GAO-10-288R Overseas Contingency Operations 

United States Government Accountability Office

Washington, DC 20548 

December 18, 2009 

Congressional Committees 

Subject: Overseas Contingency Operations: Funding and Cost Reporting for the 

Department of Defense 

This report formally transmits the enclosed briefing on work performed under the 

authority of the Comptroller General to conduct evaluations on his own initiative. 

We are sending copies of this report to the appropriate congressional committees. We 

are also sending copies to the Secretary of Defense and the Under Secretary of 

Defense (Comptroller) and the Secretaries of the Army, Air Force, and Navy. The 

report also is available at no charge on the GAO Web site at http://www.gao.gov. 

Should you or your staff have any questions concerning this report, please contact 

Sharon L. Pickup at (202) 512-9619 or pickups@gao.gov or Asif A. Khan at (202) 512-

9869 or khana@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 include Ann Borseth, Assistant Director; Mary Ellen 

Chervenic, Assistant Director; Jehan Abdel-Gawad; Robert Brown; Maxine Hattery; 

LaShawnda Lindsey; Lonnie McAllister II; Sheila Miller; James Moses; Marcus Lloyd 

Oliver; Charles Perdue; Laura Pacheco; Richard Powelson; and Arian Terrill. 

Sharon L. Pickup 

Director 

Defense Capabilities and Management 

Asif A. Khan 

Director 

Financial Management and Assurance 

Enclosure 
 Page 2 GAO-10-288R 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 
Enclosure 

 Page 3 GAO-10-288R Overseas Contingency Operations 

1

Overseas Contingency Operations: 

Funding and Cost Reporting

for the Department of Defense

Briefing for Congressional Committees

December 16, 2009
Enclosure 

 Page 4 GAO-10-288R Overseas Contingency Operations 

2

Introduction

• Since the September 11, 2001, terrorist attacks, the Department of 

Defense (DOD) has been engaged in domestic and overseas military

operations in support of Overseas Contingency Operations (OCO).

• These operations include Operation Iraqi Freedom, which focuses 

principally on Iraq, and Operation Enduring Freedom, which focuses 

principally on Afghanistan but also includes operations in the Horn of 

Africa, the Philippines, and elsewhere.

• Obtaining an accurate picture of OCO costs is of critical importance given 

the need to evaluate trade-offs and make more effective use of defense 

dollars in light of the nation's long-term fiscal challenges. In the past, we 

have reported on the need for DOD to become more disciplined in its 

approach to developing plans and budgets, including building more OCO 

costs into the base defense budget. 
Enclosure 

 Page 5 GAO-10-288R Overseas Contingency Operations 

3

Objectives

Under the Comptroller General’s authority, GAO evaluated

1) the impact of changes to OCO funding guidance on DOD’s fiscal 

year 2010 OCO funding request,

2) factors that could affect fiscal year 2010 OCO estimates for 

reducing troop levels in Iraq and increasing troop levels in 

Afghanistan, and

3) the extent of internal controls in DOD’s process for producing its 

monthly OCO cost report to help ensure reliability of reported 

data.
Enclosure 

 Page 6 GAO-10-288R Overseas Contingency Operations 

4

Summary of Findings

• The Office of Management and Budget (OMB) issued new criteria to be used in 

developing DOD’s fiscal year 2010 OCO funding request. To implement these criteria, the 

Office of the Under Secretary of Defense (OUSD) (Comptroller) and the services shifted 

some costs to the base budget and cut some costs entirely. These actions, in conjunction 

with other factors such as the need for less procurement funding, contributed to significant 

decreases in the OCO funding request for fiscal year 2010 compared to fiscal year 2009. 

To build more discipline into the budget process, the administration should continue to 

look for opportunities to move other OCO costs into the base budget.

