United States Government Accountability Office

Washington, DC 20548 

July 10, 2009 

Congressional Committees 

Subject: Overseas Contingency Operations: Reported Obligations for the 

Department of Defense

Since 2001, Congress has provided the Department of Defense (DOD) with $888 billion in 

supplemental and annual appropriations, as of June 2009, primarily for Overseas 

Contingency Operations (OCO).1 DOD’s reported annual obligations2 for OCO have shown a 

steady increase from about $0.2 billion in fiscal year 2001 to about $162.4 billion in fiscal 

year 2008. For fiscal year 2009 OCO, Congress provided DOD with about $65.9 billion in the 

fiscal year 2009 DOD Appropriations Act and about $80.0 billion in a supplemental 

appropriation enacted in June 2009. A total of $59.6 billion has been obligated through the 

second quarter of fiscal year 2009 through March 2009. The United States’ commitments to 

OCO will likely involve the continued investment of significant resources, requiring decision 

makers to consider difficult trade-offs as the nation faces an increasing long-range fiscal 

challenge. The magnitude of future costs will depend on several direct and indirect cost 

variables and, in some cases, decisions that have not yet been made. DOD’s future costs will 

likely be affected by the pace and duration of operations, the types of facilities needed to 

support troops overseas, redeployment plans, and the amount of equipment to be repaired 

or replaced.3 

DOD compiles and reports monthly and cumulative incremental obligations incurred to 

support OCO in a monthly report commonly called the Contingency Operations Status of 

Funds Report.4

 DOD leadership uses this report, along with other information, to advise 

Congress on the costs of the war and to formulate future OCO budget requests. DOD reports 

 

1

After the terrorist attacks of September 11, 2001, the President announced a Global War on Terrorism, 

requiring the collective instruments of the entire federal government to counter the threat of terrorism. 

Overseas contingency operations include operations in Iraq and Afghanistan. These operations involve a wide 

variety of activities, such as combating insurgents, training the military forces of other nations, and conducting 

small-scale reconstruction and humanitarian relief projects. Starting with the fiscal year 2009 supplemental 

request in April 2009, the Administration now refers to funds for the wars in Iraq and Afghanistan as Overseas 

Contingency Operations funds instead of Global War on Terrorism funds. 2

According to Department of Defense, Financial Management Regulation, 7000.14-R, vol. 1, ”Definitions” 

(Dec. 2001), xvii, obligations are incurred through actions such as orders placed, contracts awarded, services 

received, or similar transactions made by federal agencies during a given period that will require payments 

during the same or a future period. 

3

For more information see GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for Congressional 

Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007), and Global War on Terrorism: Observations on 

Funding, Costs, and Future Commitments, GAO-06-885T (Washington, D.C.: July 18, 2006). 4

 This report replaces the Supplemental and Cost of War Execution Report. 

 GAO-09-791R Overseas Contingency Operations
 GAO-09-791R Overseas Contingency Operations Page 2 

 

these obligations by appropriation, contingency operation,5

 and military service or defense 

agency. DOD has prepared monthly reports on the obligations incurred for its involvement 

in OCO since fiscal year 2001.6

Section 1221 of the National Defense Authorization Act for Fiscal Year 20067 requires us to 

submit quarterly updates to Congress on the costs of Operation Iraqi Freedom and 

Operation Enduring Freedom based on DOD’s monthly cost-of-war reports. This report, 

which responds to this requirement, contains our analysis of DOD’s reported obligations for 

overseas contingencies through March 2009. Specifically, we assessed (1) DOD’s cumulative 

appropriations and reported obligations for military operations in support of overseas 

contingencies and (2) DOD’s fiscal year 2009 reported obligations from October 2008 

through March 2009, the latest data available for OCO by military service and appropriation 

account. 

We have conducted a series of reviews examining funding and reported obligations for 

military operations in support of overseas contingencies. Our prior work8

 has found the data 

in DOD’s monthly cost-of-war report to be of questionable reliability. Consequently, we are 

unable to ensure that DOD’s reported obligations for OCO are complete, reliable, and 

accurate, and they therefore should be considered approximations. Based on this work, we 

have made a number of recommendations to the Secretary of Defense intended to improve 

the transparency and reliability of DOD’s OCO obligations. For example we have 

recommended that DOD (1) revise the cost reporting guidance so that large amounts of 

reported obligations are not shown in “other” miscellaneous categories and (2) take steps to 

ensure that reported OCO obligations are reliable. In response, DOD is taking steps to 

improve OCO cost reporting. For example, DOD has modified its guidance to more clearly 

define some of the cost categories and is taking additional steps to strengthen the oversight 

and program management of the cost reporting. Specifically, DOD has taken steps to 

improve transparency by requiring components to analyze variances in reported obligations 

and to disclose reasons for significant changes, and to affirm that monthly reported OCO 

obligations provide a fair representation of ongoing activities. Furthermore, in February 

