The largest changes from one year to the next in the 1996 FYDP occur during the last 2 years of the plan when the budget is projected to increase by about $10 billion from 1999 to 2000 and by another $10.4 billion from 2000 to 2001. According to the Secretary of Defense, the 1996 FYDP emphasizes readiness and quality-of-life programs. The budgeted amounts for many operation and maintenance programs changed from the 1995 to the 1996 FYDP resulting in the net increase of $10 billion during the 4 common years, 1996-99. DOD decreased the procurement account in the 4 common years by stretching out the planned buys for some systems to the year 2000 and beyond and by reducing the total acquisition quantities for others. According to the Secretary of Defense, future modernization funds will come from savings achieved through infrastructure reductions and acquisition reforms and from larger future Defense budgets. Specifically, procurement funding estimates are 15 and 24 percent greater in 2000 and 2001 compared with 1999. Congressional action may result in increasing near-term funding for defense, which could mitigate the need for DOD to increase out-year budgets. The June 1995 Concurrent Resolution on the Budget for Fiscal Year 1996 includes over $24 billion more for defense than the President’s budget for fiscal years 1996-2001. The additional funds are expected, in part, to lessen the need for DOD to reduce or defer weapon modernization programs to meet other near-term readiness requirements. Assuming the funds are appropriated, Congress will specify how defense is to spend some of the added funds, but DOD may have an opportunity to restore some programs that were reduced or deferred in the 1996 FYDP. Family Housing

Table 7 shows that, over the common years of the 1995 and 1996 FYDPs, the family housing account increases by about $2.5 billion. Our analysis of the 1996 FYDP shows that savings that have accrued or are expected to accrue from the base closings and force reductions appear to have been offset by increased infrastructure funding requirements primarily for base operations and management headquarters functions and quality-of-life programs. The net effect of these adjustments is a $24.2-billion increase over the period. . . a future-years defense program .
Why GAO Did This Study

Pursuant to a congressional request, GAO compared the Department of Defense's (DOD) fiscal year (FY) 1996 Future Years Defense Program (FYDP) with its FY 1995 FYDP, focusing on: (1) what major program adjustments DOD made from FY 1995 to FY 1996; (2) the implications of these changes for the future; and (3) whether the FY 1996 FYDP complies with statutory requirements.

What GAO Found

GAO found that: (1) the FY 1996 FYDP, which covers FYs 1996-2001, is considerably different from the 1995 FYDP, which covers FYs 1995-99; (2) the total program increased by about $12.6 billion in the 4 common years of both plans (FYs 1996-99); (3) approximately $27 billion in planned weapon system modernization programs for these 4 years have been eliminated, reduced, or deferred to the year 2000 and beyond; (4) the military personnel, operation and maintenance, and family housing accounts increased by over $21 billion during the common period and continue to increase to 2001 to support Defense's emphasis on readiness and quality-of-life programs; (5) the net effect is a more costly defense program, despite substantial reductions in DOD's weapon modernization programs between 1996 and 1999; (6) Defense plans to compensate for the decline in procurement during the early years of the 1996 FYDP by substantially increasing procurement funding in 2000 and 2001; (7) the Secretary of Defense plans to pay for the increased future modernization with a combination of savings from infrastructure reductions and acquisition reforms and from real budget growth; (8) GAO's analysis shows that the 1996 FYDP does not reflect reduced infrastructure costs, primarily because of funding increases for base operation and management headquarters functions and quality-of-life programs; however, the Concurrent Resolution on the Budget for Fiscal Year 1996 includes over $24 billion more for Defense than requested in the President's budget for FYs 1996-2001; (9) the additional budget amounts are expected, in part, to lessen the need for Defense to reduce or defer weapon modernization programs to meet other near-term readiness requirements; (10) assuming the funds are appropriated, Congress will specify how Defense is to spend some of the added funds; however, DOD may have an opportunity to restore some programs that were reduced or deferred to 2000 and beyond; and (11) the additional near-term funding could mitigate the need for DOD to increase out-year budgets.