United States General Accounting Office

GAO Briefing Report to Congressional

Requesters

July 1996 BOSNIA

Costs Are Exceeding

DOD’s Estimate

G O A

years

1921 - 1996

GAO/NSIAD-96-204BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272434 

July 25, 1996

Congressional Requesters

The Department of Defense (DOD) had deployed about 22,000 troops to

Bosnia and surrounding countries as of July 1996 to assist in implementing

the Dayton Peace Accords. U.S. forces are part of a multilateral coalition

under North Atlantic Treaty Organization (NATO) command called the

Implementation Force (IFOR). DOD is currently estimating that the

incremental cost1

 of its participation in IFOR will be about $3 billion. We

reported in March 1996 that DOD’s cost for the Bosnia operation was

uncertain at that time, but could very well exceed its earlier estimate of

$2.5 billion.2

 Based on your continued interest in this matter, we are

providing updated information about DOD’s costs to help you assess DOD’s

requests for funding. We recently briefed your staff on these issues. We

plan to continue reviewing DOD’s costs and will provide further reports.

Background The Dayton Peace Accords, signed on December 14, 1995, are designed to

end several years of conflict in the former Yugoslavia. One part of the

accords involves the deployment of a NATO-led coalition force to

Bosnia-Herzegovina, hereafter referred to as Bosnia, to implement the

peace agreement. The purpose of IFOR is to enforce the cessation of

hostilities and provide a secure environment for the other parts of the

peace plan to take place. The United States is a major force provider to

IFOR, and Americans occupy the key NATO military leadership positions that

control the operation. As of July 19, 1996, U.S. forces deployed in support

of IFOR, which included both active and reserve personnel, were located in

4 countries and numbered 22,140. Of this total, 16,175 military personnel

were deployed to Bosnia, 1,354 to Croatia, and a total of 4,611 to Hungary

and Italy.

As of April 3, 1996, DOD’s estimate of the incremental cost of operations in

and around Bosnia was about $3 billion.3 DOD’s estimated costs span 

2 fiscal years—1996 and 1997. Fiscal year 1996 costs are estimated at 

$2.2 billion, and fiscal year 1997 costs are estimated at $0.7 billion. This

1

As used in this report, “incremental costs” means those costs that would not have been incurred if it

were not for the operation. This is the same definition that is contained in 10 U.S.C. 127a, as amended

by the National Defense Authorization Act for Fiscal Year 1996.

2

Bosnia: Costs Are Uncertain but Seem Likely to Exceed DOD’s Estimate (GAO/NSIAD-96-120BR,

Mar. 14, 1996).

3

Total does not add due to rounding.

Page 1 GAO/NSIAD-96-204BR Bosnia
B-272434 

estimate reflects an increase of $476 million—$292 million in fiscal year

1996 and $184 million in fiscal year 1997—since our March 1996 report.

To cover estimated fiscal year 1996 costs, Congress provided DOD with 

$1.7 billion. This amount consists of (1) authority to reprogram

$876 million of previously appropriated funds and (2) supplemental

appropriations of $858 million. To complete funding, DOD has submitted a

second request to reprogram previously appropriated funds, totaling

$507 million, for the balance of fiscal year 1996 costs associated with

operations in and around Bosnia. Based on increased call-up of reserve

personnel, DOD also requested authority in an omnibus reprogramming

request to reprogram $21 million for military personnel costs. As of

July 19, 1996, the cognizant congressional committees had not yet

completed final action on these last two reprogramming requests. DOD

included $542 million for the fiscal year 1997 cost of the operation in its

fiscal year 1997 budget submission.

Results in Brief DOD’s costs for operations in and around Bosnia, which span fiscal 

years 1996 and 1997, could exceed DOD’s $3-billion estimate by as much as

$451 million, and further increases are possible. Fiscal year 1996 costs will

likely exceed DOD’s $2.2-billion estimate. The Army’s cost estimate, which

represents over two-thirds of the cost of the operation, has already

increased by about $309 million over DOD’s April 3 estimate. This amount

includes increased costs for such items as temporary duty for additional

reserve personnel deployed to Europe, communications, the Logistics

Civil Augmentation Program, changing the composition of the force in

Bosnia, and providing equipment to assist Bosnia in its self-defense as

directed by the President. These costs will be absorbed within the Army’s

operation and maintenance account. Potential new requirements for items

such as further changes to the force composition in Bosnia and additional

transportation could add as much as $142 million to the costs. The Army is

reviewing some of the $142 million to determine if it should pay for certain

costs related to transportation and NATO IFOR headquarters.

