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entitled 'Department of Defense’s Compliance with Statutory 
Requirements for Funding Military Operations Where Funds Were Not 
Provided in Advance' which was released on July 19, 2002. 

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GAO-02-903R: 

United States General Accounting Office: 
Washington, DC 20548: 

July 19, 2002: 

Congressional Committees: 

Subject: Department of Defense’s Compliance with Statutory Requirements 
for Funding Military Operations Where Funds Were Not Provided in 
Advance: 

Section 127a of title 10, United States Code, provides the Department 
of Defense (DOD) with two options for funding nontraining deployments 
and operations when Congress has not provided funds for these 
operations in advance. These options involve waiving reimbursements for 
support services and transferring amounts from other DOD accounts. 
Section 127a prescribes specific procedures to be followed by DOD when 
these funding options are used; requires DOD to notify Congress of and
report to Congress on certain new contingency operations; and states 
that the Comptroller General of the United States shall from time to 
time, and when requested by a committee of Congress, conduct a review 
to determine whether the Department of Defense is complying with the 
requirements and limitations of this section. This report responds to 
that provision. Our objectives were to assess (1) whether DOD complied 
with the notification and reporting requirements contained in 10 U.S.C.
127a and (2) DOD's use of its funding options. 

Results in Brief: 

DOD has complied with the requirements contained in 10 U.S.C. 127a. 
Since the current notification and reporting requirements of section 
127a were enacted in 1996, DOD has provided congressional notification 
for four operations, involving Bosnia, Kosovo, hurricane relief in 
Central America, and East Timor. In each instance, DOD complied with 10 
U.S.C. 127a notification and reporting requirements. 

DOD has rarely used the funding options provided in section 127a. It 
used the section 127a funding option allowing waiver of reimbursement 
for units providing support once, for Bosnia operations in fiscal year 
1996, and has never used the option allowing transfer of funds. DOD 
officials told us the Secretary appreciates having section 127a 
available to fund future contingency operations, if needed. However, for
the most part, DOD has used other options to fund contingency 
operations such as using funds that were planned to be spent later in a 
fiscal year and seeking supplemental appropriations. 

Background: 

Section 127a of title 10, United States Code, provides two funding 
options for certain operations for which funds are not provided in 
advance. This section applies to any operation where the incremental 
costs [Footnote 1] are expected to exceed $50 million for which
funds had not previously specifically been appropriated or where the 
incremental costs, when added to the expected incremental costs of the 
Department’s other ongoing operations, will result in cumulative 
incremental costs of more than $100 million. The Secretary of Defense 
is authorized to use these funding options for any operation that 
involves: 

* the deployment (other than for a training exercise) of elements of 
the Armed Forces for a purpose for which funds have not been 
specifically provided in advance; or; 

* the provision of humanitarian assistance, disaster relief, or the 
support of law enforcement where funds have not been specifically 
provided in advance. 

Section 127a requires that the Secretary of Defense designate an 
operation meeting the criteria specified in the section as a 
contingency and promptly notify Congress of that designation. The 
Secretary is then authorized to both waive reimbursements and
transfer funds as follows: 

* The Secretary shall direct that when a unit participating in an 
operation described in section 127a receives services from a DOD 
element that operates through the Defense Business Operating Fund (or a 
successor fund) that unit may not be required to provide reimbursement. 

* Separately, the Secretary may transfer amounts already appropriated 
to DOD to accounts from which incremental expenses for the operation 
were incurred in order to reimburse those accounts for the incremental 
expenses. [Footnote 2] The total amount that the Secretary may transfer 
under the authority of this section in any fiscal year is $200 million. 

Section 127a also requires the Secretary of Defense, within 45 days of 
identifying an operation as a contingency, to submit to Congress a 
report describing the operation. The specific information to be 
included in the Secretary’s report includes the: 

* objectives of the operation; 
* estimated duration of the operation; 
* estimated incremental cost of the operation, and; 
* exit criteria for the withdrawal of U.S. forces. 

DOD’s Compliance With Notification and Reporting Requirements: 

Since the current notification and reporting requirements of section 
127a were enacted in 1996, DOD has notified Congress of four 
operations, involving Bosnia; Kosovo; hurricane relief in Central 
America, called Operation Mitch; and East Timor. In each of these 
instances, the Secretary of Defense notified Congress in writing that
he was designating the operation as a contingency operation pursuant to 
section 127a. Specifically, the Secretary took the following actions: 

* In July 1996, the Secretary designated Operation Joint Endeavor, North
Atlantic Treaty Organization (NATO) military operations supporting 
implementation of the Bosnia peace treaty, as an operation meeting the
requirements of section 127a and so notified Congress. 

