General Accounting Office Index


Bosnia: Costs are Uncertain But Seem Likely to Exceed DOD's Estimate
(Briefing Report, 03/14/96, GAO/NSIAD-96-120BR).

Pursuant to a congressional request, GAO reviewed the Department of
Defense's estimated costs of participation in the multilateral coalition
in Bosnia.

GAO found that: (1) DOD costs for the Bosnia operation are uncertain and
could exceed its estimate; (2) while Army's costs, which represent about
two-thirds of the operation's costs, are expected to exceed the DOD
estimate, the Air Force's projected costs are likely to be understated;
(3) DOD deployment transportation and contractor costs are expected to
exceed cost estimates by $84 million and $55.7 million respectively; (4)
the costs for deploying and operating the Joint Surveillance Target
Attack Radar System were underestimated by $39 million; (5) Air Force
costs were overstated by $39 million because per diem costs were
overstated, flying hours were reduced, and many aircraft were returned
to home stations; (6) DOD special pays and reserve activation cost
estimates could be overstated by $43 million and $20 million
respectively because of overestimates in the number of personnel
eligible for special pay and reservists needed; (7) DOD could not
reliably estimate the costs of operating tempo of forces in Bosnia,
redeploying the NATO Implementation Force, and reconstituting the
operation's equipment because several factors need to be clarified; (8)
the Army projects that it will run out of discretionary operation tempo
funding in June 1996 and may have to curtail training if this shortfall
occurs; and (9) DOD plans to finance the 1996 portion of Bosnia
operations by reprogramming certain appropriated funds and requesting
additional supplemental appropriations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-96-120BR
     TITLE:  Bosnia: Costs are Uncertain But Seem Likely to Exceed DOD's 
             Estimate
      DATE:  03/14/96
   SUBJECT:  NATO military forces
             NATO military agreements
             Armed forces abroad
             Future budget projections
             Defense appropriations
             Defense budgets
             Defense economic analysis
             Defense operations
             Reprogramming of appropriated funds
             Cost overruns
IDENTIFIER:  Bosnia
             Army Logistics Civil Augmentation Program
             Joint Surveillance Target Attack Radar System
             JSTARS
             Yugoslavia
             DOD Operation Deny Flight
             DOD Operation Able Sentry
             DOD Operation Sharp Guard
             DOD Operation Provide Promise
             DOD Operation Joint Endeavor
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                    <info@www.gao.gov>                        **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Briefing Report to Congressional Requesters

March 1996

BOSNIA - COSTS ARE UNCERTAIN BUT
SEEM LIKELY TO EXCEED DOD'S
ESTIMATE

GAO/NSIAD-96-120BR

Bosnia

(701080)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  IFOR - Implementation Force
  LOGCAP - Logistics Civil Augmentation Plan
  NATO - North Atlantic Treaty Organization
  O&M - operation and maintenance
  OPTEMPO - operating tempo
  STARS - Surveillance Target Attack Radar System

Letter
=============================================================== LETTER


B-271377

March 14, 1996

The Honorable Robert Dole
Majority Leader
United States Senate

The Honorable Robert K.  Dornan
Chairman
Subcommittee on Military Personnel
Committee on National Security
House of Representatives

The Department of Defense (DOD) has deployed almost 27,000 troops to
Bosnia and surrounding countries to assist in implementing the Dayton
Peace Accords.  U.S.  forces are part of a multilateral coalition
under North Atlantic Treaty Organization (NATO) command called the
Implementation Force (IFOR).  DOD estimates that the incremental
cost\1 of its participation in IFOR and other operations involving
the former Yugoslavia will be $2.5 billion.  In response to your
request, we are providing information about DOD's cost estimate to
assist you in assessing DOD's requests for funding.  We plan to
continue reviewing DOD's costs and will provide further reports. 


--------------------
\1 As used in this report, the term incremental costs are those costs
that would not have been incurred except for the operation.  This is
the same definition contained in the Omnibus Budget and
Reconciliation Act of 1990 (P.L.  101-508). 