• A variety of factors could affect fiscal year 2010 OCO funding needs for operations in Iraq 

and Afghanistan. Our analysis of Joint Staff planning assumptions developed in February 

2009 and used for the fiscal year 2010 OCO funding request shows that the assumptions 

were optimistic and inconsistent when compared with current rotational plans for Army 

units in Iraq and Afghanistan. In addition to decisions on troop levels, we also identified 

additional factors that could affect funding, such as changes in the security situation and 

decisions yet to be made on equipment disposition.

• We found indications that DOD and certain military services did not adequately document 

current control practices for reliably reporting OCO costs. 
Enclosure 

 Page 7 GAO-10-288R Overseas Contingency Operations 

5

Scope and Methodology

To achieve our objectives, we

• reviewed and analyzed OMB’s Criteria for War/Overseas Contingency 

Operations Funding Requests for fiscal year 2010 and the criteria for prior 

years as well as other budget guidance issued by DOD;

• conducted interviews with officials from OMB, OUSD (Comptroller), the 

military services, and the Defense Finance and Accounting Service;

• reviewed and analyzed the military services’ fiscal year 2009 and fiscal year 

2010 budget justification documents and related data;

• compared the Joint Staff’s planning assumptions used to develop the fiscal 

year 2010 funding request with force rotational plans;

• compared policies and procedures against GAO’s Standards for Internal 

Control in the Federal Government; and
Enclosure 

 Page 8 GAO-10-288R Overseas Contingency Operations 

6

Scope and Methodology

• determined whether selected policies and procedures to help ensure data 

reliability were in use by analyzing selected data in the October 2008 

through July 2009 OCO cost reports. 

• We conducted our review from April 2009 to November 2009 in accordance 

with all sections of 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, 

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

• DOD provided technical comments on a draft of this product, which we 

incorporated.
Enclosure 

 Page 9 GAO-10-288R Overseas Contingency Operations 

7

OCO Funding since 2001

• Since 2001, Congress has provided DOD with about $893 billion, 

as of November 2009, primarily for OCO. DOD has reported 

obligations of about $789 billion for OCO from September 2001 

through the end of fiscal year 2009 (September 30, 2009).

• Prior GAO work has recommended that DOD shift certain 

contingency costs into the annual base budget to allow for 

prioritization and trade-offs among DOD’s needs and to enhance 

visibility in defense spending.* The department concurred with this 

recommendation. In February 2009, OMB issued new criteria for 

the development of DOD’s OCO funding requests that required 

DOD to move some OCO costs into the base budget.

Background

* GAO, 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).
Enclosure 

 Page 10 GAO-10-288R Overseas Contingency Operations 

8

• Prior GAO work has also found numerous problems in DOD’s processes for 

recording and reporting obligations, raising significant concerns about the 

overall reliability of DOD’s reported obligations. In addition, DOD’s financial 

management has been on GAO’s list of high-risk areas since 1995. 

• In October 2008, DOD began using Contingency Operations Reporting and 

Analysis Service (CORAS) to report OCO funding, obligations, and

disbursements in a new monthly OCO cost report. 

• Objectives for the CORAS system included

• improving the accuracy of the OCO reporting process by electronically 

capturing data from DOD accounting systems, 

• providing a Web-based tool to allow users to manually input data not 

readily available electronically from DOD accounting systems, and

• producing OCO cost reports electronically.

Contingency Operations Cost Reporting

Background
Enclosure 

 Page 11 GAO-10-288R Overseas Contingency Operations 

9

Funding Available to DOD for OCO (Fiscal Years 2001 

through 2009) and DOD’s Fiscal Year 2010 OCO 

Funding Request

Background

Notes: From fiscal year 2001 through fiscal year 2009, Congress provided funds to DOD in emergency supplemental appropriations and Title IX of DOD’s regular annual 

appropriation. These appropriations included funds that could be used for OCO. Except for fiscal year 2010, the figures reflect DOD’s calculations of amounts available for OCO based on excluding funds that were appropriated for specific purposes, such as hurricane assistance. For fiscal year 2010, the figure reflects 

DOD’s OCO funding request.