* In March 1999, the Secretary designated Operation Fuerte Apoyo (Strong
Support)--operations supporting Hurricane Mitch humanitarian relief and
rehabilitation--as an operation meeting the requirements of section 
127a and so notified Congress. 

* In April 1999, the Secretary designated U.S. participation in and 
support of NATO military operations in and around Kosovo as an 
operation meeting the requirements of section 127a and so notified 
Congress. 

* In March 2000, the Secretary designated U.S. participation in and 
support of Operation Stabilise-the operational name for International 
Force East Timor-as an operation meeting the requirements of section 
127a and so notified Congress. 

The Secretary subsequently provided Congress with a written report for 
each of the above operations that addressed the topics specified in 
section 127a. 

DOD’s Use of the Waiver of Reimbursement and Transfer Funding Options: 

DOD has rarely used the two funding options contained in 10 U.S.C. 
127a. We identified one instance in which DOD used the waiver of 
reimbursement provision of 10 U.S.C. 127a—in support of Bosnia 
operations in 1996. In that instance, DOD’s United States 
Transportation Command accepted $77 million in orders from the Army’s 
and the Air Force’s operating forces without reimbursement. To make it
possible for the Transportation Command to provide these services, it 
was necessary to transfer Army and Air Force Defense Business Operating 
Fund cash balances of $53 million and $24 million respectively to the 
Transportation Command’s Defense Business Operating Fund activity. We 
found no instances recorded in DOD’s files on section 127a in which DOD 
used the transfer authority. We were told that DOD considered invoking 
the section 127a funding options at the start of Operation Enduring 
Freedom (military operations combating terrorism) in September 2001 but
that Congress appropriated funds in advance, thereby negating the 
requirement for the Secretary to invoke section 127a. 

We discussed the infrequent use of section 127a with officials at DOD. 
Officials within the Office of the Secretary of Defense (Comptroller) 
told us the Secretary appreciates having section 127a flexibilities 
available for future contingency operations, if needed. However, for 
the most part, DOD has not needed to utilize these flexibilities for 
contingency operations because it had used funds that were planned to 
be spent later in a fiscal year and sought supplemental appropriations. 

Scope and Methodology: 

To assess DOD’s compliance with the notification and reporting 
requirements of 10 U.S.C. 127a, we (1) reviewed the section to identify 
the requirements placed on DOD; (2) reviewed the Department’s files, 
including the notification letters and subsequent reports to Congress; 
(3) and compared the notifications and reports sent to the Congress 
with the section’s requirements. To assess DOD’s use of the funding 
options contained in section 127a, we further reviewed DOD’s files to 
identify any instances in which the funding options were used and 
discussed their use with officials from the Office of the Secretary of 
Defense (Comptroller). We reviewed the information in this letter with 
DOD officials and made changes where appropriate. We performed our work 
from May through June 2002 in accordance with generally accepted 
government auditing standards. 

We are sending copies of this report to the Chairman and Ranking 
Minority Members, Senate Committee on Governmental Affairs and House 
Committee on Government Reform; the Secretary of Defense; the Under 
Secretary of Defense (Comptroller); and the Director, Office of 
Management and Budget. Copies of this report will also be made 
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 have any questions regarding this report, please call me on 
(757) 552-8100. Principal contributors to this report were Steve 
Sternlieb, Ray S. Carroll, Lester Ward, and Laura Talbott. 

Sincerely yours, 

Signed by: 

Neal P. Curtin: 
Director, Defense Capabilities and Management: 

Congressional Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John W. Warner: 
Ranking Minority Member: 
Committee on Armed Services: 
United States Senate: 

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

The Honorable Bob Stump: 
Chairman: 
The Honorable Ike Skelton: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Jerry Lewis: 
Chairman: 
The Honorable John P. Murtha: 
Ranking Minority Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Footnotes: 

[1] As defined in section 127a, "incremental costs" means those 
directly attributable costs that would not have been incurred if it 
were not for the operation. 

[2] Among other restrictions, transfers may only be made from amounts 
appropriated to DOD for any fiscal year that remain available for 
obligation, except operation and maintenance appropriations that are 
specified as being for operating forces (known as a budget activity 1 
account) or mobilization (known as a budget activity 2 account). 

[End of section] 

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