   BACKGROUND
------------------------------------------------------------ Letter :1

The Dayton Peace Accords, signed on December 14, 1995, are designed
to end several years of conflict in the former Yugoslavia.  One part
of the accords involves the deployment of a NATO-led coalition force
to Bosnia-Herzegovina, hereafter referred to as Bosnia, to implement
the peace agreement.  The purpose of IFOR is to enforce the cessation
of hostilities and provide a secure environment for the other parts
of the peace plan to take place.  The United States is a major force
provider to IFOR, and Americans occupy the key NATO military
leadership positions that control the operation.  As of February 22,
1996, U.S.  forces deployed in support of IFOR, which included both
active and reserve personnel, were located in four countries and
numbered almost 27,000.  Of this total, 18,400 military personnel
were deployed to Bosnia, 2,000 to Croatia, 5,500 to Hungary, and
almost 1,000 to Italy. 

As of February 23, 1996, DOD's estimate of the incremental cost of
operations in and around the former Yugoslavia was $2.5 billion. 
DOD's costs span 2 fiscal years--1996 and 1997.  Fiscal year 1996
costs are estimated at $2 billion and fiscal year 1997 costs are
estimated at $0.5 billion.  DOD is currently reevaluating its cost
estimate based on the costs incurred to date. 

DOD plans to finance the fiscal year 1996 portion of Bosnia
operations in three phases.  The first phase is a request to
reprogram $991 million of previously appropriated funds.  The second
phase is a request for supplemental appropriations that the President
forwarded to Congress on February 21, 1996.  The President is seeking
$820 million in this request--$620 million for DOD peace operations
costs and $200 million for civilian implementation of the accords. 
The third phase is another reprogramming action for the balance of
fiscal year 1996 costs and the costs of other contingency operations
unrelated to Bosnia, such as the U.N.  mission in Haiti.  DOD has
included the fiscal year 1997 cost of the operation in its fiscal
year 1997 budget submission. 

In fiscal year 1995, Congress provided DOD with supplemental funding
of $2.2 billion for the incremental costs of contingency operations. 
Some of the military services ended fiscal year 1995 with costs in
excess of their share of the supplemental funding, which they had to
absorb by reducing planned activities.  Other services ended the
fiscal year with costs below their share of the supplemental funding
and used the remaining funds for a variety of otherwise unfunded
operational needs. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

DOD's cost for the Bosnia operation is uncertain at this time, but
could very well exceed DOD's estimate.  The Army's costs, which are
estimated to represent about two-thirds of the cost of the operation,
are likely to exceed DOD's estimate, and the Air Force's costs are
likely to be less than the estimate.  At present, deployment
transportation and contractor costs are running significantly above
the estimate.  DOD estimated that deployment transportation would
cost almost $73 million.  Through the end of January 1996, DOD had
incurred about $157 million in deployment transportation costs.  DOD
estimated the cost of contractor support at $192 million.  But,
through February 1996, the Army, which manages contractor support and
pays the contractor, had obligated over $247 million.  U.S.  Army,
Europe, officials told us that they believed the contractor cost
could go as high as $500 million. 

Several major cost areas remain uncertain.  They involve the
operating tempo of forces in Bosnia, the cost of redeploying IFOR,
and the cost of reconstituting equipment used in the operation.  Army
officials stated that they cannot predict what operating tempo costs
will be for the entire operation because many factors, such as the
extent of cooperation of the warring factions and the pace of
operations when spring weather comes are still unknown.  These costs
are not likely to come into clearer focus until spring 1996. 
Redeployment costs are dependent on a number of factors that have to
be clarified, such as the arrangements for rail travel originating in
Hungary, for which the Army has no previous experience. 
Reconstitution costs are also dependent on a number of factors that
have to be clarified, such as the condition of the equipment at the
end of the operation. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :3

Because of the uncertainty in the cost estimate, it is difficult to
know how much funding Congress should provide.  Therefore, in
considering this matter, we have identified some guidelines Congress
may wish to consider.  One is that any supplemental funding provided
should only be available for (1) expenses incurred in support of
contingency operations involving the former Yugoslavia and (2) the
reimbursement of accounts initially utilized to fund those
operations.  In fiscal year 1995, some of the military services ended
the year with contingency costs that were below the amounts provided
in supplemental appropriations and used the remaining funds for other
needs that otherwise would have gone unfunded.  A related guideline
is that if initial funding proves to be inadequate, but some services
have costs that are below their funded level while others have costs
that are above it, the excess contingency funds should be
redistributed before providing additional funds.  DOD's funding plan,
which involves an initial reprogramming, followed by supplemental
appropriations, and then a second reprogramming for any remaining
costs, would lend itself to redistributing funds in the second
reprogramming.  This second reprogramming would also lend itself to
another funding guideline--reevaluating the appropriation level as
more experience and actual cost data become available. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :4

