Use of operation and maintenance funds during deployments: an informative overview of the proper use of O&M funds during an overseas deployment, exercise, or other military operation.

The increasing pace of overseas deployments has resulted in numerous, and often novel, issues concerning the proper use of operation and maintenance (O&M) funds, since those are the only appropriated funds that a deployed commander can access easily. This article summarizes the process by which the Congress authorizes and appropriates O&M funds and then examines the proper uses of O&M funds for three common requirements during deployments: construction, training, and humanitarian assistance. Finally, the article examines two specific authorizations that permit "augmentation" of other appropriated funds--the Commanders' Emergency Response Program (currently unique to Iraq and Afghanistan) and the Combatant Commander Initiative Fund.

O&M funds are intended to pay for expenses while in garrison and during exercises, deployments, and military operations. As the Comptroller General explained in Opinion B-213137, 63 Comp. Gen. 422 (1984, 1986), the "necessary expense rule" requires that "any expense must be for a particular statutory purpose, or necessary or incidental to proper execution of the general purpose of the appropriation; must not be prohibited by law; and must not otherwise be provided for by some other appropriation."

Authorization and Appropriation of O&M Funds

For each fiscal year, the Congress passes two acts that authorize programs funded by O&M and appropriate funds to pay for those operations. Although the formal names of the acts may vary from year to year, they generally are a "National Defense Authorization Act (NDAA) for Fiscal Year 200X" and a "Department of Defense Appropriations Act, 200X." The point is often made, but bears repeating, that in some cases the Department of Defense (DoD) cannot incur obligations or expend funds until both the requisite authorization act and appropriations act have been enacted; to do so would violate Title 31 United States Code (U.S.C.), section 1341, a provision of the so-called Antideficiency Act. Each year, the Office of the Under Secretary of Defense (Comptroller) and the Deputy General Counsel (Fiscal) carefully examine the authorizations and appropriations acts to determine what operations the Congress may have ceased to authorize, what changes may have been made to existing authorizations, or what new operations have been authorized. For example, section 1206 of the NDAA for fiscal year (FY) 2006 authorized the President to direct the Secretary of Defense to expend up to $200 million of O&M funds for each of FYs 2006 and 2007 "to conduct or support a program to build the capacity of a foreign nation's military forces in order for that nation to conduct counter-terrorist operations and to participate in or support military and stability operations in which the U.S. is a participant."

Further complicating the military expenditures is the body of law contained in the 50 titles of the United States Code. For DoD fiscal law purposes, the significant titles are Title 10, Armed Forces; Title 31, Money and Finance; and Title 32, National Guard. During deployments, however, U.S. Armed Forces may run the risk of conducting activities that are authorized to be conducted by the Department of State (DOS) under Title 22, Foreign Relations and Intercourse, and, thereby, might use Title 10 funds to unlawfully augment Title 22 funds. Also, other titles of the U.S. Code may affect operations, such as Title 40, Public Buildings, Property, and Works, which contains the Foreign Excess Property Act (40 U.S.C. 701-705). Under that act, U.S. Armed Forces may be able to dispose of property that is no longer needed following deployment and redeployment.

When the Congress enacts an authorization or appropriations act, it thereby may amend or create a provision in one of the titles of the United States Code. For example, section 1201 of the NDAA for FY 2006 amended 10 U.S.C. 401, Humanitarian and Civic Assistance (HCA), to add surgical care and certain types of education, training, and technical assistance to the HCA activities that can be provided to inhabitants of a foreign country during U.S. military operations. The Congress, however, may use an authorization or appropriations act to create or continue a requirement without ever placing it into the U.S. Code. For example, in each NDAA since 1999, the Congress has imposed a requirement that DoS certify that foreign military personnel to be trained by U.S. Forces have not committed a gross violation of human rights, but it has never been enacted into Title 10 or Title 22. Consequently, comptrollers and judge advocates at all echelons must be vigilant to determine the current state of the law regarding the proper obligation of O&M funds.