Fiscal year 1997 costs will likely exceed the current estimate and depend

heavily on decisions that are yet to be made regarding force requirements

and redeployment. DOD’s estimate has already increased beyond the

amount included in the President’s budget submission. Both the amount in

the President’s budget and the revised DOD estimate are based on

redeployment from Bosnia and neighboring countries being completed by

December 20, 1996. Current planning by the U.S. Army, Europe, however,

Page 2 GAO/NSIAD-96-204BR Bosnia
B-272434 

assumes that although U.S. forces will redeploy from Bosnia by

December 20, redeployment from Croatia and Hungary will extend into

1997. Future decisions on NATO force requirements and when to begin

redeployment will determine when and how U.S. forces redeploy from the

area of operations and whether additional sustainment will be required

beyond December 20. Any costs incurred beyond that date or in addition

to the planned requirements will either be absorbed within existing DOD

appropriations or require additional funding.

Scope and

Methodology

To assess DOD’s cost estimate of the Bosnia operation, we reviewed

detailed cost information at the Office of the Under Secretary of Defense

(Comptroller). We discussed the assumptions used to develop the estimate

with Comptroller and service officials. To compare actual experience and

costs incurred to date with the estimate, we held discussions and reviewed

data at the U.S. Transportation Command; the Air Mobility Command; the

U.S. European Command; U.S. Army, Europe; U.S. Air Forces, Europe; the

Air Force’s Air Combat Command; and the Navy’s Commander-in-Chief,

Atlantic Fleet.

To assess the operation’s funding for fiscal year 1996, we reviewed DOD

requests for reprogramming funds and the President’s February 21, 1996,

submission to Congress requesting supplemental appropriations and

subsequent congressional action. To determine the operation’s funding for

fiscal year 1997, we reviewed the President’s budget submission for fiscal

year 1997 and subsequent DOD information.

We performed our review from April to July 1996 in accordance with

generally accepted government auditing standards. We reviewed the

information in this briefing report with DOD officials and made changes

where appropriate. DOD officials generally agreed with our findings.

We are providing copies of this report to the Chairmen and Ranking

Minority Members of the House and Senate Committees on

Appropriations, the House Committee on National Security, and the

Senate Committee on Armed Services, and to the Ranking Minority

Member, Senate Committee on Foreign Relations. We will also send copies

to the Secretaries of Defense, the Air Force, the Army, and the Navy and

the Director, Office of Management and Budget. Copies will also be made

available to others on request.

Page 3 GAO/NSIAD-96-204BR Bosnia
B-272434 

If you or your staff have any questions about this report, please contact me

at (202) 512-3504. The major contributors to this report are listed in

appendix I.

Richard Davis

Director, National Security

 Analysis

Page 4 GAO/NSIAD-96-204BR Bosnia
B-272434 

List of Congressional Requesters

The Honorable Jesse Helms

Chairman, Committee on Foreign Relations

United States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable C.W. Bill Young

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommittee on National Security

Committee on Appropriations

House of Representatives

The Honorable Robert K. Dornan

Chairman, Subcommittee on Military Personnel

Committee on National Security

House of Representatives

Page 5 GAO/NSIAD-96-204BR Bosnia
Contents

Letter 1

Briefing Section I 

Background

8

United States Has Major Role in Bosnia Peace Implementation 8

Briefing Section II 

Fiscal Year 1996 Costs

10

Fiscal Year 1996 Cost Estimate as of April 3, 1996 10

Total DOD Cost Estimate Matched Planned Funding as of April 3,

1996

12

Army O&M Cost Estimate Now Exceeds Planned Funding 14

Communications 16

LOGCAP 18

Special Assignment Airlift Missions 20

NATO IFOR Headquarters’ Cost 22

Funding Options 24

Briefing Section III 

Fiscal Year 1997 Costs

26

Current Fiscal Year 1997 Cost Estimate 26

Costs Will Continue Beyond December 1996 28

Key Costs Will Be Affected by Future Decisions 30

Time Frames to Complete Redeployment by December 1996 32

Funding Implications 33

Appendix Appendix I: Major Contributors to This Report 36

Abbreviations

DOD Department of Defense

DBOF Defense Business Operations Fund

IFOR Implementation Force

LOGCAP Logistics Civil Augmentation Program

NATO North Atlantic Treaty Organization

O&M operation and maintenance

SAAM Special Assignment Airlift Missions

Page 6 GAO/NSIAD-96-204BR Bosnia
Page 7 GAO/NSIAD-96-204BR Bosnia
Briefing Section I 

Background

GAO United States Has Major Role in Bosnia 

Peace Implementation

Dayton Peace Accords--Three Part 

Strategy

NATO-led implementing military force

Major economic redevelopment 

program

Military stabilization effort

Page 8 GAO/NSIAD-96-204BR Bosnia
Briefing Section I 

Background

The Dayton Peace Accords, signed on December 14, 1995, are designed to

end several years of conflict in the former Yugoslavia. It contains a

three-part strategy.

