United States General Accounting Office

GAO Report to Congressional Requesters

April 1995 PEACE OPERATIONS

DOD’s Incremental

Costs and Funding for

Fiscal Year 1994

GAO/NSIAD-95-119BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-260764 

April 18, 1995

The Honorable Herbert H. Bateman

Chairman

The Honorable Norman Sisisky

Ranking Minority Member

Subcommittee on Military Readiness

Committee on National Security

House of Representatives

The Department of Defense (DOD) participated in peace operations in

several places, including Somalia, Bosnia, Haiti, and Southwest Asia,

during fiscal year 1994. To help cover the incremental costs1

 of these

operations, Congress provided DOD with two supplemental appropriations.

During fiscal year 1994, DOD also received reimbursements from the United

Nations for incremental costs incurred in Somalia during fiscal year 1993.

In response to your request, we are providing information on (1) whether

the supplemental appropriations fully covered DOD’s incremental costs,

(2) what the impacts on the services were from funding shortages and

overages, and (3) how DOD spent the reimbursements received from the

United Nations. On March 31, 1995, we briefed your staff on these issues.

Background DOD received appropriations of $251.4 billion for fiscal year 1994, of which

$88.3 billion was for operation and maintenance (O&M). DOD’s annual

appropriations do not include funds for possible contingency operations.

DOD does not budget for the incremental costs of military operations or

contingencies. It budgets to be ready to conduct such operations. When

the services have to conduct these operations, the planned budget

execution cycle is disrupted. DOD must then absorb the incremental costs

of these operations, which are mostly O&M items, within its existing

appropriations or seek supplemental appropriations.

In an Emergency Supplemental Appropriations Act (P.L. 103-211,

Feb. 1994), Congress provided DOD $1,198.3 million for incremental costs

associated with ongoing operations in Somalia, Bosnia, Haiti, and

Southwest Asia. Within the fiscal year 1995 defense appropriations act,

Congress provided DOD with additional supplemental appropriations of

$299.3 million through the Defense Emergency Response Fund (DERF) for

1

As defined by the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508), for use during Operation

Desert Shield/Storm, incremental costs are only those costs that would not have been incurred except

for the operation. DOD is still using this definition.

Page 1 GAO/NSIAD-95-119BR Peace Operations
B-260764 

fiscal year 1994 incremental costs. This fund can be used to reimburse

other appropriation accounts for costs incurred in responding to

emergencies.

Results in Brief During fiscal year 1994, DOD reported $1,907.8 million in incremental costs

for peace operations. As a means to reimburse DOD for some of these

costs, Congress provided DOD with emergency supplemental

appropriations in February 1994. The supplemental appropriations

covered almost two-thirds of these incremental costs, leaving DOD with a

funding shortfall of $709.5 million near the end of fiscal year 1994. DOD

covered $233.3 million of this shortfall by invoking its Feed and Forage Act

authority,2

 using funds from the fiscal year 1994 balance in the DERF

account, and using authorized reprogramming funds. DOD absorbed the

remaining $476.2 million primarily by reducing O&M funding for such

activities as military training, equipment maintenance, and stock

purchases.

On September 30, 1994, the fiscal year 1995 defense appropriations act

provided additional supplemental appropriations of $299.3 million through

the DERF to further reimburse DOD for certain operations that occurred in

fiscal year 1994. While this funding was technically appropriated within

fiscal year 1994, most of it was not obligated during that year. Including

this second supplemental in a final accounting for incremental peace

operations in fiscal year 1994, DOD sustained a funding shortfall of

$176.9 million.

Units participating in peace operations were fully funded for their

incremental costs. To pay these units’ costs, DOD used funds from other

service programs or units that did not participate. Except for the Air

Force, service officials told us that reductions in O&M accounts to cover

peace operation incremental costs adversely affected military readiness at

several units. While participating units were not affected by funding

shortages, as a result of their deployment to peace operations, they

experienced operational impacts such as missed training opportunities.