Use of O&M Funds for Construction

The initial determination is whether the proposed construction is authorized to be funded using either O&M funds or military construction (MILCON) funds that have been provided pursuant to a Military Construction Authorization Act and a Military Construction Appropriations Act. The statutory authority for military construction is contained in 10 U.S.C. 2801-2808 and, in particular, 10 U.S.C. 2805, Unspecified Minor Construction. Unspecified means that the project was not a line item in a military construction authorization act or appropriations act, and minor means that it has an approved cost of not more than $1.5 million. At the outset, remember that U.S. Forces have to be the primary recipients of any military construction project and that foreign countries and their forces may receive only a "minor and incidental" benefit from the construction.

Title 10, U.S.C. 2805 specifically delineates between use of O&M funds and MILCON funds for construction. Specifically, subsection 2805(c) permits the Service Secretary (subject to delegation of authority) to expend up to $1.5 million of O&M funds for an unspecified minor military construction project that is "intended solely to correct a deficiency that is life-threatening, health-threatening, or safety-threatening," or $750,000 for any other unspecified minor military construction project. Let me stress that the latter amount is the normal limit; however, the Congress and the Government Accountability Office (GAO) well may scrutinize any O&M-funded project valued at more than $750,000. Also, 10 U.S.C. 2805(b) requires that any unspecified minor military construction project costing more than $750,000 (regardless of whether O&M funds or MILCON funds are used) must be approved by the Service Secretary and reported to the Congress at least 14 days before commencing the project.

Construction is a highly regulated activity. Whenever construction is projected, a number of issues need to be resolved. First and foremost is the scope of the project. Title 10, U.S.C. 2801 specifies that all military construction projects, regardless of type of funds, must include all work necessary to produce a "complete and usable facility" or a "complete and usable improvement to an existing facility." Numerous Comptroller General opinions prohibit the practices of project splitting or project incrementation (for example, awarding several smaller contracts, each for less than $750,000, designed to accomplish a unified purpose) or project phasing (awarding a project for less than $750,000 in one FY, then another project in the subsequent FY, etc., all intended to accomplish a unified purpose). Title 10, U.S.C. 2801 defines construction as "any construction, development, conversion, or extension of any kind carried out with respect to a military installation, whether to satisfy temporary or permanent requirements." An installation is defined as a "base, camp, post, station, yard, center, or other activity under [military jurisdiction] or, in the case of an activity in a foreign country, under [military] operational control, without regard to the duration of operational control."

Comptrollers and judge advocates should be aware of the distinctions among construction, maintenance, and repair. For further guidance, refer to 10 U.S.C. 2811, Repair of Facilities; 10 U.S.C. 2854, Restoration or Replacement of Damaged or Destroyed Facilities; and an Under Secretary of Defense (Comptroller) memorandum titled Definitions for Repair and Maintenance, 2 July 1997. The military service regulations also contain extremely precise rules as to what constitutes construction, maintenance, and repair, and what expenses must be included in the funded cost. See Air Force

Instruction (AFI) 32-1021, AF132-1032, Army Regulation 415-15, Army Regulation 420-10; Department of the Army Pamphlet 420-11, and OPNAVINST 11010.20F.

In response to DoD's request for a more efficient and flexible authority to expend O&M funds for "combat and contingency related construction," the Congress enacted section 2808 in the NDAA for FY 2004. That provision authorized the Secretary of Defense to obligate up to $200 million of DoD O&M funds, during FY 2004, for "combat and contingency related construction," when the Secretary determined that it was necessary "to meet urgent military operation requirements" in support of a declaration of war, a Presidential declaration of a national emergency, or a contingency operation. That authority was retained in the NDAA for FY 2005 and in section 2809 of the NDAA for FY 2006, but the latter provision reduced the limit to $100 million for FY 2006.

"Combat and contingency related construction" is not subject to the limitations found in 10 U.S.C. 805(c); however, any project costing more than $750,000 still must be approved by the Service Secretary and reported to the Congress pursuant to 10 U.S.C. 2805(b). In addition, the military service regulations may establish certain requirements. For example, chapter 7 of AFI 32-1032 requires that the project be designed and built as temporary construction that will be abandoned at the termination of operational requirements, that relocatable or semi-permanent construction should be used to the maximum extent possible, and that the facility is not to be turned over to "other organizations" and used by them beyond the original Air Force requirement.