One part is the deployment of a North Atlantic Treaty Organization

(NATO)-led coalition force to Bosnia-Herzegovina, hereafter referred to as

Bosnia, to implement the peace agreement. The purpose of this

Implementation Force (IFOR) is to enforce the cessation of hostilities and

provide a secure environment for the other parts of the peace plan to take

place. The accords call for IFOR to provide a secure environment for 1 year

to provide “breathing space” or a “cooling-off period” after 4 years of war.

Both NATO and non-NATO forces are participating in this action under U.N.

authorization. The United States is a major force provider to IFOR, and

Americans occupy the key NATO military leadership positions that are

responsible for the operation. As of July 19, 1996, U.S. forces deployed in

either direct or indirect support of IFOR were located in 4 countries and

numbered 22,140. Of this total, 16,175 military personnel were deployed to

Bosnia, 1,354 to Croatia, and a total of 4,611 to Hungary and Italy.

The key military tasks in Bosnia are to mark and monitor a

4-kilometer-wide zone of separation between the three factions, patrol the

zone of separation, and oversee the withdrawal of forces and weapons

away from the zone and back to cantonment areas.

A second part of the peace strategy is to establish a functioning

government and economy, which includes a major economic

redevelopment program, to be lead by the Europeans. This effort will

include supervising elections, resettling refugees, and overseeing

economic reconstruction.

The third part is a military stabilization effort in which forces will be

drawn down and an arms control program will be established. The

purpose of this effort is to ensure that the parties to the peace agreement

can ensure their own safety when IFOR leaves. Establishing the military

force balance is not a task of NATO or U.S. forces. The United States said

that it is prepared to take actions in concert with other nations to ensure

that this balance is achieved.

Page 9 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Fiscal Year 1996 Cost Estimate as of 

April 3, 1996 

O&M Military

personnel

Other 

appropriations

Total

Army $1,286.2 $248.0 $37.5 $1,571.7

Navy 91.2 11.5 0 102.7

Marine Corps 1.2 2.6 0 3.8

Air Force 285.3 38.2 26.0 349.5

Other 212.8 0 0 212.8

Total $1,876.7 $300.3 $63.5 $2,240.5

Dollars in millions

Source: DOD Comptroller.

Page 10 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

As of April 3, 1996, the Department of Defense’s (DOD) estimate of the

incremental cost of operations in and around Bosnia was $3 billion.1 DOD

costs span 2 fiscal years—1996 and 1997. Fiscal year 1996 costs are

estimated at $2.2 billion, and fiscal year 1997 costs are estimated at 

$0.7 billion. Since our March 1996 report, estimated costs have increased

$476 million—$292 million in fiscal year 1996 and $184 million in fiscal

year 1997.

Fiscal year 1996 costs include training for troops designated to deploy in

and around Bosnia; deployment of forces; sustainment of those forces,

including contractor support; operating tempo; and military pay costs such

as imminent danger pay and reserve activation. Fiscal year 1997 costs are

discussed in briefing section III.

The Army, which is deploying and logistically supporting ground troops2

 in

and around Bosnia, is estimated to incur the majority of costs—

$1.6 billion, or 70 percent of the fiscal year 1996 estimated costs. The Air

Force has the next largest share of costs—about $350 million, or 16

percent. Together, the Navy and the Marine Corps have the smallest

share— about 5 percent, or $107 million. The other estimated costs are

spread over a number of defensewide agencies, such as the U.S. Special

Operations Command and the Defense Mapping Agency.

Most of the estimated costs—84 percent—are in operation and

maintenance (O&M) accounts. These accounts pay for such items as

transportation, per diem, supplies, fuel, communications, contractual

services, equipment maintenance, and other mission-related expenses. Of

the costs remaining, 13 percent is in military personnel accounts. These

accounts fund certain special pays that military personnel deployed to

Bosnia are eligible to receive, such as imminent danger pay, family

separation allowance, certain places pay (formerly called foreign duty

pay), and basic allowance for subsistence for enlisted personnel as well as

the military pay for activated reservists. The other 3 percent is in the Air

Force procurement account and the Army military construction account.

1

Total does not add due to rounding.

2

The Army is logistically supporting ground troops for all services in Bosnia, Croatia, and Hungary.

