In figure 1, for example, the “06” in the  first positions indicate this is a research and development effort. Program Element Codes and Budget Exhibits Do Not Consistently Provide Key Information

The program element code structure and budget exhibits do not  consistently provide accurate, clear, and complete information regarding  RDT&E budget requests. One-Third of the Requested RDT&E Funding Is Not Identified as RDT&E Programs

Programs that were requested in budget activity 7—RDT&E efforts for  fielded systems and programs approved for production—presented the  greatest visibility problem. This budget activity was used to  request $23.5 billion in fiscal year 2007, or about a third of DOD’s entire  RDT&E funding request. DOD Guidance and Practices Contribute to Reduced Visibility

We found the RDT&E program element code and the budget exhibits are  not always accurate, clear, consistent, and complete for two major  reasons. First, DOD’s own regulation for constructing program element  codes does not require a large part of the RDT&E effort to be reflected in  program element codes. Second, the regulation governing the structuring  of the coding and the content of the exhibits is vague. For example, it does  not require the coding to be updated from one year to the next to ensure  the correct stage of development has been accurately identified. The  regulation also does not provide sufficiently detailed guidance to ensure  consistency in the format and content of the budget exhibits. Several DOD officials said that one of the reasons that the budget exhibits  are insufficient as decision-making tools is the lack of clear and consistent  guidance for the budget exhibits in the FMR. To provide Congress with  greater understanding of the nature of developmental activities proposed,  as well as to improve the consistency and completeness of the justification  material provided for the RDT&E funds requested, the Secretary of  Defense should ensure that the DOD Comptroller:    Revises the Financial Management Regulation to, (1) in the case of  programs approved for production or fielded, ensure that the code or  the budget exhibit indicates which stage of development—from basic  research through system development and demonstration—the effort is  undertaking, and (2) ensure that the program element codes reflect the  stage of development—that is from basic research through system  development and demonstration—of the requested research and  development effort. Appendix I: Scope & Methodology

To assess whether DOD’s RDT&E program element code structure  provides Congress consistent, complete and clear information, we  reviewed relevant guidance while analyzing all 696 program elements  contained in the fiscal year 2007 RDT&E budget request.
Why GAO Did This Study

The Department of Defense (DOD) asked Congress for $73.2 billion in fiscal year 2007 for research, development, testing, and evaluation (RDT&E). DOD organized this request using program element (PE) codes, which are designed to convey key information about the budget request. DOD also provides documents called budget exhibits detailing the activities for which funds are being requested. The National Defense Authorization Act for Fiscal Year 2006 mandated that GAO examine the program elements and budget exhibits. GAO assessed (1) whether the RDT&E program element code structure and the associated budget exhibits provide accurate, consistent, complete, and clear information, and (2) what factors contribute to any problems found. In conducting this review GAO analyzed all of the fiscal year 2007 program element codes and 47 budget exhibits. GAO also interviewed key DOD officials.

What GAO Found

Neither the RDT&E program element code structure nor the budget exhibits consistently provide accurate, clear, and complete information on the nature of DOD's proposed research and development efforts. First, one-third of the requested RDT&E funding is for efforts that are not identified as research and development in their program element codes. In addition, a majority of the remaining funding request misidentifies the budget activity (which is a classification of the stage of development and ranges from BA 1 for basic research to BA 6 for management support) as it is stated in program element codes. Second, some of the budget exhibits justifying the programs' funding requests do not provide consistent, complete, and clear information with suitable levels of detail needed to understand DOD's research and development efforts. GAO found that DOD budget exhibits were difficult to understand, frequently lacked information about the accomplishments and planned efforts of each project, lacked appropriate cross-references between efforts, and were frequently missing key schedule data. The RDT&E program element codes are not always accurate nor are the budget exhibits always accurate, clear, consistent and complete for two major reasons. First, DOD's regulation does not require identification of any RDT&E effort as such in its program element code if it is taking place on a weapon system that is approved for production or already fielded. This affects over a third of all RDT&E funds. Second, the regulation governing the structuring of the coding and the content of the exhibits is vague. For example, the regulation does not require the coding to be updated from one year to the next to ensure the correct stage of development has been accurately identified. The regulation also does not provide sufficiently detailed guidance to ensure consistency in the format and content of the budget exhibits. This results in budget exhibits being insufficient as decision-making tools, according to DOD officials.