Training of Foreign Forces Using O&M Funds

Unfortunately, the rules over funding for training foreign forces and conducting various conferences and meetings are even more complicated than are those for construction. This is due to the lack of a unified statute. Rather, there exist a series of statutes that differ greatly as to the following:

* The type of funds that can be used (for example, Title 10 O&M funds versus Title 22 foreign assistance funds).

* The intended beneficiaries of the activity

* The types of reimbursable expenses

* Where the activity can take place (in or outside the United States)

* Whether the funds can be used to reimburse the expenses of participating U.S. personnel

The previously cited Comptroller General opinion considered the issue of providing certain types of training to the Honduran armed forces. As an overarching rule, it stated that training of foreign forces generally must be purchased by that country using either its own funds or funds appropriated by the Congress for that country's use under the Foreign Military Financing Program. The Comptroller General stated that DoD O&M funds can be expended to provide familiarization (interoperability) and safety training, but not if such training would rise to the level normally provided by U.S. security assistance programs. Obviously, the determination of whether training reaches the security assistance level will depend upon the circumstances, but the Comptroller General found that three to five weeks of combat medic training and three to four weeks of artillery training were clear violations of the familiarization (interoperability) and safety training standard.

In response to the cited Comptroller General opinion, the Congress enacted a series of statutes that authorize using Title 10 O&M funds to train, or train with, foreign military and security forces, or to conduct conferences with foreign military and security forces. The crucial point to remember is that each statute varies as to the nature of the activity, the intended beneficiaries, and what, if any, expenses of U.S. personnel can be reimbursed. Accordingly, the current wording of each statute must be closely examined prior to making any commitments.

* 10 U.S.C. 168, Military-to-Military Contacts and Comparable Activities (generally conducted by combatant commanders to encourage a democratic orientation of defense establishments and military forces of other countries)

* 10 U.S.C. 1050, Latin American Cooperation (very broad authority--to pay for personal expenses of Latin American officers and students as "necessary for Latin American cooperation")

* 10 U.S.C. 1051, Bilateral or Regional Cooperation Programs (conferences, seminars, or similar meetings generally conducted by combatant commanders "in the national security interests of the United States")

* 10 U.S.C. 2010, Participation by Developing Countries in Combined Exercises

* 10 U.S.C. 2011, Special Operations Forces (SOF): Training with Friendly Foreign Forces (uses SOF-unique MFP-11 (Major Force Programs) funds)

Section 8076 of the DoD Appropriations Act for FY 2006 continues a requirement first imposed in 1999 that the DoD cannot use its funds for training foreign military and defense forces where credible information from the DoS indicates that the foreign unit to be trained has committed "a gross violation of human rights, unless necessary corrective actions have been taken." A message dated 1 December 1999 from the Joint Chiefs of Staff provided guidance as to what types of training or other activities were included within the requirement.

Finally, section 9006 of the DoD Appropriations Act for FY 2006 authorizes the Secretary of Defense to use up to $500 million of FY 2006 O&M funds to "train, equip, and provide related assistance only to military or security forces of Iraq and Afghanistan to enhance their capability to combat terrorism and to support United States military operations in Iraq and Afghanistan." This authority may include provision of equipment, supplies, services, training, and funding, and is in addition to other authority to provide assistance to foreign nations (that is, it is an authorized augmentation of other available funding, and using the authority will not constitute a violation of the Antideficiency Act).

Humanitarian Assistance Programs Using O&M Funds

The main point of confusion in funding Humanitarian Assistance Programs (HAP) is the distinction as to which authorized activities can be funded with DoD O&M funds appropriated to the military services as opposed to those that can be funded with a fenced category of DoD O&M funds referred to as Overseas Humanitarian, Disaster, and Civic Aid (OHDACA) funds. The Congress and the Defense Security Cooperation Agency (DSCA), which HAP oversees, have carefully delineated which funds must be used for which activities.