Page 11 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Total DOD Cost Estimate Matched 

Planned Funding as of April 3, 1996 

Total O&M Military personnel Other

0

500

1,000

1,500

2,000

2,500

2,241

1,877

300

64

2,241

1,877

300

64

Cost Funding

Dollars in millions

Page 12 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

To cover estimated fiscal year 1996 costs, Congress provided DOD with 

$1.7 billion. This amount consists of (1) authority to reprogram

$876 million of previously appropriated funds and (2) supplemental

appropriations of $858 million. To complete funding, DOD submitted a

second request to reprogram previously appropriated funds totaling

$507 million for the balance of fiscal year 1996 costs associated with

operations in and around Bosnia. As of July 19, 1996, the cognizant

congressional committees had not yet completed final action on this

request.

The sum of the reprogramming requests, when completed, and the

supplemental funding was designed to fully fund U.S. participation in

Bosnia operations. The Army’s estimated costs have since increased

significantly. The reasons for the increase are discussed on the following

pages. The Air Force and the Navy are reviewing their costs. The Navy

expects its overall costs to remain at the funded level. Air Force officials

expect that, based on calls from their major commands, their costs may

increase, but at this point have not estimated the increases. We found that

the cost of the Air Force’s use of Special Assignment Airlift Missions

(SAAM) may exceed planned spending levels by $9 million based on the Air

Mobility Command’s estimate of Air Force SAAM billings through May 1996.

These SAAM bills are for transportation that is provided to a service, which

is then responsible for paying the cost of the transportation provided.

Funding for increases to the cost requirements will have to be revisited

before the end of the fiscal year.

Page 13 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Army O&M Cost Estimate Now 

Exceeds Planned Funding

Dollars in millions

4/3/96 

7/17/96

increases

0 500 1,000 1,500 2,000

1,286

1,595

1,737

1,286

1,286

1,286

Cost

Funding

Army estimate

other potential

Estimate with

Army O&M costs have been increasing since the April estimate of

$1,286 million was prepared. As of July 17, 1996, the Army had identified

an additional $309 million in O&M requirements, bringing the O&M cost

estimate to $1,595 million. This increased estimate includes costs for such

items as temporary duty for additional reserve personnel deployed to

Europe, communications, the Logistics Civil Augmentation Program

(LOGCAP), and miscellaneous requirements such as additional European

Command support and scheduled supply flights. It also includes costs for

Page 14 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

deploying and sustaining two additional military police units as part of the

change in the composition of forces in Bosnia involving replacing heavier

tank units with lighter units. In addition, the Army included costs to pack,

transport, and provide spare parts for items that the President directed

under section 540 of the Foreign Operations, Export Financing, and

Related Programs Appropriations Act of 1996 be turned over to Bosnia to

assist that country in its self-defense. These items include weapons,

communications gear, tanks, and helicopters. All of the $309 million will

be absorbed within the Army’s O&M account.

In addition, we identified further potential costs that total $142 million,

which could bring the Army’s O&M costs to $1,737 million for the fiscal

year. These additional costs include increases the Army expects as new

requirements are identified during the remainder of the fiscal year. Of the

$142 million, $33 million has been identified as the estimated cost for a

potential requirement to deploy and sustain two additional engineer units

as part of the continuing effort to change the force composition in Bosnia.

Another $77 million of the $142 million represents additional SAAM

transportation costs we estimated that the Army could incur through the

end of the fiscal year. This $77 million includes $37 million in disputed

billings that the Army is reviewing to determine if it should pay them,

$16 million in billings the Army has not yet received, and $24 million in

estimated costs for the remainder of this fiscal year. The remaining

$32 million of the $142 million is for the U.S. share of NATO IFOR

headquarters’ costs and is also being reviewed to determine if the Army

should pay these costs.

The Army also identified an additional $21 million in military personnel

costs to support an increase in the President’s selected reserve call-up

from 3,888 to 7,800 personnel. DOD requested this amount in an omnibus

reprogramming request submitted on May 24, 1996, to pay for reservists’

pay and benefits while on active duty in support of operations in and

around Bosnia—costs that were unknown at the time prior

reprogrammings were submitted to Congress. This request is for funding

throughout DOD and is in addition to the previously described funding

actions. As of July 19, 1996, this request was awaiting approval from the

cognizant congressional committees.

Page 15 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Communications

Original estimate $27 

Current estimate 67 

Difference (40)

Dollars in millions

Page 16 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

The Army estimated IFOR communications would cost about $27 million.

