United States General Accounting Office

GAO Report to Congressional Requesters

May 1996 DEFENSE

INFRASTRUCTURE

Costs Projected to

Increase Between 1997

and 2001

G O A

years

1921 - 1996

GAO/NSIAD-96-174

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272167 

May 31, 1996

The Honorable Charles E. Grassley

The Honorable William V. Roth, Jr.

United States Senate

As you requested, we analyzed the infrastructure portion of the

Department of Defense’s (DOD) 1997 Future Years Defense Program (FYDP),

which covers fiscal years 1997-2001. Specifically, you asked that we

provide DOD’s projected costs for each of its eight infrastructure

categories.1

Background Between fiscal years 1997 and 2001, DOD plans to increase procurement

funds from $38.9 billion to $60.1 billion primarily for new weapon systems

and upgrades to existing systems. The Secretary of Defense has stated that

he expects to achieve this 54 percent increase within the President’s

proposed budgets with savings from infrastructure reductions, cost

avoidance from acquisition reforms, and privatizing services.

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. However, DOD

excludes many intelligence, space, and command, control, and

communications programs. These programs account for about

$25.9 billion in fiscal year 1997.

Results in Brief 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 1997 to $155 billion in 2001. 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

An analysis of the infrastructure portion of DOD’s fiscal years 1996-2001 FYDP is included in Defense

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

(GAO/NSIAD-96-131, Apr. 4, 1996). Because of significant changes in DOD’s inflation assumptions and

other adjustments to infrastructure categories, the 1996 and 1997 FYDPs are not directly comparable.

Our review of the differences in the two FYDPs is continuing, and we plan to report the results of that

review at a later date.

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B-272167 

Although the installation support portion of DOD’s infrastructure budget is

projected to decline during the 1997 to 2001 period, all other categories of

infrastructure are projected to increase. The combination of operation and

maintenance and military personnel appropriations fund about 80 percent

of infrastructure activities that can be clearly identified in the FYDP. Thus,

DOD must look to these two appropriations if it intends to spend less for

infrastructure activities.

DOD’s Infrastructure

Budget Is Increasing

DOD’s budget is projected to increase by $26 billion between 1997 and 2001,

whereas infrastructure funding is projected to increase by $9 billion during

this same period, as shown in figure 1. As a result, the proportion of

planned infrastructure funding in DOD’s budget is projected to decrease

from about 60 percent to 57 percent.

Figure 1: Comparison of DOD’s Total

Planned Obligational Authority to Total

Planned Infrastructure Funding, Fiscal

Years 1997-2001 (dollars in billions)

1997 1998 1999 2000 2001

$0

$50

$100

$150

$200

$250

$300

Fiscal Year

Total DOD budget Infrastructure

244 249 255

263 270

146 145 148 150 155

Source: GAO analysis of DOD data.

Page 2 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

As we explained in our April report, 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

the Defense Business Operations Fund activities. The officials estimate

that this is about 20 to 25 percent of DOD’s total infrastructure budget and

is mostly logistics purchases that cannot be specifically identified. For

subsequent analyses, we used direct infrastructure funding identified in

the FYDP since we had no basis to allocate Defense Business Operations

Funds across the infrastructure categories.

Figure 2 and table 1 show that installation support decreases slightly

between 1997 and 2001 but all the other infrastructure categories increase

during the period. Although it is not possible to allocate the Defense

Business Operations Fund infrastructure in programs by infrastructure

categories, we believe that much of this infrastructure would be included

in the central logistics category because many of the fund’s activities

perform logistics functions.

Page 3 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

Figure 2: Projected Trends for Infrastructure Categories, Fiscal Years 1997-2001 (dollars in billions)

1997 1998 1999 2000 2001

$5

$10

$15

$20

$25

Fiscal Year

Acquisition infrastructure Installation support Force management Central logistics

Central medical Central training Central personnel Central command, control,

and communications

Source: GAO analysis of DOD data.

