In a series of reports, we have identified numerous problems in DOD’s  processes for recording and reporting obligations, raising significant  concerns about the overall reliability of DOD’s reported obligations. DOD and the Military Services Continue to Take Steps to Improve Some Aspects of the Accuracy and Reliability of GWOT Cost Reporting

DOD and the military services continue to take steps to improve some  aspects of the accuracy and reliability of GWOT cost reporting. DOD’s goals are to automate the collection of GWOT cost data  from DOD components and improve the timeliness of cost-of-war  reporting. Military Services Have Taken Actions to Correct Weaknesses in the Reliability of GWOT Cost Data

The military services have also taken actions to correct weaknesses in the  reliability of their GWOT cost data. DOD’s Approach to GWOT Cost Reporting Does Not Reliably Represent the Costs of Each Contingency Operation

Although DOD has taken steps to improve certain aspects of its GWOT  cost reporting, its approach to identifying the costs of specific operations  has, in some cases, resulted in the overstatement of costs, particularly for  Operation Iraqi Freedom, and in other cases, for both contingencies. Since  2001, DOD has reported significant costs in support of Operation Iraqi  Freedom and Operation Enduring Freedom. While the Army and Marine Corps are capturing totals for procurement  and certain operation and maintenance costs, they do not have a  methodology for determining what portion of these GWOT costs is  attributable to Operation Iraqi Freedom versus Operation Enduring  Freedom. Without a  methodology for determining what portion of total GWOT obligations is  attributable to Operation Iraqi Freedom or Operation Enduring Freedom,  reported costs for Operating Iraqi Freedom may be overstated and cost  information for both operations will remain unreliable. Air Force guidance  defines “long war” costs as all incremental costs related to the war on  terror beyond costs strictly limited to Operation Iraqi Freedom and  Operation Enduring Freedom. Navy

The Navy reported costs for forward-presence missions as part of GWOT  contingency operations even though the Navy routinely deploys its forces  around the globe in peacetime as well as wartime. Until DOD reconsiders whether expenses not directly attributable to  specific GWOT contingency operations are incremental costs, the military  services may continue to include these expenses as part of Operation Iraqi  Freedom and Operation Enduring Freedom. Furthermore, reported costs  for both operations may be overstated and costs not directly attributable  to either operation may continue to be included in DOD’s GWOT funding  requests rather than the base budget. Expenses beyond those directly attributable  to either operation may be more reflective of the enduring nature of  GWOT and the United States’ changed security environment since 9/11 and  thus should be part of what DOD would request and account for as part of  its base budget. Recommendations for Executive Action

In order to improve the transparency and reliability of DOD’s reported  obligations for GWOT by contingency operation, we recommend that the  Secretary of Defense direct the Under Secretary of Defense (Comptroller)  to (1) ensure DOD components establish an auditable and documented  methodology for determining what portion of GWOT costs is attributable  to Operation Iraqi Freedom versus Operation Enduring Freedom when  actual costs are not available, and (2) develop a plan and timetable for  evaluating whether expenses not directly attributable to specific GWOT  contingency operations are incremental costs and should continue to be  funded outside of DOD’s base budget. To assess DOD’s methodology for reporting GWOT costs by contingency  operation, including the types of costs reported for those operations, we  analyzed GWOT obligation data in DOD’s monthly Supplemental and Cost  of War Execution Reports, including the source data for those reports in  the military services’ individual accounting systems.
Why GAO Did This Study

Since September 11, 2001, Congress has provided about $808 billion to the Department of Defense (DOD) for the Global War on Terrorism (GWOT) in addition to funding in DOD's base budget. Prior GAO reports have found DOD's reported GWOT cost data unreliable and found problems with transparency over certain costs. In response, DOD has made several changes to its cost-reporting procedures. Congress has shown interest in increasing the transparency of DOD's cost reporting and funding requests for GWOT. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO assessed (1) DOD's progress in improving the accuracy and reliability of its GWOT cost reporting, and (2) DOD's methodology for reporting GWOT costs by contingency operation. For this engagement, GAO analyzed GWOT cost data and applicable guidance, as well as DOD's corrective actions.

What GAO Found

While DOD and the military services continue to take steps to improve the accuracy and reliability of some aspects of GWOT cost reporting, DOD lacks a sound approach for identifying costs of specific contingency operations, raising concerns about the reliability of reported information, especially on the cost of Operation Iraqi Freedom. Specifically, the department has undertaken initiatives such as requiring components to sample and validate their GWOT cost transactions and launching a new contingency cost-reporting system that will automate the collection of GWOT cost data from components' accounting systems and produce a new report comparing reported obligations and disbursements to GWOT appropriations data. Also, the military services have taken several steps to correct weaknesses in the reliability of their cost data. Limitations in DOD's approach to identifying the costs of Operation Iraqi Freedom and Operation Enduring Freedom may, in some cases, result in the overstatement of costs, and could lead to these costs being included in DOD's GWOT funding requests rather than the base budget. DOD guidance emphasizes the importance of accurately reporting the cost of contingency operations. However, while the Army and Marine Corps are capturing totals for procurement and certain operation and maintenance costs, they do not have a methodology for determining what portion of these GWOT costs are attributable to Operation Iraqi Freedom versus Operation Enduring Freedom and have reported all these costs as attributable to Operation Iraqi Freedom. In addition, the military services have reported some costs, such as those for Navy forward-presence missions, as part of Operation Iraqi Freedom or Operation Enduring Freedom, even though they are not directly attributable to either operation. In September 2005, DOD expanded the definition of incremental costs for large-scale contingencies, such as those for GWOT, to include expenses beyond direct incremental costs. This expanded definition provides no guidance on what costs beyond those attributable to the operation can be considered incremental and reported. Consequently, the military services have made their own interpretations as to whether and how to include costs not directly attributable to GWOT contingency operations. Without a methodology for determining what portion of GWOT costs is attributable to Operation Iraqi Freedom or Operation Enduring Freedom, reported costs for Operation Iraqi Freedom may be overstated. Furthermore, unless DOD reconsiders whether expenses not directly attributable to specific GWOT operations should be included as incremental costs, the military services may continue to include these expenses as part of Operation Iraqi Freedom and Operation Enduring Freedom, reported costs for both operations may be overstated, and DOD may continue to request funding for these expenses in GWOT funding requests instead of including them as part of the base budget. Expenses beyond those directly attributable to either operation may be more reflective of the enduring nature of GWOT and its cost implications should be part of the annual budget debate.