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posted on 15 October 2017

Funding For DoD Support Functions Consumes More Of The Defense Budget Today Than It Did In The 1980s

from the Congressional Budget Office

Funding for support functions consumes more of the defense budget today than it did in the 1980s, CBO finds. The largest increases were in health care, DoD management, communications infrastructure, and the science and technology program.

The U.S. military’s readiness to respond to current and future threats depends on the quality and availability of military forces - personnel, weapon systems such as ships and aircraft, and other material resources such as ammunition and fuel. In turn, the quality and availability of military forces depend on the support infrastructure. The military uses that support infrastructure - such as bases, depots, and schools - to recruit personnel, train units for deployment, acquire and maintain equipment, construct facilities, provide health care, facilitate communications, and more.

From the mid-1980s to the early 1990s, the Department of Defense’s (DoD’s) funding for support functions rose substantially relative to funding for forces. The ratio of funding for support to funding for forces has fluctuated since then, but it has not returned to the lower levels experienced through much of the 1980s. Policymakers have expressed concerns about the increases in support funding, and this report examines trends in funding for forces and support activities - during periods of both peacetime and war (particularly the current post - 9/11 period) - in order to identify potential areas for further analysis. (Because CBO’s analysis is primarily focused on support functions, it examines DoD’s base budget and excludes funding for overseas contingency operations, thereby avoiding the temporary effects of funding for wars.) In addition, this report provides a framework for judging the efficiency of that spending.

What Trends Have Emerged in DoD’s Support Funding?

From the 1980s to the 2010s, the funding for support activities in DoD’s base budget rose in relation to funding for forces. Between 1980 and 1989, a period marked by the rapid defense buildup against the threat of the Soviet Union, support costs accounted for 43 percent of DoD’s nearly $500 billion base budget, on average. Between 1990 and 2000, during the defense drawdown after the Soviet Union’s collapse, the average share of DoD’s base budget devoted to support costs grew to 49 percent. In the post - 9/11 period, from 2001 to 2016, it rose further - to 50 percent (see figure below).

Average Annual Funding for Forces and Support Functions by Period

From 1980 to 2016, four types of support functions saw sustained increases in funding that outpaced the 46 percent increase (in real, or inflation-adjusted, terms) among support functions as a whole: medical infrastructure and systems (“central medical programs"; 234 percent growth), DoD-wide management (123 percent), communications and information infrastructure (110 percent), and DoD’s science and technology program (94 percent).

To illuminate recent trends, CBO conducted an in-depth analysis of the growth in DoD’s funding for support functions from 2001 to 2016 (see figure below). That examination, which focused on year-by-year trends from 2001 to 2016 as opposed to averages for that period, showed the following increases in real terms:

  • Funding for central medical programs increased by about $18 billion (84 percent); the expansion of health care benefits for retirees and their families contributed to a significant portion of that growth.
  • Funding for DoD-wide management functions grew by $9 billion (45 percent); that growth was largely attributable to the management of DoD’s military and civil activities overseas as well as headquarters staff in the services and in defensewide organizations.
  • Funding for communications and information infrastructure grew by about $3 billion (68 percent), an increase driven by spending on related headquarters and administration, operations of related facilities, and information-security programs.
  • Funding for the science and technology program increased by about $2 billion (18 percent), largely as a result of increased spending on the development of advanced technologies.Funding for Selected Support Functions, 2001 and 2016

    What Are the Implications of Growing Support Costs?

    Increased costs in some areas of support may have improved efficiency by helping meet military needs, boosting productivity, or reducing costs in other areas. For example, the growth in funding for DoD’s communications infrastructure and science and technology programs may have improved DoD’s overall combat capability in the face of new threats. Additionally, the growth in DoD-wide management costs related to military and civil activities overseas could be a natural corollary of the department’s ongoing, years-long overseas military operations. Finally, increased investment in tools and machinery, a process that improves productivity and has occurred in DoD, may in part explain increases in spending on maintenance and other support activities.

    Nevertheless, some factors suggest that DoD may face difficulties in achieving efficiency in spending. Because DoD lacks market-based incentives such as prices and profit, the Office of Management and Budget and the Congress have often resorted to using control measures, such as targets for reductions in headquarters staff, to guide the department toward efficiency. That several of those measures have been implemented over time indicates that some of them were not perceived to be successful. In addition, DoD and its components perform diffuse tasks, from combat to the management of supply chains; the size of the department and the divergent outputs of those tasks make it difficult to measure and improve their efficiency. Moreover, DoD’s responses to the unique risks it faces - including threats to resources and the lives of service members - may contribute to costly hedging strategies, such as maintaining a support infrastructure that is greater than needed.

    Taken together, those factors suggest that spending on certain support functions, such as management, may not have improved efficiency as much as spending on other activities. At least one study has suggested that DoD’s business functions are less efficient than analogous functions in the private sector, and the Government Accountability Office (GAO) includes the operations of many DoD support programs on its High Risk List, which identifies programs it believes to be at risk for waste, inefficiency, or ineffective spending. These considerations suggest that the department may be able to cut some support costs without reducing its ability to perform its missions.

    Data and Supplemental Information

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