Source: DOD.

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Dollars in billions

Fiscal year

Emergency supplemental appropriation

16 13

63 61

70

48

130

71

81

86

66

87

70 60

25

Title IX Fiscal year 2010 OCO request

95

108

137

168

156
Enclosure 

 Page 12 GAO-10-288R Overseas Contingency Operations 

10

DOD’s Fiscal Year 2010 OCO and Base Budget 

Requests

Background

Source: DOD.

Note: COIN refers to Counterinsurgency and CERP refers to the Commander’s Emergency Response Program.
Enclosure 

 Page 13 GAO-10-288R Overseas Contingency Operations 

11

OMB Revised Criteria for Development of 

DOD’s Fiscal Year 2010 OCO Funding Request

• In 2007, DOD revised its Financial Management Regulation, expanding the 

definition of acceptable maintenance and procurement costs and directing the 

military services to begin including “longer war on terror” costs in their OCO 

funding requests. 

• GAO subsequently recommended that DOD issue guidance defining what 

constitutes the “longer war on terror,” to identify what costs are related to that 

longer war and to build these costs into the base defense budget.* The 

department concurred with this recommendation. This provides greater 

opportunity and impetus for DOD to assess priorities and make trade-offs within 

the base budget.

• In February 2009, OMB issued new criteria specifying which costs formerly 

considered OCO should be included in the baseline budget. OUSD 

(Comptroller) plans to put the criteria in its Financial Management Regulation 

by early 2010.

Objective 1

* GAO 08-68.
Enclosure 

 Page 14 GAO-10-288R Overseas Contingency Operations 

12

OMB Revised Criteria for Development of 

DOD’s Fiscal Year 2010 OCO Funding Request

Included

Included

Included

No time frame restrictions

Does not specify obligation 

time frames

Does not specify locations, which 

allowed for funding such items as 

home station needs to support 

contingency operations

Prior OCO Funding Guidance

Excludes pay and allowances for end 

strength above level requested in budget

Personnel

Excludes family support initiatives that 

would endure after U.S. forces redeploy 

to home stations

Family Support Initiatives

Specifies stricter definitions of replacement, 

repair, modification, and procurement 

of equipment; new criteria specify a 

12-month time frame for obligating funds

Equipment

Base Realignment and Closure Excluded

Funding for research and development 

must be for projects required for combat

operations in the theater that can be 

delivered in 12 months

Research, Development, 

Test and Evaluation 

(RDT&E)

Includes U.S. Central Command, the 

Horn of Africa, the Indian Ocean, and 

the Philippines, among others

Geographic Theater of 

Operations

Areas Current OCO Funding Guidance

Significant changes in the criteria used to build the fiscal year 2010 OCO funding 

request include the following:

Objective 1
Enclosure 

 Page 15 GAO-10-288R Overseas Contingency Operations 

13

Implementation of OMB Criteria Affected

Fiscal Year 2010 OCO Funding Request

To implement the new OCO criteria, OUSD (Comptroller) and the services shifted some costs to 

the base budget and cut some costs entirely. These actions, in conjunction with other factors such 

as the need for less procurement funding in fiscal year 2010, contributed to significant OCO 

funding request decreases in several appropriation accounts in fiscal year 2010, particularly in 

procurement, RDT&E, and military construction.

Contingency Operations Related Requests by Account Title 

(Fiscal Years 2009-2010)

Dollars in thousands

Total $143,813,790 $129,603,085 -10

Military Construction 2,113,032 1,404,984 -34

RDT&E 1,197,725 310,254 -74

Procurement 31,464,438 23,741,226 -25

Operation and Maintenance 91,657,226 90,560,280 -1

Military Personnel $17,381,369 $13,586,341 -22

Percentage 

change, FY09-10 Account title FY 2009 FY 2010

Source: DOD.

