Report to Congressional Committees 

United States General Accounting Office 

GAO 

September 2003 MILITARY 

OPERATIONS 

Fiscal Year 2003 

Obligations Are 

Substantial, but May 

Result in Less 

Obligations Than 

Expected 

GAO-03-1088 
While funds obligated by DOD for GWOT, including the war with Iraq, in 

fiscal year 2003 are substantial—about $39 billion through June 2003—the 

funds appropriated by Congress appear to be sufficient for fiscal year 2003, 

and some of the services may not obligate all of the funds they were 

appropriated for fiscal year 2003. For example, at the end of June 2003, with 

75 percent of the fiscal year completed, the services’ percentage of GWOT 

operation and maintenance funds that had been obligated ranged from a low 

of 65 percent for the Army to a high of 78 percent for the Marine Corps (see 

chart below). In contrast, the percentage of military personnel funds 

obligated by the three-fourths of-the-fiscal-year mark by the services ranged 

from 72 to 75 percent of GWOT appropriations. 

Obligations of GWOT Operation and Maintenance Funds, through June 2003 

The military services believe they will obligate all the fiscal year 2003 funds 

appropriated to them. In addition, the services have received billions of 

dollars more in transfers from the Iraqi Freedom Fund. But GAO’s analysis 

suggests that they may not need all the funds transferred as well as further 

transfers in fiscal year 2003 for operation and maintenance, since 

considerable unobligated fiscal year 2003 funds remain in their direct 

appropriations. 

Since DOD terminated Operations Desert Spring and Northern and Southern 

Watch in Southwest Asia in March 2003, the funds ($1.4 billion) that were 

included in the President’s fiscal year 2004 budget to support those 

operations next year may no longer be necessary. 

The Global War on Terrorism 

(GWOT)—principally involving 

operations in Afghanistan and 

Iraq—is being funded in fiscal year 

2003 by Congress’s appropriation 

of almost $69 billion, including 

almost $16 billion in a transfer fund 

called the Iraqi Freedom Fund. To 

assist Congress in its oversight of 

funding for GWOT, GAO examined 

the obligation of GWOT funds and 

the implications for additional 

funding in fiscal year 2003 and the 

President’s request for fiscal year 

2004 funds for several operations in 

Southwest Asia that were canceled 

after the budget was submitted. 

GAO recommends that the 

Department of Defense (DOD) take 

several actions to ensure that the 

fiscal year 2003 funds appropriated 

for GWOT are fully utilized, 

including that the Secretary of 

Defense review the services’ 

spending plans before transferring 

additional funds from the Iraqi 

Freedom Fund to ensure the funds 

will be obligated as planned. GAO 

also suggests that, given the results 

of this review, Congress not 

provide the $1.4 billion requested 

by the President for DOD in fiscal 

year 2004 for continued support of 

Operations Desert Spring and 

Northern and Southern Watch 

since DOD canceled them. GAO 

made changes to its 

recommendations based on DOD’s 

comments on a draft of this report 

and DOD now agrees with the 

revised recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-03-1088.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Neal Curtin at 

(757) 552-8100 or curtinn@gao.gov. 

Highlights of GAO-03-1088, a report to 

congressional committees 

September 2003

MILITARY OPERATIONS 

Fiscal Year 2003 Obligations Are 

Substantial, but May Result in Less 

Obligations Than Expected 
Page i GAO-03-1088 Military Operations 

Letter 1

Results in Brief 2

Background 3

Unobligated Balances Late in the Fiscal Year Raise Doubts about 

Services’ Ability to Fully Obligate Their Fiscal Year 2003 GWOT 

Funds and Justification for Iraqi Freedom Fund Transfers 5

The Termination of Operations Northern Watch, Southern Watch, 

and Desert Spring Obviates the Need for Requested Fiscal Year 

2004 Funds for These Operations 14

Conclusions 14

Recommendations for Executive Action 15

Matter for Congressional Consideration 15

Agency Comments and Our Evaluation 15

Appendix I Scope and Methodology 19 

Tables 

Table 1: Operation and Maintenance Funds Provided to the 

Services for the Global War on Terrorism 6

Table 2: Military Personnel Funds Provided to the Services for the 

Global War on Terrorism 7

Figures 

Figure 1: Location of DOD’s Fiscal Year 2003 Contingency 

Operations 4

Figure 2: Obligations of GWOT Operation and Maintenance Funds 

through June 2003 9

Figure 3: Obligations of GWOT Military Personnel Funds through 

June 2003 12

Contents 
Page ii GAO-03-1088 Military Operations 

Abbreviations 

DOD Department of Defense 

GWOT Global War on Terrorism 

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Page 1 GAO-03-1088 Military Operations 

September 17, 2003 

Congressional Committees 

Following the terrorist attacks of September 11, 2001, the United 

States began military operations to combat terrorism both in the United 

States and overseas. Military operations to defend the United States from 

terrorist attacks are known as Operation Noble Eagle. Overseas operations 

to combat terrorism are known as Operation Enduring Freedom and have 

taken place principally in Afghanistan. In March 2003, the United States 

began Operation Iraqi Freedom to change the government in Iraq. 