U.S. Army, Europe, recently submitted additional communications

requirements of about $40 million, which will increase the total cost to

$67 million. The $40 million in additional requirements is included in the

Army’s revised estimate of July 17, 1996. The primary reason for this

increase is unanticipated costs that the Army must pay, as the service

responsible for paying the communications bills relating to U.S.

participation in IFOR. This $40 million includes such items as $17 million

for the Defense Information Systems Agency for communications lines

and $14 million for reimbursable costs incurred by the Army’s 5th Signal

Command deployed to Bosnia. Although the Army currently plans to fund

the $40 million, it is reviewing the $17-million bill to determine if it is a

valid Army requirement or should be paid by the Defense Information

Systems Agency.

Page 17 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO LOGCAP

Army estimate $440.4

Requested funding as of 

April 3, 1996

407.5

Difference (32.9)

Dollars in millions

LOGCAP uses a civilian contractor to perform selected engineering and

logistics services during contingency operations to augment U.S. forces. In

Bosnia, Croatia, and Hungary, the contractor is providing many of the

basic services to support military personnel, including troop housing and

facilities, food service, laundry operation, and other logistics services.

We previously reported that estimated LOGCAP costs have increased

significantly since the beginning of the operation. Rapidly changing

Page 18 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

logistics needs at the beginning of the mission created an increase in

requirements. The geography of the U.S. sector in Bosnia and force

protection concerns required an increase in the number of base camps.

This in turn required an increase in the number of feeding stations, laundry

facilities, and other services needed to sustain the troops living in the base

camps. Muddy ground conditions and the increased number of camps

required more extensive site preparation and construction, which cost

more than originally anticipated. Under a separate review, we are

currently evaluating the management of LOGCAP and the reasons why the

costs in Bosnia have exceeded original estimates.

As of July 1, 1996, the Army had identified $440.4 million in LOGCAP costs

for fiscal year 1996. Of this amount, the Army will receive funding for

$407.5 million, which is included in the three funding actions. The funding

shortfall of $33 million is included in the Army’s July 17 revised estimate.

This shortfall does not include any costs that could be incurred for new

requirements, such as contractor involvement in changing the composition

of the force or other requirements that may occur before the end of the

fiscal year. However, the Army is looking at ways in which the costs could

be reduced, such as decreasing the level of services required from the

contractor.

A separate, diplomatic effort is underway to reduce the fiscal year 1996

LOGCAP cost. This effort involves the negotiation of a supplementary

agreement to the Status of Forces Agreement with Hungary. The Status of

Forces Agreement established terms and conditions that govern activities

of U.S. forces stationed in or transiting the Republic of Hungary in

connection with the IFOR mission. According to DOD officials, under

prevailing agreements, neither the U.S. government nor its contractors

were given relief from taxes to be paid on goods and services purchased.

This means that the LOGCAP contractor is required to pay a value-added tax

on all goods and services purchased in Hungary. Under terms of the

contract, these taxes are LOGCAP costs that must be paid by the Army.

The United States and Hungary are close to completing negotiation of the

supplementary agreement, which will then be submitted to the Hungarian

Parliament for ratification. Once ratified, the supplementary agreement

would give the United States the ability to request a refund of taxes paid

over the term of the LOGCAP contract. This refund would go directly to the

Army. The LOGCAP contractor estimated that, as of May 1, 1996, the taxes

paid to Hungary were about $3.6 million. If the money is refunded to the

Army, it will be returned to the Army’s fiscal year 1996 O&M account.

Page 19 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Special Assignment Airlift Missions

Budgeted $44

Additional Costs

 Disputed Air Mobility Command 

 billings 37

 Bills in process for services

 rendered 16

 GAO projection for June through 

 September 1996 based on 

 experience to date 24

Potential total year-end shortfall 77

Dollars in millions

Page 20 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

The Army anticipates increased costs for SAAM transportation supporting

operations in and around Bosnia. As of April 1996, the U.S. Army, Europe,

estimated that this transportation would cost $44 million and had

budgeted funding at that level. We have identified additional SAAM

transportation that could increase the Army’s cost and funding shortfall by

as much as $77 million. This amount includes $37 million in billings that

the Army is disputing and $16 million in Air Mobility Command billings

that the Army has not yet received. In addition, it includes $24 million in

remaining fiscal year 1996 costs we have estimated based on SAAM

transportation provided in the April/May 1996 time period, which averaged

about $6 million per month.

The Army is disputing $37 million of the increased billings because it

believes them to represent SAAM transportation provided to other services

or duplicate billings. It is not planning to pay the Air Mobility Command

until its analysis is complete and the billing concerns are resolved. To the

extent that these billings, as well as any future billings, are found to

duplicate previous billings or represent SAAM transportation provided to

other services, the Army’s potential funding shortfall will be reduced.

