Resourcing an army at war.

Barbara Bonessa

Office of the Assistant Secretary of the Army (Financial Management and Comptroller)

Ms. Barbara Bonessa, with the Office of the Assistant Secretary of the Army (Financial Management and Comptroller), provided a comprehensive and thought-provoking presentation titled "Resourcing an Army at War." This session was audiotaped and will be available on the ASMC Web site. Her presentation covered a broad spectrum of Contingency Operations (CONOPS) resource management, starting with the definition of Contingency Operations and including the CONOPS cost estimating process, execution reporting, and the complex evolution of funding for Global War on Terrorism (GWOT) operations. Ms. Bonessa concluded with a brief look ahead to fiscal year (FY) 2006 and a definition of success.

What Is CONOPS?

Designation of a Contingency Operation

Funding for CONOPS has a specific statutory basis--Title 10, United States Code, Section 127a--that categorizes an operation as a contingency when the deployment of the Armed Forces is not for a training exercise and is for a purpose that has not been budgeted for in advance. The statute requires the Secretary of Defense to designate the operation as CONOPS when incremental costs exceed $50 million or when cumulative operation costs exceed $100 million, and authorizes the Secretary of Defense to transfer funds to support the unplanned incremental costs.

Incremental Costs

Costs for CONOPS must be incremental, as defined by the DoD Financial Management Regulation (DoD 7000.14-R), Volume 12, Chapter 23. Incremental costs are those that would not have been incurred had the operation not been executed. These costs include everything from the pay of military personnel to logistics support and must be in excess of offsets.

Offset Costs 

The budgeted funds that will not be used because the activity has been deployed, such as funds for routine training, are considered offset costs. These offsets either are retained by the applicable units and applied to the contingency or are realigned to other units, as needed.

CONOPS Cost-Estimating Process

Contingency Operations Support Tool (COST)

In the mid 1990s, the Office of the Secretary of Defense (OSD) contracted with the Institute for Defense Analysis (IDA) to develop a comprehensive cost-estimating model for CONOPS. The result was COST, which develops estimates based on extremely detailed information, including type of unit, mission, number of personnel, location, duration, operating tempo, and transportation modes. Cost factors are updated at least once a year. IDA continues to work with DoD-wide CONOPS personnel to expand the components of the model and to increase its flexibility. Although initially designed to provide costs for small, limited operations or stable environments such as in the Balkans, the tool is now being used to develop estimates for large ground forces for a sustained period of time.

There are many other cost drivers that are not computed by the model and are manually estimated. Although the system has not been formally audited, it has secured a reputation for high integrity and is broadly accepted by the Office of Management and Budget (OMB), the Government Accountability Office, and congressional staff members.

Phases of CONOPS

There are five phases of CONOPS: predeployment, deployment, sustainment, redeployment, and reconstitution. Predeployment includes costs such as supplies and equipment to bring units up to speed, special training, household goods/vehicle storage, etc. Deployment and redeployment cover the costs of all transportation from home station or the mobilization station to the Area of Responsibility (AOR) and return. Sustainment refers to all costs incurred in-country or in direct support of the ongoing daily operation. Once the unit returns home, the tasks undertaken to bring it back to warfighting standards falls into the reconstitution category. The length and operating tempo of the operation directly affect reconstitution the most--especially the cost of returning the equipment to operational standards.

Executive Agent Responsibilities

In most theaters of operation, one military service is designated the executive agent for base operations-type support. In the case of Iraq and Afghanistan, the Army has the honor and is the executive agent for ground support in-theater. The Army Budget Office publishes annual guidance in defining roles and responsibilities for "supported" and "supporting" commands in all theaters. Coordination across services is crucial. Estimates vary, and fund management is critical, especially when funds are tight. The Army is responsible for most support funding in the Central Command (CENTCOM) AOR, while each DoD component obtains its own mission funding. The North Atlantic Treaty Organization and the United Nations operate under separate funding streams. This is readily portrayed in Figure 1.

[FIGURE 1 OMITTED]

Cost Categories

There are four principal cost categories in the cost estimating model: personnel, personnel support cost, operating support, and transportation. (These apply both to military personnel (MILPERS) and Operation & Maintenance (O&M) funding; other appropriations are managed outside of this process.)

Personnel costs include all incremental military personnel costs as well as civilian personnel costs. The biggest single personnel cost is associated with members of the Reserve components called to active duty. All of their basic pay is incremental, as are special pays and allowances for all U.S. Forces, both Active and Reserve.

Temporary duty, clothing, household goods storage, medical support, and the rest and relaxation program are costs captured in the personnel support category. The estimates for this category are developed at the Headquarters, Department of the Army (HQDA) and Army Major Command (MACOM) levels.

The largest cost category is the operating support category. Operating support includes most expenses associated with military operations, from training through operations to reconstituting equipment. Facilities and base support costs are also captured in this category. Much of this support is currently provided by contract (for example, contractor logistics support in the CENTCOM AOR). Equipment maintenance means bringing unit equipment back to "10/20" (unit level) standards. The COST model does not generate intermediate-level or depot-level maintenance estimates, so HQDA relies heavily on the MACOMs for such data.

The fourth category of cost is transportation. Estimates for airlift, sealift, port handling, inland transportation, and other transportation are developed at the HQDA and the MACOM levels.

