs by 

about $890 million by reviewing and reducing current LOGCAP 

requirements. In discussing its plans to meet its fiscal year 2005 GWOT 

needs, the Army plans to use any surplus funds in its working capital fund 

to help cover any fiscal year 2005 GWOT gaps. However, due to the 

transfers from the services’ working capital funds to cover the fiscal year 

2004 gaps, as discussed above, few assets remain elsewhere to cover the 

Army’s fiscal year 2005 GWOT gap. Should the Army’s GWOT gap be larger 

than forecasted, the Army may have to absorb the difference in its annual 

appropriation.

The Air Force also plans to take a variety of actions to address the gap 

between its supplemental appropriations and reported operation and 

maintenance obligations for GWOT. These include decreasing peacetime 

flying hours by $700 million, reducing or deferring depot maintenance 

activities by $400 million, and freezing activities involving facility 

sustainment and restoration modernization projects. Other areas that could 

be targeted for cost reductions or deferments include noncritical travel and 

other supplies and equipment.

DOD Is Not Explicitly 

Considering Funds in Its 

Annual Appropriations for 

GWOT to Cover Its 

Projected Fiscal Year 2005 

Gaps

To meet its GWOT needs in fiscal year 2005, DOD is again not explicitly 

considering the Program Budget Decision 736 funds to support GWOT that 

were provided to the military services through their annual appropriations. 

However, as discussed earlier, unlike in fiscal year 2004, in fiscal year 2005 

some of the funds provided in Program Budget Decision 736 are being used 

to fund Operation Noble Eagle, which had previously been funded as part 

of GWOT through supplemental appropriations. In fiscal year 2004 DOD 

had included $2.2 billion in its budget request for Operation Noble Eagle. 

Adjusting for Operation Noble Eagle at the fiscal year 2004 funding level 

would result in more than $5.4 billion in funds included in Program Budget 

Decision 736 in support of GWOT for the military services remaining 

available in fiscal year 2005. If counted in fiscal year 2005, the amounts 

potentially could reduce the need for reprogrammings from other activities 

24LOGCAP is an Army program that plans for the use of a private sector contractor to 

support worldwide contingency operations. Examples of the types of support available 

include laundry and bath, food service, sanitation, billeting, maintenance, and power 

generation. LOGCAP has been used extensively to support U.S. forces in recent operations 

in southwest Asia, with more than $15 billion in estimated work as of January 2005.
Page 29 GAO-05-767 Global War on Terrorism

and could reduce the Army’s and eliminate the Air Force’s GWOT gaps. 

Instead, as in fiscal year 2004, the Office of the Under Secretary of Defense 

(Comptroller) and the military services will again meet those needs by 

taking actions that may affect DOD’s peacetime operations, such as 

reducing or deferring planned spending. In some instances, these funding 

reductions and deferments could add to future spending pressures in fiscal 

year 2006 or potentially in later years and run the risk of producing a large 

“bow wave” of requirements. This can have both short-term and long-term 

impacts. In the short term, deferring spending can lead to higher costs than 

expected later in the current fiscal year, which may need to be covered by 

additional transfers and reprogrammings. In the long term, continued 

deferments can lead to higher costs.

Conclusions The extent to which one considers that GWOT funding has been sufficient 

