Could 2022 see the end of OCO?

As the Biden administration prepares to deliver its first budget, the question arises of whether there's enough political clout to end the controversial overseas contingency operations account.

U.S. Air Force MQ-9 Reaper remotely piloted aircraft awaits an engine test prior to Intelligence, Surveillance, and Reconnaissance operations at Ali Al Salem Air Base, Kuwait, July 23, 2019. (U.S. Air Force Photo by Tech. Sgt. Michael Mason)

When it comes to defense spending, there's one recurring debate that's as germane as the topline budget number: the overseas contingency operations account.

The controversial OCO account, which funds the U.S. government's response to the Sept. 11, 2001, attacks, has been criticized for being used to circumvent spending caps set by the Budget Control Act in 2011.

But with record defense budgets topping $740 billion for 2021, budget caps no longer in effect and a new administration, the question arises of whether there's enough momentum to zero out OCO, originally named for the Global War on Terror, which has received nearly $2 trillion dollars since its inception.

Mandy Smithberger, the director for the Project on Government Oversight's center for defense information, told the House Appropriations Subcommittee on Defense on March 23 that "the expiration of the Budget Control Act should be the end of using OCO."

"We've been using OCO for so long that it's easy to kind of feel like, well, this is just what we do. Actually, it hasn't been what we've done in the past, that's something we've only done in the initial years of the conflict when we were not clear what the costs are going to be," Smithberger told FCW.

Smithberger said before the Budget Control Act of 2011, there was concern that DOD was "relying too much on supplemental funding" rather than getting "a better handle as to what their costs were going to be and to have better planning."

The Commission on Wartime Contracting in Iraq and Afghanistan, which disbanded in September 2011, estimated in its final report that waste and fraud constituted about $31 billion to $60 billion in contingency contracting, or about about $12 million a day.

Smithberger argued that oftentimes sustained costs were factored into spending for the OCO account instead of being included in the base budget.

"Our bigger problems with OCO are more so what it does for planning and budget discipline," Smithberger said, adding that she is "hoping to see either the same kind of decrease or a greater decrease than what the Trump administration was proposing or nothing in OCO."

Otherwise, there's concern that more OCO-like accounts could spring up for other agencies or causes like climate change.

"I think one of the concerns we have is that the more that this kind of account seems like a permanent way of governing, that we're going to see a proliferation of these accounts," Smithberger said, adding that special accounts like OCO should be reserved for specific emergencies that require a supplemental or emergency spending bill and not part of the regular budget process because the risk for waste goes up.

The Government Accountability Office previously recommended that DOD and Congress clearly determine future resource requirements for overseas contingency operations and "better estimate its annual budget requirements and future fiscal needs for OCO, reduce improper payments, and refine and formalize its departmental reform efforts" to which the department generally agreed.

But for fiscal 2021, DOD estimated that $48.5 billion of its $69 billion OCO budget request was for enduring requirements with "few details" explaining the costs, "raising questions about how much should be included in as future requirements," the GAO wrote. DOD also estimated $11.4 billion in improper payments across its portfolios in fiscal 2020, according to the report.

Smithberger said there's bipartisan support to nix or reform OCO, "particularly where we have a number of Republicans raising legitimate concerns about how much emergency spending is being authorized ... a lot of it is legitimate, but any time you're using those kinds of authorities, you need to have a close eye on how that money is being spent."

The timing appears to be right to ditch OCO, Mark Cancian, senior adviser for the Center for Strategic and International Studies' international security program, told FCW.

"We're in a situation where if change were going to be made, this would be the time to do it. The Budget Control Act caps expired, there's a new administration, so it would be easy to move most of that funding that is now in OCO into the base," Cancian said.

But Cancian said eliminating the OCO account isn't necessarily the answer and that it, or a similar account, should be capped instead -- around $20 billion to cover actual military operations overseas. That would allow for better insight into how much the war costs, which is obfuscated if it's put into base spending accounts.

"I think many people would also recommend keeping some small elements still in a special account that covers actual military operations -- that would be about $20 billion dollars -- just so you can see what the cost is. Because if you put the cost of the war into the base, then you don't really know what the war is costing and it's very hard to get that money out.

But before anything is done, he said, the administration has to figure out its strategy for military operations, particularly in the Middle East and Afghanistan.

"I think the amount to be sufficient to cover military operations in the Middle East, and so which should come first is the decision about what those military operations are going to be and then it should be reflected in the budget. You shouldn't start in the budget and then define your military operations; the strategy should come first," Cancian said.

But one significant hurdle that OCO will have to surmount is that of perception, according to Cancian. The Obama and Trump administrations had future plans to phase out OCO and move funding into the base defense budget. But there's a looming political challenge that comes with moving money from OCO into the base will be perceived or spun as a request for a defense budget increase.

"Because of that perception, there has always been a political price to pay for moving the money, even though you're just moving it from one account, you're not changing the total -- and administrations have just not been willing to do that," Cancian said. "We'll see if the current environment overcomes those perceptions."