However, to the extent the Army was billed for other services’

transportation, these services’ costs will increase.

Page 21 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO NATO IFOR Headquarters' Cost

DOD had originally estimated U.S. share 

of $37.5 million to be paid by the Army

DOD subsequently eliminated NATO 

payment from the Army's planned 

spending

NATO recently billed the Army for $12 

million 

Army is anticipating another NATO 

request for $18-$20 million in September

Page 22 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

For operations in and around Bosnia, NATO has its headquarters in Sarajevo

as well as regional headquarters in Zagreb, Kiseljak, and Split, Croatia.

Although most IFOR operating costs are borne by the individual

troop-contributing countries, NATO decided that IFOR headquarters’ costs,

including the regional headquarters, will be commonly funded by the NATO

member nations. These costs are covered by NATO’s military budget. The

United States initially estimated its share of headquarters’ costs at

$37.5 million, which would be paid by the Army. The Bosnia cost estimate

originally included this amount, but DOD subsequently deleted it from the

Army’s planned spending, because it had determined that the Army had

sufficient funding to cover these costs.

As of June 1996, NATO is estimating IFOR headquarters’ costs of $122 million

based on actual experience. The headquarters’ budget is a conventional

O&M budget and includes such items as travel costs, vehicle rental, and fuel

and petroleum.

NATO is planning to fund its IFOR headquarters’ costs within its overall

military budget to the extent possible by (1) using lapsed funds from prior

years and (2) reducing the funding for planned exercises. Although these

funds were included in NATO’s military budget, they had not been requested

from member states until recently. NATO has now requested that member

states provide part of the funding—$51 million—for IFOR headquarters’

costs. The U.S. share, which is paid by the Army, is $12 million. A further

funding request from member states is expected in September. According

to Army officials, the U.S. share of the expected September request will be

an estimated $18 million to $20 million, for a total of up to $32 million for

the fiscal year. This amount is part of the $142 million we have identified

as other potential cost increases. According to Army officials, the Army

will not be able to fund these additional requirements within available

funds. However, according to the Office of the Under Secretary of Defense

(Comptroller), it may be able to meet IFOR funding requirements within

existing funding or, if necessary, defer part of the payment until fiscal 

year 1997. To the extent that requests for IFOR headquarters’ funding

(1) exceeds funds available for the Army to meet regular NATO

requirements and (2) cannot be deferred until fiscal year 1997, these

requests will add to the Army’s funding needs.

Page 23 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

GAO Funding Options

Transfer funding from one service to 

another

Request further funding 

Delay reimbursement of DBOF

Invoke Feed and Forage Act authority

As mentioned previously, although DOD’s April cost estimate matched

planned funding, costs have been increasing. Early in a fiscal year, the

services use funds from future quarters to cover the costs of unbudgeted

contingency operations. As the fiscal year progresses, funding flexibility is

reduced. This is especially true in the third and fourth quarters of the fiscal

year, when much of the appropriated funding has been spent. Funding

unbudgeted operations by this point in the fiscal year can affect planned

Page 24 GAO/NSIAD-96-204BR Bosnia
Briefing Section II 

Fiscal Year 1996 Costs

budget execution for such activities as spare parts acquisition, proficiency

training, and unit exercises.

If the services are unable to shift remaining funds to cover these increased

cost requirements, there are several options that they could use to meet

their funding needs. These include (1) transferring funds from one service

to another, (2) requesting further funding, (3) delaying reimbursement of

the Defense Business Operations Fund (DBOF), and (4) requesting that DOD

invoke the Feed and Forage Act authority.

As we reported in our March 1996 report, if initial contingency operation

funding proves to be inadequate, but some services have costs below their

funded level, while others have costs above it, excesses should be

redistributed by transfer before Congress provides additional funds. This

situation does not seem to be the case at this time, but funding needs

could change before the end of the fiscal year.

DOD always has the option of requesting reprogrammings of existing

appropriations or additional funding through supplemental appropriations

from Congress. For example, on September 30, 1994, the fiscal year 1995

defense appropriations act provided supplemental appropriations for

certain operations that occurred in fiscal year 1994.

The National Defense Authorization Act for Fiscal Year 1994 

(10 U.S.C. 127a) first established the use of DBOF as a temporary funding

source for contingency operations. This gives the services the authority to

delay reimbursement of DBOF-related charges for services, such as

transportation. Although this can relieve some funding problems in the

current fiscal year, the Secretary of Defense must submit a repayment plan

outlining how DBOF will be repaid. According to DOD officials, whether DBOF

can be used as a funding source depends on the sufficiency of DBOF cash

reserves.

