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March 17, 2008: 

Congressional Committees: 

Subject: Global War on Terrorism: Reported Obligations for the 
Department of Defense: 

Since 2001, Congress has provided the Department of Defense (DOD) with 
hundreds of billions of dollars in supplemental and annual 
appropriations for military operations in support of the Global War on 
Terrorism (GWOT).[Footnote 1] DOD's reported annual 
obligations[Footnote 2] for GWOT have shown a steady increase from 
about $0.2 billion in fiscal year 2001 to about $139.8 billion in 
fiscal year 2007. To continue GWOT operations, the President requested 
$189.3 billion in appropriations for DOD in fiscal year 2008. Through 
December 2007, Congress has provided DOD with about $86.8 billion of 
this request, including $16.8 billion for Mine Resistant Ambush 
Protected vehicles. As of February 2008, Congress has not taken action 
on the remaining $102.5 billion. The United States' commitments to GWOT 
will likely involve the continued investment of significant resources, 
requiring decision makers to consider difficult trade-offs as the 
nation faces an increasing long-range fiscal challenge. The magnitude 
of future costs will depend on several direct and indirect cost 
variables and, in some cases, decisions that have not yet been made. 
DOD's future costs will likely be affected by the pace and duration of 
operations, the types of facilities needed to support troops overseas, 
redeployment plans, and the amount of equipment to be repaired or 
replaced.[Footnote 3] 

DOD compiles and reports monthly and cumulative incremental obligations 
incurred to support GWOT in a monthly Supplemental and Cost of War 
Execution Report. DOD leadership uses this report, along with other 
information, to advise Congress on the costs of the war and to 
formulate future GWOT budget requests. DOD reports these obligations by 
appropriation, contingency operation,[Footnote 4] and military service 
or defense agency. The monthly cost reports are typically compiled 
within the 45 days after the end of the reporting month in which the 
obligations are incurred.[Footnote 5] DOD has prepared monthly reports 
on the obligations incurred for its involvement in GWOT since fiscal 
year 2001. 

Section 1221 of the National Defense Authorization Act for Fiscal Year 
2006[Footnote 6] requires us to submit quarterly updates to Congress on 
the costs of Operation Iraqi Freedom and Operation Enduring Freedom 
based on DOD's monthly Supplemental and Cost of War Execution Reports. 
This report, which responds to this requirement, contains our analysis 
of DOD's reported obligations for military operations in support of 
GWOT through December 2007. Specifically, we assessed (1) DOD's 
cumulative appropriations and reported obligations for military 
operations in support of GWOT and (2) DOD's fiscal year 2008 reported 
obligations through December 2007, the latest data available for GWOT 
by military service and appropriation account. 

Over the years, we have conducted a series of reviews examining funding 
and reported obligations for military operations in support of GWOT. 
Our prior work[Footnote 7] has found the data in DOD's monthly 
Supplemental and Cost of War Execution Report to be of questionable 
reliability. Consequently, we are unable to ensure that DOD's reported 
obligations for GWOT are complete, reliable, and accurate, and they 
therefore should be considered approximations. 

Based on this work, we have made a number of recommendations to the 
Secretary of Defense intended to improve the transparency and 
reliability of DOD's GWOT obligations. For example we have recommended 
that DOD (1) revise the cost reporting guidance so that large amounts 
of reported obligations are not shown in "other" miscellaneous 
categories and (2) take steps to ensure that reported GWOT obligations 
are reliable. In response, DOD is taking steps to improve GWOT cost 
reporting. For example, DOD has modified its guidance to more clearly 
define some of the cost categories and is taking additional steps to 
strengthen the oversight and program management of the cost reporting. 
Specifically, DOD has taken steps to improve transparency by requiring 
components to analyze variances in reported obligations and to disclose 
reasons for significant changes, and to affirm that monthly reported 
GWOT obligations provide a fair representation of ongoing activities. 
However, we have found that some required explanations were not 
disclosed and DOD's methodology did not always identify obligations 
omitted from cost reports, and in some cases, DOD components did not 
provide required affirmation statements to attest to accuracy.[Footnote 
8] DOD is now developing additional procedures to ensure compliance 
with the variance analysis and affirmation statements policies. Until 
all DOD efforts are more fully implemented, it is too soon to know the 
extent to which these changes will improve the reliability of DOD's 
cost reporting. 