In the course of the GAO's 1984-1986 inquiry that led to the issuance of the previously cited Comptroller General opinion, the Comptroller General determined that, at that time, DoD had no statutory authority to provide humanitarian assistance to foreign nations or their people. As a result, the Congress enacted a series of statutes (now codified in Title 10) that collectively became known as OHDACA. They are DoD's sole statutory authority for using O&M funds for HAP. The various OHDACA activities initially were separately funded but, beginning in 1996, the Congress included a specific OHDACA appropriation in each year's National Defense Appropriations Act. Generally, the amount has ranged between $50 million and $60 million each FY (the FY 2006 OHDACA appropriation is $61,546,000). However, during the years since 1996, it became obvious that the usual OHDACA appropriation was not enough to conduct all the OHDACA activities, which led the Congress and DSCA to delineate just which activities would be funded using service O&M funds and which would be funded using the OHDACA O&M appropriation.

The OHDACA statutes are codified at 10 U.S.C. 401, 402, 404, 2557, and 2561. Some of the activities under 10 U.S.C. 401 are funded from service O&M funds, and one from OHDACA funds. The activities under the other OHDACA statutes are all funded using OHDACA funds.

Title 10, U.S.C. 401, Humanitarian and Civic Assistance Provided in Conjunction with Military Operations, permits DoD to carry out a range of HCA assistance. There are a number of statutory conditions that must be met:

* The assistance must promote the national security interests of both the U.S. and the beneficiary country;

* The assistance must promote the specific operational readiness skills of the U.S. forces who participate;

* The Secretary of State must approve all such assistance;

* The assistance shall complement, but may not duplicate, other U.S. assistance to the beneficiary nation;

* The assistance must serve the basic economic and social needs of the beneficiary nation; and

* The assistance must not be provided to any individual, group, or organization engaged in military or paramilitary activity.

The DSCA requires that any labor in conjunction with the assistance be performed by U.S. military personnel. Guidance for obtaining approval for and conducting HCA is contained in DoD Directive 2205.2, "Humanitarian and Civic Assistance (HCA) Provided in Conjunction with Military Operations," and DoD Instruction 2205.3, "Implementing Procedures for the Humanitarian and Civic Assistance (HCA) Program." DoD Directive 2205.2 also requires the beneficiary country to approve the proposed HCA assistance.

Section 401 assistance that can be funded with service O&M funds includes the following:

* Medical, surgical, dental, and veterinary care provided in areas of a country that are rural or underserved, including education, training, and technical assistance related to the care provided;

* Construction of rudimentary surface transportation systems;

* Well drilling and construction of basic sanitation systems; and

* Rudimentary construction and repair of public facilities.

Additionally, section 401(c)(4) authorizes what has become known as de minimis HCA. This could arise either during a planned HCA program or during an exercise or a deployment with no planned HCA. Per the legislative history for 10 U.S.C. 401, it's clear that the Congress recognized that it might be appropriate to incur "minimal expenditures" of DoD O&M funds for "incidental costs" of carrying out HCA. The Congress provided examples that have been incorporated into DoD Directive 2205.2, for example, a unit doctor's examination of local villagers for a few hours with administration of several shots and issuance of some medicine, but not deployment of a medical team to provide mass inoculations to the local populace; opening of an access road through trees and underbrush for several hundred yards, but not the asphalting of such roadway.

Factors to consider when determining whether de minimis assistance would incur only "incidental costs" are the "reasonableness" of the activity whether a reasonable person would conclude that it was "incidental" to the exercise or deployment, the support cannot be the sort of foreign assistance provided by U.S. Agency for International Development (USAID), and the assistance should not significantly impact the unit's readiness training or funding.

Please note that de minimis assistance generally is funded from the unit's O&M account, with little possibility of reimbursement. Consequently, some combatant commands have set maximum limits on de minimis expenditures during an exercise or deployment. Therefore, be sure you know the limitation (or contact the appropriate combatant command) before undertaking de minimis assistance.