Together, these three operations are known as the Global War on 

Terrorism (GWOT). To support GWOT in fiscal year 2003, Congress 

appropriated $68.7 billion to the Department of Defense (DOD) in the 

Consolidated Appropriations Resolution, 2003, and Emergency Wartime 

Supplemental Appropriations Act, 2003.1

 Of the $68.7 billion appropriated, 

almost $16 billion was appropriated in the Wartime Supplemental for a 

transfer account called the Iraqi Freedom Fund.2

To assist Congress in its oversight role, we reviewed the fiscal year 2003 

funding for the GWOT. Specifically, we reviewed the services’ obligation 

rates for GWOT-related activities and what those obligation rates suggest 

about the services’ needs to draw from the Iraqi Freedom Fund during 

fiscal year 2003. We also reviewed the President’s request for fiscal year 

2004 funds for Operations Northern Watch, Southern Watch, and Desert 

Spring,3

 which DOD subsequently terminated in March 2003. We provided 

briefings to the House and Senate Appropriations Committee staff and 

House and Senate Armed Services Committee staff as well as the House 

and Senate Budget Committee staff in June and July 2003. This report 

updates the information we provided during the briefings. 

 1

 P.L. 108-7 (Feb. 20, 2003) and P.L. 108-11 (Apr.16, 2003). 

2

 The Iraqi Freedom Fund is a special account providing funds for additional expenses for 

ongoing military operations in Iraq, and those operations authorized by P.L. 107-40 

(Sept. 13, 2001), Authorization for Use of Military Force, and other operations and related 

activities in support of the global war on terrorism. 

3

 Operations Northern and Southern Watch enforced the no-fly zones over Iraq. Operation 

Desert Spring, an Army operation, rotated forces in and out of Kuwait to train with the 

Kuwaiti military. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-03-1088 Military Operations 

To accomplish this review, we obtained the most recently available 

DOD data on the services’ obligation of fiscal year 2003 GWOT funds. We 

interviewed DOD and service officials responsible for preparing budgets 

and estimating costs and force levels. We also interviewed resource 

management officials from most of the major commands involved in 

Operation Iraqi Freedom. We focused our work on the obligation of funds 

appropriated for operation and maintenance and military personnel 

because they represented the large majority of funds obligated in fiscal 

year 2003 through June 2003. A detailed discussion of our scope and 

methodology is contained in appendix I. 

While funds obligated for the Global War on Terrorism (GWOT) in 

fiscal year 2003 are substantial—about $39 billion through June 2003, 

our analysis of the services’ obligation rates suggests that the funds 

appropriated by Congress for fiscal year 2003 GWOT operation and 

maintenance and military personnel, excluding transfers from the Iraqi 

Freedom Fund, are sufficient because some of the services may not be 

able to obligate, before the end of fiscal year 2003, the funds they were 

appropriated. For example, at the end of June 2003, with three-fourths of 

the fiscal year complete, the percentage of the services’ GWOT operation 

and maintenance appropriations that had been obligated ranged from a 

low of 65 percent for the Army to a high of about 78 percent for the Marine 

Corps. While some costs are higher than expected, other costs are lower, 

and on balance considerable operation and maintenance funds remain 

unobligated relatively late in the fiscal year for each of the services except 

the Marine Corps. Costs are higher, for example, because force levels in 

Iraq have not decreased as quickly as expected; one of the reasons for 

lower costs, on the other hand, is that not all forces deployed as planned. 

The percentage of the GWOT military personnel funds that had been 

obligated by the three-fourths of the fiscal-year mark by the services 

ranged from 72 percent for the Air Force to 75 percent for the Army and 

the Marine Corps. 

The military services believe that they will be able to obligate their entire 

fiscal year 2003 GWOT-appropriated funds, including an additional 

$2.4 billion in transfers to their operation and maintenance accounts 

received in August 2003 from the Iraqi Freedom Fund. Based on our 

analysis of the services’ obligation data, we identified considerable 

unobligated balances in the services’ fiscal year 2003 operation and 

maintenance appropriations that can be used for GWOT. Therefore, we 

believe the services may have sufficient funds in these accounts for fiscal 

year 2003, that not all of the transferred funds may be obligated, and that 

Results in Brief 
Page 3 GAO-03-1088 Military Operations 

the services should not require any further transfers from the Iraqi 

Freedom Fund this fiscal year. 

In March 2003, DOD terminated Operations Northern Watch, Southern 

Watch, and Desert Spring. Therefore, the funds requested for these 

operations in the President’s fiscal year 2004 budget request for DOD may 

no longer be necessary as requested. 