2007, DOD established a Senior Steering Group including representatives from DOD, the 

Defense Finance and Accounting Service (DFAS), and the military services in an effort to 

standardize and improve the OCO cost-reporting process and to increase management 

attention to the process. DOD established an OCO Cost-of-War Project Management Office 

to monitor work performed by auditing agencies and to report possible solutions and 

improvements to the Senior Steering Group. DOD has started several initiatives to improve 

credibility, transparency, and timeliness. One of the initiatives is a quarterly validation of 

OCO obligation transactions at each of the DOD components. Another is the development of 

5

DOD defines contingency operations to include small, medium, and large-scale campaign-level military 

operations, including support for peacekeeping operations, major humanitarian assistance efforts, 

noncombatant evacuation operations, and international disaster relief efforts. 6

Department of Defense, Financial Management Regulation, 7000.14-R, vol. 12, ch. 23. This regulation 

generally establishes financial policy and procedures related to DOD contingency operations. Volume 6A, 

chapter 2, and volume 3, chapter 8, of the DOD Financial Management Regulation also include provisions to 

ensure the accuracy of cost reporting. 

7

Pub. L. No. 109-163, § 1221(c) (2006). 

8

For more information see GAO, Global War on Terrorism: DOD Needs to Improve the Reliability of Cost 

Data and Provide Additional Guidance to Control Costs, GAO-05-882 (Washington, D.C.: Sept. 21, 2005); and 

Global War on Terrorism: DOD Needs to Take Action to Encourage Fiscal Discipline and Optimize the Use 

of Tools Intended to Improve GWOT Cost Reporting, GAO-08-68 (Washington, D.C.: Nov. 6, 2007). 
 GAO-09-791R Overseas Contingency Operations Page 3 

 

the Contingency Operations Reporting and Analysis Service system, which will allow the 

Department to move from a manual methodology of collecting cost data to extracting a 

portion of the data from various accounting systems. However, until all DOD efforts are 

more fully implemented, it is too soon to know the extent to which these changes will 

improve the reliability of DOD’s cost reporting. 

While establishing sound cost reporting procedures and oversight is clearly important, the 

reliability of the cost-of-war reports also depends on the quality of DOD’s accounting data. 

Factors contributing to DOD’s challenges in reporting reliable cost data include longstanding deficiencies in DOD’s financial management systems. We are aware that DOD has 

efforts under way to improve these systems as well. 

We have also made recommendations to improve transparency and fiscal responsibility 

related to funding the war on terrorism and to permit the Congress and the administration to 

establish priorities and make trade-offs among those priorities in defense funding. 

Specifically, we recommended that DOD (1) issue guidance defining what constitutes the 

“longer war against terror,” identify what costs are related to that longer war, and build 

these costs into the base defense budget; (2) identify incremental costs of the ongoing OCO 

that can be moved into the base budget; and (3) in consultation with the Office of 

Management and Budget, consider limiting emergency funding requests to truly unforeseen 

or sudden events.9

 We will continue to review DOD’s efforts to implement these 

recommendations as part of our follow-up work on OCO. 

In March 2009 we reported that while DOD and the military services continue to take steps 

to improve the accuracy and reliability of some aspects of OCO reporting,10 DOD lacks a 

sound approach for identifying cost of specific contingency operations, raising concerns 

about the reliability of reported information. We recommended that DOD (1) establish a 

methodology for determining what portion of OCO costs is attributable to Operation Iraqi 

Freedom versus Operation Enduring Freedom and (2) develop a plan and timetable for 

evaluating whether certain expenses are incremental and should continue to be funded 

outside of DOD’s base budget. DOD agreed with the first recommendation and intends to 

strengthen guidance requiring an annual review of cost reporting. Regarding the second 

recommendation, DOD responded it will use refined criteria for developing the fiscal year 

2009 Overseas Contingency Operations Supplemental Request and the fiscal year 2010 

Overseas Contingency Operations Request. We are currently reviewing that criteria and the 

related funding request. 

Scope and Methodology 

To conduct our work, we analyzed applicable annual and supplemental appropriations from 

fiscal year 2001 through fiscal year 2009 as of May 2009--the latest OCO funding provided 

and reported OCO obligations through March 2009--the latest OCO obligation data available. 

Specifically, we identified appropriated amounts primarily intended for OCO and reported 

OCO obligations for each operation, military service, and appropriation account. 