The annual OHDACA appropriation provides reimbursement for unit O&M expenditures incurred pursuant to assistance provided under the following statutes:

* 10 U.S.C. 401(e) (5), the Humanitarian Demining Program

* 10 U.S.C. 402, Transportation of Humanitarian Relief Supplies to Foreign Countries (the Denton Program)

* 10 U.S.C. 404, Foreign Disaster Assistance (different than 22 U.S.C. 2292, Foreign Disaster Relief, which is administered by the USAID)

* 10 U.S.C. 2557, Excess Nonlethal Supplies (do not confuse with 22 U.S.C. 2321j, a form of Presidential drawdown of excess defense articles)

* 10 U.S.C. 2561, Humanitarian Assistance

It is beyond the scope of this article to examine each of these forms of assistance. A unit's primary concern is to be reimbursed by DSCA for unit O&M expenditures. Therefore, comptroller personnel should note carefully whether the particular deployment order contains an Emergency and Special Program Code (ESP Code) and ensure that expenditures refer to the ESP Code in order to obtain reimbursement. For detailed information on OHDACA authorities, and DSCA guidance, access the DSCA Web site at http://www.dsca.mil/programs/HA/HA.htm.

Commanders' Emergency Response Program (CERP)

When U.S. Forces occupied Iraq in 2003, they began to find stashes of money hidden by Saddam Hussein. Under the authority of the Law of Armed Conflict, U.S. commanders were able to use these funds to assist the Iraqi people. Once those funds were expended, the Congress authorized DoD to use O&M funds to conduct what is known as CERP. Section 1202 of the NDAA for FY 2006 continues the authorization of the CERP, and section 9007 of the DoD Appropriations Act for FY 2006 authorizes the Secretary of Defense to use up to $500 million of FY 2006 O&M funds for the purpose of "enabling [United States] military commanders in Iraq [and Afghanistan] to respond to urgent humanitarian relief and reconstruction requirements within their areas of responsibility by carrying out programs that will immediately assist the people of Iraq [and Afghanistan]."

Current CERP guidance is contained in a 27 July 2005 memorandum from the Office of the Under Secretary of Defense (Comptroller) and in chapter 27, volume 12 of the DoD Financial Management Regulation. A wide range of projects may be conducted using CERP funds; however, CERP funding cannot be used for direct or indirect support of U.S. and coalition allies, or for training or supporting the Iraqi or Afghan military or security forces (since other funding sources are available for those purposes). Also, a series of Fragmentary Orders have been published in both Iraq and Afghanistan that contain detailed local guidance on CERP projects and procedures.

Combatant Commander Initiative Fund (CIF)

The CIF has been authorized by the Congress since FY 1994. That authority now is codified in 10 U.S.C. 166a. Generally, the Congress annually has appropriated $25 million of O&M funds to the Chairman of the Joint Chiefs of Staff in order to fund 10 different CIF activities. The CIF statute avoids Antideficiency Act violations by stating that the funds provided "shall be in addition to amounts otherwise available for [each CIF] activity for that fiscal year." The statute does not require that U.S. Forces obtain any training or other benefit and does not prohibit providing assistance to foreign military forces. Guidance is contained in Chairman of the Joint Chiefs of Staff Instruction 7401.01B, "Combatant Commander Initiative Fund."

Conclusion

The proper use of O&M funds during an overseas deployment, exercise, or other military operation is a complex area, and changes can occur on a yearly basis as the Congress reevaluates programs and funding. Nevertheless, there is almost always a legal authority to obligate or expend funds for activities that are necessary and incident to our military operations. The deployed comptroller and judge advocate must work closely to ensure that well-meaning commanders do not violate the law or directives and that other staff offices are aware of the fiscal implications of their activities. Fortunately, the number of comptrollers and judge advocates who are well versed in this area has expanded greatly over the last decade. Do not hesitate to inquire up the chain of command and to use other reachback assets in order to provide your commander with the best possible advice.