An objective of DOD’s 1993 Report on the Bottom-Up Review was to identify potential infrastructure savings and to launch a long-term process to reduce and streamline DOD’s infrastructure without harming readiness. The report stated that infrastructure activities accounted for $160 billion in fiscal year 1994, or about 60 percent of DOD’s total obligational authority. It defined infrastructure as all DOD activities other than those directly associated with operational forces, intelligence, strategic defense, and applied research and development and identified seven infrastructure categories. The categories were logistics, medical, personnel, training, acquisition management, installation support, and force management. The FYDP is an authoritative record of current and projected force structure, costs, and personnel levels that have been approved by the Secretary of Defense. The FYDP displays the allocation of resources by programs and activities known as program elements. There are about 2,600 program elements in DOD’s fiscal year 1996 FYDP, which covers fiscal years 1996-2001. In September 1995, we reported on the significant differences between the fiscal year 1995 and 1996 FYDPs. As part of that work, we requested that DOD identify for us the infrastructure programs in the FYDP. DOD officials stated that they were in the process of coordinating changes to some infrastructure activities and categories, and therefore, would not identify the FYDP infrastructure related programs at that time. Based on DOD’s infrastructure definition and categories in the bottom-up review report, we identified the program elements in the FYDP that we considered to be associated with infrastructure activities. In our 1995 report, we concluded that, based on our analysis of the 1996 FYDP using the program elements that we considered to be associated with infrastructure activities, the proportion of infrastructure funding in the total defense budget would remain relatively constant through 2001. DOD officials concurred with this conclusion. In November 1995, DOD provided us with a detailed breakdown of the infrastructure related program elements in the FYDP. According to DOD officials within the Office of Program Analysis and Evaluation (PA&E), DOD’s efforts to identify and track infrastructure funding have been underway for several years. PA&E officials told us DOD has a better understanding of the elements that fund DOD infrastructure activities than it had at the time of the bottom-up review. Using the FYDP, DOD has clearly identified program elements that fund infrastructure activities and refer to these as “direct infrastructure.” However, there are parts of the total infrastructure funding that cannot be clearly identified in the FYDP. According to PA&E officials, this is about 20 to 25 percent of DOD’s total infrastructure funding and mostly represents logistics purchases which cannot be specifically identified. Since the FYDP is the most comprehensive source of continuous defense resource data, PA&E, with assistance from the Institute for Defense Analyses, sought to define infrastructure programs in terms of FYDP program elements. In June 1995 the Institute issued a manual and a mapping scheme that categorize each of the FYDP program elements as either mission programs or infrastructure programs. Activities and programs that produce the outputs expected of DOD or directly support missions by deploying with the combat forces are classified as mission programs. Activities that provide support services to the mission programs and primarily operate from fixed locations are classified as infrastructure programs. PA&E assigned each infrastructure program element to one of the following eight categories based on the program’s activities: acquisition infrastructure; installation support; central command, control, and communications; force management; central logistics; central medical; central personnel; and central training. These categories are described in appendix II. Central command, control, and communications is a new category since the bottom-up review. The program elements in this category were previously included in the force management category. PA&E officials told us that some infrastructure activities and programs could not be clearly identified in the FYDP because their funding is derived from the goods and services they provide to others. For example, the Defense Logistics Agency receives most of its funds from the goods and services it sells to other DOD activities. As a result, the costs of its infrastructure activities are included in all of the other defense activities’ budgets that purchase their goods and services. This situation is common for activities that are included in DBOF. According to the officials, PA&E has estimated a range for the DBOF infrastructure costs funded by mission programs based on data from various DOD financial systems. For the fiscal year 1995 FYDP (1995-1999), PA&E estimated these annual costs to be between $28 billion and $39 billion, or about 20 to 25 percent of the total infrastructure funding. However, the officials consider these estimates to be preliminary until more precise methods to calculate this portion of the infrastructure are developed next year. We could not verify the source or accuracy of these estimates. DOD defines infrastructure as activities that provide support services to the mission programs and primarily operate from fixed locations. In our analysis of DOD’s infrastructure and mission programs, we found that many intelligence, space, and