Unrelated to the supplemental appropriations, in fiscal year 1994, DOD

received $98.1 million in reimbursements from the United Nations for

assistance provided to the U.N. operation in Somalia during fiscal year

2

This authority (41 U.S.C. 11) permits DOD to incur obligations in advance of appropriations or

receipts to cover clothing, subsistence, forage, fuel, quarters, transportation, and medical and hospital

supplies. DOD is seeking fiscal year 1995 supplemental appropriations to, among other things,

liquidate the $126.3 million in obligations.

Page 2 GAO/NSIAD-95-119BR Peace Operations
B-260764 

1993. The majority of this amount was paid on March 29, 1994. The funds

were deposited to fiscal year 1994 appropriation accounts and, according

to DOD, cannot be traced to specific expenditures.

Scope and

Methodology

To analyze DOD’s incremental costs and funding for peace operations, we

compared its reported incremental costs to approved supplemental

funding and other funding sources, reviewed funding documents, and

interviewed officials in DOD, each service headquarters, selected major

commands, and selected units and bases. We did not independently verify

the accuracy of DOD’s reported incremental costs because, as we have

previously reported, the services do not have systems that capture actual

incremental costs.3

 Only the total obligations are captured by the

accounting systems. The services use various management information

systems to identify incremental obligations and to estimate incremental

costs.

To obtain information on the impact of funding shortfalls, we reviewed

service documents and met with officials in each of the military services,

including selected major commands and units. We also discussed these

matters with officials from the Office of the Secretary of Defense.

To analyze the U.N. reimbursement, we obtained records showing

expenditures in fiscal year 1993 and accounts credited in fiscal year 1994.

We performed our work between June 1994 and March 1995 in accordance

with generally accepted government auditing standards. We reviewed the

information in this briefing report with DOD officials and made changes

where appropriate.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from its

issue date. At that time, we will send copies to the Chairmen of the House

Committee on National Security, the Senate and House Committees on

Appropriations, and the Senate Committee on Armed Services and to the

Secretaries of Defense, the Army, the Air Force, and the Navy. Copies will

be made available to others upon request.

3

Peace Operations: Information on U.S. and U.N. Activities (GAO/NSIAD-95-102BR, Feb. 13, 1995).

Page 3 GAO/NSIAD-95-119BR Peace Operations
B-260764 

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

contact me at (202) 512-3504. The major contributors to this report are

listed in appendix I.

Richard Davis

Director, National Security

 Analysis

Page 4 GAO/NSIAD-95-119BR Peace Operations
Page 5 GAO/NSIAD-95-119BR Peace Operations
Contents

Letter 1

Briefing Section I 

Background

8

Reported Incremental Costs for Fiscal Year 1994 Operations 8

Briefing Section II 

Cost and Funding

10

Summary of Incremental Costs and Funding During Fiscal Year

1994

10

Final Fiscal Year 1994 Incremental Costs Absorbed by DOD 12

Individual Services’ Incremental Costs and Funding During Fiscal

Year 1994

14

Incremental Costs and Funding for Units Deployed to Peace

Operations

16

Briefing Section III 

Impacts of Funding

Shortfalls

18

Summary of Impacts on Services 18

Impacts on the Army 20

Impacts on the Air Force 22

Impacts on the Navy 24

Impacts on the Marine Corps 26

Briefing Section IV 

U.N. Reimbursements

28

Distribution of Fiscal Year 1994 U.N. Reimbursements 28

DOD Accounts Credited With U.N. Reimbursements 30

Appendix I 

Major Contributors to

This Report

32

Abbreviations

DERF Defense Emergency Response Fund

DOD Department of Defense

FORSCOM Forces Command

O&M operation and maintenance

USAFE U.S. Air Forces, Europe

Page 6 GAO/NSIAD-95-119BR Peace Operations
Page 7 GAO/NSIAD-95-119BR Peace Operations
Briefing Section I 

Background

GAO Reported Incremental Costs for Fiscal 

Year 1994 Operations

Cuba

$106.8M

Haiti

$370.7M

Western Sahara

$0.1M

Angola

$2.6M

Rwanda

$106.7M

Somalia

$528M

Cambodia

$5M

Korea

$69.7M

Bosnia

$292M

Iraq--Provide Comfort $91.8M

 Southern Watch $333M

Note: With the exception of the operations in Cuba, Korea, and that part of the Haitian operation

involving migrant processing, which were unilateral U.S. military operations, these operations

supported U.N.-authorized peace operations.