Note: Numbers may not add to totals due to rounding.

Objective 1
Enclosure 

 Page 16 GAO-10-288R Overseas Contingency Operations 

14

Applying the new criteria, OUSD (Comptroller) shifted about $7.8 billion in funding 

from OCO to the fiscal year 2010 base budget request. Programs and initiatives that 

shifted to the base were overarching and long term.

Total $7.8

Intelligence, Surveillance, and Reconnaissance Enhancements 0.3

Building Partnerships 0.6

Family Support Initiatives 0.6

Joint Improvised Explosive Device Defeat Organization 0.6

Recruiting and Retention 0.6

Medical Support Costs 2.8

Grow the Force $2.3

Program Amount Shifted

Implementation of OMB Criteria Affected 

Fiscal Year 2010 OCO Funding Request

To accommodate these shifts, OMB raised DOD’s annual base budget limit by 

$8 billion. Therefore, DOD did not need to make trade-offs to stay within the budget.

Objective 1

DOD Funding Shifted to Base Budget due to New Criteria

(Dollars in billions)
Enclosure 

 Page 17 GAO-10-288R Overseas Contingency Operations 

15

In addition to shifting costs, OUSD (Comptroller) and the services made a number of 

cuts to the fiscal year 2010 OCO funding request because of the new criteria:

• New restrictions on procurement resulted in a number of aircraft funding 

requests being denied by OSD (Comptroller), including:

• Marine Corps request for 2 KC-130J tankers ($200 million).

• Navy request for 5 EA-18G Growlers ($300 million).

• New restrictions on the geographic area of operations resulted in a number of 

military construction projects being denied by OSD (Comptroller), including:

• Air Force request for construction and maintenance of runways in Guam ($80 million). • Marine Corps request for docks and warehouse facilities at Blount Island Command in Florida ($90 million).

OMB’s new OCO criteria have resulted in DOD building a number of former OCO 

costs into the base defense budget, as suggested by our prior recommendation. To 

build more discipline into the budget process, the administration should continue to 

look for opportunities to move other OCO costs into the base budget.

Implementation of OMB Criteria Affected 

Fiscal Year 2010 OCO Funding Request

Objective 1
Enclosure 

 Page 18 GAO-10-288R Overseas Contingency Operations 

16

• In July 2009, DOD decided to temporarily increase the Army’s Active Component 

by up to 22,000 personnel, the costs for 15,000 of which would be funded in fiscal 

year 2010.

• In August 2009, the administration submitted budget amendments to the fiscal 

year 2010 OCO request, reallocating $1.0 billion in order to provide funding for the 

additional personnel. The amendments reduced Army funding for vehicles by 

about $700 million and reduced Navy and Air Force procurement funding by about 

$310 million. This funding was then shifted to military personnel and various 

operation and maintenance accounts. 

• These amendments request pay and allowances for end strength above the level 

requested in the President’s budget. These types of costs are specifically excluded 

by the new OMB criteria. OMB officials explained that this increase is “temporary”

and is the Army’s only alternative to stop-loss for active duty personnel, and 

therefore OMB waived the criteria. OMB expects Army force levels to return to the 

current active end strength of 547,400 once demand for deploying units stabilizes. 

OMB Waived New Criteria to Allow for End 

Strength Growth

Objective 1
Enclosure 

 Page 19 GAO-10-288R Overseas Contingency Operations 

17

Fiscal Year 2010 OCO Funding Request 

Based on Joint Staff Planning Assumptions

• The fiscal year 2010 OCO funding request assumed average force structure 

levels of about 100,000 in Iraq and 68,000 in Afghanistan. 

• The request reflects plans for reducing troop levels in Iraq and increasing troop 

levels in Afghanistan based upon Joint Staff Planning Assumptions, developed in 

February 2009.

• According to GAO analysis and confirmed by discussions with the Joint Staff, the 

Planning Assumptions were optimistic (faster withdrawal of troops) and 

inconsistent with current rotational plans for Army units in Iraq and Afghanistan 

(more troops rotating in than planned). 