command, control, and communications programs are excluded from the infrastructure, even though they appear to fit DOD’s infrastructure definition. In fiscal year 1996, intelligence, space, and command, control, and communications programs accounted for $25.2 billion, or 20 percent of mission programs. These programs include installations, facilities, and activities that would not deploy with combat forces but would support those forces. For example, the command, control, and communications mission program was projected to receive $3.6 billion in fiscal year 1996. Over $1 billion was for long-haul communications for the defense communications system and various expenses within the World-Wide Military Command and Control Systems. Although combat forces may link into these systems, the actual systems operate from fixed locations. We believe that by categorizing most intelligence, space, and command, control, and communications programs as mission activities, even though they appear to include infrastructure activities, DOD’s accounting of infrastructure may not be complete. Our review of DOD’s fiscal year 1996 FYDP found no significant net infrastructure savings between fiscal years 1996 and 2001 because the proportion of infrastructure in the DOD budgets under current plans will remain relatively constant through 2001. For example, although infrastructure funding was projected to decline from 1996 to 1997, the DOD budget was also projected to decline at about the same rate. Infrastructure activities would have to be reduced more than DOD’s total budget to achieve net savings in infrastructure. About 60 percent of DOD’s budget is expected to fund infrastructure activities during the 1996-2001 period, the same as was reported for fiscal year 1994 in the bottom-up review report. Figure 1 shows the trends for DOD’s total planned budgets and infrastructure activities—both direct and estimated DBOF infrastructure funded by mission programs. We analyzed the eight infrastructure categories to see if their estimated funding levels changed from 1996 through 2001. For this and subsequent analyses, we used direct infrastructure funding since we had no basis to allocate DBOF funds across these categories. Figure 2 shows the projected funding for the infrastructure categories through 2001. As figure 2 shows, DOD has programmed about 25 percent less for installation support in 2001 than in 1996. Most of the planned decline results from base closures and realignments and reductions in base operation costs and military construction costs. However, any savings resulting from the decline in installation support costs between 1996 and 1998 are offset by the projected reductions in DOD’s total budget. The decline in installation support costs from 1998 to 2001 is almost entirely absorbed by the increases in the other infrastructure categories. The projected funding by fiscal year for the infrastructure categories is shown in table 1. Table 1 shows that three categories, installation support, central training, and central medical, comprise 50 percent of the total direct infrastructure in fiscal years 1996 and 2001. The table also shows that only two categories increase over the 1996-2001 period—force management and acquisition infrastructure. Although it is not possible to allocate the DBOF infrastructure in mission programs by infrastructure categories, we believe that much of this infrastructure would be included in the central logistics category because many of the DBOF activities perform logistics functions. As shown in figure 3, most direct infrastructure activities are funded by operation and maintenance and military personnel appropriations. These appropriations have been closely associated with the readiness and quality-of-life of the force, priority areas of the Secretary of Defense for the last few years. Thus, DOD must identify significant infrastructure savings from these appropriations to modernize its force. As shown in table 2, 90 percent of DOD’s planned direct infrastructure costs are funded out of three appropriations—operation and maintenance (about 50 percent), military personnel (about 30 percent), and research, development, test, and evaluation (about 10 percent). Table 2 also shows that infrastructure funded by four appropriations—operation and maintenance, military personnel, military construction, and family housing—decline. The largest percentage decline (about 50 percent) is in the military construction appropriation. Most of the decline in the operation and maintenance, military personnel, and military construction appropriations is from fiscal years 1996 to 1998. The infrastructure funded by the procurement appropriation increases by about $2.4 billion, or by 73 percent, between fiscal years 1996 and 2001. Table 3 shows the distribution of operation and maintenance funds by infrastructure program categories. Almost 60 percent of the total operation and maintenance funding for direct infrastructure in fiscal years 1996 and 2001 is for installation support, central logistics, and central medical costs. Central medical is the only category that is projected to increase during the 1996 to 2001 period. Installation support is projected to decline by over 20 percent, or by about $2.5 billion. Table 4 shows the distribution of military personnel funds by infrastructure category. Central training accounts for about 30 percent of the infrastructure funded by military personnel appropriations in fiscal years 1996 and 2001. As the table shows, all of the categories decline slightly during the 6-year period.