While establishing sound cost reporting procedures and oversight is 
clearly important, the reliability of the cost-of-war reports also 
depends on the quality of DOD's accounting data. Factors contributing 
to DOD's challenges in reporting reliable cost data include long- 
standing deficiencies in DOD's financial management systems. We are 
aware that DOD has efforts under way to improve these systems as well. 

We have also made recommendations to improve transparency and fiscal 
responsibility related to funding the war on terrorism, and to permit 
Congress and the administration to establish priorities and make trade- 
offs among those priorities in defense funding. Specifically, we 
recommended that DOD (1) issue guidance defining what constitutes the 
"longer war against terror," identify what costs are related to that 
longer war, and build these costs into the base defense budget; (2) 
identify incremental costs of the ongoing GWOT operations that can be 
moved into the base budget; and (3) in consultation with the Office of 
Management and Budget, consider limiting emergency funding requests to 
truly unforeseen or sudden events.[Footnote 9] We will continue to 
review DOD's efforts to implement these recommendations as part of our 
follow-up work on GWOT. 

Scope and Methodology: 

To conduct our work, we analyzed applicable annual and supplemental 
appropriations from fiscal year 2001 through fiscal year 2007 and for 
fiscal year 2008 through December 2007. We also analyzed DOD's monthly 
Supplemental and Cost of War Execution Reports from September 2001 
through December 2007, the latest data available. Specifically, we 
identified appropriated amounts intended for GWOT and reported GWOT 
obligations for each operation, military service, and appropriation 
account. 

We are continuing to review DOD's fiscal year 2008 funding and reported 
obligations, including the reliability of the reported obligations. We 
are also reviewing the processes, including models and other tools, 
used to estimate GWOT funding requirements. We plan to report on this 
work later this year. 

We conducted this performance audit from February 2008 to March 2008, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

Summary: 

From fiscal year 2001 through December 2007, Congress has provided DOD 
with about $635.9 billion for its efforts in support of GWOT.[Footnote 
10] DOD has reported obligations of about $527 billion for military 
operations in support of the war from fiscal year 2001 through fiscal 
year 2007 and for fiscal year 2008 through December 2007. The $108.9 
billion difference[Footnote 11] between DOD's GWOT appropriations and 
reported obligations can generally be attributed to certain fiscal year 
2008 appropriations and multiyear funding for procurement; military 
construction; and research, development, test, and evaluation from 
previous GWOT-related appropriations[Footnote 12] that have yet to be 
obligated, and obligations for classified and other activities, which 
are not reported in DOD's cost-of-war reports. As part of our ongoing 
work, we are reviewing DOD's rationale for reporting its GWOT related 
obligations. 

Figure 1 shows the increase in DOD's cumulative reported GWOT 
obligations and cumulative GWOT appropriations from fiscal year 2001 
through fiscal year 2007 and for the first quarter of fiscal year 2008 
(October through December 2007). 

Figure 1: DOD's Cumulative Reported GWOT Obligations and Cumulative 
GWOT Appropriations for Fiscal Years 2001 through 2007 and for the 
First Quarter of Fiscal Year 2008 (October through December 2007): 

This figure is a combination bar and line graph showing DOD's 
cumulative reported GWOT obligations and cumulative GWOT appropriations 
for fiscal years 2001 through 2007 and for the first quarter of fiscal 
year 2008 (October through December 2007). The X axis represents the 
fiscal years, and the Y axis represents the dollars (in millions). The 
line represents cumulative GWOT appropriations, and the bar represents 
cumulative reported GWOT obligations. 