Page 8 GAO/NSIAD-95-119BR Peace Operations
Briefing Section I 

Background

U.S. military forces participated in several contingency operations during

fiscal year 1994. These operations included (1) activities in support of U.N.

peace operations in Bosnia, Haiti, Somalia, and Southwest Asia; (2) the

increased deployment of military capability to South Korea in response to

heightened tensions; and (3) the enforcement of a revised U.S. migration

policy designed to prevent Cuban migrants from reaching the United

States. The map shows where these operations occurred and the

Department of Defense’s (DOD) reported incremental costs for each

operation.

DOD does not budget for the cost of contingency operations. Therefore, a

common characteristic of each operation is that it was not included in

DOD’s budget for fiscal year 1994. DOD had to absorb the cost of these

operations within its existing budget or seek supplemental appropriations.

During fiscal year 1994, DOD received supplemental appropriations for

some of these operations.

We were asked in part to assess whether the supplemental appropriations

provided were adequate to cover DOD’s estimated costs, and, if inadequate,

to ascertain the impact on DOD. In recent years, there has been a

proliferation of terms used to describe military operations other than war

that are unplanned or not budgeted for in advance by DOD. Included are

peacekeeping, peace enforcing, and humanitarian operations. To assess

the adequacy of supplemental appropriations for these operations and the

impact of any shortfalls, we included the cost of each contingency

operation for which DOD reported incremental costs because (1) each was

not included in DOD’s fiscal year 1994 budget and (2) DOD had to cover the

cost in some way. The bulk of the reported incremental costs was for U.S.

forces’ operations in support of U.N. peace operations. We also included

the incremental costs of U.S. forces engaged in enforcing U.S. policy

concerning Cuban migration, which was a unilateral U.S. military

operation.

DOD’s reported incremental costs do not include all peace operations. DOD

includes in its annual budget costs of the long-standing U.S. military

presence in Korea and U.S. participation in the Multinational Force and

Observer Mission in the Sinai, which provides a buffer between Egypt and

Israel in compliance with the Camp David Accords.

Page 9 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

GAO Summary of Incremental Costs and 

Funding During Fiscal Year 1994

Dollars in millions

Reported incremental costs $1,907.8

Supplemental funding in February 1994 1,198.3

Funding shortfall $ 709.5

How DOD covered shortfall:

 Feed and Forage Act 126.3

 DERF 64.7

 Authorized reprogramming 42.3

 Subtotal $ 233.3

Funding shortfall near the end of fiscal year 1994 

that had to be absorbed $ 476.2

Page 10 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

For fiscal year 1994, DOD reported $1,907.8 million for peace

operations-related incremental costs. In February 1994, Congress provided

DOD with emergency supplemental appropriations of $1,198.3 million to

reimburse it for these incremental costs. The supplemental appropriations

covered almost two-thirds of these incremental costs, leaving DOD with a

funding shortfall of $709.5 million during fiscal year 1994.

DOD covered $233.3 million of its initial funding shortfall in three ways—by

invoking its Feed and Forage Act authority, using funds from the fiscal

year 1994 balance in the Defense Emergency Response Fund (DERF)

account,1

 and using authorized reprogramming funds.

DOD used its Feed and Forage Act authority to help fund the cost of

operations that supported the restoration of democracy in Haiti.

Specifically, DOD used this authority to obligate $126.3 million more than it

was appropriated for fiscal year 1994. Of this amount, $123 million was for

Army operation and maintenance (O&M) expenses; the balance of

$3.3 million was obligated to pay expenses of activated Army reservists.

