United States General Accounting Office

GAO Briefing Report to the Chairman,

Committee on National Security

House of Representatives

April 1997 DEFENSE BUDGET

Observations on

Infrastructure

Activities

GAO/NSIAD-97-127BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-276573 

April 4, 1997

The Honorable Floyd D. Spence

Chairman, Committee on National Security

House of Representatives

Dear Mr. Chairman:

The Department of Defense (DOD) wants to reduce and streamline

infrastructure to help pay for the billions of dollars that DOD projects it will

need for modern weapon systems. On February 10, 1997, we briefed your

staff on infrastructure activities within DOD and our budget and program

reviews of those activities. Our briefing was based primarily on data

included in DOD’s 1997 Future Years Defense Program (FYDP) because the

1998 FYDP was not available for our analysis. The information we provided

at that briefing is detailed in the sections following this letter.

Background An objective of DOD’s 1993 Report on the Bottom-Up Review was to

identify potential infrastructure savings and to launch a long-term process

to reduce and streamline DOD’s infrastructure without harming readiness.

The report stated that infrastructure activities accounted for $160 billion in

fiscal year 1994, or about 60 percent of DOD’s total obligational authority.

DOD defines infrastructure as those activities that provide support services

to mission programs, such as combat forces, and primarily operate from

fixed locations. DOD accounts for its infrastructure activities in eight

categories: installation support; central training; central medical; central

logistics; force management; acquisition infrastructure; central personnel;

and central command, control, and communications.

Between fiscal year 1997 and 2001, DOD planned to increase its

procurement budget from $38.9 billion to $60.1 billion, primarily to buy

modern weapon systems and upgrades to existing systems. DOD planned to

fund that increase with a combination of increased defense budgets,

savings from acquisition reform, and a reallocation of funds from

infrastructure activities to procurement.

The FYDP is an authoritative record of current and projected force

structure, costs, and personnel levels that have been approved by the

Secretary of Defense. The 1997 FYDP supported the administration’s fiscal

year 1997 budget and included budget estimates for fiscal years 1997-2001.

Page 1 GAO/NSIAD-97-127BR Defense Budget
B-276573 

Results in Brief The proportion of planned infrastructure funding in DOD’s 1997-2001

budgets was projected to remain at about 60 percent, the same proportion

it was at the time of the Bottom-Up Review. Costs of infrastructure

activities were expected to increase by $9 billion, from $146 billion in

fiscal year 1997 to $155 billion in fiscal year 2001. About 50 percent of the

infrastructure is in two categories—central logistics and installation

support.

About 80 percent of infrastructure activities that can be clearly identified

in DOD’s FYDP are funded by a combination of the military personnel

(30 percent) and operation and maintenance (50 percent) appropriations.1

Therefore, if DOD is to reduce its infrastructure activities, it must look to

these appropriations for the reductions.

Although active military personnel were projected to decline by about

30 percent between fiscal year 1990 and 1997, the salaries and benefits for

active duty military personnel were projected to decline by only

13 percent. The budgets were not expected to decrease commensurate

with the force because the force that remains has progressively become

more expensive. Increases in basic pay and allowances have contributed

to the higher costs. Also, by 1999, each service is expected to have a higher

percentage of officers in its force than it had in 1990.

Congress has been concerned about whether the drawdown of military

personnel may have gone too far and imposed permanent end strength

levels in the National Defense Authorization Act for Fiscal Year 1996 

(P.L. 104-106). But, our work has shown that smaller end strengths are

possible without reducing the number of military personnel assigned to

mission forces. Specifically, about 660,000, or 45 percent, of active military

personnel for fiscal year 1997 were to be assigned to infrastructure

activities. Each service is assessing ways to streamline its operations that

could lead to fewer active military personnel needs. DOD could achieve

savings in the military personnel accounts by replacing active duty military

personnel, who perform infrastructure functions, with less costly civilian

personnel.

