	Background

During fiscal year 2002, U.S. military forces participated in a number of contingency operations, and Congress appropriated funds to cover DOD’s costs. U.S. forces have been involved in enforcing the no-fly zone over parts of Iraq since the end of the Persian Gulf War in 1991. Balkans and Southwest Asia Funding for Fiscal Year 2002

The military services received a combination of funding provided by the DOD appropriations act for fiscal year 2002 and funds that remained in the OCOTF. In response to the reduction in funding, the military services took steps to reduce costs in order to keep costs in line with available funding, although they will have to absorb some costs related to operations in both the Balkans and Southwest Asia. Plans to Further Reduce Balkans Force Levels May Reduce Fiscal Year 2003 Funding Needs

Both NATO and DOD plan to reduce troop levels in the Balkans during fiscal year 2003, which may reduce funding needs to support Balkan operations during the year. Army in Europe officials told us—and we agree—that a decline in troop strength does not necessarily correspond to an equal reduction in costs. However, given the large anticipated reduction in troop levels, we would expect a decrease in estimated costs for fiscal year 2003. An Army headquarters budget official told us that the fiscal year 2003 budget request was developed from the already reduced fiscal year 2002 appropriation level and that any further reduction in the fiscal year 2003 level would pose a funding challenge. Appendix I: Location of the Department of Defense’s Major Contingency Operations in Fiscal Year 2002
What GAO Found

From the end of the Persian Gulf War in February 1991 through May 2002, the Department of Defense (DOD) reported over $43.9 billion in incremental costs for its overseas contingency operations. These operations include the enforcement of no-fly zones, humanitarian assistance, and peace enforcement operations, as well as combating terrorism beginning in fiscal year 2001. The majority of these costs were incurred in the Balkans and Southeast Asia. In fiscal year 2002, U.S. military forces are continuing to participate in a number of contingency operations, primarily in the Balkans, Southwest Asia, and a number of locations that involve combating terrorism. The military services received a combination of funding provided in the DOD appropriations act for fiscal year 2002 and money remaining in previously funded contingency fund accounts. The services also took steps to reduce costs in order to keep them in line with available funding. Both the North Atlantic Treaty Organization and DOD plan to reduce troop levels in the Balkans during fiscal year 2003, which may reduce funding needs during the year. In Europe, the Army anticipates an overall reduction of 1,160 troops during fiscal year 2003. Although a decline in troop strength does not necessarily correspond to an equal reduction in costs, given the large anticipated reduction in troop levels, there should be a decrease in estimated costs for fiscal year 2003. Since the fiscal year 2003 budget request was developed from an already reduced fiscal year 2002 appropriation level, any further reduction in fiscal year 2003 level would pose a funding challenge.