We are making recommendations to ensure that (1) funds provided to the 

services for GWOT are fully utilized and (2) any funds transferred from the 

Iraqi Freedom Fund that are not obligated by the end of fiscal year 2003 

are identified and returned to the Fund. We also identified a matter for 

congressional consideration regarding the President’s fiscal year 2004 

budget request for certain Southwest Asia operations that DOD canceled 

in March 2003 following the President’s budget submission. 

In official oral comments on a draft of this report, DOD agreed with one of 

our recommendations and had concerns with two others. We revised our 

recommendations to reflect DOD’s concerns, and DOD now concurs with 

the revised recommendations. 

From the end of the Persian Gulf War in February 1991 through June 2003, 

the DOD reported that it had obligated over $86.203 billion for incremental 

costs4

 it had incurred for its overseas contingency operations. These 

operations included the enforcement of no-fly zones, humanitarian 

assistance, and peace enforcement operations, as well as operations to 

combat terrorism. In fiscal year 2003, these costs were incurred preparing 

for and undertaking GWOT, including the 2003 war against Iraq. In 

addition, U.S. military forces are continuing to participate in contingency 

operations in the Balkans. Figure 1 shows the location of DOD’s 

contingency operations for fiscal year 2003. 

 4

 The term “incremental costs” means those directly attributable costs that would not have 

been incurred if it were not for the operation. Sections 230406 and 230902 of Department 

of Defense Financial Management Regulation 7000.14R, Volume 12, Chapter 23, 

Contingency Operations (Feb. 2001) provide additional information on incremental costs. 

We further note that DOD’s financial systems only capture total obligations and the 

services use various management information systems to identify incremental obligations 

and to estimate costs. Although we use the term costs throughout this report as a 

convenience, we are actually referring to DOD’s obligation of funds. 

Background 
Page 4 GAO-03-1088 Military Operations 

Figure 1: Location of DOD’s Fiscal Year 2003 Contingency Operations 

Most of the costs associated with GWOT fall into two accounts—operation 

and maintenance and military personnel. Operation and maintenance 

account funds obligated in support of 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. Military personnel funds obligated in support of 

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. 
Page 5 GAO-03-1088 Military Operations 

The services were appropriated about $34 billion to their operation and 

maintenance accounts and about $15 billion to their military personnel 

accounts for fiscal year 20035

 to support the war in Iraq and Operations 

Enduring Freedom and Noble Eagle. It appears that while the funds 

obligated for these operations—about $39 billion as of the end of 

June 2003—are substantial,6

 the proportion of appropriated funds that 

have been obligated as of that date is lower than the proportion of the 

fiscal year elapsed as of that same date except for the Marine Corps. In 

this regard, through June 2003, which represents three-fourths of the fiscal 

year, three of the four services had not obligated more than 68 percent of 

the operation and maintenance funds appropriated for GWOT, while the 

Marine Corps had obligated 78 percent. 

To support GWOT in fiscal year 2003, Congress appropriated $68.7 billion 

to DOD in the Consolidated Appropriations Resolution, 2003, and 

Emergency Wartime Supplemental Appropriations Act, 2003. According to 

the conference report that accompanied the legislation, Congress included 

$6.1 billion for Operations Noble Eagle and Enduring Freedom in the 

Consolidated Appropriations Resolution of February 2003.7

 In March 2003, 

the President requested that Congress appropriate $74.8 billion for GWOT, 

including the conduct of military operations in Iraq and reconstruction and 

relief there. Of this amount, $62.6 billion was identified in the President’s 

budget for DOD’s GWOT military operations. In developing the President’s 

request, DOD assumed, among other things, that the war with Iraq would 

be a short conflict, would involve a two-front war using Turkey as a 

staging area, and there would be a rapid redeployment and demobilization 

of Reserve and National Guard troops following the cessation of combat 

operations. In April 2003, Congress appropriated $79.2 billion, including 

$62.6 billion for DOD to cover all GWOT, including the war with Iraq, in 

 5

 This amount excludes almost $16 billion provided in the Iraqi Freedom Fund, which is 

available until the end of fiscal year 2004. 

6

 Of this amount, we estimate that almost $28 billion was for the war with Iraq based on the 

Office of the Secretary of Defense (Comptroller)’s estimate through May 2003 and our 

analysis of the June 2003 obligations data. 

7

 Conference Report (H.R. Conf. Rep. No. 108-10), Feb. 13, 2003, accompanying H.J. Res. 2, 

Consolidated Appropriations Resolution, 2003 (P.L. 108-7) Feb. 20, 2003. 

