United States Government Accountability Office

Washington, DC 20548 

September 25, 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 $893 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, Congress appropriated $151 billion in war-related requests. 

A total of $89.1 billion has been obligated through the third quarter of fiscal year 2009 

through June 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 

these obligations by appropriation, contingency operation,5

 and military service or defense 

 

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. 

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. 

 GAO-09-1022R Overseas Contingency Operations
Page 2 GAO-09-1022R Overseas Contingency Operations 

 

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 June 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 June 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 

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 

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). 
Page 3 GAO-09-1022R Overseas Contingency Operations 

 

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. 

In February 2009, the Office of Management and Budget, in concert with the Office of the 

Secretary of Defense, collaboratively developed the Criteria for War/Overseas Contingency 

Operations Funding Requests, guidance for the OCO criteria development of the war 

requests. Since April, we have been examining whether and how the military services have 

implemented this criteria in formulating their FY 2010 budget. Also, we are focusing on the 

extent to which internal controls are designed into the contingency operations status of the 

funds reporting process to reduce the risk of inaccurate information in FY 2009. 

We conducted our work from August 2009 to September 2009 in accordance with all 

sections of the GAO’s Quality Control Assurance Framework that are relevant to our 

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). 
Page 4 GAO-09-1022R Overseas Contingency Operations 

 

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 June 2009, Congress has appropriated a total of about $893 billion primarily for OCO 

since 2001. Of that amount, $151 billion was appropriated for use in fiscal year 2009. DOD 

has reported obligations of about $744 billion for OCO from fiscal year 2001 through fiscal 

year 2008 and for fiscal year 2009 (October 2008 through June 2009). The $149 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. 

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 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 third 

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

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 June 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 September 30 cost-of-war reports for each fiscal year. 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 June 2009 (about 

$744 billion), about $570 billion is for operations in and around Iraq as part of Operation 

Iraqi Freedom, and about $146 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 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 

Page 5 GAO-09-1022R Overseas Contingency Operations 
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 billion to about $30 billion each fiscal year since 

2003. Recent increases in reported obligations for Operation Enduring Freedom are in 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 September 30 cost-of-war reports for each fiscal year. 

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 June 2009, DOD reported obligations of about $89.1 billion, 

which is more than one half 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 $61.5 

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

about $27.4 billion, and reported obligations associated with Operation Noble Eagle total 

about $138.2 million. 

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

through June 2009—about $60.7 billion, more than 5.7 times higher than the $10.5 billion in 

Page 6 GAO-09-1022R Overseas Contingency Operations 
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 $52.1 billion. Reported obligations for the procurement account represent about 16.2 

percent of reported obligations or about $14.4 billion. 

Figure 3 shows DOD’s reported obligations for fiscal year 2009 for October 2008 through 

June 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 June 2009 

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

Afghanistan Security Forces Fund, the Iraq Security Force Fund, and the Joint Improvised Explosive Devices Defense Fund. 

Agency Comments 

The Office of the Under Secretary of Defense (Comptroller) provided technical comments 

on a draft of this report and we incorporated these comments as appropriate. 

- - - - - 

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 

Page 7 GAO-09-1022R Overseas Contingency Operations 
Management and Budget. In addition, this report will be available at no charge on the GAO 

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

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 the attached enclosure. 

Sharon L. Pickup 

Director, Defense Capabilities and Management 

Enclosure 

 

Page 8 GAO-09-1022R Overseas Contingency Operations 
Page 9 GAO-09-1022R Overseas Contingency Operations 

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 
 

Page 10 GAO-09-1022R Overseas Contingency Operations 

Enclosure 

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 

Kevin O’Neill made key contributions to this report. 

(351397) 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 
The Government Accountability Office, the audit, evaluation, and GAO’s Mission investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost Obtaining Copies of is through GAO’s Web site (www.gao.gov). Each weekday afternoon, GAO 

GAO Reports and posts on its Web site newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, Testimony go to www.gao.gov and select “E-mail Updates.” 

Order by Phone 	 The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s Web site, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information. 

Contact: To Report Fraud, 

Waste, and Abuse in Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Federal Programs Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 Congressional U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Relations Washington, DC 20548 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 Public Affairs U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548