ANALYSIS OF PRICE AND PROGRAM GROWTH IN OPERATION AND MAINTENANCE, NAVY

Abstract

For decades, operation and maintenance (O&M) has been growing as a share of the defense budget. To understand the drivers of that growth, we examined OP-32 and OP-32A data, which are the summary of price and program changes from the Navy’s annual budget requests, and attempted to isolate price and program growth by budget activity and object class. We found violations in sound principles of budgeting and financial management regarding Overseas Contingency Operations (OCO) funding and how the annual budgets report the allocation of funding. Due to the lack of transparency and traceability of the current base budget practices, a clear answer to our primary research question could not be produced. The current base budgeting practices do not meet the ideals and are not effective. In lieu of providing insights into the growth of O&M at the budget activity and object class level, we provide recommendations to improve the transparency and completeness of defense budgets.