From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Overseas Contingency Operations 

Description: Audio interview by GAO staff with John Pendleton, Director,
Defense Capabilities and Management 

Related GAO Work: GAO-17-68: Overseas Contingency Operations: OMB and
DOD Should Revise the Criteria for Determining Eligible Costs and
Identify the Costs Likely to Endure Long Term

Released: January 2017


[ Background Music ]

[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the U.S. Government Accountability Office. It's January
2017. Since 2001, Congress has provided more than $1.6 trillion in
appropriations to fund overseas contingency operations, or OCO. These
operations can include peacekeeping support, major humanitarian
assistance, noncombatant evacuations, and disaster relief efforts. The
Department of Defense's OCO budget request has generally focused on
operations in Iraq and Afghanistan, but more recently the request has
also included more activities elsewhere. A team led by John Pendleton, a
director in GAO's Defense Capabilities and Management team, recently
looked at how these funds are actually being used. Jacques Arsenault sat
down with John to talk about what they found.

[ Jacques Arsenault: ] What are overseas contingency operations funds,
and how do they differ from regular appropriations?

[ John Pendleton: ] Overseas contingency operations funds, or OCO, are
basically funds to cover war costs, in addition to the regular budget.
They were actually originally called Global War on Terror funds. The
name changed a few years ago, but the intent was to cover the
incremental cost, so the military didn't have to pay for the war
operations out of their basic budget, out of hide, so to speak.

[ Jacques Arsenault: ] Right. So, with the regular budget and
appropriations cycle, they're planning based on, what are the major
ongoing expenses that they're going to have, and you can't necessarily
make all those plans about the war, so this provides, I guess, more
flexibility?

[ John Pendleton: ] In peacetime, the military's basic mission is to
train and engage with partners, and other things, and so their budgets
are based on those kinds of activities. The war costs obviously add a
significant cost. It takes fuel to get them there. You've got to pay
them. You've got to pay contractors. And so, overseas contingency
operations funding was designed to allow the Congress to provide the
funding needed to cover those costs, which would be incremental in
addition to what they were originally planning for.

[ Jacques Arsenault: ] So then, what are these funds being used for?

[ John Pendleton: ] Well, since 2001, Congress has provided about 1.6
trillion, with a T, trillion in funds to cover these war costs. This
fiscal year, DOD has asked for 65 billion, and that's about 10 percent
in addition to their regular budget, and it's being used to cover
operations in Iraq and Afghanistan. That's the bulk of it. More
recently, we've assisted in Syria and Libya, and there's some money for
that, but it's even now being used to conduct deterrence operations in
Europe. So, it's adjusted from what it was traditionally used for.

[ Jacques Arsenault: ] So, about how much of the funding is used for
these kind of other uses beyond the big fights in Iraq and Afghanistan?

[ John Pendleton: ] It's a fair amount, but it's a little bit
complicated, and there's a couple part to it. First, the department
flags some items as non-war that they're doing, in reports to Congress,
and that's been $6 or $7 billion a year in recent years, even as the
total amount of overseas contingency operations funds have dropped. But,
the second part is bigger and more difficult to unravel. These are the
costs that are enduring. This means they would continue even after
current operations stopped. For example, many of the bases in the Middle
East, even outside of Iraq and Afghanistan, support ongoing operations,
but I don't think anybody thinks we would close them, even if the wars
were to stop.

[ Jacques Arsenault: ] Right. It doesn't really sound like a
contingency, as much as something that we're planning for, and are going
to have in place.

[ John Pendleton: ] Absolutely, and it's difficult to identify precisely
how much these enduring costs are, but they're substantial. We talked to
DOD about it, and they think it's as much as $30 billion of the 65
billion that they've asked for this year. So, it's a fair amount of
money.

[ Jacques Arsenault: ] How does DOD decide what should be included in
these OCO requests?

[ John Pendleton: ] We've been looking at this for more than a decade,
and we've cautioned previously that the funding was becoming blended in
such a way that it would be difficult to separate it out. We urged DOD
to work with the Office of Management and Budget, who provide the
guidance here, to craft criteria to provide guidance for what would be
included, and they did that. They took our recommendation back in 2010
and provided that guidance. The problem is, a lot has changed since
2010, but the guidance hasn't been updated. So you've got a situation
now where you're using OCO for things that the guidance didn't
contemplate, like the operations in Europe, and in fact, about $3.4
billion was requested in this fiscal year in order to provide army units
the opportunity to go over and train with partners. So, it's a fairly
substantial amount that's outside the guidance at this point.

[ Jacques Arsenault: ] So, without criteria being updated in the last
six years, it sounds like it's hard to even assess, you know, what
should or shouldn't be included.

[ John Pendleton: ] You know, it sound wonky, but it's about controls.
We're now using OCO for things that we really didn't envision, and that
guidance needs to be updated to provide some boundaries for the use of
OCO. And, without clear guidance, it's going to be very difficult to
disentangle the OCO costs from the regular budget going forward.

[ Jacques Arsenault: ] So then, can you talk about the recommendations
that GAO is making in this report?

[ John Pendleton: ] We make two recommendations. First, they need to
update the guidance. They need to know that the left and right
boundaries are, and allow folks to assess whether or not what they're
doing is appropriate. Second, I think they need to get a complete and
reliable estimate of the enduring costs. They said it was in the range
of 20 to 30 billion, maybe closer to 30, but it's pretty imprecise, and
it's a big number, but they need to know that that number is, to inform
future budget requests. Ideally, these enduring costs should be paid for
with the regular budget.

[ Jacques Arsenault: ] Finally, then, what would you say is the bottom
line of this report?

[ John Pendleton: ] GAO's repeatedly raised concerns about the lack of
transparency created when enduring costs are paid for with year-to-year
war funds. I mean, if you compare it to your home budget, it's obviously
much bigger. You wouldn't want to pay your mortgage with a credit card.
Your mortgage is a predictable, important part of your family, and it
needs to be paid for out of your main budget. If you don't, there's risk
involved. And, the problem at this point is that DOD has significant,
but not precisely known long-term costs blended into its OCO funding,
and it could be $30 billion, possibly more. When we've sent these
reports over, DOD has responded by saying, "Yes, we'd love to do these
things, but we can't, because we don't have room under the existing
budget caps." And, the bottom line is, $30 billion is a lot of money,
even at DOD, and the department needs to figure out how they're going to
pay for it, long term.

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