Fiscal year 2001; 
Cumulative GWOT appropriations: $16.6; 
Cumulative reported GWOT obligations: $0.2. 

Fiscal year 2002; 
Cumulative GWOT appropriations: $31; 
Cumulative reported GWOT obligations: $29.4.  

Fiscal year 2003; 
Cumulative GWOT appropriations: $99.9; 
Cumulative reported GWOT obligations: $98. 

Fiscal year 2004; 
Cumulative GWOT appropriations: $165.8; 
Cumulative reported GWOT obligations: $169.2. 

Fiscal year 2005; 
Cumulative GWOT appropriations: $266.7; 
Cumulative reported GWOT obligations: $254. 

Fiscal year 2006; 
Cumulative GWOT appropriations: $382.7; 
Cumulative reported GWOT obligations: $352.5. 

Fiscal year 2007; 
Cumulative GWOT appropriations: $549.1; 
Cumulative reported GWOT obligations: $492.2. 

Fiscal year 2008; 
Cumulative GWOT appropriations: $635.9; 
Cumulative reported GWOT obligations: $527. 

[See PDF for image] 

Source: GAO analysis of DOD and appropriations data. 

Notes: Reported GWOT obligations include Operation Noble Eagle, 
Operation Enduring Freedom, and Operation Iraqi Freedom, and generally 
reflect costs reported in DOD's cost-of-war reports. However, the 
fiscal year 2002 and 2003 figures include about $20.1 billion that 
according to DOD officials was war related but not reported in DOD's 
cost-of-war reports. GAO has assessed the reliability of DOD's 
obligation data and found significant problems, such that these data 
may not accurately reflect the true dollar value of GWOT obligations. 

[End of figure] 

Of DOD's total cumulative reported obligations for GWOT through 
December 2007 (about $527 billion), about $406.2 billion is for 
operations in and around Iraq as part of Operation Iraqi Freedom, and 
about $92.9 billion is for operations in Afghanistan, the Horn of 
Africa, the Philippines, and elsewhere as part of Operation Enduring 
Freedom. The remaining about $28 billion is for operations in defense 
of the homeland as part of Operation Noble Eagle. 

As figure 2 shows, DOD's reported obligations for Operation Iraqi 
Freedom have consistently increased each fiscal year since operations 
began. The increases in reported obligations for Operation Iraqi 
Freedom are in part because of continued costs for military personnel, 
such as military pay and allowances for mobilized reservists, and for 
rising operation and maintenance expenses, such as higher contract 
costs for housing, food, and services and higher fuel costs. In 
addition, the need to repair and replace equipment because of the harsh 
combat and environmental conditions in theater and the ongoing costs 
associated with the surge strategy announced in January 2007, which 
provided for the deployment of additional troops, have further 
increased obligations for Operation Iraqi Freedom. In contrast, DOD's 
reported obligations for Operation Noble Eagle have consistently 
decreased since fiscal year 2003, largely because of the completion of 
repairs to the Pentagon and upgrades in security at military 
installations that were onetime costs, as well as a reduction in combat 
air patrols and in the number of reserve personnel guarding government 
installations. Reported obligations for Operation Enduring Freedom have 
ranged from $10.3 billion to $20.1 billion each fiscal year. Recent 
increases in reported obligations for Operation Enduring Freedom are in 
part caused by higher troop levels in Afghanistan, the costs associated 
with training Afghan security forces, and the need to repair and 
replace equipment after several years of ongoing operations. 

Figure 2: DOD's Reported GWOT Obligations for Fiscal Years 2001 through 
2007 by Operation: 

This figure is a line graph with shading showing DOD's reported GWOT 
obligations for fiscal years 2001 through 2007 by operation. The X axis 
represents the reported GWOT obligations per fiscal year, and the Y 
axis represents dollars (in millions). 