1

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

(GAO/NSIAD-96-131, Apr. 4, 1996), we stated that there are parts of the total infrastructure funding

that cannot be clearly identified in the FYDP, according to DOD officials. These funds pay for goods

and services sold by service-specific revolving funds. The officials estimate that this is 20 to 25 percent

of DOD’s total infrastructure budget and is mostly logistics purchases that cannot be specifically

identified.

Page 2 GAO/NSIAD-97-127BR Defense Budget
B-276573 

Operation and maintenance accounts were projected to increase from

$88.3 billion in fiscal year 1990 to $95.9 billion in fiscal year 2001.

Operation and maintenance funds are often linked with the readiness of

U.S. forces; however, those funds also pay for numerous other DOD

activities and functions. Although DOD has improved operations and

reduced costs, it continues to waste billions of dollars annually on

unneeded facilities and inefficient activities. For example, DOD retains

billions of dollars of excess inventory for which it spends hundreds of

millions of dollars annually to store. Also, 40 percent of the capacity of

DOD’s 21 major depots was excess to its 1996 workload. We have reported

that, as a first step to reduce infrastructure activities, DOD needs to prepare

a plan to guide its efforts. This plan should establish time frames and

identify organizations and personnel responsible for accomplishing fiscal

and operational goals.

We did not obtain agency comments on a draft of this report because it

was based primarily on our prior work, which is noted throughout the

report.

We conducted our work between January and March 1997 in accordance

with generally accepted government auditing standards.

We are providing copies of this report to appropriate Senate and House

Committees; the Secretary of Defense; and the Director, Office of

Management and Budget. We will also provide copies to other interested

parties upon request.

Please contact me at (202) 512-3504 if you or your staff have any questions

concerning this briefing report.

Sincerely yours,

Richard Davis

Director, National Security

 Analysis

Page 3 GAO/NSIAD-97-127BR Defense Budget
Contents

Letter 1

Briefing Section I 

Background

6

DOD Wants to Reduce Infrastructure to Help Pay for Modern

Weapon Systems

6

Briefing Section II 

Infrastructure in

DOD’s Budget

8

Comparison of Total Planned Obligational Authority to Total

Planned Infrastructure Funding, Fiscal Years 1997 to 2001

8

DOD’s Fiscal Years 1997 to 2001 Program 10

DOD’s Fiscal Years 1997 to 2001 Program by Infrastructure

Category

12

Direct Infrastructure Funding by Appropriation, Fiscal Years 1997

to 2001 Program

14

Briefing Section III 

Military Personnel

Accounts

16

Trends in Military Personnel 16

Military Personnel in Infrastructure and Mission Programs, Fiscal

Year 1997

18

Briefing Section IV 

Reforming Military

Personnel Functions

20

Military Personnel Staffing—Condition 20

Military Personnel Staffing—Actions Needed 22

Briefing Section V 

Operation and

Maintenance

Accounts

24

Trends in Operation and Maintenance Accounts 24

Operation and Maintenance Component: Civilian Personnel in

Workforce, Fiscal Year 1997

26

Operation and Maintenance Component: Civilian Personnel in

Infrastructure and Mission Programs, Fiscal Year 1997

28

Briefing Section VI 

Reforming Operation

and Maintenance

Functions

30

Current Infrastructure Condition 30

Actions Needed to Reform Systems and Processes and Reduce

Infrastructure

32

Page 4 GAO/NSIAD-97-127BR Defense Budget
Contents

Appendix I 

Categories of Defense

Infrastructure

34

Abbreviations

DOD Department of Defense

FYDP Future Years Defense Program

Page 5 GAO/NSIAD-97-127BR Defense Budget
Briefing Section I 

Background

GAO DOD Wants to Reduce Infrastructure to Help Pay for 

Modern Weapon Systems

Infrastructure accounted for 60 percent of budget 

authority at time of Bottom-Up Review

DOD wants to increase procurement funding

Infrastructure activities support mission activities, 

such as combat forces, and operate primarily from 

fixed locations

Page 6 GAO/NSIAD-97-127BR Defense Budget
Briefing Section I 

Background

An objective of the Department of Defense’s (DOD) 1993 Report on the

Bottom-Up Review was to identify potential infrastructure savings and to

launch a long-term process to reduce and streamline DOD’s infrastructure

without harming readiness. The report stated that infrastructure activities

accounted for $160 billion in fiscal year 1994, or about 60 percent of DOD’s

total obligational authority.