Under the Feed and Forage Act (41 U.S.C. 11), DOD is authorized to incur

obligations on behalf of the United States “for clothing, subsistence,

forage, fuel, quarters, transportation, or medical and hospital supplies”

that exceed available appropriations, but that may not exceed “the

necessities of the current year.” This authority is unfunded and requires a

subsequent appropriation to liquidate any obligations that are incurred.

DOD considers the use of the Feed and Forage Act to cover increased cost

requirements as a last resort when all other options have been exhausted.

Page 25 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

GAO Current Fiscal Year 1997 Cost 

Estimate 

O&M Military

personnel

Other 

appropriations

Total

Army $462.2 $75.1 $12.5 $549.8

Navy 23.1 3.6 0 26.7

Marine Corps 0.2 0.8 0 1.0

Air Force 82.3 10.3 6.0 98.6

Other 49.3 0 0 49.3

Total $617.1 $89.8 $18.5 $725.4

Dollars in millions

Page 26 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

As noted earlier, DOD’s estimate of fiscal year 1997 incremental costs for

operations in and around Bosnia is $725 million. These costs include

continuation of operations underway in fiscal year 1996, redeployment of

U.S. forces and reserve inactivation at the conclusion of the operation, and

reconstitution of equipment used in the operation.

As in fiscal year 1996, the Army is estimated to incur the majority of the

costs—almost $550 million, or 76 percent of all fiscal year 1997 costs. The

Air Force has the next largest share of costs—almost $99 million or 

14 percent. Together, the Navy and the Marine Corps have the smallest

share, 4 percent, or about $28 million. The other estimated costs are

spread over a number of defensewide agencies, such as the U.S. Special

Operations Command and the Defense Mapping Agency.

Most of the estimated costs—85 percent—is in O&M accounts. Of the costs

remaining, 12 percent is in military personnel accounts. All cost estimates

are based on the assumption that all U.S. military personnel will be out of

Bosnia and neighboring countries by December 20, 1996, to reflect the

time frame established at the beginning of the operation.

Page 27 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

GAO Costs Will Continue Beyond December 

1996

President's budget assumes all forces 

will redeploy from Bosnia, Croatia, and 

Hungary by December 20, 1996

Current planning assumes redeployment 

from Croatia and Hungary will last into 

1997

Page 28 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

In an earlier report on funding contingencies,3 we suggested that DOD

include the costs of operations that are expected to extend into a second

fiscal year in its annual budget submission. DOD recognized that operations

in Bosnia and neighboring countries would continue into fiscal year 1997

and included $542 million for the operation in the President’s budget

submission to Congress in February. Currently, DOD’s fiscal year 1997

estimate of the incremental cost of the operation has increased by

$184 million to a total of $725 million.4

 These costs reflect a revised

estimate for October through December 1996 costs and continue to

assume that all U.S. military personnel will have redeployed from the area

of operations, which includes Bosnia, Croatia, and Hungary, by

December 20, 1996. DOD has informally advised the House and Senate

Committees on Appropriations of this increase.

U.S. European Command and U.S. Army, Europe, officials told us that,

although planning for the redeployment of troops after the operation was

based on the premise that all troops would be out of Bosnia by

December 20, 1996, redeployment from Croatia and Hungary would extend

into 1997. Any troops remaining in the theater of operations beyond

December 1996 will incur costs beyond those included in the President’s

budget and DOD’s current estimate. In addition, key decisions that will be

made in the coming months will further affect fiscal year 1997 costs.

3

DOD Budget: Analysis of Options for Funding Contingency Operations (GAO/NSIAD-94-152BR, 

Apr. 26, 1994).

4

Total does not add due to rounding.

Page 29 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

GAO

Size of covering or capable force until 

mission is completed 

Date on which redeployment begins

Possible follow-on force requirement

Key Costs Will Be Affected by Future 

Decisions

Page 30 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

There are several key decisions that will affect the fiscal year 1997 cost of

U.S. operations in support of IFOR. These involve the size of the covering

force that will remain until the end of the mission, the date when

redeployment of U.S. forces begins, and the possibility of a follow-on force

to replace IFOR, and, if there is, whether it will include U.S. forces.

The IFOR NATO Commander has expressed the desire to maintain a capable,

effective force in Bosnia until the anticipated end of the mission on

December 20, 1996. However, the makeup of such a force has not been

defined. In a letter addressed to a Member of Congress dated June 7, 1996,

the Secretary of Defense stated that “. . . the key point is [to] retain

sufficient forces to accomplish assigned tasks and protect the lives of

personnel . . . completing IFOR’s withdrawal will obviously take some time

after the one year anniversary [December 20] . . . .” If these troops remain

in Bosnia or neighboring countries after December 20, 1996, costs for their

support would exceed DOD’s estimated costs.