depends on whether one counts both funding provided through 

supplemental appropriations and funding included in DOD’s annual 

appropriation, which DOD requested for GWOT. The administration 

increased DOD’s annual appropriation request by more than $10 billion 

annually beginning in fiscal year 2003 to support GWOT, with the military 

services receiving about $7.9 billion of that amount in fiscal year 2004 and 

about $7.6 billion in fiscal year 2005. The military services absorbed the 

increase into their annual appropriations and allocated it based on their 

judgment of where the funds were most needed. Since DOD’s accounting 

systems do not separately identify these additional appropriations and 

there are no reporting requirements for DOD to identify to which 

appropriation accounts the funds were allocated, the military services have 

lost visibility over these funds and do not know the extent to which they 

are being used to support GWOT. Consequently, despite having asked for 

the increase, DOD is not explicitly counting the more than $10 billion when 

considering funding for GWOT. In fiscal year 2004, the military services 

reported obligations in support of GWOT that were above the supplemental 

funds appropriated by the Congress. In response, DOD used authorities 

granted to it, including transferring funds and reducing or deferring 

planned spending for peacetime operations, to cover the gaps. However, if 

the additional funds that were included in DOD’s annual appropriation to 

help fund the war are included in the analysis, those funds could potentially 

have reduced the Army’s gap and eliminated the gap for the Air Force and 

Navy in fiscal year 2004. In fiscal year 2005, the Army and the Air Force are 

again projecting obligations for the war above their supplemental 

appropriations, and DOD is taking steps to cover the gaps. As was the case 

in fiscal year 2004, the additional funds that were included in DOD’s annual 
Page 30 GAO-05-767 Global War on Terrorism

appropriation to help fund the war potentially could reduce or eliminate 

the projected gaps for the Army and Air Force. With military operations in 

Iraq and Afghanistan ongoing, and the likely need for DOD to request 

additional funds to support GWOT, it is important that DOD fulfill its role as 

a steward of taxpayer funds by taking steps to account for all the funds it 

receives for the war. 

Recommendations for 

Executive Action

To improve the visibility and accountability of DOD’s use of funds for 

GWOT, we recommend that the Secretary of Defense, in future requests for 

supplemental appropriations, adjust such requests to reflect the additional 

funds DOD requested and received in its annual appropriations to support 

GWOT and provide the Congress with an explanation of these adjustments. 

We further recommend that in addressing any future GWOT funding needs 

the Secretary consider the additional GWOT funds provided through the 

department’s annual appropriation when assessing how to cover expenses 

for the war and document its decisions. 

Matter for 

Congressional 

Consideration

Because DOD did not concur with our recommendation to adjust its future 

supplemental appropriations requests to reflect the additional funds the 

department requested and received in its annual appropriations to support 

GWOT and explain these adjustments to the Congress, we have no 

confidence that the Congress will receive the information that we believe 

the Congress needs to properly assess DOD’s requests for supplemental 

appropriations to support the war. Further, because the amount of funds 

DOD is receiving to support GWOT through its annual appropriations is 

substantial—more than $10 billion annually—the Congress should consider 

directing DOD, when it submits future supplemental appropriations 

requests, to provide an explanation of how such requests reflect the funds 

DOD requested and already received in its annual appropriations to 

support GWOT.

Agency Comments and 

Our Evaluation

DOD provided written comments on a draft of this report. Its comments are 

discussed below and are reprinted in appendix II.

DOD did not concur with our recommendations. DOD further commented 

that the report confuses a Program Budget Decision, which is an internal 

document, with the President’s budget, which is the official explanation of 

DOD’s budget request, and that funds are not appropriated in accordance 
Page 31 GAO-05-767 Global War on Terrorism

with a Program Budget Decision. In addition, DOD commented that the 

report’s focus on the Program Budget Decision results in the inaccurate 

conclusion that if DOD had considered these funds it could have reduced 

the Army’s GWOT gap and eliminated the GWOT gaps of the Air Force and 

Navy. In that regard, DOD stated that the only resources available to the 

department are those appropriated by the Congress and these funds were 

considered when determining the needs and expenses of the war. 