Between fiscal year 1997 and 2001, DOD planned to increase procurement

funding from $38.9 billion to $60.1 billion, primarily to buy modern

weapon systems and upgrades to existing systems. DOD planned to fund

that increase with a combination of increased defense budgets, savings

from acquisition reform, and a reallocation of funds from infrastructure

activities to procurement.

DOD’s Future Years Defense Program (FYDP) is the most comprehensive

source of continuous defense resource data. The FYDP displays the

allocation of resources by programs and activities known as program

elements. Using the FYDP, DOD has clearly identified program elements that

fund infrastructure activities and refer to these as “direct infrastructure.”

However, there are parts of the total infrastructure funding that cannot be

clearly identified in the FYDP. According to DOD officials, these parts

account for 20 to 25 percent of DOD’s total infrastructure funding. These

funds pay mostly for logistics purchases.

DOD, in conjunction with the Institute for Defense Analysis, categorized

each of the FYDP program elements as either mission programs or

infrastructure programs. Activities and programs that produce the outputs

expected of DOD or directly support missions by deploying with the combat

forces are classified as mission programs. Activities that provide support

services to mission programs, such as combat forces, and primarily

operate from fixed locations are classified as infrastructure programs. DOD

accounts for its infrastructure activities in eight categories: installation

support; central training; central medical; central logistics; force

management; acquisition infrastructure; central personnel; and central

command, control, and communications. DOD excludes many intelligence,

space, and command, control, and communications programs from its

infrastructure even though they appear to fit DOD’s infrastructure

definition. These programs account for about $25.9 billion, or 26 percent,

of mission programs in fiscal year 1997.

Page 7 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

GAO Comparison of Total Planned Obligational Authority to 

Total Planned Infrastructure Funding, Fiscal Years 

1997 to 2001

1997 1998 1999 2000 2001

$0

$50

$100

$150

$200

$250

$300

244 249 255 263 270

146 145 148 150 155

Fiscal year

Dollars in billions

Total budget Infrastructure

Page 8 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

The 1997 FYDP supported the administration’s fiscal year 1997 budget and

included budget estimates for fiscal years 1997-2001. In May 1996, we

reported that our analysis of the infrastructure portion of the 1997 FYDP

shows that infrastructure costs are projected to increase about $9 billion,

from $146 billion in fiscal year 1997 to $155 billion in fiscal year 2001.1

Although the infrastructure portion of DOD’s budget is projected to

decrease from about 60 percent in 1997 to about 57 percent in 2001, this is

primarily because DOD’s total budget is projected to increase at a faster

rate than the infrastructure part of that budget.

1

Defense Infrastructure: Costs Projected to Increase Between 1997 and 2001 (GAO/NSIAD-96-174,

May 31, 1996).

Page 9 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

GAO DOD's Fiscal Years 1997 to 2001 Program

Dollars in billions

Infrastructure

Mission

$744

$537

Page 10 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

The total projected DOD budget for the 5-year period (1997-2001) included

in the 1997 FYDP was about $1.3 trillion. Infrastructure activities account

for about $744 billion of the $1.3 trillion total and mission activities

account for the remaining $537 billion.

Page 11 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

GAO DOD's Fiscal Years 1997 to 2001 Program by 

Infrastructure Category

Acquistion infrastructure

Command, control, and communications

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Installation support

Central logistics

Central medical

Force management

Central training

Central personnel

16%

32%

7%

11%

4%

9%

14%

7%

Page 12 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

The $744 billion of infrastructure included in the 1997 FYDP can be

subdivided into the eight infrastructure categories, which DOD has defined.

