A new report by the Government Accountability Office (GAO) proposes four alternative methods for lawmakers to separate base military funding from overseas contingency operations (OCO) dollars as Congress prepares for the release of the fiscal year 2020 defense budget.

The report, titled “Overseas Contingency Operations: Alternatives Identified to the Approach to Fund War-Related Activities” and
released Jan. 28, follows a provision set forth in the fiscal year 2018 National Defense Authorization Act which directed GAO to report on the possibility of separating OCO expenditures from other Pentagon expenditures.  

The four alternative methods include:

– Moving enduring costs – or costs that continue in the absence of contingency funds – that are currently included in the OCO budget, into the base budget;

– Directing Congress to use “legally binding language” in the annual Pentagon appropriations acts to specify the purposes — including programs, projects and activities—for which OCO amounts may be obligated;

– Creating separate appropriation accounts for OCO base funding;

– Directing Congress to appropriate funds for OCO into a non-expiring transfer account. “DOD would fund OCO with its base budget and later reimburse its base accounts using funds from a transfer account,” the report said.

Since 2001, the Pentagon has received more than $1.8 trillion in OCO funds, according to GAO.

The report comes as the 116th Congress prepares to debate the FY ‘20 presidential budget request, currently set to be released in early February, and to weigh whether to lift the caps imposed by the 2011 Budget Control Act (BCA) once again.

Congress passed the Bipartisan Budget Act of 2018, lifting discretionary budget caps on defense spending for FY ‘18 and FY ’19, and since then, lawmakers have proposed shifting more OCO funds – which have not been limited by caps imposed by the 2011 BCA – into the base defense fund.

Any decision by the 116th Congress to change or shift discretionary defense and non-defense spending limits that currently remain in effect for the next two fiscal years could impact future OCO funding levels, a Jan. 15 Congressional Research Service (CRS) report titled, “Overseas Contingency Operations Funding: Background and Status” said.

Lawmakers may consider various scenarios as they move into the next budget cycle, the CRS report said. They could opt to keep the BCA as is, and rely on OCO funding that is not subject to the budget caps to meet agency requirements, or they could choose to repeal the BCA and use less OCO funding.

Congress could also choose to amend the Budget Control Act’s limits for future years – as it has done four times before, in the American Taxpayer Relief Act of 2012 and the Bipartisan Budget Acts of 2013, 2015 and 2018 – and continue to use OCO funds, or it could approve a defense budget that stays within the BCA caps altogether and not use OCO funding at all, the report notes.

In late 2018, President Donald Trump asked each of his cabinet leaders to cut 5 percent of the FY ’20 budget, prompting many to consider whether the Pentagon would propose a $700 billion budget. More recent estimates have included between $733 billion and $750 billion. Republicans and Democrats on the Hill have remained divided on what they deem to be an acceptable budget threshold. Democrats, including new House Armed Services Committee Chairman Rep. Adam Smith (D-Wash.), recently claimed there is “a mountain of evidence” that the U.S. military can survive for less than $750 billion at a December 2018 media event, while his Republican counterpart, Ranking Member Rep. Mac Thornberry (R-Texas) has called the $750 billion topline “reasonable” (Defense Daily, Jan. 8).