DOD Has Expanded ERI’s Objectives and Funding, Contributing to Enhancements in Its Posture in Europe

Since 2014, DOD has expanded ERI’s objectives, increased its funding,  and planned enhancements to posture in Europe. In fiscal  year 2017, DOD expanded ERI’s objectives to include deterring Russian  aggression in the long term and developing the capacity to field a credible  combined force should deterrence fail. DOD  will have requested approximately $4.5 billion in ERI funding for posture  enhancements through the end of fiscal year 2017; about $3.2 billion of  this was requested for use in fiscal years 2017. These short-duration deployments  were intermittent and focused on demonstrating U.S. commitment to  allies and partners. As of April 2017, DOD was still evaluating force  enhancements in Europe as part of its fiscal year 2018 budget  submission. New locations and improvements to infrastructure: Since ERI was  announced in 2014, DOD has established new enduring locations in  Europe. An enduring location is designated by DOD and is a  geographic site that DOD expects to access and use to support U.S.  security interests for the foreseeable future. According to DOD and State Department officials, DOD is also  working with U.S. allies and partners to determine what infrastructure  improvements to roads, railroads, and bridges need to occur outside  enduring locations to allow rapid response to a conflict. DOD Does Not Prioritize Posture Initiatives Funded Under ERI against Those in Its Base Budget, Estimate Their Sustainment Costs, or Communicate Future Costs to Congress

DOD is using a separate process instead of its established posture  planning process to plan for ERI’s posture initiatives because of the  emergent nature of ERI requirements and their having been funded  through the OCO budget. DOD Does Not Prioritize ERI Initiatives against Those in Its Base Budget, Estimate Long-Term Sustainment Costs, or Communicate Future Costs to Congress

DOD’s planning for ERI’s posture initiatives does not establish priorities  for ERI initiatives relative to those in the base budget, estimate long-term  sustainment costs for some posture initiatives funded under ERI, or  communicate future ERI costs to Congress. However, because it does not  prioritize ERI initiatives against other initiatives funded through the base  budget, DOD lacks an understanding of the relative importance of  initiatives funded under ERI and may begin investing in projects that it  would not support in the absence of funding from DOD’s OCO budget. Based on DOD’s approach for calculating rough order sustainment costs,  we determined that ERI sustainment costs for prepositioned equipment  and construction could be substantial. DOD officials said that we correctly applied  DOD’s approach for estimating sustainment costs, but noted that actual  costs may be lower than the estimated costs, because the military services may not fully fund sustainment. As a result,  DOD is limiting congressional visibility into the resources needed to  achieve ERI’s objectives. If DOD does not provide Congress with  projections of the future costs of posture initiatives funded under ERI and  information on its assumptions pertaining to host nation support and  burden sharing, it will continue to impede congressional visibility into the  resources that are needed to fully implement these initiatives. (Recommendation 1)
To better enable decision makers to evaluate the full long-term costs of  posture initiatives under ERI, we recommend that the Secretary of  Defense direct EUCOM and the military services to develop estimates for  the sustainment costs of prepositioned equipment and other infrastructure  projects under ERI and ensure that the services plan for these long-term  costs in future budgets. DOD partially concurred with all three of our recommendations,  and we have reproduced DOD’s comments on the classified report in  appendix II. In the absence of robust cost estimates and deliberate  planning to address those costs in future budgets, DOD will continue to  be limited in its ability to evaluate the affordability of posture initiatives  funded under ERI, and the military services may not plan adequate  funding to sustain posture investments in Europe.
Why GAO Did This Study

In response to Russia's annexation of Crimea in March 2014, the President announced the ERI, to reassure allies in Europe of U.S. commitment to their security. This initiative has been funded using OCO appropriations, which Congress provides in addition to DOD's base budget appropriations.
The Joint Explanatory Statement accompanying the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, included a provision for GAO to review matters related to ERI. In this report, we (1) describe changes in ERI's objectives, funding under ERI, and DOD's posture in Europe since 2014 and (2) evaluate the extent to which DOD's planning processes for posture initiatives funded under ERI prioritize those initiatives, estimate their long-term costs, and communicate their estimated costs to Congress. GAO analyzed DOD strategy documentation, budget and cost analysis guidance, budget justification materials, and cost and obligations data. GAO also interviewed knowledgeable officials within the Office of the Secretary of Defense, U.S. European Command, the military services, and the State Department.

What GAO Found

Since 2014, the Department of Defense (DOD) has expanded the European Reassurance Initiative's (ERI) objectives, increased its funding, and planned enhancements to European posture. DOD expanded ERI's objectives from the short-term reassurance of allies and partners to include deterring Russian aggression in the long term and developing the capacity to field a credible combined force should deterrence fail. With respect to funding, DOD will have requested approximately $4.5 billion for ERI's posture enhancements through the end of fiscal year 2017 (about $3.2 billion for fiscal year 2017 alone), and in July 2016 EUCOM identified funding needs for future posture initiatives. The expansion of ERI's objectives has contributed to DOD's enhancing its posture in Europe. Specifically, DOD has increased the size and duration of Army combat unit deployments, planned to preposition Army equipment in Eastern Europe, added new enduring locations (e.g., locations that DOD expects to access and use to support U.S. security interests for the foreseeable future), improved infrastructure, and negotiated new agreements with European nations. As of April 2017, DOD was considering further force enhancements under ERI as part of the department's ERI budget request. DOD also was reviewing whether new enduring locations to support ERI were needed and was considering other improvements to existing infrastructure.
DOD's process for planning ERI has not established priorities among posture initiatives funded under ERI relative to those in its base budget, nor estimated long-term sustainment costs for some posture initiatives funded under ERI, nor communicated future costs to Congress. ERI is being planned using a separate process from DOD's established processes and is funded from DOD's overseas contingency operations (OCO) appropriations. GAO found several weaknesses:
Lack of prioritization : DOD establishes priorities among ERI posture initiatives but has not evaluated them against base budget initiatives using its posture management process. As a result, DOD lacks an understanding of the relative importance of ERI initiatives and may be investing in projects that it will not continue should OCO funding become unavailable.
Lack of sustainment costs : EUCOM and the military services have not fully estimated the long-term costs to sustain equipment and construction funded under ERI. Based on DOD's approach for calculating rough order sustainment costs, GAO determined that these costs could be substantial. DOD officials said that GAO correctly applied DOD's approach for estimating sustainment costs, but noted that actual costs may be lower, because the military services may not fully fund sustainment. In the absence of comprehensive estimates, DOD has been limited in its ability to assess affordability and plan for future costs.
Not communicating future costs : DOD limits Congress's visibility into the resources needed to implement ERI and achieve its objectives because it does not include future costs in its ERI budget request.
This is a public version of a classified report issued in August 2017. Information on specific posture planning, guidance, and budget estimates that DOD deemed to be classified have been omitted from this report.

What GAO Recommends

GAO recommends that DOD prioritize ERI posture initiatives against initiatives in its base budget, develop cost estimates for sustaining initiatives, and communicate future costs to Congress. DOD partially concurred with GAO's recommendations. GAO continues to believe that these recommendations are warranted.