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House Report. 106-244
(Associated Bill -- H.R.2561)



Adding to the difficulties confronting the Committee in its consideration of the fiscal year 2000 budget request are serious budgeting and funding execution issues regarding appropriations for defense acquisition programs. These are occuring with increasing frequency in both the budget requests submitted by the Department of Defense as well as in the execution of program funding once appropriations have been provided by the Congress. Throughout this report there will be more specific descriptions of these and related issues. Of particular concern is the failure of certain DoD entities to comply with many existing procedures governing the expenditure of appropriated funds.

One of the highest duties of the Congress is to exercise the mandate in Clause 7, Section 9, Article I of the Constitution of the United States that `No money shall be drawn from the Treasury but in Consequence of Appropriations made by law.' In terms of appropriations provided to the Department of Defense, this mandate has evolved over time as a result of statute, appropriations law, court rulings, and executive branch regulations; decades of appropriations implementation and resulting `practices and rules'; and what the Committee regards as an ongoing discussion with the DoD and its component departments and agencies over budget rules and appropriate procedures regarding the use of appropriated funds.

The Committee's perspective is one of ensuring that funds made available in appropriations acts are in fact put to the use intended by the elected members of Congress, under the terms and conditions the Congress and the House and Senate Appropriations Committees place on the funding in question. This is a responsibility the Constitution clearly intended for the Congress--the so-called power of the purse--and therefore, the Committee does not take issues regarding the use of appropriated funds lightly. However, given the sheer size, complexity, and dynamism of both the real world and the funding environments that the Department of Defense and the U.S. military operates, the Committee is sensitive to and has in fact actively engaged the Department on countless occasions to ensure that the DoD has the funding flexibility it needs to respond rapidly to emerging circumstances. The Committee notes that unless specific restrictions have been enacted into law, in most instances the most restrictive rules require the DoD, in accordance with certain pre-established thresholds, to provide the Committee with prior notification or, through the reprogramming process, to seek the Committee's prior approval for contemplated funding shifts. All the Committee demands is that these well-established procedures--many enshrined in statute or appropriations law, not just custom or practice--be followed.

Regrettably, in recent years the Committee has observed a steady erosion of departmental compliance with these standards, prompting the Committee to actively address these problems in recent appropriations acts and accompanying Committee reports. The Committee further observes these abuses have generally been most numerous and blatant with respect to defense acquisition programs--and of late, those managed by the acquisition communities within the Department of the Air Force, the Department of the Army, and the Office of the Secretary of Defense.

For example, with respect to the Air Force, despite recent Committee direction and, in several instances, new appropriations law, the Committee finds that both in execution of funds provided in appropriations acts and in its fiscal year 2000 budget submission the Air Force acquisition community continues to ignore and violate a wide range of appropriations practices and acquisition rules. Details on these specific instances can be found elsewhere in this report, but a short summary of such Air Force abuses includes:

(a) In its fiscal year 2000 budget the Air Force continues to blithely ignore specific Committee direction and law intended to ensure that funds appropriated for one purpose--for example, weapons procurement--are in fact used for that purpose and not for other efforts, such as research and development, by:

(b) Violation of both new start program regulations and law, as well as standard reprogramming procedures, by using fiscal year 1999 funds to begin a new start, several hundred-million dollar production program which the Congress never formally approved (the C-5 avionics modernization program)--and did so by diverting funds specifically provided by the Congress for another program; and

(c) Initiation of a new Special Access Program without prior Congressional notification as required by law.

Regarding the Army, it has in several instances ignored specific Committee or House-Senate conference report direction on major programs, to include:

(a) Entering into a new multi-year production contract for the Family of Medium Tactical Vehicles, despite specific Committee direction to defer such action until it first identified and then formally submitted to the Congress, an approved plan to fix significant technical and safety problems plaguing thousands of vehicles already delivered and in service;

(b) Negotiating a multi-year production contract for the TOW Improved Target Acquisition System (ITAS) despite both fiscal year 1999 Committee and appropriations conference committee direction explicitly denying approval of the ITAS multi-year contract; and

(c) In conjunction with OSD, explicitly ignoring fiscal year 1999 conference committee direction and using Advanced Concept Technology Demonstration funds for the Line-of-Sight Tank (LOSAT) program.

Regarding OSD acquisition officials, in addition to the example involving LOSAT cited above, the Committee is little short of amazed when it comes to their actions on the Medium Altitude Air Defense (MEADS) program. This program was specifically terminated in the conference report accompanying the fiscal year 1999 Defense Appropriations Act. Internal DoD financial management documents issued this spring noted this action and correctly stated that: 'This item has been denied by the Congress and is not subject to reprogramming' (emphasis added). Nonetheless, the Committee has since learned that officials in the OSD acquisition structure as well as in the Ballistic Missile Defense Organization, an OSD acquisition organization, directed the use of over $2 million of funds specifically provided for another program to continue MEADS-related activities, and actually announced the winner of the MEADS contract competition. All for a program explicitly terminated in the fiscal year 1999 appropriations process.

The Committee believes these and similar instances raise fundamental questions regarding DoD program oversight and compliance with existing law and regulations. The Committee is also compelled to note such actions contribute to the Committee's uncertainty regarding the adequacy of the Department's proposed defense budget and program planning. The extent of such problems gives the Committee little confidence that the military service or defense agency in question is requesting appropriations for its major acquisition programs based on solid cost estimates, testing and production milestones, and firm estimates and commitments to funding requirements. In this sense, such actions are extremely corrosive to sensible program management, defense planning and budgeting. And it severely weakens the working relationship between the executive branch--charged with proposing, then managing, programs if funded--and the legislative branch, which in providing funding must have confidence that the budget and program proposals underlying the funding requests in question are accurate and executable.

The Committee could speculate as to the reason behind this growing trend--for example, the pressure to deal with weapons modernization demands following more than a decade of inflation-adjusted cuts in funding--but to do so is to justify these practices. While sympathetic to budget pressures, and aware of the desire of the acquisition community to exercise as much control and flexibility over its programs as possible, in keeping with its constitutional duties the Committee simply cannot excuse violations of appropriations and acquisition law, regulation and practice.

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