To assess DOD's estimate of the cost of the Bosnia operation, we
reviewed detailed cost information at the Office of the Secretary of
Defense, Comptroller.  We discussed the assumptions that were made to
develop the estimate with DOD Comptroller and service officials.  To
compare actual experience and costs incurred to date with the
estimate, we held discussions and reviewed data at the U.S. 
Transportation Command, the Air Mobility Command, the U.S.  European
Command, U.S.  Army, Europe, the Army's Forces Command, U.S.  Air
Forces, Europe, and the Air Force's Air Combat Command.  We were not
able to assess Navy costs in the time available and chose to examine
those costs at a later date because they represented less than 5
percent of the estimate. 

To review the funding plan for the operation, we reviewed DOD's
request for reprogramming funds.  We also reviewed the President's
February 21, 1996, submission to Congress requesting supplemental
appropriations. 

We performed our review between December 1995 and February 1996 in
accordance with generally accepted government auditing standards.  We
reviewed the information in this briefing report with DOD officials
and made changes where appropriate. 


---------------------------------------------------------- Letter :4.1

We are providing copies of this report to the Chairmen and Ranking
Minority Members of the House and Senate Committees on
Appropriations, the House Committee on National Security, and the
Senate Committee on Armed Services.  We will also send copies to the
Secretaries of Defense, the Air Force, the Army, and the Navy and the
Director, Office of Management and Budget.  Copies will also be made
available to others on request. 

If you or your staff have any questions about this report, please
contact me at (202) 512-3504.  The major contributors to this report
are listed in appendix I. 

Richard Davis
Director, National Security
 Analysis


BACKGROUND
============================================================ Chapter I


   UNITED STATES HAS MAJOR ROLE IN
   BOSNIA PEACE IMPLEMENTATION
---------------------------------------------------------- Chapter I:1



   (See figure in printed
   edition.)

The Dayton Peace Accords, signed on December 14, 1995, are designed
to end several years of conflict in the former Yugoslavia.  The
accords contain a three-part strategy. 

One part is the deployment of a North Atlantic Treaty Organization
(NATO)-led coalition force to Bosnia-Herzegovina, hereafter referred
to as Bosnia, to implement the peace agreement.  The purpose of this
Implementation Force (IFOR) is to enforce the cessation of
hostilities and provide a secure environment for the other parts of
the peace plan to take place.  The accords call for IFOR to provide a
secure environment for 1 year in order to provide "breathing space"
or a "cooling off period" after
4 years of war. 

Both NATO and non-NATO forces are participating in this action under
U.N.  authorization.  The United States is a major force provider to
IFOR, and Americans occupy the key NATO military leadership positions
that are responsible for the operation.  As of February 22, 1996,
U.S.  forces deployed in either direct or indirect support of IFOR
were located in 4 countries and numbered 26,860.  Of this total,
18,421 military personnel were deployed to Bosnia, 2,035 to Croatia,
5,453 to Hungary, and 951 to Italy. 

The key military tasks in Bosnia are to mark and monitor a
4-kilometer wide zone of separation between the three factions,
patrol the zone of separation, and oversee the withdrawal of forces
and weapons away from the zone and back to their cantonment areas. 

A second part of the peace strategy is to establish a functioning
government and economy, which includes a major economic redevelopment
program, to be lead by the Europeans.  This effort will include
supervising elections, resettling refugees, and overseeing economic
reconstruction. 

The third part is a military stabilization effort in which forces
will be drawn down and an arms control program will be established. 
The purpose of this effort is to ensure that the parties to the peace
agreement can assure their own safety when IFOR leaves.  The U.S. 
military is assisting in this effort by participating in activities
such as the arms embargo.  However, establishing the military force
balance is not a task of NATO or U.S.  forces.  The United States has
said that it is prepared to take actions in concert with other
nations to ensure that this balance is achieved. 


   ESTIMATED COST OF OPERATIONS IN
   AND AROUND THE FORMER
   YUGOSLAVIA
---------------------------------------------------------- Chapter I:2



   (See figure in printed
   edition.)

Source:  DOD Comptroller. 

The Department of Defense (DOD) has seven operations that support
U.S.  and U.N.  activities in and around the former Yugoslavia. 
These operations, and their missions, are as follows. 

