The services' O&M appropriation gives them the funds to carry out day-to-day activities, such as recruiting and fielding a trained and ready force, equipment maintenance and repair, child care and family centers, transportation services, civilian personnel management and pay, and maintaining the infrastructure to support the forces. Table 1 shows the Army's and the Air Force's O&M budget requests, amounts received, and amounts obligated for fiscal years 1993 through 1995. The services' annual O&M budget requests to Congress are presented in four broad categories referred to as budget activities: operating forces, mobilization, training and recruiting, and administrative and servicewide activities. Each budget activity is further broken down into activity groups which, in turn, are further broken down into subactivity groups. For example, the Army's operating forces budget activity is divided into two activity groups (land forces and land operations support), and each of the activity groups is made up of various subactivity groups. To illustrate, the land forces activity group consists of eight subactivity groups: combat units, tactical support, theater defense forces, forces related training, force communications, depot maintenance, Joint Chiefs of Staff (JCS) exercises, and base support. Table 2 is an example of the budget presentation document for the Army's operating forces budget activity, activity groups, and subactivity groups for fiscal year 1995. The budget subactivity groups are further broken down into program element codes. Although the codes are not part of the budget presentation to Congress, they are maintained as part of the services' funds control process and provide more details about how the services plan to spend the funds received. For example, within the Army's subactivity group--combat units--there are three program element codes that show how the Army plans to use the funds designated for combat units. There are similar program elements in the four budget activities. For example, base operations is a program element that is in most budget activities. Therefore, by grouping similar program elements, it can be determined how much was budgeted and obligated for a particular function. In performing our analysis, we placed all the program element codes into the following four categories: combat forces and support of the forces, training and recruitment, management and command activities, and base support. For each of these four categories, we listed the budgeted and obligated amounts. See appendixes II and III for a complete listing of the program element codes that comprise each of these four major categories. For fiscal years 1993 through 1995, funds requested for combat forces and support of the forces ranged from $3.6 billion to $4.5 billion for the Army. During the same period, the amount of O&M funds the Army obligated for these program element codes ranged from $3.2 billion to $4.2 billion. For the Air Force, funds requested for combat forces and support of the forces ranged from $4.7 billion to $5.1 billion and the amount obligated ranged from $5 billion to $5.3 billion. As shown in table 3, the amounts obligated have increased slightly during the 3-year period, but, at their highest level, still only represent 21.5 percent of the Army's and 26.8 percent of the Air Force's total O&M obligations. As shown above, over the past 3 years, the Air Force obligated about $700 million more for its combat forces than was requested. In contrast, the Army obligated about $900 million less than the amounts requested.The fact that the Army did not obligate all the funds that it requested for its combat forces means that the amount initially requested for combat forces was probably used to fund other O&M programs. Training and recruiting are essential elements in maintaining a ready force. Our analysis showed that the amounts obligated for these purposes were routinely less than the amounts the services requested. As shown in table 4, the Army's and the Air Force's requests for the program elements related to training and recruiting in fiscal years 1993 through 1995 ranged from $2 billion to $2.2 billion and from $1.5 billion to $1.9 billion, respectively. Although the amounts obligated have increased slightly during the 3-year period, at their highest level they still only represented about 10.8 percent of the Army's and 9.1 percent of the Air Force's O&M budgets. Table 5 shows the types of training and recruiting activities the Army and the Air Force obligated their O&M funds for in fiscal year 1995. In most cases, the amounts requested and obligated were fairly close. However, overall, the Army and the Air Force obligated less than they requested for their training and recruiting activities. For fiscal years 1993 through 1995, the Army obligated about 33 percent of its total O&M funds for base support and the Air Force about 30 percent. Table 6 shows the amounts requested and obligated for base support program elements during the 3-year period under review. Although the amounts have decreased slightly from the high point during the period under review, the services continue to devote a substantial portion of their O&M budgets to maintaining the infrastructure. Program elements in the base support category include base communications, environmental compliance, real property maintenance and real property services activities, child and family services, leases, maintenance of nontactical equipment, food service programs, and community and morale support activities. Table 7 shows the amount requested and obligated for the above base operations program elements in fiscal year 1995. Of particular interest is the amount the services obligated for base maintenance and repair--about $974 