We recognize that a Program Budget Decision is an internal document and 

that the President’s budget is the official explanation of DOD’s budget 

request and that funds appropriated are determined by the Congress—not 

by either a Program Budget Decision or the President’s budget. In our 

report, we refer to Program Budget Decision 736 and the President’s budget 

not to establish how much money the Congress appropriated to support 

GWOT, but to establish how much money DOD intended for GWOT. As 

stated in our report, according to a representative from the Office of the 

Under Secretary of Defense (Comptroller), in December 2001 the President 

directed that his annual budget submission for DOD be increased by about 

$10 billion annually to support GWOT. Consequently, Program Budget 

Decision 736, entitled Continuing the War on Terrorism and dated 

January 31, 2002, was approved by the Under Secretary of Defense 

(Comptroller). Program Budget Decision 736 provided for increasing 

DOD’s annual budget request in the amount of more than $10 billion per 

year plus inflation in fiscal years 2003 through 2007 to enhance the 

department’s efforts to respond to, or protect against, acts or threatened 

acts of terrorism against the United States. We therefore believe that since 

the funds referenced in Program Budget Decision 736 were specifically 

identified as being requested in support of GWOT, DOD should maintain 

visibility over how these funds were used to support GWOT. We believe 

that if DOD asks for a significant increase in appropriations and explains 

that the increase is needed to support GWOT, DOD should be able to show 

that it actually used those funds for GWOT.

DOD did not concur with our recommendations that the Secretary of 

Defense (1) adjust future supplemental appropriations requests to reflect 

the additional funds DOD received in its annual appropriations to support 

GWOT and explain these adjustments to the Congress and (2) also consider 

the additional GWOT funds provided through DOD’s annual appropriations 

in addressing any future GWOT funding needs. In commenting on our first 

recommendation, DOD stated that the department’s supplemental 

appropriations request accounts for all relevant adjustments to the annual 

appropriation bill. DOD also commented that it builds and submits 
Page 32 GAO-05-767 Global War on Terrorism

supplemental appropriations requests based on the incremental cost of the 

operation, which it described as those additional costs to the DOD 

component conducting the operation that are not covered in their existing 

budgets and would not have been incurred had they not been supporting 

the contingency. It is not apparent, however, that DOD’s request for 

supplemental appropriations for fiscal year 2004 in fact reflected amounts 

already appropriated. The President’s fiscal year 2005 supplemental 

appropriations request did reflect amounts already enacted, but only 

because the Office of Management and Budget, not DOD, made the 

adjustments.

As we discuss in this report, DOD included a $10 billion increase in its 

fiscal year 2004 annual appropriations in order to support GWOT. In its 

Program Budget Decision 736, DOD stated that $1.2 billion of that amount 

would be used for combat air patrols over U.S. cities, which is part of 

Operation Noble Eagle. At the same time, in its fiscal year 2004 

supplemental appropriations request for GWOT, DOD included funding for 

Operation Noble Eagle, but without explaining why it needed amounts in 

addition to those that the Congress already provided. 

In addition, although DOD stated that the department’s supplemental 

appropriations request accounts for all relevant adjustments to the annual 

appropriation bill, as stated in our report, in a November 2004 

memorandum issued by the Office of the Under Secretary of Defense 

(Comptroller) the Comptroller’s office sought to adjust DOD’s 

supplemental appropriations request for fiscal year 2005 to reflect funds 

already provided. In that memorandum, the Office of the Under Secretary 

of Defense (Comptroller) stated that funding in fiscal year 2005 for GWOT 

missions previously added to the baseline budget (e.g., Program Budget 

Decision 736, Continuing the War on Terrorism) should be explicitly 

identified as a reduction to funding requests in those areas, as appropriate. 

The memorandum further requested that the components’ submissions 

should show the total requirement and note the level of funding already in 

the baseline for this purpose. The memorandum directed that the services’ 

supplemental appropriations requests net out the available funding and 

address the incremental costs above the baseline funding needed to 

support specific forces and capabilities required to execute Operation Iraqi 

Freedom, Operation Enduring Freedom, and portions (to be determined) of 

Operation Noble Eagle. However, as stated in our report, none of the 

military services provided the information requested in the November 2004 

memorandum and instead the military services requested supplemental 

appropriations for Operation Noble Eagle. Nevertheless, in preparing the 
Page 33 GAO-05-767 Global War on Terrorism

fiscal year 2005 supplemental appropriations request, the Office of 

Management and Budget did not include Operation Noble Eagle in the 

President’s budget request because funds had already been included in 

DOD’s annual appropriation, pursuant to DOD’s request, as described in 

Program Budget Decision 736. 