  IFOR Operations, called Joint Endeavor by DOD, is the peace
     operation implementing the accords. 

  Deny Flight, now called Decisive Endeavor by DOD, involves air
     operations maintaining the no-fly zone over Bosnia. 

  IFOR Preparation involves preparing U.S.  troops for IFOR
     deployment. 

  Sharp Guard continues the enforcement of the arms embargo and U.N. 
     sanctions on Serbia-Montenegro, which is expected to end this
     summer. 

  Able Sentry provides U.S.  forces for U.N.  peacekeeping activities
     in Macedonia to deter against widening of the Balkan conflict. 

  Provide Promise is the airlift and airdrop of humanitarian supplies
     into Bosnia, and it is expected to end in March 1996. 

  United Nations in Croatia provides U.S.  military personnel and
     supplies for the operation of the Zagreb hospital in support of
     the United Nations. 

IFOR and the preparation for it are by far the largest operations,
representing about 85 percent of DOD's estimated costs.  The next
largest operation is the continuation of Deny Flight, representing
about 13 percent of estimated costs. 


   COST ESTIMATE BY SERVICE AND
   APPROPRIATION ACCOUNT
---------------------------------------------------------- Chapter I:3



   (See figure in printed
   edition.)

\a Does not include $26 million in fiscal year 1996 Air Force
procurement. 

Source:  DOD Comptroller. 

As of February 23, 1996, DOD's estimate of the incremental cost of
operations in and around the former Yugoslavia was $2.5 billion. 
DOD's costs span 2 fiscal years--1996 and 1997.  Fiscal year 1996
costs are estimated at $2 billion and fiscal year 1997 costs are
estimated at $0.5 billion. 

Fiscal year 1996 costs include training for troops designated to
deploy in and around Bosnia; deployment of forces; sustainment of
those forces, including contractor support; operating tempo; and
military pay costs such as imminent danger pay and reserve
activation.  Fiscal year 1997 costs include continuation of
operations underway in 1996; redeployment of U.S.  forces and reserve
deactivation at the conclusion of the operation; and reconstitution
of equipment used in the operation. 

The Army, which is deploying and logistically supporting ground
troops in and around Bosnia, is estimated to incur the majority of
the costs--
$1.6 billion, or two-thirds of all estimated costs.  Of this amount,
$1.2 billion is for fiscal year 1996 and $0.4 billion for fiscal year
1997.  The Air Force has the next largest share of costs--almost
one-fifth, or $465 million, most of it in fiscal year 1996.  Together
the Navy and the Marine Corps have the smallest share, less than 5
percent, or $111 million.  The other estimated costs are spread over
a number of defensewide agencies, such as the U.S.  Special
Operations Command and the Defense Health Program. 

Most of the estimated cost--84 percent--is in the operation and
maintenance (O&M) appropriations account.  This account pays for
items such as transportation, per diem, supplies, fuel,
communications, contractual services, equipment maintenance, and
other mission-related expenses.  Most of the remaining 16 percent is
in the military personnel appropriations account.  This account funds
incremental military pay, such as imminent danger pay, family
separation allowance, certain places pay (formerly called foreign
duty pay), and basic allowance for subsistence for enlisted personnel
as well as the military pay for activated reservists. 


   DEPLOYMENT TRANSPORTATION
---------------------------------------------------------- Chapter I:4



   (See figure in printed
   edition.)

Transportation costs for deploying U.S.  military forces
participating in IFOR are exceeding DOD's estimate.  DOD estimated
that deployment transportation would cost $73 million, with the
largest portion--$58 million--for the Army.  Through the end of
January 1996, DOD had incurred at least $157 million in deployment
transportation costs, $84 million more than estimated. 

Both the costs of ground transportation and airlift are significantly
higher than estimated.  The Army assumed that the IFOR deployment
would be a major ground one with heavy use of rail transportation and
limited airlift support.  Through January, the Army had incurred
ground deployment transportation costs of $75 million, or $17 million
more than the DOD estimate.  Airlift costs, which DOD and the Army
had assumed would be several million dollars, are almost equaling
ground transportation costs.  According to Air Mobility Command data
collected through January 1996, the Command had flown about 1,486
missions, or 12,668 hours, in support of IFOR at an estimated cost of
$82 million.  The majority of this airlift was in support of the
Army.  Since the original estimate assumed limited airlift, a major
portion of the $84 million difference between the DOD estimate and
the incurred costs represents airlift support. 