million obligated versus about $793 million requested for the Army and about $2.4 billion obligated versus $1.3 billion requested for the Air Force. In fiscal year 1995, Congress reduced the Army's and the Air Force's requests by $100 million, respectively. Therefore, the fact that the services obligated more than requested cannot be explained by Congress appropriating more than was requested. The more likely answer is that O&M funds from other programs were reprogrammed to the base maintenance and repair accounts. Another area where the services obligated more than was requested was for environmental activities. Whereas the Army requested about $465 million for these activities, it obligated over $1.1 billion. The Air Force also obligated significantly more of its O&M funds for environmental activities than it requested--about $774 million versus $404 million. The reason for this is that the requested amounts do not include funds transferred from DOD to the services under DOD's environmental account. Between fiscal years 1993 through 1995, the Army obligated approximately 37 percent of its O&M funds for management, command, and servicewide activities. The Air Force obligated about 35 percent of its O&M funds for the same purposes. Table 8 shows the amounts requested and obligated for management, command, and servicewide program elements during the 3-year period under review. Although the amounts obligated by the Army decreased from fiscal years 1993 to 1994, fiscal year 1995 obligations show a reversal of that trend. Air Force obligations rose steadily over this same time period. As shown in table 9, Army headquarters and command management activities accounted for $770 million, or 11 percent, of the total obligations in the management, command, and servicewide activities grouping. The $770 million included obligations to operate the headquarters activities of the Army's specified commands as well as the operations of the departmental headquarters located in Washington, D.C., and other headquarters activities, such as the Corps of Engineers, public affairs, and space activities. The Air Force obligated about $654 million, or about 9 percent, of its management, command, and servicewide activities funds for similar programs. Athough it would not be expected that the amounts obligated would necessarily agree with the amounts requested, there are certain obligation trends that seem to emerge. This is particularly true for the Army, which historically obligates less funds for its combat forces than it requests even when appropriated more than requested. Conversely, the opposite trend emerges for the infrastructure and management accounts. The reason why obligations exceed the amounts requested may be because Congress appropriated more than requested. However, another reason could also be that funds initially requested for other O&M accounts were reprogrammed to the infrastructure and management accounts. We believe that this report will assist congressional decisionmakers by showing how obligation patterns differ from the budget estimates submitted to Congress. In commenting on a draft of this report, DOD said that all of the Army's special activities programs (see app.II) should not have been included in the management, command, and servicewide activities category. DOD said that special activities include items such as the Army battle simulation center, Louisiana maneuvers, Army flying hour program, combat training centers, training range operations, soldier modernization, and contingency operations and that these items should have been included in the combat forces category. DOD further stated that the only portion of special activities that was properly included in the management, command, and servicewide activities category was subsistence-in-kind, which has been about $250 million to $300 million a year. DOD contended that including all of these programs in the management, command, and servicewide activities category led us to conclude that this category was too large in comparison to the combat forces budget. DOD's response included a level of detail beyond the program element level that was not available to us during our review of the activities included in the special activities category or other O&M subaccounts. For that reason, our analysis was based on the program element level that was available for all O&M subaccounts. We categorized special activities as management, command, and servicewide activities because of the Army's definition of the special activities program element. The Army defines special activities as units with a predominantly peacetime mission. After analyzing obligation data and the description of the type of activities DOD said are included in the special activities program element, with minor exceptions, we do not agree with DOD's assertion that these activities should have been categorized as combat forces activities. If we had had the detailed information during our review, we would have listed the Louisiana maneuvers, battle simulation center, and combat training center as training activities in the training and recruiting category. We would also have listed the cost of training range operations and soldier modernization in the base support category. The above activities accounted for about $181.3 million of the $1.5 billion of fiscal year 1995 obligations incurred in the special activities category. The Army flying hour program in the special activities program element accounted for $13.3 million out of a total Army flying hour program of $848.6 million in fiscal year 1995. Furthermore, the type of flying hour program activities included in the special activities program element included aircraft operating costs associated with (1) transporting headquarters