Operation Noble Eagle: $27.9; 
Operation Enduring Freedom: 86.2; 
Operation Iraqi Freedom: 378.1. 

[See PDF for image] 

Source: GAO analysis of DOD data. 

Notes: Operation Iraqi Freedom began in fiscal year 2003; therefore no 
obligations were reported in fiscal years 2001 and 2002 for this 
operation. Reported GWOT obligations generally reflect costs reported 
in DOD's cost-of-war reports. However, the fiscal year 2002 and 2003 
figures include about $20.1 billion that according to DOD officials was 
war related but not reported in DOD's cost-of-war reports. GAO has 
assessed the reliability of DOD's obligation data and found significant 
problems, such that these data may not accurately reflect the true 
dollar value of GWOT obligations. 

[End of figure] 

In fiscal year 2008, through December 2007, DOD's total reported 
obligations of about $34.8 billion are about one quarter of the total 
amount of obligations it reported for all of fiscal year 2007. Reported 
obligations for Operation Iraqi Freedom continue to account for the 
largest portion of total reported GWOT obligations by operation--about 
$28.1 billion. In contrast, reported obligations associated with 
Operation Enduring Freedom total about $6.6 billion, and reported 
obligations associated with Operation Noble Eagle total about $49.6 
million. 

The Army accounts for the largest portion of reported obligations for 
fiscal year 2008 through December 2007--about $27.2 billion, nearly 11 
times higher than the almost $2.5 billion in obligations reported for 
the Air Force, the military service with the next greatest reported 
amount. Among appropriation accounts, operation and maintenance, which 
includes items such as support for housing, food, and services; the 
repair of equipment; and transportation to move people, supplies, and 
equipment, accounts for the largest reported obligations--about $16.1 
billion. Reported obligations for procurement account for about 27 
percent of reported obligations, or about $9.4 billion. Of the $43.6 
billion provided to DOD for procurement in fiscal year 2007, 
approximately 21 percent, or $9.1 billion, has yet to be obligated and 
remains available in fiscal year 2008. Figure 3 shows DOD's reported 
obligations for fiscal year 2008 through December 2007 by DOD component 
and appropriation account. 

Figure 3: DOD's Reported GWOT Obligations for Fiscal Year 2008, by DOD 
Component and Appropriation Account, as of December 2007: 

This figure is a combination of two pie graphs showing DOD's reported 
GWOT obligations for fiscal year 2008, by DOD component and 
appropriation account, as of December 2007. 

By DOD component (dollars in millions): 

Army: 79%: $27.2; 
Air Force: 7%: $2.5; 
Marine Corps: 6%: $2.2; 
Navy: 4%: $1.3; 
Other DOD components: 4%: $1.5. 

By appropriation account (dollars in billions): 

Operation and Maintenance: 47%: $16.1; 
Procurement: 27%: $9.4; 
Other: 13%: $4.5; 
Military personnel: 12%: $4.3; 
Military construction: 1%: $0.3; 
Working Capital Fund: 0%: $0.1; 
Research, development, test, and evaluation: 0%: $0.1. 

[See PDF for image] 

Source: GAO analysis of DOD data. 

Notes: Obligation figures may not add to $34.8 billion because of 
rounding. The "Other" portion of the appropriation account pie includes 
programs designed to reimburse coalition countries for logistical and 
military support, to train and equip the Afghan National Army and Armed 
Forces of Iraq and to execute the Commanders Emergency Response 
Program. GAO has assessed the reliability of DOD's obligation data and 
found significant problems, such that these data may not accurately 
reflect the true dollar value of GWOT obligations. 

[End of figure] 

Agency Comments: 

We requested comments from DOD, but none were provided. 

We are sending copies of this report to interested congressional 
committees; the Secretary of Defense; the Under Secretary of Defense 
(Comptroller); and the Director, Office of Management and Budget. We 
will also make copies available to others upon request. In addition, 
this report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-9619 or pickups@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in the enclosure. 