As noted above, DOD originally assumed primary reliance on ground
transportation.  However, DOD officials told us that to oversee the
strict time lines contained in the accords, which call for the
factions in the former Yugoslavia to cease various military
activities within a specified number of days after the accords were
signed, beginning with actions on the first day of the signing,
deployment had to proceed rapidly.  Rapid deployment requirements and
unexpected problems with ground transportation caused the Army to
rely more heavily on airlift. 

Some of the ground transportation problems included the impact of
weather conditions, the fact that the deployment began around the
Christmas holiday, and the French rail strike.  Weather conditions,
for example, affected construction of a bridge over the Sava River to
conduct the deployment operation.  An unexpected winter thaw resulted
in major flooding and this bridge project became much larger than
originally envisioned.  The Army had to use construction material
intended to build two spans over the Sava River to build the first
span.  Because of the holiday time of the year, the European rail
system was heavily involved in holiday passenger and commercial
traffic and rail employees were taking holiday vacations.  European
rail did not respond to the IFOR deployment, which it did not view as
a wartime operation, with the sense of urgency it would have for a
wartime operation.  A rail strike in France further complicated
ground transportation because many large rail cars needed for the
deployment could not be moved from France to Germany. 


OPERATION AND MAINTENANCE COSTS
=========================================================== Chapter II


   LOGCAP
--------------------------------------------------------- Chapter II:1



   (See figure in printed
   edition.)

The Logistics Civil Augmentation Program (LOGCAP) uses a civilian
contractor to perform selected engineering and logistics services
during contingency operations to augment U.S.  forces.  In Bosnia,
Croatia, and Hungary, the contractor is providing many of the basic
services to support the military personnel, including troop housing
and facilities, food service, and laundry operations.  The contractor
is also providing base camp and equipment maintenance, shuttle bus
services within camps, and freight transport throughout the area of
operations. 

DOD estimated the cost of LOGCAP at $191.6 million--$167 million in
fiscal year 1996 and $24.6 million in fiscal year 1997.  The
contractor had originally estimated the LOGCAP cost at $350 million,
but DOD reduced the estimate to $191.6 million because it believed
that there was duplication between the services the contractor would
provide and the services military personnel would provide.  Through
February 1996, the Army, which manages LOGCAP and pays the
contractor, had obligated $247.3 million for LOGCAP, or $55.7 million
more than DOD estimated for the entire IFOR operation. 

Estimated LOGCAP costs have been rising rapidly.  The original
contractor estimate of $350 million was developed before U.S. 
personnel were allowed into Bosnia.  At the end of January 1996, the
contractor was estimating that total LOGCAP costs would be $371
million, whereas by the week ending February 10, 1996, the
contractor's cost estimate was $422 million.  Army officials in
Europe told us that they thought the cost could be as high as $500
million.\1

Since U.S.  personnel were not allowed into Bosnia before the
operation started, the conditions on the ground were unknown. 
According to Army officials in Europe, actual ground conditions have
increased contractor requirements.  The geography of the U.S.  sector
in Bosnia and force protection concerns did not allow for the 10 to
12 large base camps originally planned and so the number of camps has
increased to 23.  The number of feeding locations also increased from
the 12 originally planned to 24.  Muddy ground conditions and the
increased number of camps required more extensive site preparation
and construction, which cost more than originally anticipated. 

The Army is working to control LOGCAP costs.  It is instituting a
procedure to ensure that tasks being performed by the contractor are
within the statement of work and that no additional LOGCAP
requirements are tasked to the contractor until costs are determined
and potential trade-offs are identified. 


--------------------
\1 We have not had the opportunity to independently evaluate the
reasonableness of these estimates. 


   JOINT STARS
--------------------------------------------------------- Chapter II:2



   (See figure in printed
   edition.)

The Joint Surveillance Target Attack Radar System (Joint STARS) is a
joint Army and Air Force program that provides near-real-time
surveillance and targeting information on moving and stationary
ground targets, slow moving aircraft, and rotation antennas.  The
system consists of aircraft, for which the Air Force is responsible,
and ground station modules, for which the Army is responsible. 