command personnel, (2) the multinational force observers in Egypt, and (3) training Army pilots in newly fielded aircraft. The only portion of the $13.3 million that possibly should be included in the combat forces category is the costs associated with the multinational force observers in Egypt. In our opinion, the flying hour program costs for transporting headquarters command personnel should remain in the management, command, and servicewide activities category and the costs for training Army pilots in newly fielded aircraft should be shown in the training and recruiting category. The contingency operations that DOD said were in the special activities program element, and which they believe should be categorized as a combat force activity, incurred obligations totaling $633.2 million in fiscal year 1995. Of this total, $456.1 million was for operations to restore democracy in Haiti. In our opinion, such operations do not contribute to the day-to-day training of the combat forces to prepare them to carry out their national security mission. Therefore, we believe that these obligations were properly categorized as a management, command, and servicewide activity. There were other obligations, totaling about $177.1 million, for contingency operations that probably should be listed in the combat forces category. However, including these obligations in the combat forces category would not have a significant effect on the percentage of total obligations incurred for combat forces in fiscal year 1995--an increase from 21.5 percent to 22.4 percent. Finally, it should be noted that the report does not conclude, as suggested by DOD, that the Army budget for management, command, and servicewide activities was too large in comparison to the combat forces budget. The report reaches no conclusions about the relative significance of the combat forces budget as compared to the budget for management, command, and servicewide activities. DOD also commented that it disagreed with our statement that only one-third of Army's and Air Force's O&M funds are obligated for combat forces, including training and recruitment. DOD said that some noteworthy examples that we considered to be support activities, but that they believe contribute directly to combat readiness, include the national foreign intelligence program, national space assets, early warning systems, significant airlift costs, warfighting logistics, and command and control systems. We agree that the activities cited by DOD contribute to readiness as do many other O&M funded activities. The point of our report was not that certain O&M funded activities do or do not contribute to readiness. Instead, the report was intended to identify those expenditures that could be directly related to combat forces as opposed to infrastructure activities. In categorizing the various costs, we used the Institute for Defense Analyses, the JCS, and the Office of Program Analysis and Evaluation criteria for defining defense missions and infrastructure. In essence, the criteria provide that, if the activity deploys with the combat force, it is defense mission related. If, on the other hand, it operates from a fixed location, it is infrastructure. Based on this criteria, we believe that our categorizations of what is combat force related and what is infrastructure related are appropriate. DOD further commented that it did not agree with the report's categorization of noncombat activities. DOD said that many of these activities enhance combat capability and are not merely "nice to have" programs that are funded at the expense of combat elements. The use of the term noncombat was to distinguish the "other than combat" activities from the category labeled "combat forces" activities. The purpose of this delineation was to illustrate what portion of the O&M funds were used for those O&M activities that could be directly related to the combat forces as opposed to those O&M activities that were infrastructure related. This categorization was not, in any way, intended to imply that the infrastructure related activities do not contribute to combat capability. To avoid confusion, we deleted the word "noncombat" from the report section. DOD also provided suggested clarification to other issues cited in the report. We considered the clarifying information and made changes where deemed appropriate. DOD comments are presented in their entirety in appendix IV. The scope and methodology of our review are discussed in appendix I. We are sending copies of this report to the Secretaries of the Army, the Navy, and the Air Force; the Director, Office of Management and Budget; and the Chairmen, House Committee on Government Reform and Oversight, Senate Committee on Governmental Affairs, the House and Senate Committees on Appropriations, House Committee on National Security, Senate Committee on Armed Services, and Senate Committee on the Budget. Please contact me on (202) 512-5140 if you have any questions concerning this report. Major contributors to this report are listed in appendix V. To obtain the budget and obligation data and an explanation of program elements and how they are used in the budget process, we held discussions with Army, Navy, and Air Force financial management officials. We also reviewed the Army's manual on financial management, which provided a definition of the program elements associated with the operation and maintenance (O&M) appropriation. The Air Force did not have a similar manual but did provide us with some program element definitions. We also reviewed the Institute for Defense Analyses' (IDA) recent paper, A Reference Manual for Defense Mission Categories, Infrastructure Categories, and Program Elements, to help us categorize the program element codes. To evaluate how