Operation and Support Costs for the Department of Defense

Abstract : Operation and support (OS funding actually declined in real terms in 1986 and 1988. In the next several years, if overall defense budgets are held constant or decline, there may be pressure to halt growth in funding for O&S activities and perhaps to repeat recent real reductions. This pressure may become particularly severe as DoD attempts to finance the many weapons programs that have entered development or procurement during the last 8 years. These trends raise concerns. As DoD fields new systems that are both more capable and more expensive, the costs of operating and supporting these systems may rise. If funding for O&S costs does not keep pace, there may be adverse effects on military readiness, which is defined as the ability of U.S. forces to fight well early in a war. This study uses several approaches to estimate the amount of O&S funding that would be needed over the next 5 years if DoD carries out its current investment plans. The estimates suggest that O&S funds might at least have to remain constant in real terms and may have to increase. Because deficit concerns may force reductions in defense funding, possibly including O&S funding, this study also briefly discusses several broad strategies for holding down O&S costs.