Unobligated Balances 

Late in the Fiscal Year 

Raise Doubts about 

Services’ Ability to 

Fully Obligate Their 

Fiscal Year 2003 

GWOT Funds and 

Justification for 

Iraqi Freedom 

Fund Transfers 

Fiscal Year 2003 Funding 

for the Global War on 

Terrorism 
Page 6 GAO-03-1088 Military Operations 

the Emergency Wartime Supplemental Appropriations Act of April 2003.8

Although the services received their Consolidated Appropriations 

Resolution, 2003, funds for fiscal year 2003 in February 2003, they did not 

receive their first allocation of funds from the Emergency Supplemental 

until May 2003 and their second allocation until July 2003. Before 

receiving these monies, the services used funds from the Consolidated 

Appropriations and their base programs, obligating $25.9 billion for 

GWOT. DOD’s statement of its requirements for the supplemental 

appropriation included reimbursing the services’ accounts for costs 

incurred and financing the costs associated with military operations 

against Iraq. 

Neither the President’s request for funds nor the appropriations act 

allocated the funds to specific operations. Of the funds appropriated 

to DOD by the Emergency Wartime Supplemental, $46.699 billion was 

appropriated directly to the services’ and other defense agencies’ 

appropriations accounts and $15.679 billion to a transfer fund called the 

Iraqi Freedom Fund. Tables 1 and 2 show the operation and maintenance 

and the military personnel appropriations provided to the services 

for GWOT. 

Table 1: Operation and Maintenance Funds Provided to the Services for the Global War on Terrorism 

Dollars in millions 

Operation and maintenance Army Navy Air Force Marine Corps All services 

Consolidated Appropriations Resolution $1.340 $0.436 $1.767 $0.202 $3.745 

Emergency Wartime Supplemental Appropriations $16.078 $5.107 $7.120 $1.670 $29.975 

Total $17. 418 $5.543 $8.887 $1.872 $33.720 

Source: Department of Defense Fiscal Year 2003 Appropriations Report. 

Note: The dollar figures cited above include appropriations received by both the active and the 

reserve components for each service. 

 8

 P.L. 108-11 (Apr. 16, 2003). 
Page 7 GAO-03-1088 Military Operations 

Table 2: Military Personnel Funds Provided to the Services for the Global War on Terrorism 

Dollars in millions 

Military personnel Army Navy Air Force Marine Corps All services 

Consolidated Appropriations Resolution $0.771 $0.214 $0.563 $0.069 $1.617 

Emergency Wartime Supplemental Appropriations $7.803 $1.600 $2.800 $1.200 $13.403 

Total $8.574 $1.814 $ 3.363 $1.269 $15.020 

Source: Department of Defense Fiscal Year 2003 Appropriations Report. 

Note: The dollar figures cited above include appropriations received by both the active and the 

reserve components for each service. 

To assess the extent to which funds appropriated for GWOT have been 

obligated, we compared the latest available obligation reports for 

GWOT with the funds appropriated to each of the services’ operation and 

maintenance and military personnel accounts. We then compared the 

proportion of the funds obligated to the proportion of the fiscal year that 

had elapsed to ascertain if funds were obligated at a level commensurate 

with that point in the fiscal year. We recognize that funds are not obligated 

equally each month throughout the fiscal year but 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. The 

results of this analysis are discussed in the following sections of this 

report. We discussed our analysis with DOD representatives at the Office 

of the Secretary of Defense (Comptroller) and each of the services’ budget 

offices, who disagreed with our methodology. These representatives 

believed that the analysis should take into account the fact that the 

supplemental appropriation was not available until mid-April 2003 and that 

funds were not provided to the services until the beginning of May 2003. 

We recognize that the supplemental funding was not provided to the 

services until May 2003. At the same time, DOD had to conduct Operations 

Noble Eagle and Enduring Freedom from the first day of fiscal year 2003 

and subsequently prepare for war in Iraq, deploy over 100,000 military 

personnel to the Persian Gulf, and conduct major combat operations, all 

before receiving supplemental funding. As discussed earlier, to fund these 

operations in advance of receiving supplemental funding, the services 

used funds from the Consolidated Appropriations and their base 

programs. In doing so, DOD reported that it had obligated $25.9 billion for 

GWOT in fiscal year 2003 through April 2003. Therefore, we believe that 

assessing how much of the services’ direct GWOT appropriations have 

been obligated relatively late in the fiscal year provides a reasonable 

measure of how quickly the services are obligating their GWOT 
Page 8 GAO-03-1088 Military Operations 

appropriations and the likelihood that they will obligate all the funds 

appropriated to them. Our analysis suggests that the services have no need 

for further transfers from the Iraqi Freedom Fund in fiscal year 2003, that 

all the funds transferred to their operation and maintenance accounts may 

not be obligated, and that any transferred funds unobligated at the end of 

the fiscal year should be transferred back to the Iraqi Freedom Fund. 