• According to both Comptroller and Joint Staff officials, it may become necessary 

to seek additional funding in fiscal year 2010 through a supplemental or other 

means because of deviations from the Planning Assumptions.

Objective 2
Enclosure 

 Page 20 GAO-10-288R Overseas Contingency Operations 

18

Iraq: Additional Factors That Could Affect

Fiscal Year 2010 Funding Needs for the Troop 

Drawdown

GAO has identified several additional factors that could affect funding 

needs for the Iraq drawdown in fiscal year 2010 and beyond, including:

• Changes in the security situation in the area.

• Decisions on the disposition of vehicles and other items, including 

what can and will be transferred to the Iraqi Government.

• DOD’s ability to identify and move equipment from Iraq, including 

the storage and transfer capability in Kuwait and the capacity to 

receive and reset equipment in the continental United States.

• Further identification of drawdown-related contract services and a 

lack of contract oversight personnel.

• Environmental cleanup costs associated with large base closures.

Objective 2
Enclosure 

 Page 21 GAO-10-288R Overseas Contingency Operations 

19

Afghanistan: Additional Factors That Could Affect 

Fiscal Year 2010 Funding Needs for the Troop Plus-Up

GAO has identified several additional factors that could affect funding 

needs for the Afghanistan plus-up in fiscal year 2010 and beyond, 

including:

• Changes in the security situation in the area. 

• Availability of U.S. forces, particularly for specialized capabilities 

such as engineering, civil affairs, transportation, and military police.

• DOD’s ability to adjust its training capacity from Iraq to Afghanistan.

• DOD’s continued assessment of equipment requirements and 

availability for Afghanistan’s harsh operating environment.

• DOD’s ability to transport personnel and equipment given 

Afghanistan’s limited infrastructure and topography, as well as its 

strategic airlift capacity and regional staging base options. 

• Requirements for additional contractors.

Objective 2
Enclosure 

 Page 22 GAO-10-288R Overseas Contingency Operations 

20

Preliminary Observations on Contingency Operations

Cost Reporting

We found indications that DOD and certain military services did not 

adequately document current control practices for reliably reporting 

OCO costs, including

• providing for effective oversight of implementation of our 

previous recommendation concerning OCO cost allocations or

• documenting the results of monthly OCO cost analyses, 

comparisons, and reasonableness checks.

As appropriate, we plan to provide more detail on the extent and

nature of our findings with respect to these observations, along

with related recommended actions, in a separate report.

Objective 3
Enclosure 

 Page 23 GAO-10-288R Overseas Contingency Operations 

21

Related GAO Products

• 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.: March 17, 2009.

• Defense Budget: Independent Review Is Needed to Ensure DOD's Use of Cost 

Estimating Tool for Contingency Operations Follows Best Practices. GAO-08-982. 

Washington, D.C.: September 15, 2008.

• Supplemental Appropriations: Opportunities Exist to Increase Transparency and 

Provide Additional Controls. GAO-08-314. Washington, D.C.: January 31, 2008.

• 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. GAO08-68. Washington, D.C.: November 6, 2007.
Enclosure 

 Page 24 GAO-10-288R Overseas Contingency Operations 

22

Related GAO Products

• Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are Within Funding

Levels and Significant Multiyear Procurement Funds Will Likely Remain Available for 

Use in Fiscal Year 2007. GAO-07-76. Washington, D.C.: November 13, 2006.

• Global War on Terrorism: Observations on Funding, Costs, and Future 

Commitments. GAO-06-885T. Washington, D.C.: July 18, 2006.

• Global War on Terrorism: DOD Should Consider All Funds Requested for the War 

When Determining Needs and Covering Expenses. GAO-05-767. Washington, D.C.: 

September 28, 2005.

• 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.: 

September 21, 2005.

(351345) 
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