These categories are described in appendix I. Since most of the

infrastructure that cannot be clearly identified in the FYDP relates to

logistics purchases, we included this portion of the infrastructure in the

central logistics category.

Central logistics and installation support, the two largest categories,

together comprise almost 50 percent of infrastructure costs. As we stated

in our May 1996 report on defense infrastructure, funding for all of the

categories, except installation support, is projected to increase during the

1997-2001 period. The decline in installation support is absorbed by the

increases in the other infrastructure categories.

Page 13 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

GAO Direct Infrastructure Funding by Appropriation, Fiscal 

Years 1997 to 2001 Program

Operation and

maintenance

Research, 

development,

test, and evalution

1997 1998 1999 2000 2001

$0

$20

$40

$60

$80

$100

$120

$140

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Fiscal year

Dollars in billions

AAA

AAA AAAA AAAA AAAAAA Military personnel Military construction Family housing Procurement

Page 14 GAO/NSIAD-97-127BR Defense Budget
Briefing Section II 

Infrastructure in DOD’s Budget

Although each appropriation funds some direct infrastructure activities,

about 80 percent of direct infrastructure costs are funded by military

personnel and operation and maintenance accounts, about 30 percent and

50 percent, respectively. Thus, if DOD is to achieve significant

infrastructure reductions to fund future force modernization, those

reductions must come from these appropriations. However, these

appropriations have been closely associated with the readiness and

quality-of-life of the force, the Secretary of Defense’s priority areas for the

last few years.

Page 15 GAO/NSIAD-97-127BR Defense Budget
Briefing Section III 

Military Personnel Accounts

GAO Trends in Military Personnel 

Active Military Only

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

0

20

40

60

80

1

1.2

1.4

1.6

1.8

2

2.2

Fiscal year

Dollars in billions Personnel in millions

Personnel Dollars

Page 16 GAO/NSIAD-97-127BR Defense Budget
Briefing Section III 

Military Personnel Accounts

Between 1990 and 1997, the number of active military personnel was

projected to decrease from 2.07 million to 1.46 million, or about 

30 percent. During the same period, DOD’s annual budgets for active

military personnel were projected to decrease by only about 13 percent,

from $70 billion to about $61 billion. The budgets were not expected to

decrease commensurate with the force because the force that remains has

progressively become more expensive. Increases in basic pay and

allowances have contributed to the higher costs.1

 Also, force reductions

left DOD with a more senior and, thus, a more expensive force. For

example, our ongoing work shows that by 1999, each service is expected

to have a higher percentage of officers in the total forces than was the case

in 1990. The projected budgets for active military personnel in the 1997

FYDP reflect DOD’s plans for a relatively stable force and pay and benefit

increases through 2001.

DOD can reduce costs in the military personnel accounts by (1) reducing

the force, (2) changing the compensation package for military personnel,

and/or (3) changing the composition of the force. Any of these actions

would be difficult and controversial and would require collaboration

between Congress and the administration.

1

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

(GAO/NSIAD-96-183, July 9, 1996), we present comprehensive data on various pay categories included

in the military personnel compensation accounts and trends in those pay categories.

Page 17 GAO/NSIAD-97-127BR Defense Budget
Briefing Section III 

Military Personnel Accounts

GAO Military Personnel in Infrastructure and Mission 

Programs, Fiscal Year 1997

 

Army infrastructure

Navy infrastructure

USMC infrastructure

Mission

241,155

170,313

178,134

70,100

797,298

Air Force 

infrastructure

Page 18 GAO/NSIAD-97-127BR Defense Budget
Briefing Section III 

Military Personnel Accounts

Congress has been concerned about whether the drawdown of military

personnel may have gone too far and imposed permanent end strength

levels in the National Defense Authorization Act for Fiscal Year 1996

(P.L. 104-106). But, our work has shown that smaller end strengths are

possible without reducing the number of military personnel assigned to

mission forces. In fiscal year 1997, about 797,000, or 55 percent, of all

active duty military personnel are assigned to positions DOD classified as

directly related to mission programs. The remaining 660,000, or 45 percent,

of active military personnel are assigned to positions that support

infrastructure functions. Of the military personnel that support

infrastructure functions, 36 percent are in the Air Force, 26 percent are in

the Army, 27 percent are in the Navy, and 11 percent are in the Marine

Corps. Each service is assessing ways to streamline its operations that

could lead to fewer active military personnel needs.