DOD also offset incremental costs associated with ongoing operations in

Haiti with funds from the DERF account. In 1989, Congress appropriated

$100 million for this fund to cover emergency costs of natural and

man-made disasters. At the beginning of fiscal year 1994, $94.7 million

remained in the fund. DOD used $64.7 million of this amount to support

maritime interdiction, the enforcement of sanctions, and the processing of

migrants based on DOD’s determination that these operations were in

support of a man-made disaster.2

In May 1994, under DOD’s existing reprogramming authority, the Army used

$42.3 million in funds provided through congressionally approved

reprogramming action to cover increased operations in Korea.

The remaining $476.2 million funding shortfall near the end of fiscal year

1994 was absorbed within DOD’s existing appropriations. The majority of

this was absorbed within its O&M appropriation through a variety of

actions, including the deferral of maintenance, nonreplenishment of

supplies, and cancellation of training.

1

The DERF is a DOD management fund that can be used to reimburse other appropriation accounts for

costs incurred in responding to emergencies. The money appropriated to the DERF is available for

expenses occurring during any fiscal year.

2

The remaining $30 million was used for various global disaster relief missions, which DOD did not

consider to be unfunded contingency operations.

Page 11 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

GAO Final Fiscal Year 1994 Incremental 

Costs Absorbed by DOD

 Dollars in millions

Funding shortfall near the end of 

fiscal year 1994

$476.2

Supplemental funding approved 

September 30,1994

299.3

Net shortfall absorbed $176.9

Page 12 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

On September 30, 1994, DOD had a funding shortfall of $476.2 million. At

that time, the fiscal year 1995 defense appropriations act provided

additional supplemental appropriations of $299.3 million through the DERF

to further reimburse DOD for certain operations that occurred in fiscal year

1994. While this funding was technically appropriated within fiscal year

1994, most of it was not obligated during that year. For example, only

$19.6 million was obligated in fiscal year 1994 for immediate military

personnel requirements within the Navy. The balance, $279.7 million, was

available in fiscal year 1995 for programs that were deferred in support of

contingency operations during fiscal year 1994.

Including this second supplemental in a final accounting for incremental

peace operations in fiscal year 1994, DOD sustained a funding shortfall of

$176.9 million.

Page 13 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

GAO Individual Services' Incremental Costs 

and Funding During Fiscal Year 1994

Army Air Force Navy Marine Corps Other DOD

0

200

400

600

800

1,000

802.1

670.8

378.4

10.9 45.6

619.8 610.9

177.3

2 21.6

Dollars in millions

Costs Funding

Page 14 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

The Army’s reported incremental costs were $802.1 million. Within fiscal

year 1994, it received $447.2 million of the February 1994 supplemental

appropriations and $4 million from the DERF balance available at the

beginning of the fiscal year. It was also allowed to incur obligations in

excess of its appropriations by $126.3 million under authority of the Feed

and Forage Act. In addition, the Army received an additional $42.3 million

from reprogrammed funds for increased operations in Korea. Thus, it had

to absorb $182.3 million within its fiscal year 1994 appropriations.

The Air Force’s reported incremental costs were $670.8 million. The

service received $605.3 million of the supplemental appropriations and

$5.6 million in DERF funds available at the beginning of the fiscal year.

Thus, it had to absorb $59.9 million within its fiscal year 1994

appropriations.

The Navy’s reported incremental costs were $378.4 million. The Navy

received $124.2 million of the supplemental appropriations and

$53.1 million from DERF funds available at the beginning of the fiscal year.

Thus, it had to absorb $201.1 million within its fiscal year 1994

appropriations.3

The Marine Corps reported incremental costs of $10.9 million. It received

$2 million of DERF funds available at the beginning of the fiscal year and

had to absorb $8.9 million within its fiscal year 1994 appropriations.

Other DOD agencies, including the U.S. Special Operations Command,

Defense Health Program, Defense Intelligence Agency, and Defense

Mapping Agency, collectively reported $45.6 million in incremental costs.

They received $21.6 million from the supplemental appropriations and had

to absorb $24 million within the fiscal year 1994 appropriations.

3

On September 30, 1994, the Navy obligated $19.6 million from the supplemental funding provided

through the DERF on that date for immediate military personnel requirements.

