Mr. Chairman and Members of the Subcommittee:

It is a pleasure to be here today to discuss the findings of our work on the Department of
Defense's (DOD) funding of its infrastructure and of activities that directly affect
readiness. The National Defense Authorization Act for Fiscal Year 2000 requires us to
review the military services' funding and management of real property maintenance and
base operations.' We have just issued the first in a series of reports in response to that
mandate.2 Our testimony today is based on this report and stems from congressional
concerns that funds may be moving away from areas such as training to pay for real
property maintenance and base operations. The services' principal source of funding for
these functions is their operation and maintenance (O&M) appropriations, and the
services have considerable flexibility in using O&M funds.
Today we will discuss (1) the movement of funds to and from real property maintenance
and base operations during fiscal years 1994 through 1999, (2) the movement of unit
training funds during the same period of time, and (3) the evidence indicating that unit
training funds have been moved to pay for base operations and real property
maintenance.
SUMMARY
From fiscal years 1994 through 1999, the services moved $7.1 billion dollars into real
property maintenance and base operations, bringing the total funding for these activities
to $95.7 billion, or 8 percent more than the initial congressional designation of $88.6
billion.3 The services' movement of funds into and out of unit training varied. The Navy
and the Marine Corps consistently moved funds into unit training. The Army moved
funds out of unit training from fiscal year 1997 through 1999 (the only years for which
comparable Army data is available). The Air Force decreased unit training funds in 1994
and 1995 and increased funding in later years.
While it is not possible to trace the origins of all funds moved into real property
maintenance and base operations and to determine the effects of these movements on
readiness, DOD reports show that at least some of the funds that the Army and the Air
Force moved into these activities came from unit training. DOD's reports to Congress on
high-priority readiness-related transfers in fiscal years 1997 and 1998 show that the Army
moved $641 million from unit training to real property maintenance and attribute these
movements to increased efficiencies in training. The fiscal year 1998 report also shows
that the Air Force moved $35 million from unit training to base operations. DOD
generally agreed with our analysis and facts as presented in our latest report.
1P. L. 106-65 section 365.
2Defense Budget: Analysis of Real Property Maintenance and Base Operations Fund Movements
(GAO/NSIAD-00-87, Feb. 29, 2000).
3We use the term "initial congressional designation" or variations of this term throughout to refer to
amounts set forth in an appropriation act's conference report. These recommended amounts are not
binding unless they are also incorporated directly or by reference into an appropriation act or other
statute.