The proportion of active duty military personnel that support

infrastructure functions varies by service. For fiscal year 1997, 63 percent

of Air Force personnel, 34 percent of Army personnel, 44 percent of Navy

personnel, and 40 percent of Marine Corps personnel are assigned to

infrastructure functions.

Page 19 GAO/NSIAD-97-127BR Defense Budget
Briefing Section IV 

Reforming Military Personnel Functions

GAO

Requirements for many noncombat positions are 

not based on sound strategy

Thousands of positions staffed by military 

personnel could be staffed by less costly civilians

Military Personnel Staffing--Condition

Our work has shown that DOD requirements for many noncombat positions

are not based on sound strategy and that thousands of positions staffed by

military personnel could be staffed by less costly civilians. We reported in

1997 that the Army’s efforts to make its institutional force (which provides

generally nondeployable support, including training, doctrine

development, base operations, supply, and maintenance) more efficient

and potentially smaller are hampered by long-standing weaknesses in its

Page 20 GAO/NSIAD-97-127BR Defense Budget
Briefing Section IV 

Reforming Military Personnel Functions

process to determine institutional force requirements.1 Specifically, many

of the Army’s institutional requirements are not determined through an

analysis of workload that includes analyzing what work needs to be done

based on mission and assessing how processes can be improved. Such an

analysis, when combined with the Army’s efforts to reengineer its overall

organization through functional assessments, would help the Army

determine how big its force needs to be and allocate resources efficiently

toward its highest priority institutional needs. In ongoing work, we found

that the Navy does not have an effective program for determining

personnel requirements for its shore establishment and, therefore, has

little assurance that these resources are being used efficiently and that its

shore establishment is appropriately sized.

We reported in 1994 that, although DOD policy is to use civilians wherever

possible, large numbers of military personnel perform technical,

management, administrative, and other functions that civilians typically

perform.2 DOD’s and the services’ policies allow service managers wide

latitude in filling positions with military personnel. No single directive

explains how DOD’s policy should be implemented or the specific criteria

to use in determining the appropriate mix of personnel. Therefore,

because of the broad nature of the guidance, tradition, and cultural

preferences for military incumbency, DOD and the services often merely

maintain the status quo on military incumbency. We identified

opportunities for the services to achieve operational efficiencies and

budget savings through greater use of civilian personnel in support

positions. We reported that, on average, each civilian support employee in

the United States costs about $15,000 less per year than a comparable

graded military person.

In 1996, we reported that about 9,500 military officers were staffed to

administrative and support positions in the Army, the Navy, and the Air

Force that civilians might be able to fill at lower costs and with greater

productivity due to the civilians’ much less frequent rotations.3

1

Force Structure: Army Support Forces Can Meet Two-Conflict Strategy With Some Risks

(GAO/NSIAD-97-66, Feb. 28, 1997).

2

DOD Force Mix Issues: Greater Reliance on Civilians in Support Roles Could Provide Significant

Benefits (GAO/NSIAD-95-5, Oct. 19, 1994).

3

DOD Force Mix Issues: Converting Some Support Officer Positions to Civilian Status Could Save

Money (GAO/NSIAD-97-15, Oct. 23, 1996).