the services are using their O&M funds, we asked them to provide us with their budget requests, appropriations, and obligations by program element code for fiscal years 1993 through 1995. The Navy was unable to provide any information at the program element level because that type of data is not maintained at the headquarters level. As a result, we did not include the Navy in our analysis. Also, the Army and the Air Force were unable to provide appropriation data by program element code because neither service allots the appropriation below the subactivity level. Using the Army and the Air Force databases, we divided the program element codes into four broad categories: combat forces and support of combat forces, training and recruiting, base support, and management, command, and servicewide activities. The rationale for these categorizations was the services' program element definitions as well as definitions developed by IDA, the Office of Program Analysis and Evaluation, and the Joint Chiefs of Staff (JCS). The IDA and Office of Program Analysis and Evaluation divided the services' program elements into two broad classes--defense missions and infrastructure. Defense missions were defined as those activities that produced the expected outputs of the Department of Defense as well as activities that directly support the mission by deploying with combat forces. Both the IDA and the JCS defined infrastructure as those activities that are operated from a fixed location. All program elements were then placed in the appropriate category even though the program element may have been categorized differently in the service's budget document. For example, all program elements related to environmental activities were included in the base support category. Similarly, all program elements for management of headquarters activities were included in the management, command, and servicewide activities category. We then calculated the percentage of both budgeted and obligated funds by category to determine the funding levels for the various O&M activities. Our review was performed between October 1995 and February 1996 at the Army, the Air Force, and the DOD headquarters level in accordance with generally accepted government auditing standards. JCS Directed and Coordinated Exercises Air Traffic Control (ATC) Management Tactical Support-Maintenance of Tactical Equipment Support of the Training Establishment (continued) MANAGEMENT, COMMAND, AND Information Management Central Software Design Activities Information Management Reimbursable Nonautomation Programs Management Headquarters(Crypotologic) Management Headquarters(FCI) (continued) MANAGEMENT, COMMAND, AND Management Headquarters US Army Acquisition Executive Support Agency Management Headquarters Departmental Headquarters Support Management Headquarters Concept Analysis Agency Security and Intelligence Activities Management Headquarters (continued) MANAGEMENT, COMMAND, AND Miscellaneous Support to Other Nations Foreign Military Sales Program Personnel Automated Data Processing GDIP Support Intelligence, Telecommunications, and Defense Special Security System Acquisition Support to Project Managers (continued) MANAGEMENT, COMMAND, AND Combat Development Test, Experimentation, and Instrumentation End Item Integrated Material Management Construction and Real Estate Administration End Item Supply Depot Support Drug Abuse Prevention (OSD) Community and Family Support Activities Army Personnel Management and Support Activities Publications,Printing, and Reproductions (continued) MANAGEMENT, COMMAND, AND Records Management and Mailroom Operations Armed Forces Radio and TV Service Strategic Command and Control Facilities Strategic Army Communications (STARCOM) Short Range Attack Missile (AGM-69) STRAT War Planning System USSTRATCOM Advance Medium Range A/A Missile (Procurement) (continued) USSOCOM Command & Control Platform Overseas Air Weapon Control System Airborne Warning & Control System Tactical Airborne CMD & Control System Command Communications (TAC) Combat Air Intelligence System Activities JTIDS Class 2/2H Terminal Supt Act JT Tactical Command Program (TRI-TAC) Theater Nuclear Weapon Storage & Sec System (continued) Depot Maintenance (NON-IF) EURO-NATO Joint Jet Pilot Training Training (Offensive) Training (Defensive) TAC FTR TNG (Aggressor) Sq JCS Directed and Coordinated Exercises (continued) Base Communications (Administrative) Base Communications (Logistics) Base Communications (Training) Base Communications (Offensive) Command and Base Communications-Air Defense Visual Info Activities-OTH Program 3 (continued) (continued) Real Property Services-Tactical Air Force (continued) Minor Construction (RPM) (Defensive) (H) Minor Construction (RPM)-Cryptologic Minor Construction (RPM)-Other Program Minor Construction (RPM)-Service Academies Minor Construction (RPM)-TAC Air Forces Minor Construction (RPM)-Administrative Minor Construction (RPM) (Offensive) MANAGEMENT, COMMAND, AND CMN AF Improvement & Insert Program Operational Headquarters (Offensive) Management Headquarters (USSTRATCOM) Operational Headquarters (Defensive) Management Headquarters (Strategic DEF FOR) (H) US Space Command (SPACECOM) Activities US Element (NORAD Activities) Management Headquarters (US Element NORAD) Management Headquarters (US Space Command) US Central Command (CENTCOM) Activity Management Headquarters (US CENTCOM) Operational Headquarters (TAF) Theater Battle Management (TBM) C4I Management Headquarters (TAC Air Forces) Management Headquarters (Electronic Security) (continued) MANAGEMENT, COMMAND, AND Management Headquarters (Airlift) (Non-DBOF) Management Headquarters (Logistics) Operational Headquarters (Technical Training) Operational Headquarters (FT) Management Headquarters (Training) Air Force Combat Operations Staff Management Headquarters (Public Affairs) Management Headquarters (Departmental) Management Headquarters (Administrative) Management Headquarters-ADP Support (OSD) Management Headquarters-ADP Support (AF) Management Headquarters (International) Management Headquarters Technology Transfer Functions Management Headquarters (Cryptologic) Misc Support to Other Nations (continued) MANAGEMENT, COMMAND, AND SR-71 Squadrons (H) Communications (416-L) Podded Reconnaissance System (PRS) Missile and Space Technology Collection HUMINT (Controlled) HUMINT (Overt) Strategic Air CMD GDIP Activities Automated Data Processing GDIP SPT Intel Comm & Def Spec Security System (continued) MANAGEMENT, COMMAND, AND Ballistic Missile Tactical Warning/Attack Asses System Ballistic Missile Early Warning Systems Mobility Air Intel System Activities Air Force Operational Test and Evaluation Center Airlift Support Services (IF)(H) (continued) MANAGEMENT, COMMAND, AND Logistics Operations (Non-DBOF) Tactical Air Control System for Counternarcotics Military Drug Dogs Counternarcotics Support American Forces Info Service Field Activities USAF Civil Air Patrol Support Mission Evaluation Activity (Offensive) Civil Engineer Squadrons (HV Repair) (continued) MANAGEMENT, COMMAND, AND Service Support to Non-DOD Activities Non-REIMB Service Support to Non-DOD Activities-REIMB Joint Health Care Management Engineering Team (JLMET) NCMC-TW/AA Systems (H) Mission Evaluation Activity (Defensive) Strat Aerospace Intel System Activities Milstar Satellite Communications System (AF Terminals) Defense Meteorological Satellite Program Communucations NAVSTAR Global Positioning System (USER EQ) NAVSTAR GPS (Space/Grd Segments) (continued) MANAGEMENT, COMMAND, AND SAC Automated Command and Control System-ADP PACCS/WWABNCP System EC-135 CL V MODS Airborne Command Post (CINCEUR) National Emergency ABN Command Post-Communications Long-Haul Communications (DCS) WWMCCS/Global Command & Control System R-2508 Air Traffic Control Enhancement (continued) 1. The report was modified to reflect the fact that DOD has projected further decreases in the O&M account and increases in the procurement account as part of its force modernization efforts. 2. The report was modified to recognize that DOD is required to notify Congress when it reprograms $20 million or more among budget activities and if $20 million or more is moved from the predominant combat-related subactivity groups. 3. The report was clarified to point out that the Army obligated less than requested for combat forces and support of forces and that the Air Force obligated more than requested for combat forces and support of the forces. 4. The report was clarified to point out that the reason for the Army and the Air Force obligating more than requested for environmental actiities was because the requested amounts do not include funds transferred to the services from the Defense-wide environmental account. Sharon A. Cekala Robert J. Lane Carole F. Coffey Donna M. 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Summary:
GAO reviewed how the Army and Air Force obligated their annual operation and maintenance (O&M) funds. GAO found that; (1) the services have a great deal of flexibility as to how they use their O&M funds; (2) this flexibility is evident in the O&M obligation trends, which illustrate that the proposed uses of O&M identified in the budget request may not always reflect how the funds are obligated; (3) this is particularly true for the Army, which historically obligates less funds for its combat forces than it requests even when Congress appropriates more than was requested; (4) the Army and the Air Force obligate about one-third of their O&M funds for activities directly related to combat forces, including training and recruitment; (5) the remainder goes to support infrastructure-type activities such as base support and management activities; (6) from fiscal years 1993 through 1995, the Army obligated less than 20 percent of its O&M funds for combat forces and support of the forces and the Air Force obligated about 26 percent of its O&M funds for such purposes; (7) when training and recruiting funds are added, the Army's and the Air Force's obligations are about 30 and 34 percent, respectively; (8) the balance of the O&M funds was obligated for infrastructure-type functions such as base support and management activities. During the 3-year period, the Army obligated 33 percent of its O&M funds for base support and 37 percent for management activities; (9) the Air Force obligated 30 percent of its O&M funds for base support and 35 percent for management activities for that same period; (10) the fastest growing accounts were minor construction, maintenance and repair, administrative activities, and international activities; (11) when the amounts obligated for combat forces and support of the forces and training and recruitment are compared to the amounts requested for these categories, the Army historically requested more than it obligated; (12) conversely, it often obligates more than requested for infrastructure and management activities; (13) in part, this may be due to Congress appropriating more than requested; (14) however, it can also be the result of O&M funds requested for one purpose being obligated for another purpose; (15) GAO's comparison of the amounts obligated and budgeted by the Air Force for these same functions showed that the Air Force obligated slightly more than it requested for combat forces; (16) with regard to training and recruiting, the Air Force obligated less than the amounts requested; and (17) it obligated more than it requested for base support and slightly less than it requested for management activities.