The DOD estimate of $20 million for Joint STARS is $39 million below
the latest Air Force and Army cost estimates.  In its estimate, DOD
included $20 million for the Air Force to deploy Joint STARS for 60
days, but it did not include any Joint STARS costs for the Army.  As
of February 1996, the Joint STARS deployment had been extended
another 60 days, and the current Air Force and Army estimates for
Joint STARS now total $59 million.  Air Force costs are estimated to
increase by $29 million.  Due to the deployment extension, the Air
Force estimates that Joint STARS deployment will cost an additional
$17 million.  In addition, post deployment and refurbishment
activities costs, which were not included in the DOD estimate, are
estimated to be $12 million. 

The Army estimates that it will have $10 million in costs for the
ground station modules, Joint STARS contract, and all logistics
support for Joint STARS. 


   AIR FORCE COSTS
--------------------------------------------------------- Chapter II:3



   (See figure in printed
   edition.)

Air Force costs to support Bosnia operations may be significantly
less than originally estimated.  Per diem costs are less than
planned, the estimated number of flying hours has decreased, and
aircraft are being redeployed to their home stations. 

DOD's per diem and transportation cost estimates for Air Force
personnel assigned to Bosnia operations for fiscal year 1996 were
originally estimated to be $128 million.  The Air Force currently
estimates that those costs will be $89 million, or $39 million less
than the DOD estimate. 

Because security conditions in Bosnia have been more stable than
originally anticipated, the number of flying hours needed to support
operations has been reduced.  For example, U.S.  Air Force, Europe,
reduced its estimate of flying hours for Deny Flight by 1,900 hours. 
In addition, some aircraft deployed to support Bosnia operations have
redeployed to their home stations. 



   KEY COSTS REMAIN UNCERTAIN
--------------------------------------------------------- Chapter II:4



   (See figure in printed
   edition.)

Several major cost areas remain uncertain.  They involve the
operating tempo of forces in Bosnia, the cost of redeployment at
IFOR's conclusion, and the cost of reconstituting equipment used in
the operation. 

In its estimate, DOD assumed Army operating tempo (OPTEMPO) would
cost $217 million, based on 1.5 times greater than normal operations
for ground forces and 2 times higher for aviation forces.  According
to Army officials, units reported through January that their OPTEMPO
was running ahead of the estimate; however, they stated that this
higher rate may simply reflect early initial activity.  They said
that they cannot predict what the OPTEMPO costs will be for the
entire operation because many factors could affect these costs. 
These factors include the extent of cooperation of the warring
factions in Bosnia; changes in OPTEMPO as the operation reached a
"steady state" in February; changes with the advent of spring
weather; and cost offsets resulting from lower usage of equipment
that was left in Germany.  More reliable OPTEMPO cost estimates will
not be available until the spring of 1996. 

In developing its cost estimate, DOD assumed that redeployment would
occur in November and December 1996, which is in the first quarter of
fiscal year 1997.  It estimated that redeployment and reserve
deactivation costs would total $61 million, with the bulk being
redeployment costs.  The Army is just beginning redeployment planning
and assumes that redeployment will begin this summer.  While earlier
redeployment could decrease the overall operation cost, it would
shift costs planned for fiscal year 1997 into fiscal year 1996,
affecting 1996 funding needs. 

Redeployment costs are dependent on a number of factors that have to
be clarified.  For the IFOR deployment, which originated in Germany,
all rail arrangements were handled by the German railway.  For
redeployment, rail movement will originate outside Germany, for
example in Hungary, and pass through several other countries, such as
Austria.  The Army has no experience with rail movements beginning in
Hungary and no rate agreements.  Hungary and Austria also have much
higher rail rates than does Germany--as much as 250 percent higher. 
The United States is engaged in negotiations to obtain more favorable
rates.  On the other hand, the Army is exploring the use of barges
for redeployment, which would be significantly cheaper albeit slower
than rail.  The waterways in the former Yugoslavia at the time of the
deployment had not been dredged for several years and contained war
debris, not permitting barge movement. 

DOD estimated that the cost of reconstituting equipment would be $70
million.  It based this estimate on experience in earlier contingency
operations.  These operations occurred in different climates, and the
OPTEMPO in Bosnia may differ significantly from earlier operations. 
As in the case of the OPTEMPO estimate, it may be several months
before reconstitution costs are better defined.  Army officials
stated that they have not attempted to reevaluate the reconstitution
cost estimate. 


MILITARY PERSONNEL COSTS
========================================================== Chapter III


   SPECIAL PAYS
-------------------------------------------------------- Chapter III:1



   (See figure in printed
   edition.)


