GAO: War costs underestimated by $12.3B

The U.S. General Accounting Office’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.

From U.S. General Accounting Office:
Fiscal Year 2004 Costs for the Global War on Terrorism Will Exceed Supplemental, Requiring DOD to Shift Funds from Other Uses

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.

The following table shows the shortfall and surplus for each service. Service Forecasts of GWOT Funding Shortfalls and Surpluses in Operation and Maintenance and Military Personnel Appropriations Accounts as of June 2004

Dollars in billions
Army
Operation and maintenance ($10.2)
Military personnel $.8
Net total by service ($9.4)

Air Force
Operation and maintenance (1.5)
Military personnel .1
Net total by service (1.4)

Navy
Operation and maintenance (.9)
Military personnel (.1)
Net total by service (1.0)

Marine Corps
Operation and maintenance (.4)
Military personnel (.1)
Net total by service (.5)

Total ($13.0) $.7 ($12.3)
Source: Developed by GAO from service data. Note: Parentheses indicate shortfall.

GAO did not audit the data. 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.

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