Sharon L. Pickup: 

Director, Defense Capabilities and Management: 

Enclosure: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Ted Stevens: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan L. Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable John P. Murtha: 
Chairman: 
The Honorable C. W. Bill Young: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

GAO Contact and Staff Acknowledgments: 

GAO Contact: Sharon Pickup, (202) 512-9619 or pickups@gao.gov: 

Acknowledgments: In addition to the contact named above, Ann Borseth, 
Assistant Director; Richard Geiger; Ron La Due Lake; Deanna Laufer; 
Lonnie McAllister; and Eric Petersen made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] After the terrorist attacks of September 11, 2001, the President 
announced a Global War on Terrorism, requiring the collective 
instruments of the entire federal government to counter the threat of 
terrorism. Ongoing military and diplomatic operations overseas, 
especially in Iraq and Afghanistan, constitute a key part of GWOT. 
These operations involve a wide variety of activities, such as 
combating insurgents, training the military forces of other nations, 
and conducting small-scale reconstruction and humanitarian relief 
projects. 

[2] According to Department of Defense, Financial Management 
Regulation, 7000.14-R, vol. 1, Definitions (December 2001), p. xvii, 
obligations are incurred through actions such as orders placed, 
contracts awarded, services received, or similar transactions made by 
federal agencies during a given period that will require payments 
during the same or a future period. 

[3] For more information see GAO, Securing, Stabilizing, and Rebuilding 
Iraq: Key Issues for Congressional Oversight, GAO-07-308SP (Washington, 
D.C.: Jan. 9, 2007), and Global War on Terrorism: Observations on 
Funding, Costs, and Future Commitments, GAO-06-885T (Washington, D.C.: 
July 18, 2006). 

[4] DOD defines contingency operations to include small, medium, and 
large-scale campaign-level military operations, including support for 
peacekeeping operations, major humanitarian assistance efforts, 
noncombatant evacuation operations, and international disaster relief 
efforts. 

[5] Department of Defense, Financial Management Regulation, 7000.14-R, 
vol. 12, ch. 23. This regulation generally establishes financial policy 
and procedures related to DOD contingency operations. Volume 6A, 
chapter 2, and volume 3, chapter 8, of the DOD Financial Management 
Regulation also include provisions to ensure the accuracy of cost 
reporting. 

[6] Pub. L. No. 109-163,  1221(c) (2006). 

[7] For more information see GAO, Global War on Terrorism: DOD Needs to 
Improve the Reliability of Cost Data and Provide Additional Guidance to 
Control Costs, GAO-05-882 (Washington, D.C.: Sept. 21, 2005), and 
Global War on Terrorism: DOD Needs to Take Action to Encourage Fiscal 
Discipline and Optimize the Use of Tools Intended to Improve GWOT Cost 
Reporting, GAO-08-68 (Washington, D.C.: Nov. 6, 2007). 

[8] GAO-08-68. 

[9] GAO-08-68. 

[10] From fiscal year 2001 through fiscal year 2004, military 
operations in defense of the homeland (Operation Noble Eagle) were 
funded through supplemental appropriations. Since fiscal year 2005, 
these operations have been funded through DOD's base budget. Because 
Congress does not appropriate funds by military operation, these 
amounts cannot be separately identified. Therefore, the $635.9 billion 
includes funding for Operation Noble Eagle only from fiscal years 2001 
through 2004. 

[11] We calculated this difference by comparing available data on 
appropriations and reported obligations. Since data on appropriations 
for Operation Noble Eagle from fiscal year 2005 through fiscal year 
2007 are unavailable, the difference between DOD's GWOT appropriations 
and reported obligations may be larger. 

[12] Appropriations for military personnel and operation and 
maintenance are usually available for 1 year, while appropriations for 
research, development, test ,and evaluation are usually available for 2 
years; procurement funds (with the exception of shipbuilding funds, 
which are sometimes available longer) are usually available for 3 
years; and military construction funds are usually available for 5 
years. 

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