In the same letter, the Secretary of Defense stated that IFOR will remain at

full strength through September 1996, after the Bosnian elections are

scheduled to be held. Based on Army planning estimates, it will take about

100 days to conduct an orderly and cost-efficient redeployment from

Bosnia primarily using rail and barge transportation and troop labor

instead of contractors. Other redeployment plans taking less time would

have to make greater use of more expensive modes of transportation and

contractors. Therefore, to complete redeployment by December 20, 1996,

without having to use more expensive modes of transportation, movement

would have to begin around the time of the Bosnian elections.

The President and the Secretary of Defense stated that IFOR’s mission will

last for 1 year and that all NATO forces will redeploy at that time. There has,

however, been speculation that some type of follow-on force will supplant

IFOR. A decision to have a follow-on force will increase U.S. costs to the

extent the United States chooses to participate in such a force.

Page 31 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

GAO Time Frames to Complete 

Redeployment by December 1996

Oct. 20 Dec. 20

(- - - - - - - - - - -100 days- - - - - - - - -)

Dec. 20

Starting date of redeployment based 

on Army planning to conduct an orderly redeployment

Starting date of redeployment based on time it took to deploy

Sept. 12

(- - - - -62 days - - - -)

Page 32 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

Future events and decisions will affect the time frames allowed for

redeployment of U.S. forces. The time frames allowed will in turn affect

the choice of transportation modes to be used for the redeployment. The

time frames and transportation modes will affect the cost. DOD officials in

Europe told us that no decision has been made regarding when

redeployment of U.S. forces from Bosnia will begin. DOD is planning for the

redeployment, but no actions will be taken to redeploy until that decision

is made and coordinated with NATO and various allied countries.

As noted earlier, the Army estimates that an orderly, cost-efficient

redeployment from Bosnia will take about 100 days. Planning for this

redeployment is based on using ground transportation—rail and

barge—for the most part and troop labor as opposed to contractors. To

complete a redeployment in 100 days, it would have to begin around

September 12—2 days before the Bosnian elections are estimated to be

held. If a decision is deferred until well after the Bosnian elections, either

the redeployment under the above plan would extend beyond December

20 or the plan would have to be revised to rely more heavily on airlift than

previously planned, as well as on ground transportation. A heavier reliance

on airlift would increase the cost of redeployment. The deployment into

Bosnia, which involved considerable airlift, took about 62 days. Relying

more heavily on airlift for redeployment, and using the deployment time as

a guide, we estimated a redeployment starting in late October could be

completed by December 20.

DOD estimates that redeployment will cost $73 million. We previously

reported that through January 1996, deployment transportation had cost

$157 million. Deployment was completed in early February. As noted

above, the cost of the redeployment will be affected by the modes of

transportation used, with a reliance on airlift driving up transportation

costs. Alternatively, a heavy reliance on ground transportation with

redeployment beginning after September 1996 and extending beyond

December 20 will increase sustainment costs. Office of the Under

Secretary of Defense (Comptroller) officials estimated that sustainment

costs for the operation at the current troop strength average about

$150 million per month. Therefore, paying more in transportation costs for

a more rapid redeployment would result in lower sustainment costs. Until

decisions on redeployment are made, costs will remain uncertain.

Page 33 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

GAO Funding Implications

Costs beyond December 1996 are 

unfunded in President's budget

Costs beyond December will have to be 

absorbed by the services or will require 

congressional action

Page 34 GAO/NSIAD-96-204BR Bosnia
Briefing Section III 

Fiscal Year 1997 Costs

As mentioned previously, DOD’s current cost estimate and funding level is

based on the assumption that all U.S. military personnel will be out of

Bosnia and neighboring countries by December 20, 1996. We identified

several circumstances under which the departure date could be delayed,

and key costs remain uncertain. Costs incurred beyond December 20,

1996, as well as any further increases in costs between October and

December 1996, are unfunded in the President’s budget, and will either

have to be absorbed within existing DOD appropriations or funded through

further congressional action.

Page 35 GAO/NSIAD-96-204BR Bosnia
Appendix I 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Steven H. Sternlieb, Assistant Director

Ann Borseth, Evaluator-in-Charge

Lisa M. Quinn, Evaluator

Norfolk Field Office Suzanne Wren, Evaluator

Kansas City Field

Office

John G. Wiethop, Evaluator

(701084) Page 36 GAO/NSIAD-96-204BR Bosnia
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