We believe that our recommendation has merit and have retained it. In 

addition, since DOD does not agree with the recommendation and the 

amount of funds at issue is substantial—more than $10 billion annually—

we have added a matter for congressional consideration. Specifically, the 

Congress should direct DOD, when it submits future supplemental 

appropriations requests, to provide an explanation of how such requests 

reflect the additional funds that were addressed in Program Budget 

Decision 736 and which DOD requested and received in its annual 

appropriations to support GWOT.

With respect to our second recommendation, DOD commented that it 

considers all funds provided through the department’s annual 

appropriation when addressing how to cover expenses for the war. We 

recognize that DOD reviews all funds when determining how to cover its 

GWOT needs. However, DOD, as it explained in Program Budget Decision 

736, intended increased annual appropriations to support GWOT, but then 

lost visibility of the funds requested. There is no documentation, therefore, 

regarding how the department took the funds that it requested into account 

or whether it was applying the entire amount to cover its GWOT needs. We 

believe that since DOD stated that the additional annual funds were needed 

to support GWOT, and DOD continues to include this funding in its request 

for annual appropriations, to fulfill its role as a steward of taxpayer funds 

DOD should explicitly maintain visibility over how these funds are used to 

support GWOT and consider the entire amount to be available for GWOT. 

We therefore continue to believe our recommendation has merit and have 

retained it, including expanding it to recommend that DOD also document 

its decisions.

We are sending copies of this report to other interested congressional 

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

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

of this report will also be made available to others upon request. In 

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

http://www.gao.gov.
Page 34 GAO-05-767 Global War on Terrorism

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

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

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

of this report. Principal contributors to this report were Steve Sternlieb, 

Assistant Director; Richard K. Geiger; Wesley A. Johnson; James Nelson; 

and David Mayfield.

Sharon L. Pickup

Director, Defense Capabilities and Management 
Page 35 GAO-05-767 Global War on Terrorism

List of Congressional Committees

The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Judd Gregg

Chairman

The Honorable Kent Conrad

Ranking Minority Member

Committee on the Budget

United States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Duncan L. Hunter

Chairman 

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

The Honorable Jim Nussle

Chairman 

The Honorable John M. Spratt, Jr.

Ranking Minority Member

Committee on the Budget

House of Representatives
Page 36 GAO-05-767 Global War on Terrorism

The Honorable C.W. Bill Young

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Page 37 GAO-05-767 Global War on Terrorism

Appendix I

Scope and Methodology AAppenednxidexiIs

To identify funding for the Global War on Terrorism (GWOT), we reviewed 

applicable annual and supplemental Department of Defense (DOD) 

appropriations in fiscal years 2004 and 2005. We also reviewed DOD reports 

on the transfer of funds from the Iraqi Freedom Fund to support GWOT 

activities, and DOD reports on the transfer or reprogramming of funds 

among various appropriation accounts or budget activities to support 

GWOT. In addition, we reviewed material related to the decision to add 

funds to DOD’s annual appropriation to support GWOT, specifically 

Program Budget Decision 736, entitled Continuing the War on Terrorism, 

dated January 31, 2002, and approved by the Under Secretary of Defense 

(Comptroller). 