Page 15 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

GAO Incremental Costs and Funding for 

Units Deployed to Peace Operations

Deployed units were fully reimbursed

While there were no funding shortages, there were 

stresses from operational involvement

Page 16 GAO/NSIAD-95-119BR Peace Operations
Briefing Section II 

Cost and Funding

According to DOD officials, units participating in contingency operations

received funds to cover their reported incremental costs. Examples of unit

incremental costs and funding follow:

• The Army’s 10th Mountain Division provided troops, supplies, and

equipment for the Somalia operation. It also provided accounting services

for all other Army units operating in Somalia. The incremental costs paid

through the 10th Mountain Division were $103.9 million, all of which were

reimbursed by the Army Forces Command (FORSCOM).

• The Air Force’s Aviano, Italy, Air Base incurred $16.1 million in

incremental costs, most of which was related to Bosnia for providing

contract quarters, leasing office space, and funding temporary duty. Its

total reimbursements from U.S. Air Forces, Europe (USAFE) were

$18.2 million, $2.1 million more than the costs. According to Air Force

officials, USAFE advised them to retain the excess to avoid multiple

accounting transactions. The excess funds were used for other O&M

requirements, unrelated to peace operations, which would otherwise have

been funded by USAFE. The base also incurred expenses for flying hours,

but USAFE accounted for these costs and reimbursements separately.

• The USS America aircraft carrier was deployed to the Mediterranean Sea

when it was ordered to Somalia. It incurred incremental costs of $914,000

for passage through the Suez Canal and was fully reimbursed by the Navy’s

Commander-in-Chief, Atlantic Fleet.

• A Marine Corps transportation and refueling squadron, which operates

C-130 aircraft, incurred $1.3 million in incremental costs for operations in

Bosnia. It was fully reimbursed for fuel, maintenance repair parts, and

aircrew travel costs from the Naval Air Forces, Atlantic.

While units that deployed to peace operations were fully reimbursed for

their costs, we recently reported that such operations have stressed key

military capabilities.4

 Repeated use of deployed forces, particularly certain

Army support forces such as quartermaster and transportation units and

specialized Air Force units as well as European-based Air Force units, had

resulted in some units and personnel deploying more than once to an

operation or to consecutive operations, increased the tempo of operations,

and reduced the time available to prepare for combat missions.

Furthermore, the Air Force’s participation in these operations had resulted

in extended tours of duty, missed training, increased maintenance on

aircraft, and cannibalization of aircraft.

4

Peace Operations: Heavy Use of Key Capabilities May Affect Response to Regional Conflicts

(GAO/NSIAD-95-51, Mar. 8, 1995).

Page 17 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

GAO Summary of Impacts on Services

Funding shortfalls relatively small compared to 

overall service budgets

Adverse effects not solely due to peace operations

Shortfalls affected nondeploying units

Units do not know to what degree peace operations 

affect anticipated funding

Page 18 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

To the extent supplemental appropriations and other sources of funding

were not sufficient to cover incremental costs, the services had to absorb

costs in their annual appropriations. For the most part, the shortages in

funding for peace operations were relatively small when compared to

overall service accounts. For instance, the initial $709.5 million shortage in

congressional funding in fiscal year 1994 represented less than 1 percent

of DOD’s O&M expenses of $88.3 billion for fiscal year 1994. However,

because services and major commands borrow funds from the fourth

quarter to cover funding shortfalls and because some of those funds

cannot be used to fund peace operations on relatively short notice, the

relative amounts available for funding such operations become more

constricted within that quarter.

The impact of funding shortfalls reported by the services was not solely

due to peace operations. Army officials reported, for example, that

Congress did not fund locality pay and foreign national pay raises, totaling

$193 million, which the Army had to absorb within its annual

appropriations, and that the Army had not received $27 million in

congressionally directed transfers5

 from National Defense Stockpile Fund

revenues.

Since the services took steps to ensure that units participating in peace

operations received additional funds, shortfalls primarily affected bases or

units that did not participate in the operations.

