DOD’s Enacted Funding for O&M Base Generally Increased Each Fiscal Year since 2009 But Was Less Than DOD Had Planned, and Congress Made Additional O&M Funding Available

DOD’s enacted funding for O&M base has generally increased each year  since fiscal year 2009, with the exception of fiscal year 2013. DOD Has Realigned $146.9 Billion of O&M Funding since Fiscal Year 2009

Our analysis of DOD data for the military services’ and defense-wide  agencies’ O&M accounts—from fiscal years 2009 through 2015—found  that DOD realigned $146.9 billion by transfers between O&M base, O&M  OCO, and other appropriations accounts and reprogrammings within  O&M accounts. We estimated that after the department used its authorities to transfer  funds, DOD’s base obligations subsequent to fiscal year 2009 were  greater than amounts enacted by Congress for O&M base funding by an  annual average of 5.6 percent. DOD Reported Obligations to Congress on O&M OCO but Not O&M Base Obligations

DOD has reported its O&M OCO obligations to Congress, but it has not  reported its O&M base obligations. Instead, DOD has reported a  combination of O&M base and OCO obligations in its O&M base budget  justification materials and execution reports. Congressional budget  justification materials and O&M execution reports are key documents that  help Congress make appropriations decisions, conduct oversight, and  provide control over funds. The Senate Appropriations Committee’s report accompanying a bill for  DOD’s fiscal year 2015 appropriations stated that the committee does not  have a clear understanding of enduring activities funded by the OCO  budget. According to OUSD Comptroller officials, DOD components track  obligations by base and OCO appropriation, but DOD’s Financial  Management Regulation—issued by the OUSD Comptroller—does not  require the department to report to Congress on O&M base obligations at  the levels of information presented by account in its base budget  justification materials and execution reports. Until DOD revises its  guidance to require reporting of O&M base obligations at the level of  information presented for each account in its budget justification materials  and execution reports, Congress will not have complete information to  better understand DOD’s full funding needs for its O&M base programs  and activities and to oversee the O&M budget. Conclusions

Although operation and maintenance accounts are the largest category of  DOD’s appropriations, DOD does not report O&M base obligations to  Congress separately from O&M OCO obligations in its budget justification  materials and O&M execution reports. Recommendation for Executive Action

To ensure that Congress will have more complete information on DOD’s  full funding needs for its O&M base budget and to conduct oversight of  DOD’s use of OCO funds to support base programs and activities, we  recommend that the Secretary of Defense direct the OUSD Comptroller to  revise its guidance on preparing budget justification materials and  execution reports for Congress to require the addition of O&M obligations  used for base programs and activities at the level of information  presented for each account. Appendix I: Scope and Methodology

Senate Report 114-49 accompanying a proposed version of the National  Defense Authorization Act for Fiscal Year 2016, includes a provision for  GAO to evaluate the effects of budgetary constraints on DOD’s available  base funding within the O&M appropriations accounts. This report: (1)  identifies the trends in enacted and planned funding for DOD’s O&M base  appropriations since fiscal year 2009; (2) describes the amount of O&M  funding DOD has transferred or reprogrammed, and the effect of this  realignment on O&M base obligations; and (3) evaluates the extent to  which DOD reported to Congress its O&M obligations for its base and  OCO budgets.
Why GAO Did This Study

O&M is DOD's largest category of appropriations and constitutes about 43 percent of the President's total request for DOD of $582.7 billion in fiscal year 2017. The President requested $251 billion for DOD's total O&M funding, which included approximately $206 billion for O&M base and $45 billion for O&M OCO.
Senate Report 114-49 included a provision for GAO to review the effects of budgetary constraints on DOD's base funding within its O&M appropriations accounts. This report (1) identifies the trends in enacted funding for DOD's O&M base appropriations accounts since fiscal year 2009; (2) describes how much O&M funding DOD has transferred or reprogrammed, and the effect of this realignment on base obligations; and (3) evaluates the extent to which DOD reported to Congress its O&M obligations for its base and OCO budgets. GAO analyzed DOD's O&M budget justification materials and execution reports since 2009 and interviewed DOD officials.

What GAO Found

Congress enacted funding for the Department of Defense's (DOD) Operation and Maintenance (O&M) into multiple base appropriations accounts, which are used to pay for day-to-day programs and activities. This enacted funding generally has increased each year since fiscal year 2009, with the exception of fiscal year 2013, when sequestration reduced funding for O&M base.
GAO found that DOD used its authorities to realign about $146.9 billion of its funding from fiscal years 2009 through 2015 (that is, moving funds through transfers from one account to another, and reprogrammings within an account). During GAO's review, the effects of such realignments on base obligations were not readily apparent because DOD did not report its O&M base obligations to Congress separately from its O&M overseas contingency operations (OCO) obligations used to support war-related programs and activities. GAO estimated O&M base obligations since fiscal year 2009 and found that DOD's realignment of funds led to its O&M base obligations exceeding O&M base enacted amounts in each fiscal year and by an annual average of 5.6 percent (see figure).
DOD reported to Congress a combination of O&M base and O&M OCO obligations in its budget justification materials and execution reports, but it did not separately report its O&M base obligations by account for each of its multiple O&M base appropriations. These materials and reports are key documents that help Congress appropriate, conduct oversight of, and provide control over funds. The Senate Appropriations Committee has expressed concern in its report accompanying a bill for DOD's fiscal year 2015 appropriations that it does not have a clear understanding of OCO funding used to support DOD's day-to-day programs and activities. The services track O&M obligations by base and OCO appropriations for OCO reporting purposes, but DOD's financial management regulations do not require it to congressionally report O&M base obligations separately for each account in its budget justification materials and execution reports. By revising its guidance to require congressional reporting on O&M base obligations for each account in these materials and reports, DOD could provide complete information to assist Congress in better understanding and overseeing DOD's full funding needs for O&M base.

What GAO Recommends

To assist Congress in its oversight of the O&M budget, GAO recommends that DOD revise its guidance on preparing budget materials and execution reports to require the addition of O&M base obligations for each account. DOD did not concur, citing the inability of its current financial systems to easily distinguish base obligations. GAO believes the recommendation is valid as discussed in the report.