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Blog: Overseas Contingency Operations and How the Fund Is Currently Used

May 09, 2014 | By Carolyn Burstein, NETWORK Communications Fellow

The Overseas Contingency Operations (OCO) fund is money set aside in the DOD portion of the federal budget for expenses such as: crisis response, infrastructure and coalition support for operations in Iraq/Afghanistan, humanitarian assistance in parts of the Middle East and North Africa and embassy security, among other needs abroad.

The OCO fund is the name given to it by the Obama Administration in 2009 when the nomenclature used by President George W. Bush -- the "Global War on Terror" -- was discarded.

Although the U.S. footprint in Afghanistan has shrunk to about 37,000 troops and will continue to recede as the year progresses, the OCO fund has remained robust. In 2013 outlays/expenditures were $93 billion; in 2014 funding has been approved at $85 billion and troops are to be withdrawn by the end of the calendar year. $79 billion is requested for the OCO in 2015. The president is planning to leave a force of about 10,000 or none at all, depending on whether a troop deal is reached with Afghan authorities. At the present time, the Administration and the Pentagon are calling the $79 billion a "placeholder;" the budget also calls for $30 billion in OCO funding "placeholders' from 2016 through 2019.

According to the Defense News, the OCO budget has ballooned over the past decade, hitting $187 billion in 2008 at the height of the Iraq War. But the OCO budget has often been used to fund various needs outside its original definition, especially after sequestration became law three years ago. This year OCO funding is paying about $20 billion in regular Army and Air Force operations and maintenance, and the Army and Marine Corps are using it to fund pay and benefits for 38,000 troops. Because it is an uncapped fund, both the administration and Congress use it to soften the impact of sequestration.

A word about the sequester, or BCA caps, as they are sometimes called. The sequester is the product of the Budget Control Act of 2011, which enacted limits on discretionary spending. These caps are enforced by automatic cuts if appropriated funds exceed the year's cap, a process known as sequester. The BCA-mandated savings are split evenly between defense and non-defense spending. The Bipartisan Budget Act of 2013 (sometimes referred to as the Murray-Ryan Bill) revised the caps slightly upward. The caps for national defense discretionary spending extend through 2021, rising approximately 2% annually to reach $590 billion in 2021. However, OCO funding, because it was not deemed "discretionary," is not subject to the BCA caps. Under the BCA caps, the DOD base budget is capped at $496 billion in 2015, before rising steadily to about $554 billion in 2021.

Lawrence Korb, currently with the Center for American Progress and formerly with the Council on Foreign Relations and a fr