WASHINGTON — The Pentagon shifted $146.9 billion over six years from its wartime accounts to pay for routine operations, and its accounting systems don't know the difference between the two, according to a new report from the Government Accountability Office.
In a study released Aug. 16, the GAO detailed a practice that some in the US Congress have said is inappropriate. Between 2009 and 2015, the Defense Department spent funds meant for the Overseas Contingency Operations (OCO) account to augment the base budget Operations and Maintenance (O&M) at the rate of 5.6 percent more per year than Congress allotted.
The Defense Department is not required to separately track O&M in its base and war budgets, which effectively lowers the wall around money intended to pay for the Iraq and Afghan wars. However, the GAO's report called for the Pentagon to end that — a recommendation the Pentagon disputed, saying in an official response included in the report that separating the accounts would be "very difficult and labor intensive."
The lines between OCO and base budget needs have long been blurry, particularly as Congress and successive presidential administrations have used OCO, which is exempt from statutory budget caps, as a means to pay for some of the military's day-to-day needs and skirt those caps.
The report comes amid Congressional negotiations on a 2017 defense authorization bill where OCO is a controversial issue. The House-approved plan is to stick to budget levels agreed to in 2015 bipartisan budget deal but use $18 billion from OCO to pay for base budget items — expecting the incoming president to ask Congress for a supplemental defense spending package.
As lawmakers have argued for an end to the caps and increased military funding, they included language in the 2016 defense authorization bill requiring the GAO study. The Senate Appropriations Committee similarly expressed similar concerns on this issue in the 2015 Defense appropriations bill, according to a committee spokesman.
Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies and a critic of the blurring of OCO and base funding, estimated that the Pentagon has been using $25 billion to $30 billion in OCO every year to supplement its base budget.
Harrison said he has shown this through indirect evidence, such as trends in the cost per troop in Afghanistan, "but without the kind of detailed reporting the GAO is calling for it is not possible to produce direct evidence," he wrote in an email.
"This is one of the main ways they are able to do that without getting caught," Harrison said. "Once Congress appropriates base and OCO funding, the money is mixed together in the same accounts and DoD does not track it separately. If they did, it would be readily apparent that they are using OCO funding (specifically, funding that was requested and appropriated for activities in Afghanistan) for base budget purposes."
Former Defense Department Comptroller Bob Hale agreed that in most cases it would be beneficial to split out O&M by base and OCO, but the process of integrating the information into meaningful reports would "require manual efforts that are labor intensive," as the armed services use different financial systems.
The process of splitting the costs in detail for the Pentagon's budget justification to Congress, would "involve hundreds, probably thousands, of sub categories," Hale, now a BoozAllen fellow, said in an email. It's a hardship particularly as the Pentagon endures Congressionally mandated personnel cuts within their various headquarters.
"Bottom line: I don't think DoD is trying to hide information. I do think they are trying to avoid a significant new workload," Hale said.
Hale also noted that Congress's actions may also ultimately hinder greater transparency.
"I would note that Congress keeps putting some base funds into OCO; so even a detailed base/OCO split would not reveal all base funding," Hale said. "But the amounts of base funding in OCO are relatively small. So the split would still be useful."
Joe Gould is the Congress and industry reporter at Defense News, covering defense budget and policy matters on Capitol Hill as well as industry news.