Page 21 GAO/NSIAD-97-127BR Defense Budget
Briefing Section IV 

Reforming Military Personnel Functions

GAO Military Personnel Staffing--Actions Needed

Improve processes for determining number 

and composition of noncombat positions

Fill positions with military personnel only when 

essential

Page 22 GAO/NSIAD-97-127BR Defense Budget
Briefing Section IV 

Reforming Military Personnel Functions

DOD needs to improve its processes for determining the number and

composition of noncombat positions and to fill positions with military

personnel only when essential. In our 1997 report on the Army’s force

structure, we recommended that the Secretary of the Army improve the

management and allocation of personnel resources to the institutional

Army. Specifically, we recommended that the Secretary of the Army report

to the Secretary of Defense the Army’s long-standing problems with

implementing a workload-based analysis as a material weakness under the

Federal Managers’ Financial Integrity Act to maintain visibility of the

issue. DOD concurred with our recommendation and stated that the Army

will look at relationships and potential of new workload-based

management tools in the Quadrennial Defense Review.

In our 1994 report on DOD’s force mix, we recommended that the Secretary

of Defense establish a joint review board and provide it with a mandate to

work with the services to ensure a thorough and consistent review of

military support positions that may have potential for conversion to

civilian positions. We also recommended that the Secretary of Defense

direct the services to identify military positions that should be replaced

with civilians and eliminate, to the extent possible, impediments to using

civilians when they would be less costly. Although DOD concurred with our

recommendations, it converted no positions based on this work. In a

congressionally mandated report,4 DOD explained that large-scale

conversions of military positions would not be undertaken until its civilian

workforce stabilized at the conclusion of the drawdown.

In our October 1996 report, we recommended that the Secretary of

Defense overcome the impediments to conversion, develop a plan to

convert officer positions in support activities that are not military

essential, and require that the services implement the plan and report back

to the Secretary on the progress in implementing the plan. We also

recommended that the Secretary develop a process to ensure that the need

for military staffing in support positions is reassessed when major changes

or reorganizations occur. DOD generally concurred with our report and

acknowledged that support positions could be converted by the services

and that cost savings and other advantages can be obtained through such

conversions. DOD indicated that it would convene a series of meetings to

develop approaches to facilitate conversions.

4

Department of Defense Report on the Civilian and Military Mix in Support Occupations, Report to the

House Committee on National Security and Senate Committee on Armed Services, Office of the Under

Secretary of Defense (Personnel and Readiness), April 1995.

Page 23 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

GAO Trends in Operation and Maintenance Accounts

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

0

50

100

150

1

1.2

1.4

1.6

1.8

2

2.2

Fiscal year

Dollars in billions Personnel in millions

Dollars Military personnel

Page 24 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

While the number of active military personnel were projected to decline by

about 30 percent between fiscal year 1990 and 1997, operation and

maintenance budgets were projected to stay relatively constant, except for

the increase in 1991 due to the Persian Gulf War. From fiscal year 1997 to

fiscal year 2001, the operation and maintenance budgets are projected to

increase by 8 percent while active military personnel remain relatively

unchanged. Although the operation and maintenance appropriations do

not fund military pay and allowances, the accounts support many

readiness activities and quality-of-life programs that are affected by the

number of military personnel.

Since fiscal year 1987, the operation and maintenance accounts have been

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

remain the largest through fiscal year 2001. When compared with the

federal budget, DOD’s fiscal year 1997 operation and maintenance budget

request represents about 18 percent of total federal discretionary spending

and is larger than most federal agencies’ fiscal year 1997 budget requests.1

This is larger than the combined budgets of the Departments of Education,

Energy, Housing and Urban Development, Interior, and State and the

Environmental Protection Agency. Operation and maintenance

appropriations fund a diverse range of programs and activities that include

salaries and benefits for most civilian DOD employees; depot maintenance

activities; base operations; consumable supplies; and health care for active

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

and their dependents.

1

Discretionary programs are funded through annual appropriations acts and include such programs as

national defense, education, and law enforcement.

Page 25 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

GAO Operation and Maintenance Component: Civilian 

Personnel in Workforce, Fiscal Year 1997

Total: 798,300

Army

Navy/Marines

Air Force

Defense agencies

32%

28%

22%

18%

Page 26 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

According to DOD, over 40 percent of annual operation and maintenance

appropriations fund civilian salaries and benefits. In fiscal year 1997, DOD

was projected to have 798,300 civilian personnel. Of these, about 252,000

were assigned to Army programs, 227,000 to Navy and Marine Corps

programs, 178,000 to Air Force programs, and 142,000 to defense agencies

and DOD-wide programs.