Units receive their annual funding on a quarterly basis. To cover

incremental costs, DOD initially absorbs the incremental costs from third

and fourth quarter allocations. If DOD does not receive additional funds to

cover these costs and reinstate the borrowed quarterly allocation, the

impact is felt toward the end of the fiscal year when units must make do

with the lowered funding allocations. However, units also regularly receive

periodic budget adjustments from higher military commands for a variety

of reasons unrelated to peace operations. While these units know how

much funding they are allocated and how much they anticipate, they do

not know whether any shortfall is due to peace operations or other

reasons.

5

These transfers were based on anticipated revenues that did not materialize.

Page 19 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

GAO Impacts on the Army

Officials stated that, in addition to peace operation 

shortfalls, the Army had to absorb other funding 

shortfalls

FORSCOM units had to cancel training and leave 

stock levels unreplenished

Army units in Europe reduced and restructured 

major training exercises

During fiscal year 1994, the Army absorbed most of its shortage of

$182.3 million in funding for peace operations within its O&M accounts,

which totaled $18 billion. As discussed earlier, the impact of funding

shortfalls reported by the services was not solely due to the need to fund

peace operations. Army officials reported, for example, that they had to

absorb costs for pay raises and that it had not received expected revenues

from the National Defense Stockpile Fund.

Page 20 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

FORSCOM units, among other things, were forced to scale back training and

leave inventories unreplenished. For example, the 2nd Armored Division

was unable to complete an advanced maneuver exercise due to a lack of

training funds, which cover its costs for fuel, spare parts, and maintenance

used in such exercises. Since such training is scheduled months in

advance, the cycle is disrupted and missed training cannot be immediately

rescheduled. According to 2nd Armored Division documents, the division

funded $57.4 million for training and ended the year with $8.3 million in

unfunded training requirements. The division reported a lowered readiness

rating,6

 which division officials attributed to the training deficit and

personnel problems.

FORSCOM also deferred replenishment of stocks to authorized levels

beginning in the mid-third quarter. Furthermore, in September 1994,

FORSCOM approved a complete halt to reordering or replenishing supplies

of low priority items for the 1st Infantry Division. Since supplies are

funded within the division’s training budget, this allowed the division the

flexibility it needed with its available resources to continue to purchase

high priority supplies and maintain its training schedule.7

 The 1st Infantry

Division had a training budget of $29.3 million and ended the year with

$7.5 million in unfunded supply requirements.

The U.S. Army, Europe’s 1st Armored Division as a whole was forced to

reduce major scheduled training exercises and its units reduced or

canceled local training exercises due to funding shortfalls. For example,

the division reduced one of its two major gunnery exercises by not taking

all of its equipment and reduced its major maneuvering exercise from 10 to

7 days. As for the division’s units, (1) an aviation brigade commander

canceled the majority of fourth quarter battalion-level training events for

three of the brigade’s four battalions and (2) a tank battalion conducted its

training exercises in high mobility multi-wheeled vehicles instead of its

tanks because they were less expensive to operate.

6

The division still possessed the resources and training necessary to undertake many, but not all,

portions of its wartime mission.

7

Due to funding shortages and reprogramming requirements at the beginning of the fiscal year, the

division already was operating under a reduced training schedule.

Page 21 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

GAO Impacts on the Air Force

Experienced little or no major funding-related 

impacts

Some funds shifted from depreciation and project 

accounts

Received additional funds in fiscal year 1995, 

which resulted in an overage

Page 22 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

The Air Force shortfall during fiscal year 1994 was $59.9 million, and its

total incremental costs were $670.8 million. This shortfall was

substantially less than the shortfall for the Navy and the Army. While Air

Force officials stated that the Air Force experienced limited or no major

funding-related impacts on operational programs during the fiscal year

because of peace operations, certain actions were taken to minimize

potential impacts. These actions included reducing the size and scope of

acquisition programs and reducing the funding of several O&M accounts. As

noted earlier, however, Air Force units that participated in peace

operations did experience several adverse operational impacts. These

impacts resulted from the high tempo of operations rather than from a

shortage of funds.