Our analysis of the percentage of fiscal year 2003 GWOT operation 

and maintenance funds obligated by the services compared with the 

proportion of the fiscal year elapsed (i.e., October 1, 2002, through 

June 2003, the latest month for which obligation data are available for all 

the services) shows that the proportion of available appropriations that 

have been obligated as of a particular date is lower than the proportion of 

the fiscal year elapsed as of that same date for three of the four military 

services, notwithstanding that funds obligated to date include those 

required to cover the preparation of military forces for the war with Iraq 

and the expense of transporting them and their equipment from the United 

States and elsewhere to the Persian Gulf. Therefore, we believe the actual 

operation and maintenance obligations made in fiscal year 2003 could be 

less than the funds available for obligation in fiscal year 2003. By the end 

of June 2003, only one of the services, the Marine Corps, had obligated 

more than 75 percent of the funds appropriated for operation and 

maintenance, while the other three services had obligated between 65 and 

68 percent, although three-fourths of the fiscal year had already elapsed, 

raising doubts about whether all the services will be able to obligate their 

entire fiscal year 2003 GWOT operation and maintenance funds in the 

remaining 3 months of fiscal year 2003. For example, the Army, by the end 

of June 2003, had obligated 65 percent of its directly appropriated funds 

for GWOT. Figure 2 displays the obligations through June 2003 for each of 

the military services. 

As can be seen in figure 2, the percentage of directly appropriated 

operation and maintenance funds that were obligated as of June 30, 2003, 

ranged from a low of 65 percent for the Army to a high of 78 percent for 

the Marine Corps. 

Proportion of Operation 

and Maintenance Funds 

Obligated Is Lower Than 

Proportion of Fiscal Year 

Elapsed Except for the 

Marines Corps 
Page 9 GAO-03-1088 Military Operations 

Figure 2: Obligations of GWOT Operation and Maintenance Funds through 

June 2003 

Note: Total obligations include obligations from both the active and the reserve components. 

Based on our analysis, we believe that in fiscal year 2003 the services, with 

the possible exception of the Marine Corps, may not obligate all operation 

and maintenance funds appropriated to them for GWOT. The services, 

however, believe that they will obligate all or almost all of these funds. 

This may in fact be the case, but except for the Marine Corps, if the 

services do obligate all these funds it will require a faster rate of obligation 

of funds—greater than the rate at which they have been obligating funds in 

recent months. We recognize that estimating the costs of ongoing military 

operations is difficult because operational requirements can differ 

substantially from what was assumed in developing budget estimates. 

This has been the case in Iraq, where actual operations have differed from 

some of the assumptions. For example, a second front using Turkey as a 

staging area never materialized, there has not been a rapid redeployment 

and demobilization of Reserve and National Guard troops, one major Army 
Page 10 GAO-03-1088 Military Operations 

division expected to deploy did not, and transportation costs were lower 

than predicted. Some of these differences, such as the lack of a rapid 

redeployment and demobilization, are resulting in higher than expected 

costs, while other differences, for example, the decision to not deploy one 

of the Army’s divisions, are resulting in lower than expected costs. 

However, in light of the rate of obligations made through June and the 

information presented below, we continue to believe that actual 

obligations of GWOT operation and maintenance funds for fiscal year 2003 

may be less than the total GWOT operation and maintenance 

appropriations available for obligation in fiscal year 2003. 

• According to the Army’s obligation plan, the Army expects to obligate 

$6 billion during the last 3 months of fiscal year 2003. Through June 2003, 

the Army had obligated $11.315 billion. Combining the funds obligated 

through June and the Army’s estimate for the balance of fiscal year 2003 

indicates that the Army will obligate a total of $17.315 billion—$98 million 

less than the $17.413 billion it received in direct operation and 

maintenance appropriations for GWOT. It should be noted, however, that 

the Army’s actual June obligations of $2.38 billion are higher than the 

$2.2 billion it planned to obligate in June. Whether the Army will obligate 

all its fiscal year 2003 GWOT operation and maintenance funds depends on 

whether its obligations for the last 3 months of the fiscal year continue at 

or near the June 2003 rate or fall to the levels expected in its obligation 

plan. In discussing the results of our analysis with the Army, Army officials 

told us that preliminary reports indicate that their July obligations will be 

about $3 billion. However, their preliminary June obligation estimate was 

higher than their actual June obligations, which underscores the difficulty 

in projecting costs and the need to closely monitor the obligation of 

GWOT funds. 

• The Marine Corps expects to obligate approximately $591 million for force 

reconstitution (the repair of damaged equipment and the replacement of 

munitions, spare parts or equipment lost in war) during the last 3 months 

of the fiscal year. However, in discussing our analysis with the Marine 

Corps, Marine Corps officials involved with budgeting for ongoing military 

operations told us that constraints in depot and contractor capacity could 

lead the Marine Corps to obligate fewer funds in fiscal year 2003 than 

planned for depot maintenance, which accounts for $50 million to 

$70 million of its $591 million reconstitution estimate. 