Military personnel deployed to support the Bosnia operation are
eligible to receive certain special pays--imminent danger pay,
certain places pay, and family separation pay--if specific criteria
are met.  Enlisted personnel, if they do not receive basic allowance
for subsistence when at their home station, are eligible to receive
it when they deploy.  DOD estimated that special pays would total
$109 million.  Actual eligibility for special pays has differed from
DOD's assumptions about eligibility, which could result in an
overstatement of DOD's estimate by about $43 million. 

In calculating the special pays amount, DOD used a composite figure
of $322 a month a troop and assumed that all deployed personnel would
receive this amount.  This amount included $150 for imminent danger
pay, $75 for family separation pay, and an average figure of $20 for
certain places pay.  It also included $77 per month to reflect the
amount those eligible for additional basic allowance for subsistence
would receive. 

Not all personnel, however, are eligible for all of these special
pays.  Only those personnel deployed to, traveling into, or flying
over Bosnia, Croatia, Serbia, Montenegro, and Macedonia are eligible
to receive imminent danger pay.  This excludes most of the 7,000
personnel scheduled to be deployed to Hungary and Italy.  In
addition, only enlisted personnel deployed to the countries eligible
for imminent danger pay and Hungary are eligible to receive certain
places pay, which excludes all officers and those enlisted personnel
deployed to places other than these countries, such as Italy. 
Furthermore, only those personnel with dependents are eligible to
receive family separation pay, which excludes at least an estimated
40 percent of enlisted personnel who have no dependents. 


   RESERVE ACTIVATION SALARY COSTS
-------------------------------------------------------- Chapter III:2



   (See figure in printed
   edition.)

The President, using his Selected Reserve Callup authority,
authorized the activation of up to 4,300 reservists to support
operations in Bosnia.  The 4,300 reservists and an additional
estimated 300 volunteers were used to calculate the incremental
military personnel salary cost of $196 million estimated for the
Bosnia operation.  Based on the deployment to date, this amount
appears to be overstated by over $20 million.  In developing its cost
estimate, DOD expected that all reservists would attend their annual
training exercises, which may not be the case.  If all reservists do
not attend their annual training, reserve military personnel accounts
will not incur as much as another $8.5 million in costs. 

As of February 22, 1996, 3,475 reservists had been mobilized, and
according to DOD Reserve Affairs officials, the first reserve
rotation is in place.  Additionally, about 960 volunteers have been
deployed, which is significantly above the 300 included in the
estimate.  While DOD Reserve Affairs officials say this number
probably will not be sustained over the long term, there may be as
many as 785 reserve volunteers deployed for the length of the
operation. 

Fewer reservists have been called up than were authorized, but more
reservists have volunteered for active duty.  It appears that between
165 and 340 fewer reservists will be on active duty than was assumed. 
Using DOD assumptions and actual deployment figures, we estimate that
the salary costs for the reserve activation, including volunteers,
could be over $20 million less than DOD estimated. 

DOD officials expect that all reservists will attend their 2-week
annual training because they will need to receive the planned skill
and unit training.  However, this may be unrealistic, given that
reservists who have been deployed for up to 270 days may find it
difficult to be absent from their regular employment for another 2
weeks or they may be deployed during their unit's annual training
time.  The decision to allow a reservist to miss annual training
rests with the individuals and their commanders.  We estimate that if
all reservists are excused from their annual training, the estimated
cost of reserve activation could be offset by as much as $8.5
million.  Since annual training is funded by the reserves' military
personnel accounts, if funds set aside for their annual training are
not transferred to other service accounts, reserve accounts will have
as much as $8.5 million available for other expenditures. 


FUNDING
=========================================================== Chapter IV


   FUNDING IMPLICATIONS
--------------------------------------------------------- Chapter IV:1



   (See figure in printed
   edition.)


Through fiscal year 1996, DOD has not budgeted for the cost of
contingency operations such as the one in Bosnia.\1 It has budgeted
to be ready to conduct such operations.  When the services conduct
such operations they initially have had to shift funds within
existing appropriations.  This is primarily done by using funds
available for the same purpose but scheduled for obligation later in
the fiscal year.  Subsequently, DOD has often sought supplemental
appropriations or reprogramming of already appropriated funds to
cover its costs. 