In fiscal year 1995, $69.4 million of the $299.3 million in the second

supplemental appropriation that was provided to the DERF was allocated to

the Air Force. Of that amount, $35.1 million was allocated to the major

commands that shifted fiscal year 1994 funds to cover incremental costs.

Specifically, in fiscal year 1994, the Air Mobility Command shifted

$21 million from asset depreciation accounts, which were established for

such assets as vehicles and equipment;8

 the Air Combat Command shifted

$4.5 million from facility projects; and USAFE shifted $9.6 million from

facility projects. The remaining $34.3 million was given to the Air Mobility

Command for fiscal year 1994 airlift costs relating to operations in

Rwanda.

The total reimbursements to the Air Force in fiscal years 1994 and 1995

were $9.5 million more than its reported incremental costs for fiscal year

1994. Near the end of fiscal year 1994, DOD requested the service to

estimate additional funds needed for peace operations. The Air Force’s

actual costs were later found to be less than its preliminary estimates. DOD

officials stated that this overage was applied to other areas within the Air

Force that had shortages.

8

The command operates under the Defense Business Operations Fund and therefore charged military

activities rates that recovered the full costs of operations. The asset depreciation account allowed the

command to recognize the expense of decreasing property value of assets and set aside funds to

replace the items. A fiscal year 1995 revision to the accounting system eliminated the command’s use

of this account.

Page 23 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

GAO Impacts on the Navy

Absorbed shortfall within various programs

Limited and/or rescheduled ship maintenance

Grounded aircraft in fourth quarter

Page 24 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

The overall peace operations shortfall for the Navy as fiscal year 1994

ended was $201.1 million. Because the Navy received $19.6 million in

funding for its military personnel account on the last day of fiscal year

1994, it ended the year with a shortfall of $181.5 million of its $20.8 billion

total O&M account. The Navy absorbed most of this within its O&M account

by reducing planned expenditures for air and ship operations, ship

maintenance, facilities maintenance, weapons maintenance engineering

support, and submarine inactivations.

For example, the Commander-in-Chief, Atlantic Fleet, absorbed

$65 million within the fleet’s O&M account. About $36.5 million was taken

from the $930.5 million budgeted for the ship depot maintenance program.

As a result, the Atlantic Fleet reduced maintenance on three ships and

rescheduled planned limited maintenance on six ships to the next fiscal

year. According to fleet officials, continued limited maintenance will result

in the reduction of the ships’ capability and useful lives. Moreover, Navy

officials reported that shifting maintenance into the next fiscal year

increased costs by $3 million because of increases for material, salaries,

and scope of work changes.

The Atlantic Fleet also took $16.3 million from the $827.6 million budgeted

for the Naval Air Forces, Atlantic, flying hour program. During the last

quarter of the year, Naval Air Forces, Atlantic, grounded one aircraft

carrier’s air wing for 1 month and reduced flying for the remainder of the

quarter. According to Navy officials, the reduced flying caused readiness

ratings to drop.

The remaining $12.2 million was taken from other Atlantic Fleet programs

such as supply and equipment purchases, counternarcotics programs, and

base operations.

Page 25 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

GAO Impacts on the Marine Corps

Absorbed shortfall in operating forces' funds

Reduced flying hours for nondeployed squadrons

Reduced equipment maintenance

Page 26 GAO/NSIAD-95-119BR Peace Operations
Briefing Section III 

Impacts of Funding Shortfalls

Overall, the Marine Corps absorbed $8.9 million within its $1.9 billion O&M

account for fiscal year 1994. The service reduced funding for such things

as flying hours, training, and equipment maintenance. Marine Corps

officials told us that this reduction contributed to some units’ lowered

readiness ratings and to reduced equipment maintenance.

For example, the Marine Forces Command, Atlantic, absorbed $1.4 million

within the $285.4 million budgeted for its flying hour program by

transferring over 5,000 training flying hours from nondeployed squadrons

to units supporting contingency operations. The command stated that

because of this transfer, 11 of 30 squadrons reported significantly reduced

readiness ratings for the last quarter. Command officials reported that it

will be mid-fiscal year 1995 before these squadrons’ readiness levels return

to normal.