• Through June 2003, which is the first 9 months of fiscal year 2003, the 

Air Force had obligated $6.0 billion, or 68 percent, of its direct GWOT 

operation and maintenance appropriation. Most of the Air Force’s aircraft 

have redeployed from Operation Iraqi Freedom, and the Air Force’s role in 

that operation has been reduced. According to Air Force officials, in 

March 2003, the Air Force had 1,000 aircraft deployed in support of the 
Page 11 GAO-03-1088 Military Operations 

war in Iraq and by late June the number had been reduced to 276. The 

Air Force’s June 2003 obligation of its GWOT operation and maintenance 

appropriation was $76 million less than its May 2003 obligation of 

that appropriation. 

• The Navy had obligated $3.7 billion, or 67 percent, of its direct GWOT 

appropriation through June 2003. According to Navy officials, all Navy 

ships that deployed to support Operation Iraqi Freedom have been 

redeployed, and Navy activity is back to pre-Operation Iraqi Freedom 

levels. Furthermore, Navy officials with the Pacific Fleet (the Navy’s major 

force provider for Operation Iraqi Freedom) told us that their GWOT 

obligations were lower than they had estimated, due in part to lower fuel 

and airlift costs. In discussing our analysis with Navy headquarters 

officials, they said that while a shorter duration of combat operations 

resulted in certain costs not accruing or accruing at the estimated levels, 

other operational factors and costs occurred that were substituted and 

more than offset estimated fuel and airlift savings. Based on obligations 

through June 2003, we believe the Navy may not be able to obligate its 

entire fiscal year 2003 GWOT operation and maintenance appropriation by 

the end of fiscal year 2003. 

The services have been obligating their funds for military personnel at a 

faster rate than that for their operation and maintenance funds. As figure 3 

shows, with three-fourths of the fiscal year gone, the Army and the 

Marine Corps had each obligated about three-fourths of their GWOT 

appropriations for military personnel costs while the Navy and Air Force 

had each obligated slightly less than three-fourths of their respective 

GWOT appropriation. 

Military Personnel Funds 

Are Being Obligated at 

a Faster Rate Than 

Operation and 

Maintenance Funds 
Page 12 GAO-03-1088 Military Operations 

Figure 3: Obligations of GWOT Military Personnel Funds through June 2003 

Note: Total obligations include obligations from both the active and the reserve components. 

According to DOD’s July 2, 2003, report on fiscal year 2003 appropriations, 

the services will obligate their entire fiscal year 2003 GWOT military 

personnel appropriations. Service officials told us that they believe they 

will use their entire GWOT military personnel appropriation because the 

planned demobilization of reserve component personnel has not occurred. 

In addition, the Army has not been able to redeploy its troops from Iraq as 

originally planned, which increased the Army’s costs for the special pays 

and allowances, such as imminent danger pay and family separation 

allowance, which some deployed military personnel are entitled to receive. 
Page 13 GAO-03-1088 Military Operations 

In addition to the direct appropriations included in the Emergency 

Wartime Supplemental Appropriations Act, Congress also established the 

Iraqi Freedom Fund, which provides the services with additional funds to 

cover their GWOT costs. Congress appropriated almost $15.7 billion9 to 

this Fund and made it available to DOD through September 30, 2004. DOD 

must notify Congress at least 5 days in advance of such transfers, but 

congressional approval to make the transfers is not required. Once DOD 

transfers funds to the services’ operation and maintenance or military 

personnel accounts during fiscal year 2003, the funds must be obligated by 

September 30, 2003, or they should be transferred back to the Iraqi 

Freedom Fund.10

On August 11, 2003, DOD notified the Congressional Defense Committees 

of its intention to make an initial transfer of $4.8 billion from the Iraqi 

Freedom Fund to various service and DOD agency accounts. Of the 

$4.8 billion, about half ($2.4 billion) would be transferred to the services’ 

operation and maintenance accounts; the balance would be transferred 

to defensewide operation and maintenance and to a variety of 

procurement and research, development, test, and evaluation accounts. 

The August 11, 2003, notification did not include any transfers to the 

services’ military personnel accounts. Of the amount to be transferred to 

the services’ operation and maintenance accounts, 

• $1,097.3 million would be transferred to the Army, 

• $683.7 million would be transferred to the Navy, 

• $285.9 million would be transferred to the Marine Corps, and 

• $377.5 million would be transferred to the Air Force. 

These transfers will increase the amount of funds in the services’ fiscal 

year 2003 operation and maintenance accounts available for GWOT. 

 9

 Of the $15.7 billion, as much as $5.2 billion was earmarked for particular programs or 

activities such as the Coast Guard, fighting oil well fires, and repairing Iraq’s oil fields, as 

well as payments to reimburse cooperating nations. The remaining $10.4 billion is available 

to meet the requirements of the services and defensewide programs. 

10 Although Iraqi Freedom Fund budget authority remains available for transfer until 

September 30, 2004, funds transferred under this Fund shall be merged with and shall be 

available for the same purposes and for the same time period, as the appropriation to 

which transferred, but can be transferred back to the Fund if unobligated by the end of the 

fiscal year. 