Page 27 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

GAO Operation and Maintenance Component: Civilian 

Personnel in Infrastructure and Mission Programs, 

Fiscal Year 1997

Mission

Infrastructure

19%

81%

Page 28 GAO/NSIAD-97-127BR Defense Budget
Briefing Section V 

Operation and Maintenance Accounts

Civilian personnel have historically provided important support to military

combat forces in peacetime and in war. Civilian personnel maintain

military installations, repair and maintain weapon systems, and provide

communications and logistical support. In some instances, civilians fill

combat-essential functions and deploy with combat troops. For example,

during the Persian Gulf War, DOD employed over 14,000 civilian employees

and contractor personnel to support its military forces. Civilians served in

a wide variety of support positions, including transportation, maintenance

and repair, and weapon systems support roles.2

 In fiscal year 1997, about

648,000 of DOD’s civilian employees (81 percent) were projected to fill

positions that relate to infrastructure programs, while 150,000 (19 percent)

were projected to fill positions related to mission programs.

2

DOD Force Mix Issues: Greater Reliance on Civilians in Support Roles Could Provide Significant

Benefits (GAO/NSIAD-95-5, Oct. 19, 1994).

Page 29 GAO/NSIAD-97-127BR Defense Budget
Briefing Section VI 

Reforming Operation and Maintenance

Functions

GAO

Many unneeded facilities exist

Billions of dollars of excess inventory on hand

Billions of dollars wasted on inefficient operations

Current Infrastructure Condition

Page 30 GAO/NSIAD-97-127BR Defense Budget
Briefing Section VI 

Reforming Operation and Maintenance

Functions

Although DOD has made progress in improving key operations and

reducing costs, it continues to waste billions of dollars annually on

unneeded facilities, excess inventory, and inefficient activities. DOD has

acknowledged that it has more infrastructure than needed for the

downsized force.

We have identified potential areas where DOD could achieve savings by

reducing unneeded facilities. For example, at the time of the 1995 Base

Realignment and Closure process, DOD’s overall depot system had 

40 percent excess capacity (i.e., fiscal year 1996 program workload

compared to maximum potential capacity). DOD currently has 21 major

depots—7 depots have 50 percent or more excess capacity and 3 have

between 40 and 50 percent excess capacity. After all base closure actions

are completed, DOD’s research and development laboratory infrastructure

still will have about 35 percent excess capacity, according to DOD officials.

Further, DOD is spending $51 million in military construction funds on

accounting facilities that are unneeded.

We also pointed out that maintaining inventory that is not needed is

expensive and does not contribute to an effective, efficient, and

responsive supply system. In 1996, we found that $2.7 billion of DOD’s 

$8.3 billion in inventory at nonmajor locations was not needed to meet the

services’ current operating and war reserve requirements. We estimated

the services could save about $382 million annually in inventory holding

costs by eliminating the excess inventory.1

We also found instances where more efficient operations could achieve

savings. For example, to cover excessively high overhead costs, DOD

frequently charges customers double or triple the cost of basic

transportation. The high overhead costs stem in part from an outdated and

inefficient organizational structure and separate billing systems that could

be streamlined. DOD estimates its processing costs for temporary duty

travel—about $3.5 billion in fiscal year 1993—are as much as 30 percent of

the direct travel cost. This percentage is well above the 10-percent average

reported for private companies and the 6-percent rate that industry

considers an efficient operation. Other examples can be found in our

March 14, 1997, report, Addressing the Deficit: Budgetary Implications of

Selected GAO Work for Fiscal Year 1998 (GAO/OGC-97-2).

1

Defense Inventory: Spare and Repair Parts Inventory Costs Can Be Reduced (GAO/NSIAD-97-47,

Jan. 17, 1997).