Cost Estimating Is Highly Complex

In any given operation, force rotations may overlap. For example, during FY 2005, the Army was budgeting for the redeployment and reconstitution phases for units returning from Operation Iraqi Freedom and Operation Enduring Freedom, the sustainment phase for units still serving, and predeployment of units scheduled to deploy in FY 2005 or very early in FY 2006. Obviously, there are lots of estimates in motion.

Execution

The services are required to report CONOPS costs monthly by operation, but the CONOPS cost breakdown is not included in their standard accounting systems. For Army, Functional Cost Account codes are established to capture budget execution by operation (for example, Tsunami Relief, Kosovo, Bosnia, Operation Iraqi Freedom) and by phase of each operation, and a "crosswalk" is used to develop the reports in the CONOPS cost structure. The other services follow a similar process. The cost data is sent to the Defense Finance and Accounting Service-Denver on a monthly basis. Consolidated costs are reported as the monthly Cost of War and Supplemental Appropriations cost report.

Evolution of Funding for the Global War on Terrorism

Pre-September 11

Historically, costs for contingency operations were almost exclusively for MILPERS and O&M requirements. Through FY 2001, ongoing operations, primarily Bosnia, Kosovo, and Southwest Asia, were funded through a combination of base budgets and supplemental appropriations. Funding was appropriated into the Overseas Contingency Operations Transfer Fund and transferred to the services in the year of execution. For these operations, all estimates were moved to the service base budgets effective in FY 2002.

Post-9/11

Since the terrorist attacks of September 11, 2001, no two fiscal years have looked alike. In late September 2001, the Administration requested, and the Congress provided, immediate supplemental funding in a special appropriation--Defense Emergency Response Fund (DERF), a Defense, no-year appropriation. It was a very different structure and was challenging to implement. That appropriation expired in October 2003. In FY 2002, the Army continued to receive DERF and also received direct appropriations. The Congress established a new Transfer Fund (also called DERF). (Transfer funds allow the Secretary of Defense to respond to emerging requirements and to move funds into regular appropriations without affecting the normal transfer authority ceilings.) Beginning in FY 2003, the DERF transfer fund was replaced with the Iraq Freedom Fund (IFF). The IFF continued in FY 2004 and FY 2005, although most funding was provided to the services by direct appropriations.

Timing truly is everything in our business. In FY 2002 and FY 2003, the supplemental appropriations were late, which placed significant cash flow demands on the services. The FY 2004 supplemental was unique in that approval for GWOT funding took only a few weeks from start to finish within the Administration, and was passed by Congress less than two months later. For FY 2005, partial funding was received early, with a unique "bridge" enacted as part of the FY 2005 Defense Appropriations Act. It was "available upon enactment" late in FY 2004. The full FY 2005 supplemental was enacted in early June 2005--quite an evolution, as illustrated in Figure 2.

Appropriations Mix

The types of funding provided have also evolved in the GWOT. By definition, CONOPS traditionally provides for pay and takes care of daily operations. CONOPS funding was never intended to include major procurement funding. For the current military operations, the Army faced huge procurement requirements. One of the initial key investment areas was force protection, such as body armor for the forces, add-on armor for vehicles, electronic jammers, radios, and night vision devices. Other major investment priorities include command and control systems and additional equipment for Army units deploying in the new Army Modular Force structure.

The Army requested several reprogramming actions from MILPERS and O&M accounts to support these types of urgent procurement requirements. To put it into perspective, from September to November 2004, the Army reprogrammed $2.7 billion with approval from OSD, OMB, and Congress. This unprecedented level of reprogramming speaks to the urgency and magnitude of the requirements.

The Way Ahead

Congressional committees have already indicated their preference for FY 2006 bridge funding, similar to that enacted for FY 2005. The bridge is expected to be roughly $50 billion, enacted as part of the FY 2006 Defense Appropriations Act. The focus for this funding is still on MILPERS and O&M, possibly with more money targeted for procurement. There will likely be another supplemental funding request later in the fiscal year.

In Conclusion

Success in resourcing an Army at war requires supporting national policy and combatant commanders, taking care of soldiers, and resourcing critical requirements--all while maintaining good stewardship, minimizing the impact on base programs, and being able to withstand audit scrutiny during and after budget execution. We have a shared responsibility to remain responsive and adaptive to changing or emerging requirements. Ms. Bonessa challenged the audience to stay aware of our truly critical requirements and the demands of current events.

Acknowledgments

The author wishes to thank Ms. Vickv Jefferis, Ms. Sue Goodyear, and Ms. Minit Robertson for their review of drafts of this article, and special thanks to Ms. Barbara Bonessa for her gracious assistance during and after the PDI.

Reported by Linda "L" Benedik

Linda "L" Benedik is the chief of Budget Formulation and Execution for U.S. Army Forces Command. Over the past three years, she has served the ASMC Greater Atlanta Chapter as executive vice president and as Mini-PDI chair and on a variety of committees as needed.

Figure 2. Evolution of Funds from FY01 to FY05

Funding Sources         FY01   FY02   FY03   FY04   FY05

DERF Appropriation       X      X
DERF Transfer Fund              X
Direct Appropriations           X      X      X      X
Omnibus / Bridge                       X             X
Iraq Freedom Fund                      X      X      X
Internal Cashflow                      X             X
Reprogramming                                 X      X