The Marine Forces Command, Atlantic, also absorbed $3.5 million within

the $106.4 million budgeted for ground operating forces’ training,

equipment, and maintenance of equipment programs. Regularly scheduled

preventive maintenance for such items as trucks, engines, generators, and

artillery parts was foregone in fiscal year 1994. Marine Corps officials

reported this will eventually result in more costly corrective maintenance

or degraded equipment.

Page 27 GAO/NSIAD-95-119BR Peace Operations
Briefing Section IV 

U.N. Reimbursements

GAO Distribution of Fiscal Year 1994 

U.N. Reimbursements 

Foreign Assistance Act allows credits to current 

accounts within 180 days of year's end

DOD received $98.1 million from United Nations in 

1994 within 180 days

Most funds were deposited to appropriation 

accounts from which funds were originally taken

Page 28 GAO/NSIAD-95-119BR Peace Operations
Briefing Section IV 

U.N. Reimbursements

The United Nations reimburses governments for support provided under

different types of agreements. DOD provided some of the assistance to the

United Nations for operations in Somalia under the Foreign Assistance Act

(sec. 607). The act allows U.N. reimbursements received within 180 days

of the end of the fiscal year in which the support was provided to be

credited to the current year appropriation that originally funded the

support. Unless the agreements providing the reimbursement call for

payment of interest, payments received after that date are to be deposited

in the U.S. Treasury.

Within the 180-day time period in fiscal year 1994, the United Nations

reimbursed DOD $98.1 million for assistance DOD provided in fiscal year

1993. DOD received the majority of the funds on March 29, 1994, 1 day prior

to the time when the funds would have to have been deposited in the U.S.

Treasury.

DOD records show that, in fiscal year 1994, most of the funds were credited

to the types of accounts that originally funded the goods and services.

According to DOD officials, reimbursements received from the United

Nations generally are used to execute programs that had to be deferred in

order to provide support to the United Nations. The following table

compares the fiscal year 1993 expense category for each service to fiscal

year 1994 appropriation accounts credited. According to DOD, expenditures

of these funds cannot be traced beyond each service’s appropriation

account shown in the table.

Page 29 GAO/NSIAD-95-119BR Peace Operations
Briefing Section IV 

U.N. Reimbursements

GAO DOD Accounts Credited With U.N. 

Reimbursements

Dollars in thousands

Appropriations credited 

Fiscal year 1993 expense category in fiscal year 1994 Amount

Army

 Rations O&M $ 6,402

 Sustainment O&M 16,633

 Medical supplies O&M 484

 Logistics contract O&M 14,845

 Personnel rotation O&M 3,925

 Support to other nations O&M 5,670

 Sale of trucks to U.N. Other procurement 13,933

 Repair parts for trucks O&M 3,797

 Sale of armored personnel

 carriers Procurement 13,683

 Personnel support Military personnel 4,391

 Miscellaneous O&M 1,557

 Subtotal $85,320

Navy

 Marine Corps O&M 1,380

 Military Sealift Command a 2,110

 Subtotal $3,490

Air Force

 Air Mobility Command a 8,359

Miscellaneous agencies b 955

Total $98,125

aOfficials at these commands could not readily identify accounts credited because funds were

processed through an intragovernment revolving fund.

bWe did not determine the accounts credited because only a small amount of credits was given to

multiple agencies.

Page 30 GAO/NSIAD-95-119BR Peace Operations
Page 31 GAO/NSIAD-95-119BR Peace Operations
Appendix I 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Steven H. Sternlieb, Assistant Director

Lisa M. Quinn, Evaluator

Norfolk Field Office Lindsay B. Harwood, Evaluator-in-Charge

J. Larry Peacock, Evaluator

Carleen C. Bennett, Evaluator

European Office Joanne L. Jurmu, Evaluator

(701045) Page 32 GAO/NSIAD-95-119BR Peace Operations
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