Overseas Contingency Operations Funding: Vigilance Required

June 27, 2014

Among the weapons funded in the overseas contingency operations request is an Air Force procurement request of $70 million for one Lockheed Martin C-130J. [U.S. Air Force photo by Staff Sgt. Brigitte N. Brantley/Released, 5/31/14]

Yesterday, the White House submitted its Fiscal Year 2015 request for Overseas Contingency Operations (OCO) funding. The request totaled $65.8 billion – what would be the fifth highest-funded military in the world if it were a stand-alone force – $58.6 billion of which is slated for the Pentagon. While modestly below last year’s $80 billion, this year’s request appears larger than necessary to fund ongoing contingency operations given that the expected cost of war in Afghanistan this year was previously cited at $20 billion by administration officials. This $40 billion difference fuels the bipartisan concern already voiced by lawmakers that OCO dollars will continue to be used as a slush fund to avoid the spending caps imposed on the Pentagon, and to fund budget items that belong in the base budget. That practice last year virtually erased the reductions to Pentagon spending mandated by the Budget Control Act.

The House Armed Services Committee (HASC) has already announced a hearing to take a closer look at the request, which will be an opportunity to investigate the legitimacy of the request to avoid budget gimmicks. The committee will also have the opportunity to gain clarity on how exactly the President’s $60 billion request fits into American national security strategy and priorities. In separating what should and should not be funded through OCO, the devil is sure to be in the details. However, it is already clear that some proposals, such as the new counterterrorism fund and a measure designed to reassure European allies, belong in the base budget as they are unrelated to ongoing combat operations.

Worrying precedent: In the past, OCO has been used as a slush fund to skirt Pentagon spending caps. Todd Harrison of the Center for Strategic and Budgetary Assessments explains, “Since the enactment of the BCA [Budget Control Act], which does not count war-related funding against DoD’s budget cap, Congress and DoD have moved items that had been funded in the base budget to the OCO budget. In FY 2014, this practice appeared to expand. DoD transferred some $20 billion in operations and maintenance funding from the base budget to OCO in the budget request (author’s estimate), and Congress moved an additional $9.6 billion from base to OCO in the appropriations bill.” Mattea Kramer, formerly of the National Priorities Project, compares the use of OCO funds to skirt reductions from the Pentagon’s base budget and the left-over reductions, concluding that “All told, that leaves $3.4 billion — a cut of less than 1% from Pentagon funding this year. It’s hard to imagine that anyone in the sprawling bureaucracy of the Defense Department will even notice.” [Todd Harrison, 3/3/14. Mattea Kramer, 3/6/14]

Vigilance and attention to detail are required to prevent – and not contribute to – abuse of 2015 OCO funds:

The total 2015 OCO request appears much higher than actual war costs and signals further spending after the War in Afghanistan ends. Earlier this month, Defense News reported that “The 9,800 troops [to remain in Afghanistan during 2015] would cost about $20 billion, Tony Blinken, Obama’s deputy national security adviser, said…’We’re looking at probably in the vicinity of about $20 billion, when you factor everything in.’” However, the total 2015 OCO request for the Department of Defense is about $60 billion. The $40 billion difference therefore warrants close oversight. Additionally, the FY2015 request discusses the potential for an average of $33.2 billion of OCO spending per year between 2016 and 2021 despite the scheduled end of combat operations in Afghanistan at the end of 2016. [Tony Blinken via Defense News, 6/1/14. OCO Request for 2015, 6/26/14]

Making sure the request meets and stays within regulations for OCO spending: The devil’s in the details. According to an initial tabulation conducted by NSN, the 2015 OCO request breakdown is as follows: $5.4 billion for personnel, $47 billion for operations & maintenance, $6 billion for procurement, $80 million for research and development, $46 million for military construction, and $91 million for revolving management funds. It is not immediately clear how all of these funds square up to previous guidance released by the Office of Management and Budget (OMB) regarding rules for OCO funding. For example, regarding procurement expenditures (this year’s already analyzed by Defense News), OMB requires that funding must meet requirements such as “replacement of losses that have occurred but only for items not already programmed for replacement in the Future Years Defense Plan (FYDP).” Other limitations include that the funding cannot accelerate FYDP procurement, is limited to repairing items only to original or currently available capability, and can only enhance equipment used in theater for combat operations. [OMB Guidance, 9/9/10]

New counterterrorism and European programs belong in the base budget – not OCO. Included in the request is the Counterterrorism Partnerships Fund (CTPF) that totals about $5 billion ($4 billion for the Pentagon, $1 billion for the State Department) and proposes increasing foreign militaries’ ability to deal with terrorism. As NSN has noted, while the CTPF has potential value – and problems, such as possible redundancy – the fund belongs in the base budget. The CTPF does not propose to fund combat operations (the purpose of the OCO), and comparable funds from agencies outside the Pentagon draw primarily from base funding, such as the State Department’s Foreign Military Financing program, of which $5.1 billion was requested through base funding with about one-tenth that amount requested through OCO. The same is true of the European Reassurance Initiative (ERI) that proposes funding modest force posture changes in Europe in response to Russian aggression in Ukraine. While of potential value to reassuring allies, such measures are unrelated to combat operations and are within the purpose of base spending.

Lawmakers of both parties share concern over OCO abuse and oppose its use as a slush fund:

Rep. Paul Ryan (R-WI): The report accompanying the Budget Committee’s 2015 budget said, “Abuse of the OCO/GWOT [Global War on Terrorism] cap adjustment is a backdoor loophole that undermines the integrity of the Budget process.” [Budget Committee Report for 2015 Budget]

HASC Republicans: Rep. Buck McKeon’s (R-CA) Chariman’s Mark of the FY2015 National Defense Authorization Act said, “The committee is concerned about the large portion of enduring activities, training, sustainment, and other military requirements being funded through amounts authorized to be appropriated for OCO. The committee believes the Department of Defense is accepting high levels of risk in continuing to fund non-contingency related activities through the OCO budget…” [Chairman's Mark, Sec. 332]

24 members of Congress, including Reps. Keith Ellison (D-MN), Barbara Lee (D-CA), Justin Amash (R-MI) and Mike Coffman (R-CA): In a letter to the President, the members of Congress wrote, “We are deeply concerned by the migration of base budget funding into the OCO budget as well as the use of war funds to finance activities and procure items that are unrelated to the war in Afghanistan.” [Bipartisan letter, 5/22/14]