9

GAO-08-68. 10 For more information see GAO, Global War on Terrorism: DOD Needs to More Accurately Capture and 

Report the Costs of Operation Iraqi Freedom and Operation Enduring Freedom, GAO-09-302 (Washington, 

D.C., Mar. 17, 2009). 
 GAO-09-791R Overseas Contingency Operations Page 4 

 

We conducted our work from April 2009 to June 2009 in accordance with all sections of the 

GAO’s Quality Control Assurance Framework that are relevant to our objectives. The 

framework requires that we plan and perform the engagement to obtain sufficient and 

appropriate evidence to meet our stated objectives and to discuss any limitations in our 

work. We believe that the information and data obtained, and the analysis conducted, 

provides a reasonable basis for our findings and conclusions in this product. 

Summary 

As of March 2009, Congress has appropriated a total of about $888 billion primarily for OCO 

since 2001. Of that amount, about $65.9 billion was appropriated in the fiscal year 2009 DOD 

Appropriations Act and about $80 billion was appropriated in the June 2009 supplemental 

appropriation for a total of about $145.9 billion for use in fiscal year 2009. DOD has reported 

obligations of about $714.3 billion for OCO from fiscal year 2001 through fiscal year 2008 

and for fiscal year 2009 (October 2008 through March 2009). The $173.7 billion difference11

between DOD’s appropriations and reported obligations can generally be attributed to the 

remaining fiscal year 2009 appropriations; multiyear funding for procurement; military 

construction; and research, development, test, and evaluation from previous OCO-related 

appropriations12 that have yet to be obligated; and obligations for classified and other items, 

which DOD considers to be non-OCO related, that are not reported in DOD’s cost-of-war 

reports.13 As part of our ongoing work, we are reviewing DOD’s process for reporting its 

OCO-related obligations. 

Figure 1 shows the increase in DOD’s cumulative reported OCO obligations and cumulative 

OCO appropriations from fiscal year 2001 through fiscal year 2008 and through the second 

quarter of fiscal year 2009 (October 2008 through March 2009). 

11We calculated this difference by comparing available data on appropriations and reported obligations. 

12Appropriations for military personnel and operation and maintenance are usually available for 1 year, while 

appropriations for research, development, test and evaluation are usually available for 2 years; procurement 

funds (with the exception of ship building funds, which are sometimes available longer) are usually available 

for 3 years; and military construction funds are usually available for 5 years. 13 We have not reviewed DOD’s determination of what appropriations should be considered non-overseas 

contingency operations. 
Figure 1: DOD’s Cumulative Reported Overseas Contingency Operations 

Appropriations and Obligations for Fiscal Years 2001 through 2008 and for Fiscal 

Year 2009 for October 2008 through March 2009 

Notes: Appropriations amounts reflect totals provided in supplemental and annual appropriations legislation. Reported OCO obligations 

include Operation Noble Eagle, Operation Enduring Freedom, and Operation Iraqi Freedom, and generally reflect costs reported in

DOD’s cost-of-war reports. However, the fiscal year 2002 and 2003 figures include about $20.1 billion that according to DOD officials was 

war related but not reported in DOD’s cost-of-war reports. GAO has assessed the reliability of DOD’s obligation data and found significant 

problems, such that these data may not accurately reflect the true dollar value of OCO obligations. 

Of DOD’s total cumulative reported obligations for OCO through March 2009 (about $714.3

billion), about $553.8 billion is for operations in and around Iraq as part of Operation Iraqi 

Freedom, and about $132.4 billion is for operations in Afghanistan, the Horn of Africa, the 

Philippines, and elsewhere as part of Operation Enduring Freedom. The remainder of about 

$28.2 billion is for operations in defense of the homeland as part of Operation Noble Eagle. 

As figure 2 shows, DOD’s reported obligations for Operation Iraqi Freedom have 

consistently increased each fiscal year since operations began. The increases in reported 

obligations for Operation Iraqi Freedom are in part due to continued costs for military 

personnel, such as military pay and allowances for mobilized reservists, and for rising 

operation and maintenance expenses, such as higher contract costs for housing, food, and 

services and higher fuel costs. In addition, the need to repair and replace equipment because 

of the harsh combat and environmental conditions in theater has further increased 

obligations for Operation Iraqi Freedom. In contrast, DOD’s reported obligations for 

Operation Noble Eagle have consistently decreased since fiscal year 2003, largely because of 

the completion of repairs to the Pentagon and upgrades in security at military installations 

that were onetime costs, as well as a reduction in combat air patrols and in the number of 

reserve personnel guarding government installations. Reported obligations for Operation 

Enduring Freedom have ranged from $10.3 billion to about $32.0 billion each fiscal year 

since 2003. Recent increases in reported obligations for Operation Enduring Freedom are in 

 GAO-09-791R Overseas Contingency Operations Page 5 
part caused by higher troop levels in Afghanistan, the costs associated with training Afghan 

security forces, and the need to repair and replace equipment after several years of ongoing 

operations. 

