Mr. Chairman and Members of the Subcommittee:
We appreciate the opportunity to be here today to discuss our work on the
military services' budgeting for bulk fuel.1 The bulk fuel budgeting issues I
will describe, however, may be symptomatic of a larger issue relating to
how the services estimate requirements for operation and maintenance
(O&M) activities.2 Our work has shown a recurring pattern of the
Department of Defense (DOD) estimating that it needs more funds than it
obligates for some O&M activities.3
My statement focuses on
the services' use of O&M funds and their latitude in obligating the funds,
specific overestimating of funds needed for bulk fuel, and
bulk fuel as one example of the services' overestimating their needs for
some activities within the O&M account.
The O&M appropriation provides the services with funds to carry out
The O&M Budget and
day-to-day activities such as the recruitment and fielding of a trained and
What It Provides for
ready force, equipment maintenance and repair, child care and family
centers, transportation services, civilian personnel management and pay,
and maintenance of the infrastructure to support the forces.
The services have a great deal of flexibility as to how they obligate O&M
funds,4 and we recognize the need for flexibility. We also recognize that
the amounts obligated will rarely agree with the estimated requirements
reflected in the budget request. However, the issue is to what extent DOD's
budget estimates should reflect actual experience. For example, our
analysis of certain O&M activities shows a pattern of the estimated
requirements being more than what is obligated. Conversely, for other O&M
DOD Bulk Fuel: Services' Fuel Requirements Could Be Reduced and Funds Used for Other Purposes
(GAO/NSIAD-96-96, Mar. 28, 1996).
The words "activity" and "activities" are generally used in this statement to refer to "items of
expense," which is the term used in appropriations law.
In our analysis of O&M activities below the level of detail shown in the budget, we compared the
amount obligated to DOD's estimated requirements. We were unable to compare the obligated
amounts to the amounts appropriated for the O&M activities because that information is not available
at the DOD or services' headquarters level.
Some limitations have been imposed on this flexibility. If a service moves more than $20 million from
one budget activity to another, for example, from operating forces to mobilization, the move is subject
to normal reprogramming procedures. If a service moves $20 million or more from certain subactivity
groups within a budget activity, for example, from combat units to depot maintenance, it is required to
provide prior written notification to the congressional defense committees.
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