Page 31 GAO/NSIAD-97-127BR Defense Budget
Briefing Section VI 

Reforming Operation and Maintenance

Functions

GAO Actions Needed to Reform Systems and Processes 

and Reduce Infrastructure

Prepare a strategic plan to reduce unneeded 

infrastructure

Consolidate facilities to eliminate excess capacity

Shift commercial-type activities to the private 

sector

Reengineer functions based on best practices

Improve inventory practices and dispose of excess 

inventory

Page 32 GAO/NSIAD-97-127BR Defense Budget
Briefing Section VI 

Reforming Operation and Maintenance

Functions

DOD has substantial opportunities to reduce its infrastructure costs and

realize the significant savings it needs to support modernization. In

March 1997, we reported on opportunities to reform key DOD business

practices.2

 We have previously reported that, to take best advantage of

these opportunities, DOD needs to develop an overall strategic plan to

guide efforts to reduce infrastructure activities. This plan should establish

time frames and identify organizations and personnel responsible for

accomplishing fiscal and operational goals. In developing this plan, DOD

should consider using a variety of means to achieve reductions, including

consolidations, closings, reengineering, and privatizing facilities and

operations. It should also consider the need and timing for future base

closure rounds, as suggested by the 1995 Base Realignment and Closure

Commission and others.

Numerous opportunities exist for DOD to eliminate excess capacity by

consolidating workloads and closing facilities, especially in the areas of

depot maintenance, training, research, and financial accounting. Greater

efficiency could also be achieved by consolidating and eliminating

duplicate support services where military bases are located close to one

another or where similar functions are performed at multiple locations.

DOD needs to apply private industry’s best practices to reengineer key

processes, such as transportation, travel, and pay, which currently cost

much more than industry standards.

DOD needs to reform its inventory management system by adapting best

business practices to ensure that its supply system is effective, efficient,

and responsive. For example, DOD should improve its requirements

determination system and storage practices.

2

Defense Programs: Opportunities to Reform Key Business Practices (GAO/NSIAD-97-99R, 

Mar. 5, 1997).

Page 33 GAO/NSIAD-97-127BR Defense Budget
Appendix I 

Categories of Defense Infrastructure

Installation support consists of activities that furnish funding, equipment,

and personnel to provide facilities from which defense forces operate.

Activities include construction planning and design, real property

maintenance, base operating support, real estate management for active

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

closure activities, and environmental programs.

Acquisition infrastructure consists of all program elements that support

program management, program offices, and production support, including

acquisition headquarters, science and technology, and test and evaluation

resources. This category includes earlier levels of research and

development, including basic research, exploratory development, and

advanced development.

Central logistics consists of programs that provide support to centrally

managed logistics organizations, including the management of material,

operation of supply systems, maintenance activities, material

transportation, base operations and support, communications, and minor

construction. This category also includes program elements that provide

resources for commissaries and military exchange operations.

Central training consists of program elements that provide resources for

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

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

other college commissioning programs, and officer and enlisted training

schools.

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

personnel that provide medical care to active military personnel,

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

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

Activities include medical training, management of the medical system,

and support of medical installations.

Central personnel consists of all programs that provide for the recruiting

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

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

Other programs supporting personnel include permanent

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

compensation, veterans education assistance, and other miscellaneous

personnel support activities.

Page 34 GAO/NSIAD-97-127BR Defense Budget
Appendix I 

Categories of Defense Infrastructure

Command, control, and communications consists of programs that

manage all aspects of the command, control, and communications

infrastructure for Department of Defense facilities; information support

services; mapping and charting products; and security support. This

category includes program elements that provide nontactical telephone

services, the General Defense Intelligence Program and cryptological

activities, the Global Positioning System, and support of air traffic control

facilities.

Force management consists of all programs that provide funding,

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

major military command headquarters activities. Force management also

includes program elements that provide resources for Defense-wide

departmental headquarters, management of international programs,

support to other defense organizations and federal government agencies,

security investigative services, public affairs activities, and criminal and

judicial activities.

(701113) Page 35 GAO/NSIAD-97-127BR Defense Budget
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