Page 4 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

Table 1: Projected Funding for

Infrastructure Categories, Fiscal Years

1997-2001

Dollars in billions

Infrastructure categories FY 1997 FY 1998 FY 1999 FY 2000 FY 2001

Installation support $25.10 $23.64 $22.68 $22.53 $23.03

Central training 19.35 19.40 20.08 20.71 21.46

Central medical 15.47 15.82 16.13 16.64 17.38

Central logistics 13.33 13.30 14.18 14.15 14.70

Force management 12.91 12.38 13.05 13.12 13.35

Acquisition infrastructure 10.25 10.64 10.97 11.19 11.76

Central personnel 10.33 10.24 10.41 10.60 10.83

Central command, control,

and communications 5.78 5.84 6.05 6.05 6.20

Resource adjustmentsa 0.05 0.53 0.50 0.62 0.58

Total direct infrastructureb $112.58 $111.80 $114.05 $115.61 $119.30

aThese include adjustments for foreign currency fluctuations and service and Defense Logistics

Agency managed stock fund cash requirements.

bTotals may not add due to rounding.

Source: GAO analysis of DOD data.

As shown in figure 3 and table 2, most direct infrastructure activities are

funded by operation and maintenance and military personnel

appropriations. Thus, if DOD is to achieve significant infrastructure savings

for future force modernization, the savings must come from these

accounts. 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 5 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

Figure 3: Direct Infrastructure Funding by Appropriation, Fiscal Years 1997-2001 (dollars in billions)

1997 1998 1999 2000 2001

$0

$20

$40

$60

$80

$100

$120

$140

Fiscal Year

Research, development,

test, and evaluation Family housing Military construction

Military personnel Operation and maintenance Procurement

Source: GAO analysis of DOD data.

Page 6 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

Table 2: Direct Infrastructure by

Appropriation, Fiscal Years 1997-2001 Dollars in billions

Appropriation FY 1997 FY 1998 FY 1999 FY 2000 FY 2001

Operation and

maintenance $56.30 $56.17 $56.41 $57.57 $59.50

Military personnel 33.53 33.10 33.67 34.33 35.20

Research,

development,

test, and evaluation 10.47 10.89 11.20 11.43 11.89

Military construction 4.99 4.15 4.15 3.84 3.96

Family housing 3.98 3.84 4.08 4.08 4.12

Procurement 2.38 2.53 3.48 3.21 3.46

Revolving funds and

othera 0.93 1.11 1.06 1.13 1.17

Total direct

infrastructureb $112.58 $111.80 $114.05 $115.61 $119.30

aThese include adjustments for foreign currency fluctuations and service and Defense Logistics

Agency managed stock fund cash requirements.

bTotals may not add due to rounding.

Source: GAO analysis of DOD data.

Agency Comments The data and analysis in this report were provided to DOD for review and

comment. In oral comments, DOD stated the data were complete and

accurate and concurred with the analysis.

Scope and

Methodology

To define and evaluate DOD’s infrastructure activities in the 1997 FYDP, we

interviewed the acting Director, Force and Infrastructure Analysis Division

in the Office of the Secretary of Defense, Program Analysis and

Evaluation. Our analyses are based on data contained in the fiscal year

1997 FYDP. In addition to the FYDP and associated annexes, we reviewed

DOD’s Reference Manual for Defense Mission Categories, Infrastructure

Categories, and Program Elements, prepared in conjunction with the

Institute for Defense Analysis. We also reviewed the President’s fiscal year

1997 budget submission and our prior reports.

Our work was conducted during the month of May 1996 in accordance

with generally accepted government auditing standards.

Page 7 GAO/NSIAD-96-174 Defense Infrastructure
B-272167 

We are providing copies of this report to appropriate congressional

committees; the Secretaries of Defense, the Air Force, the Army, and the

Navy; and the Director, Office of Management and Budget. We will also

provide copies to other interested parties upon request.

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

(202) 512-3504. Major contributors to this report were Robert Pelletier,

William Crocker, Margaret Morgan, Edna Thea Falk, and Scott Hornung.

Richard Davis

Director, National Security

 Analysis

(701093) Page 8 GAO/NSIAD-96-174 Defense Infrastructure
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