To assess the extent of differences between supplemental appropriations 

and reported obligations for GWOT, we compared supplemental 

appropriations provided to the military services to reported obligations in 

fiscal year 2004 and reported obligations through May 2005 and assessed 

obligations through May 2005 for fiscal year 2005.1

 Specifically, we 

identified applicable supplemental appropriations in fiscal years 2004 and 

2005 and compared them to the reported amounts obligated by each 

service in DOD’s Supplemental and Cost of War Execution Reports.2

 We 

limited our review to the obligation of funds appropriated for military 

personnel and operation and maintenance for the Army, Air Force, Navy, 

and Marine Corps, for both active and reserve forces, because they 

represented the majority of the funds obligated in fiscal years 2004 and 

2005, about 90 percent in each year. We excluded classified programs from 

our review, because obligations for those programs are not reported in 

DOD’s Supplemental and Cost of War Execution Reports. We did not 

review the obligation of funds for investment, which are used for 

procurement; military construction; and research, development, test, and 

evaluation. In addition, for fiscal year 2005, we reviewed the latest available 

obligation data and held discussions with the military services on the 

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

reported military personnel and operation and maintenance obligations 

through May 2005, the latest available obligation data at the time of our 

review, to the supplemental appropriations provided to calculate the 

1

DOD’s financial systems only capture total obligations, and the services use various 

management information systems to identify incremental obligations and to estimate costs.

2

Through December 2004, these reports were called the Consolidated Department of 

Defense Terrorist Response Cost Reports. Beginning in January 2005, DOD renamed these 

reports the Supplemental and Cost of War Execution Reports.
Appendix I

Scope and Methodology

Page 38 GAO-05-767 Global War on Terrorism

proportion of funds obligated through May. We then compared those 

proportions to the proportion of the fiscal year that has elapsed through 

May—which represents 67 percent of the fiscal year—to assess whether 

based on obligations through May funding is likely to be adequate. We 

recognize that funds are not obligated equally each month throughout the 

fiscal year. However, we believe that the further into the fiscal year the 

closer to 100 percent obligations should be relative to appropriations if all 

appropriated funds are likely to be obligated.

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

reported in the Supplemental and Cost of War Execution Reports. In 

related work,3

 we have reported these data to be of questionable reliability. 

For example, we found financial management systems with acknowledged 

weaknesses, a lack of systematic processes to ensure accurate data entry, 

failure to use actual data when it was available, and improperly categorized 

costs. Therefore, we are unable to ensure that DOD’s reported obligations 

for GWOT are complete, reliable, and accurate. Consequently, the gaps we 

identify between supplemental appropriations and DOD’s reported 

obligations may not reliably reflect true differences between supplemental 

appropriations and obligations and therefore should be considered 

approximations. Despite the uncertainty about the obligation data, we are 

reporting the information because it is the only data available on overall 

GWOT costs and 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 the Congress on the cost of the 

war. As such, obligation data provided in this report reflect DOD reported 

obligations, however unreliable those reports may be. 

To determine actions taken by DOD and the services to cover any identified 

gaps between reported obligations and supplemental appropriations for 

GWOT, we held discussions with DOD representatives from the Office of 

the Under Secretary of Defense (Comptroller) and the Army, Air Force, 

Navy, and Marine Corps. At the major command level, we discussed with 

service representatives any actions taken to cover gaps and the impacts of 

actions taken to cover those gaps on their budgeted peacetime operations.

3

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

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

2005).
Appendix I

Scope and Methodology

Page 39 GAO-05-767 Global War on Terrorism

We interviewed DOD representatives regarding GWOT obligations and 

funding for fiscal years 2004 and 2005 in the following locations: 

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

D.C.

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

• Army Forces Command and Headquarters, Third Army, Fort 

McPherson, Georgia.

• Army Installation Management Agency, Arlington, Virginia.

• Army Materiel Command, Fort Belvoir, Virginia. 

• Army Pacific Command, Fort Shafter, Hawaii.

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

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

• Air Force Air Mobility Command, and Headquarters, U.S. Transportation 

Command, Scott Air Force Base, Illinois.

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

• Navy Atlantic Fleet Command, Norfolk Naval Base, Virginia.

• Navy Pacific Fleet Command, Pearl Harbor, Hawaii.

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

• Marine Corps Forces, Pacific, Camp Smith, Hawaii.

We performed our work from November 2004 through August 2005 in 

accordance with generally accepted government auditing standards.
Page 40 GAO-05-767 Global War on Terrorism

Appendix II

Comments from the Department of Defense ApendxiI
Appendix II

Comments from the Department of Defense

(350616) Page 41 GAO-05-767 Global War on Terrorism
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