DOD is Transferring 

Additional Funds to the 

Military Services 
Page 14 GAO-03-1088 Military Operations 

Since the 1991 war with Iraq, the United States has been conducting 

operations in Southwest Asia to monitor Iraq’s compliance with various 

United Nations resolutions. Operations Northern and Southern Watch 

enforced the no-fly zones over Iraq. Operation Desert Spring, an Army 

operation, rotated forces in and out of Kuwait to train with the Kuwaiti 

military. From the inception of operations through June 2003,11 costs for 

these operations have totaled $11.4 billion. Since fiscal year 2002, funds 

for these operations have been included in the services’ base programs. 

In March 2003, DOD terminated Operations Northern and Southern Watch 

and Operation Desert Spring. The President’s fiscal year 2004 budget 

request, which was submitted in February 2003, before the termination of 

these operations, included approximately $1.4 billion for these operations. 

We briefed the Senate and House Committees on Appropriations on the 

termination of these operations in early June 2003 and suggested that 

since the operations have ended there was no need to provide funds for 

them in fiscal year 2004, although there could be further costs associated 

with shutting them down in fiscal year 2003 between the time they were 

terminated in March 2003 and September 2003. 

The Army agreed that it would not require any funding in fiscal year 2004 

for Operation Desert Spring, and the Air Force agreed that it would not 

require funding for Northern Watch, but it disagreed with congressional 

action to eliminate funding for Operation Southern Watch. The Air Force 

asked that the funds for Operation Southern Watch be restored because 

it believed it needed these funds to maintain the bases that were 

previously used for Operation Southern Watch and that now support the 

ongoing operations. 

Our analysis of the obligation of funds to support GWOT in fiscal year 2003 

suggests that the funds appropriated to the services for that purpose, 

particularly for operation and maintenance, could be sufficient to cover 

their fiscal year 2003 costs. On August 11, 2003, DOD notified Congress of 

its intent to initially transfer $2.4 billion from the Iraqi Freedom Fund to 

the services’ operation and maintenance accounts. Collectively, with the 

funds DOD has transferred from the Iraqi Freedom Fund to the military 

 11 While the programs were terminated in March 2003, after the President’s fiscal year 2004 

budget request submission, some costs continue to be obligated as the services complete 

the process of shutting down the operations. 

The Termination of 

Operations Northern 

Watch, Southern 

Watch, and Desert 

Spring Obviates the 

Need for Requested 

Fiscal Year 2004 

Funds for 

These Operations 

Conclusions 
Page 15 GAO-03-1088 Military Operations 

services and the large amount of unobligated funds remaining in the 

services’ fiscal year 2003 GWOT operation and maintenance 

appropriations except for the Marine Corps as of the end of June 2003, 

obligating these funds between July and September 30, 2003, could 

be challenging. 

In March 2003, DOD terminated Operations Northern Watch, Southern 

Watch, and Desert Spring. Therefore, the funds requested for these 

Operations in the President’s fiscal year 2004 budget request for DOD may 

no longer be necessary as requested. 

To ensure that funds already appropriated, including funds transferred 

from the Iraqi Freedom Fund, to the military services for GWOT are fully 

utilized and that additional funds are not transferred to the military 

services’ operation and maintenance and military personnel accounts from 

the Iraqi Freedom Fund until they are needed, we recommend that the 

Secretary of Defense (1) monitor the obligation of funds in the services’ 

operation and maintenance accounts, including the GWOT funds, 

(2) ensure that all funds transferred to the services’ operation and 

maintenance accounts that are not likely to be obligated by the end of 

fiscal year 2003 are transferred back to the Fund as allowed by the 

Wartime Supplemental Appropriation, and (3) closely review the 

executability of further funding transfers from the Iraqi Freedom Fund to 

ensure the funds will be obligated as planned. 

Because Operations Northern Watch, Southern Watch, and Desert Spring 

were canceled in March 2003, after the President’s fiscal year 2004 budget 

submission, Congress may wish to delete the funds requested for this 

purpose from the fiscal year 2004 DOD appropriations. 

In official oral comments on a draft of this report, DOD agreed with our 

recommendation to ensure that all funds transferred to the services’ 

operation and maintenance accounts that are not likely to be obligated by 

the end of fiscal year 2003 are transferred back to the Iraqi Freedom Fund. 

DOD had concerns with our other two recommendations dealing with (1) 

monitoring the obligation of GWOT funds and (2) prohibiting the transfer 

of funds from the Iraqi Freedom Fund until the services provide obligation 

reports showing that a large percentage of their current GWOT 

appropriations, such as 90 percent, have been obligated and suggested 

some revisions. Based on DOD’s comments we have revised our 

Recommendations for 

Executive Action 

Matter for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 
Page 16 GAO-03-1088 Military Operations 

recommendations as discussed below. DOD agrees with our revised 

recommendations. 

