By the time the budget approval process is complete and the funds are  made available, several things can be said about the appropriated amounts  for the individual program: (1) they represent decisions by Congress to  approve programs as requested, create new programs, and adjust the  requested amounts for others; (2) because of the elapsed time from the  point the program manager began formulating the budget request until  enactment of the appropriations act, situations may have changed that  cause a misalignment between the approved funds and the actual status of  the program; (3) the inherent unknowns in research and development will  result in some programs not being executed as contemplated by the  budget; and (4) unanticipated events will develop during the execution year  that were not anticipated in the budget. It is for these and other reasons that Congress recognizes that DOD needs  some flexibility to adjust research and development funds after they are  appropriated. Because the reports contained classified information, their  distribution was limited. Further, the reports did not include  detailed information about BTR activity on a program-by-program level,  such as whether programs gained or lost funding, and provided no  withhold data. The data needed to determine the amount and volume of BTRs for  fiscal years 2002 and 2003 were not readily available from some of the  systems and some manual data collection was necessary. DOD’s Reports to Congress Have Shortfalls

For fiscal years 2002 and 2003, DOD delivered the DD 1416s to Congress  several months after Congress began deliberations on the new budget year. BTRs and Withholds Used Frequently to Adjust or Control Programs’ Funding Levels

We found that the Air Force, Army, Navy, and MDA executed 1,927 BTRs in  fiscal year 2003, totaling about $1 billion. Although we did not observe any instances in which DOD’s use of BTRs  exceeded the thresholds, our work was not conclusive on this point as we  did not design steps to assess compliance with thresholds. Officials from the military departments, MDA,  and the Office of the Secretary of Defense cited several reasons for  implementing BTRs and withholds, including accommodating  unanticipated changes or events, implementing congressional mandates,  and, in the case of some withholds, controlling the execution of individual  programs. This  amounted to about 2 percent of the research and development funds for  these organizations. 5, shows percentages for fiscal year 2002.) In fiscal year 2003, the DOD organizations we reviewed withheld a total of  about $2.8 billion in appropriated funds. Often, these withholds are in response to a  congressional directive contained in authorization or appropriations report  language. DOD disagreed that its recent reports to Congress provide BTR  information of limited quality and cited other information it provides to  Congress in addition to the DD 1416. DOD did note that the issues we raised on the  quality of information it provides can be addressed, and that DOD was  open to suggestions and will gladly work with the committee staff to satisfy  its needs. DOD offered several suggestions to put the findings of the report more in  context. DOD’s willingness to work with Congress is a constructive response that  can lead to reporting changes that can meet the needs of both Congress and  DOD. Congress has required DOD to provide better  and more timely information on reprogramming and withhold activities. Scope and Methodology

To determine the quality of the information available about the Department  of Defense’s (DOD) use of below-threshold reprogrammings (BTR) and  withholds, we reviewed the DOD Financial Management Regulation and  recent congressional guidelines on reprogramming and withholds; various  DOD internal reports and reports to Congress; and data from financial  management systems recorded for the research and development programs  from the Army, Air Force, Navy, and Missile Defense Agency (MDA).
Why GAO Did This Study

Congress recognizes that the DOD needs some flexibility to adjust research and development program levels. A key mechanism--below threshold reprogramming (BTR)--enables DOD to adjust program funding levels without seeking prior congressional approval as long as a certain dollar amount or percentage threshold is not exceeded. In response to a mandate by the appropriations committees, this report addresses (1) the quality of the information available about DOD's use of BTRs and withheld funds in fiscal years 2002 and 2003 and (2) the amount and volume of BTRs and temporarily withheld funds for those years. The report also addresses recent congressional direction on providing information on funding adjustments. DOD disagreed that its recent reports to Congress provide BTR information of limited quality but noted that the issues GAO raised in this regard can be addressed and that DOD was open to suggestions and will gladly work with committee staff to satisfy their needs. DOD also offered suggestions to clarify language on certain issues and to put its use of BTRs more in context. DOD's willingness to work with Congress is a constructive response that can lead to reporting changes that can meet the needs of both Congress and DOD. GAO has made appropriate clarifications of language and overall BTR context.

What GAO Found

DOD's recent reports to Congress provide BTR information of limited quality and do not contain data about funds withheld from DOD's research and development programs in fiscal years 2002 and 2003. DOD delivered its reports to Congress months after the time that Congress began considerations for the new budget, and accessibility was limited because the reports were classified. BTR data in the reports to Congress were derived through subtraction, rather than totaling the actual value of BTR transactions. The reports do not provide a complete picture of how BTRs are implemented on a program-by-program level. DOD has no overall system for maintaining detailed BTR and withhold data across organizations, although such data can be reconstructed from DOD's multiple data collection systems. GAO found that DOD organizations used BTRs frequently to increase or decrease research and development program funding levels. The Air Force, Army, Navy, and Missile Defense Agency (MDA) executed 1,927 BTRs, amounting to about $1 billion in fiscal year 2003. This amounted to about 2 percent of the research and development funds for these organizations. Among the programs affected by BTRs, about half lost funds and more than one-fourth gained funds. While the dollar amounts and frequency differed for fiscal year 2002, the patterns were similar. Although GAO did not observe any instances in which DOD's use of BTRs exceeded the thresholds, GAO's work was not conclusive on this point, as GAO did not design steps to assess compliance with thresholds. DOD withheld about $2.8 billion in funds in fiscal year 2003. Officials cited several reasons for implementing BTRs and withholds, including accommodating unanticipated changes or events, implementing congressional mandates, and, in the case of some withholds, controlling the execution of individual programs. Congress has required DOD to provide better and more timely information on reprogramming and withhold activities.