Models Used by the Military Services to Develop Budgets

February 14, 2012

The military services—the Army, Navy, Air Force, and Marine Corps—use modeling techniques to inform parts of their annual budget requests. As directed by the Congress in the 2011 National Defense Authorization Act, today’s CBO study provides information on the models used to develop budgets for activities associated with operational readiness. 

The Department of Defense’s (DoD’s) total budget request for fiscal year 2012 was $671 billion, of which $554 billion was for the base budget (which funds the department’s normal activities) and $118 billion was for funding overseas contingency operations in Afghanistan, Iraq, and elsewhere.

CBO focused its analysis on the portion of the base budget devoted to operating forces—which totaled $79 billion for active duty forces in the FY 2012 request—because that portion is most closely linked to operational readiness. Funding for operating forces falls under the operation and maintenance budget, which covers most of the day-to-day expenses of the running the military; such funding pays for the training of combat and support units, as well as the operation of most service installations.

CBO’s Findings

As shown in the report below, CBO found that:

  • For all of the services together, models informed about $53 billion, or two-thirds, of the $79 billion request for funding for operating forces in 2012.
  • The amount of modeling varies considerably across services (see Exhibit 4). For example, about 80 percent of the Army’s budget request for operating forces is informed by models, whereas about 45 percent of the Air Force’s request is informed by models.
  • Modeling also varied across different activities within the operating forces category. All of the services use models in forming all or almost all of their requests for funding for maintenance of equipment conducted at the depot level. Most services also model large portions of their budget requests for training and for peacetime operations.
  • But, the services did not all use models to generate their budget requests for funding for day-to-day operations at their facilities and bases. The costs of base operating support are modeled by the Navy and the Army but not by the Air Force or the Marine Corps at the headquarters level. All of the services model the costs of facilities sustainment. The costs of restoring and modernizing facilities are modeled only by the Navy.

CBO also found that the results of models are just one of many inputs to the budgeting process. DoD’s program and budget review process attempts to allocate the fixed overall funding amount that the President and the Office of Management and Budget set for the Department. Models inform decisions regarding resource allocation between competing areas of the budget, but they generally do not produce the final budget requests. Rather, the services often adjust the budget amounts generated by models in order to address programmatic trade-offs, budget constraints, and other factors not included in the models.

Scope of Analysis

For the purposes of this study, CBO defined a model as a set of mathematical relationships or similar logical expressions that link a military service’s activities, such as training and maintenance, to the cost of those activities. CBO focused only on models that inform budget requests for operating forces and included only those models that are used at the headquarters level of each service.

Additionally, CBO:

  • Relied on the services themselves to identify and characterize any models used in forming their budget requests for operating forces and
  • Did not compare, audit, or validate the services’ models or attempt to identify any deficiencies in them.

The report was prepared by Adebayo Adedeji, Daniel Frisk, and Derek Trunkey of CBO’s National Security Division.