Fiscal Year 2004 Funds Appropriated for the Global War on Terrorism

To support GWOT in fiscal year 2004, the Congress appropriated  $65 billion to DOD in an emergency supplemental appropriation. Funding for GWOT Operation and Maintenance in Fiscal Year 2004 Is Not Likely to Be Sufficient

Our analysis of reported obligations for the first seven months of fiscal  year 2004 and the military services’ forecasts as of June 2004 of their likely  costs for GWOT through the end of fiscal year 2004 suggest that  anticipated costs will exceed the supplemental funding provided for  GWOT. These actions include taking steps to reduce costs,  transferring funds from the Iraqi Freedom Fund, transferring funds  between appropriations accounts, and deferring planned peacetime  activities to use those funds to support GWOT. According to this representative, DOD plans to ask the Congress for an  additional $1.1 billion in transfer authority, which would give the  department sufficient authority to move funds from one service to another  and get funds to the operation and maintenance accounts that have the  greatest shortfalls. We believe that the deferral of these activities will  add to the requirements that will need to be funded in fiscal year 2005 and  potentially later years and so could result in a “bow wave” effect in future  fiscal years. Congressional Efforts to Improve Accountability of GWOT Funds

Recent congressional committee actions have signaled the Congress’  intent to require greater accountability regarding the use of GWOT funds. The House Committee on Appropriations  included provisions in its bill for accountability related to the use of these  funds. DOD is taking a variety of actions to cover these shortfalls. It has  also asked the Congress to provide a $25 billion contingent reserve for  GWOT in fiscal year 2005. Our past work has shown that current cost reporting  includes large amounts of funds that have been reported as obligated in  miscellaneous categories and so provides little insight on how those funds  have been spent. This may result in reduced transparency and  accountability to the Congress and the American people. This  in turn helps highlight the importance of providing useful information to  the Congress for its oversight role. Appendix I: Scope and Methodology

To assess the adequacy of funding for the Global War on Terrorism  (GWOT), we reviewed (1) the President’s fiscal year 2004 budget request  for supplemental appropriations, (2) applicable laws appropriating funds  for GWOT, and (3) Department of Defense (DOD) reports on the  obligation of GWOT funds.
Why GAO Did This Study

To support the Global War on Terrorism in fiscal year 2004, the Congress appropriated $65 billion to the Department of Defense (DOD) in an emergency supplemental appropriations act. To assist the Congress in its oversight role, GAO reviewed (1) the adequacy of current funding for fiscal year 2004 war-related activities and (2) actions DOD is undertaking to cover anticipated shortfalls, if any. Based on the body of work GAO has done on the cost of contingency operations, GAO is also making observations on efforts to require greater accountability to the Congress on the use of funds appropriated to DOD for contingency operations.

What GAO Found

GAO's analysis of reported obligations for the first seven months of fiscal year 2004 through April 2004 and the military services' forecasts as of June 2004 of their likely costs for the Global War on Terrorism for operation and maintenance and military personnel through the end of fiscal year 2004 suggests that anticipated costs will exceed the supplemental funding provided for the war by about $12.3 billion for the current fiscal year. DOD and the services are taking a variety of actions to cover anticipated shortfalls in their war-related funding. These actions include taking steps to reduce costs, transferring funds among appropriations accounts, and deferring some planned activities to use those funds to support the war. Also, DOD plans to ask the Congress for additional transfer authority, which would give it sufficient authority to move funds from one service to another and get funds to the operation and maintenance accounts that have the greatest shortfalls. The deferral of activities planned for fiscal year 2004 adds to the requirements that will need to be funded in fiscal year 2005 and potentially later years and could result in a "bow wave" effect in future fiscal years. GAO's past work has shown that current cost reporting includes large amounts of funds that have been reported as obligated in miscellaneous categories and thus provide little insight on how those funds have been spent. This is likely to result in reduced transparency and accountability to the Congress and the American people. Recent congressional actions have signaled the Congress' intent to require greater accountability regarding the use of GWOT funds. For example, in action on the President's $25 billion request for an Iraqi Freedom Fund Contingent Emergency Reserve in fiscal year 2005, the House Committee on Appropriations included provisions in its bill for cost reporting related to the use of these funds. But additional actions are necessary.