Under DOD’s measurement of infrastructure, O&M funds approximately half of DOD’s infrastructure costs that can be clearly identified in DOD’s Future Years Defense Program (FYDP). O&M Has Declined More Slowly Than Personnel Levels

Total O&M funding for DOD is projected to decline at a slower rate than either civilian or military personnel levels between fiscal years 1985 and 2001. Because personnel levels decline at a faster rate than annual O&M funding levels, annual O&M funds when allocated per person (military and civilian) are projected to increase by about 20 percent over the fiscal  year 1985-2001 period, as shown in figure 2. Projections show that between fiscal years 1998 and 2001, DOD will have 10 program accounts. As a share of total annual O&M funds, the Defense Health Program budget account is projected to grow from 10.6 percent in fiscal year 1993 to 11.8 percent in fiscal year 2001. Only the Army experienced an increase in its share of annual O&M funds. This change caused a significant increase in the total annual O&M funds provided to the combined DOD agencies. Beginning in fiscal year 1998, the Army will annually receive the smallest portion of O&M funds. The level of Navy/Marine Corps military personnel fell almost 10 percent less than the other two services, while Navy/Marine Corps civilian personnel levels fell by almost 30 percent, similar to the Army. The Air Force’s proportion of annual O&M funds changed the least of the three services. Although the Air Force’s share of O&M funds fell by about 2 percent between fiscal years 1991 and 1992, the Air Force’s annual portion of O&M funds are planned to remain between 24.6 and 27.6 percent for the fiscal year 1993 through 2001 period. Therefore, the proportion of total DOD infrastructure funded by O&M is clearly greater than 50 percent. During fiscal years 1985 through 2001, direct infrastructure O&M funds decline by 22.6 percent, similar to total O&M trends. O&M Funds Are Concentrated in Three Major Defense Programs, and Only One of Those—Training, Medical, and Other General Purpose Activities—Increased

Another way to analyze the changes and components of O&M funding is to aggregate FYDP data by DOD’s major defense programs. 7.) In total, there are about 30 mission categories during the fiscal year 1993-2001 period. Most of the growth in medical occurs prior to fiscal year 1997, and the majority of these costs are for health care needs. In contrast, between fiscal years 1985 and 2001 military and civilian personnel levels decline by 34.4 and 36.5 percent, respectively. Base operations and management headquarters activities have received and are planned to continue to receive the largest portion of annual O&M funds for this mission category, although its portion of the training mission’s O&M funds has declined. Figure II.24: Annual O&M Funding by Service for Active Military Training Mission Activities for Fiscal Years 1985-2001 (Constant 1997 dollars in billions)
Figure II.24 also shows that O&M training funds for the Navy/Marine Corps and the Air Force have declined between fiscal years 1985 and 1996 in concert with declines in their force structure, but similar to the Army, funding levels are expected to remain fairly stable in the out-years.
Why GAO Did This Study

GAO reviewed the Department of Defense's (DOD) budget request for fiscal year (FY) 1997 for its operation and maintenance (O&M) accounts, focusing on: (1) how annual funding relates to military and civilian personnel levels through 2001; (2) overall trends from fiscal years 1985 though 2001; and (3) key areas in which most money has been budgeted through 2001.

What GAO Found

GAO found that: (1) total DOD O&M funds, in constant FY 1997 dollars, are projected to decline at a slower rate than either civilian or military personnel levels between fiscal years 1985 and 2001; (2) however, beginning in FY 2000, projections show that O&M funds begin to rise at the same time civilian personnel decline and military personnel remain relative stable; (3) increases in other O&M-funded programs will more than offset the decline in O&M-funded civilian salaries; (4) since 1993, approximately 85 percent of the funds are concentrated in five budget accounts; (5) another data view shows that three major defense programs receive the majority of annual O&M funds; (6) between fiscal years 1993 and 2001, about 50 percent of annual O&M funds are found in five of DOD's mission categories; (7) in total, there are about 30 mission categories during the FY 1993-2001 time period; (8) from an organizational perspective, the military services' portion of total annual O&M funds declines; (9) beginning in FY 1998, the Army is projected to receive a smaller proportion of annual O&M funds than either of the other two services or the combined DOD agencies; (10) even though the Army will receive the smallest portion of annual O&M funds, this service will have the second largest active military force and the largest civilian workforce; (11) the Navy-Marine Corps' share of annual O&M funds declined by almost 10 percent prior to FY 1996; (12) in contrast, the Air Force's proportion of annual O&M funds changes the least of the three services, while Air Force military and civilian personnel levels fall significantly over the FY 1985-2001 time period; (13) only the combined DOD agencies' share of annual O&M funds increases between fiscal years 1985 and 2001 because of the health program funding consolidation into a Defensewide account; (14) regardless of how the O&M budget is analyzed, medical is the only area where consistent growth occurred; (15) O&M funds for medical activities increase by 72.8 percent from fiscal years 1985 through 2001; (16) the majority of these costs are for the health care needs of DOD's 8.3 million eligible beneficiaries; (17) during fiscal years 1985 through 2001, O&M infrastructure funds that can be clearly identified in the Future Years Defense Program decline by 22.6 percent and thus mirror total O&M trends; (18) despite increases, O&M continues to fund about half of DOD's clearly identifiable infrastructure costs; and (19) thus, if DOD is to identify significant savings from infrastructure to fund modernization, it must look to the O&M appropriations.