DOD is currently financing its Bosnia operation by using funds
expected to be used later in the fiscal year.  The Army, which has
the highest costs, projects that it will run out of discretionary
OPTEMPO funds in June 1996 if it does not receive additional funding. 
According to Army officials, if this happens some units will have to
suspend training among other activities.  Army officials further
stated that if additional funding is not provided soon they will have
to curtail training beginning in April. 


--------------------
\1 The Air Force has included funds in its military personnel
appropriation account for the payroll cost of reserve volunteers
participating in contingency operations. 


   DOD'S FUNDING PLAN
--------------------------------------------------------- Chapter IV:2



   (See figure in printed
   edition.)

DOD is planning to finance the fiscal year 1996 portion of Bosnia
operations using a three-phase plan.  The first phase is a request to
reprogram $991 million of appropriated funds.  DOD also proposes to
use its fiscal year 1996 general transfer authority under section
8005 of the fiscal year 1996 DOD Appropriations Act (P.L.  104-61). 
The reprogramming request was submitted to the relevant congressional
committees on January 21, 1996.  DOD proposes to use savings from
lower than estimated economic assumptions regarding inflation. 

The second phase is a request for supplemental appropriations that
the President forwarded to Congress on February 21, 1996.  The
President is seeking $820 million in this request--$620 million for
DOD peace operations costs and $200 million for civilian
implementation of the Dayton Peace Accords.  The President proposes
to fully offset the requested increases in appropriations by
rescissions from funds previously appropriated to DOD for a
classified program with funds that are in excess of DOD's
requirements.  Most of the $200 million for civilian purposes would
be available to the U.S.  Agency for International Development for
economic revitalization, police monitors and training, and demining
assistance.  The remainder would go to the Department of State, the
U.S.  Agency for International Development, and the U.S.  Information
Agency for administrative costs.  On March 7, 1996, the House of
Representatives approved legislation providing $820 million in
supplemental funding for DOD operations in Bosnia and an additional
$197 million for civilian implementation of the accords.  On March
13, 1996, similar legislation was before the Senate. 

The third phase is an expected second reprogramming action for the
balance of fiscal year 1996 Bosnia operation costs and the costs of
other contingency operations unrelated to Bosnia, such as the U.N. 
mission in Haiti.  This second request is estimated to be for $560
million.  DOD has included the fiscal year 1997 portion of the
operation in its fiscal year 1997 budget submission. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
--------------------------------------------------------- Chapter IV:3



   (See figure in printed
   edition.)

As stated previously, DOD is planning to finance the Bosnia operation
using a three-phase plan.  Because of the uncertainty in the cost
estimate it is difficult to know how much funding Congress should
provide.  Therefore, in considering this matter, we have identified
the following guidelines Congress may wish to consider. 

  Any supplemental funding provided should only be available for (1)
     expenses incurred in support of contingency operations involving
     the former Yugoslavia and (2) the reimbursement of accounts
     initially utilized to fund those operations.  In fiscal year
     1995, some of the military services ended the year with
     contingency costs below the amounts appropriated by Congress for
     contingency operations in that year, while other services had
     costs that exceeded those appropriations.  Because the
     supplemental appropriations were not earmarked for contingency
     operations, those services with excess funds used the funds for
     other needs that otherwise would have gone unfunded. 

  If initial contingency operation funding proves to be inadequate,
     but some services have costs below their funded level while
     others have costs above it, excesses earmarked for contingencies
     should be redistributed by transfer before Congress provides
     additional funds.  DOD's funding plan, which involves an initial
     reprogramming, followed by supplemental appropriations, and then
     a second reprogramming for any remaining costs, would lend
     itself to transferring funds at the time of the second
     reprogramming.\2

  Appropriation levels should be reevaluated as more experience and
     actual cost data become available.  The second reprogramming in
     DOD's Bosnia funding plan would lend itself to such a
     reevaluation. 


--------------------
\2 Section 8005 of the fiscal year 1996 DOD Appropriations Act
provides transfer authority of up to $2.4 billion in case it is
necessary to move funds between accounts. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Steven H.  Sternlieb, Assistant Director
Ann Borseth, Evaluator
Lisa M.  Quinn, Evaluator
James F.  Reid, Evaluator

OFFICE OF THE GENERAL COUNSEL

Margaret L.  Armen, Attorney-Adviser

<head1x<NORFOLK FIELD OFFICE

Suzanne Wren, Evaluator

KANSAS CITY FIELD OFFICE

John G.  Wiethop, Evaluator
David J.  Henry, Evaluator


*** End of document. ***