Figure 2: DOD’s Reported Overseas Contingency Operations Obligations for Fiscal 

Years 2001 through 2008 by Operation 

Notes: Operation Iraqi Freedom began in fiscal year 2003; therefore no obligations were reported in fiscal years 2001 and 2002 for this 

operation. Reported OCO obligations generally reflect costs reported in DOD’s cost-of-war reports. However, the fiscal year 2002 and 

2003 figures include about $20.1 billion that according to DOD officials was war-related but not reported in DOD’s cost-of-war reports. 

GAO has assessed the reliability of DOD’s obligation data and found significant problems, such that these data may not accurately reflect 

the true dollar value of OCO obligations. 

In fiscal year 2009, through March 2009, DOD reported obligations of about $59.6 billion, 

which are about one third of the total amount of obligation it reported for all of fiscal year 

2008. Reported obligations for Operation Iraqi Freedom for the same period continue to 

account for the largest portion of total reported OCO obligations by operation—about $45.3 

billion. In contrast, reported obligations associated with Operation Enduring Freedom total 

about $14.2 billion, and reported obligations associated with Operation Noble Eagle total 

about $88.5 million. 

The Army accounts for the largest portion of reported obligations for fiscal year 2009 

through March 2009—about $40.6 billion, more than 5.5 times higher than the almost $7.1 

billion in obligations reported for the Air Force, the military service with the next greatest 

reported amount. Among appropriation accounts, operation and maintenance, which 

includes items such as support for housing, food, and services; the repair of equipment; and 

transportation to move people, supplies, and equipment, accounts for the largest reported 

obligations—about $35.4 billion. Reported obligations for the procurement account 

represent about 16.3 percent of reported obligations or about $9.7 billion. 

 GAO-09-791R Overseas Contingency Operations Page 6 
Figure 3 shows DOD’s reported obligations for fiscal year 2009 for October 2008 through 

March 2009 by DOD component and appropriation account. 

Figure 3: DOD’s Reported Overseas Contingency Operations Obligations for Fiscal 

Year 2009, by DOD Component and Appropriation Account, as of March 2009 

Notes: Totals may not add due to rounding. The “Other” portion of the appropriation account pie chart includes programs designed to 

reimburse coalition countries for logistical and military support, to train and equip the Afghan National Army and Armed Forces of Iraq, 

and to execute the Commanders Emergency Response Program. GAO has assessed the reliability of DOD’s obligation data and found 

significant problems, such that these data may not accurately reflect the true dollar value of OCO obligations. 

Agency Comments and Our Evaluation 

In written comments on a draft of this report, DOD noted our report stated that the 

Department has started several initiatives to improve the credibility, transparency, and 

timeliness of cost of war reporting and mentioned the deployment of the Contingency 

Operations Reporting and Analysis Service system. According to DOD, this is a web-based 

system that will allow the Department to move away from a manual/email template 

methodology of collecting cost data to extracting a portion of the data from various 

accounting systems. As the Department requested, we have included this information in the 

report. DOD’s comments are reprinted in Enclosure 1. 

- - - - - 

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. In addition, this report will be available at no charge on the GAO 

Web site at http://www.gao.gov. 

 GAO-09-791R Overseas Contingency Operations Page 7 
If you or your staff have any questions about this report, please contact me at (202) 512-9619 

or pickups@gao.gov. Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Key contributors to this report are listed 

in enclosure II. 

Sharon L. Pickup 

Director, Defense Capabilities and Management 

Enclosures - 2 

 

 GAO-09-791R Overseas Contingency Operations Page 8 
 GAO-09-791R Overseas Contingency Operations Page 9 

List of Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Thad Cochran 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Howard McKeon 

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John P. Murtha 

Chairman 

The Honorable C. W. Bill Young 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 
 

 GAO-09-791R Overseas Contingency Operations Page 10 

Enclosure I 

Comments from the Department of Defense 
 

 

Enclosure II

GAO Contact and Staff Acknowledgments 

GAO Contact Sharon Pickup, (202) 512-9619 or pickups@gao.gov 

Acknowledgments In addition to the contact named above, Ann Borseth, Assistant 

Director; Bruce Brown; Ron La Due Lake; Lonnie McAllister; and 

Sara Cradic made key contributions to this report. 

(351346) 

GAO-09-791R Overseas Contingency Operations Page 11 
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