With respect to our recommendation that the Secretary of Defense 

monitor the obligation of GWOT funds in the services’ operation and 

maintenance accounts, including those transferred from the Iraqi Freedom 

Fund, DOD noted that when the supplemental funds are released to the 

components those funds become part of the appropriation and are not 

separately identified as GWOT funds. DOD further noted that it could not 

separately monitor GWOT funds because they are not identified separately 

in the accounting systems. As a result, we revised our recommendation to 

state that the Secretary of Defense monitor the obligation of funds in the 

services’ operation and maintenance accounts, including the GWOT funds. 

DOD did not agree with our recommendation that the Secretary of 

Defense prohibit further transfers until the services provide obligation 

reports showing that a large percentage of their current GWOT 

appropriations, such as 90 percent, have been obligated. DOD noted that 

our recommendation ignores the funding pipeline issues; specifically that 

it takes time for the funds to be released, received by the services, and 

obligated. DOD said that to arbitrarily suggest that 90 percent of an 

account must be obligated before additional funds could be transferred 

into the account would create an unnecessary burden on the services, lead 

to "stop-go" funding decisions, and have a negative impact on normal 

operating procedures. We did not cite a specific figure in our draft 

recommendation; rather we suggested that a large percentage of the 

services’ current GWOT appropriations, such as 90 percent, be obligated 

before making further transfers. However, in light of DOD's concerns we 

revised our recommendation to state that the Secretary of Defense closely 

review the executability of further funding transfers from the Iraqi 

Freedom Fund to ensure the funds will be obligated as planned.

We are sending copies of this report to interested congressional 

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

(Comptroller); and the Director, Office of Management and Budget. 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 17 GAO-03-1088 Military Operations 

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

(757) 552-8100. Principal contributors to this report were Steve Sternlieb, 

Carole Coffey, George Duncan, Matt Ullengren, and James Reynolds. 

Neal P. Curtin 

Director, Defense Capabilities 

 and Management 
Page 18 GAO-03-1088 Military Operations 

List of Congressional Committees 

The Honorable Ted Stevens 

Chairman 

The Honorable Daniel K. Inouye 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable John Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Jerry Lewis 

Chairman 

The Honorable John Murtha 

Ranking Minority Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 
Appendix I: Scope and Methodology 

Page 19 GAO-03-1088 Military Operations 

To examine the adequacy of funding for the Global War on Terrorism 

(GWOT), we reviewed (1) the President’s fiscal year 2003 budget request 

for supplemental appropriations, (2) applicable laws and accompanying 

reports appropriating funds for GWOT, and (3) DOD reports on the 

obligation of funds. We also obtained budget estimates from the services 

and their key elements involved in GWOT operations. We also met with 

service officials to discuss world events that may have had an impact on 

their budget estimates and their obligation patterns. We compared the 

latest available obligation reports against total available appropriated 

funds. We then compared the proportion of appropriated funds obligated 

with the proportion of the fiscal year that had elapsed to ascertain how 

rapidly funds were being obligated. We recognized that funds are not 

obligated equally each month throughout the fiscal year but 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. We focused our work on the obligation of funds appropriated 

for operation and maintenance and military personnel because they 

represented the large majority of funds obligated in fiscal year 2003 

through June 2003. During that period $866 million of the $38.9 billion in 

reported obligations was obligated for what the Department of Defense 

categorized as investment. 

To determine if there is a continued need for fiscal year 2004 funds for 

Operations Southern Watch, Northern Watch, and Desert Spring, we met 

with service officials and reviewed documents to determine the status of 

the three operations. We reviewed the President’s fiscal year 2004 budget 

request for the Department of Defense to determine the total requested for 

the three operations. 

We visited the following locations during our review: 

• Office of the Secretary of Defense (Comptroller), Washington, D.C. 

• Office of the Secretary of Defense (Reserve Affairs), Washington, D.C. 

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

• U.S. Army Reserve Command, Fort McPherson, Ga. 

• U.S. Army Forces Command, Fort McPherson, Ga. 

• U.S. Army National Guard, Arlington, Va. 

• U.S. Army Europe, Heidelberg, Germany. 

• U.S. Army Pacific Command, Fort Shafter, Hawaii 

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

• U.S. Air National Guard, Arlington, Va. 

• U. S. Air Force Europe, Ramstein Air Base, Germany. 

• Pacific Air Force, Hickham Air Base, Hawaii 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 20 GAO-03-1088 Military Operations 

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

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

• Naval Reserve Forces Command, New Orleans, La. 

• United States Marine Corps Reserve Forces, New Orleans, La. 

• Marine Forces, Pacific, Camp Smith, Hawaii 

• Pacific Fleet, Pearl Harbor, Hawaii 

We also obtained information from the Army Material Command, 

Alexandria, Virginia. 

We performed our work from February through September 2003 in 

accordance with generally accepted government auditing standards. 

(350308/350359) 
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