Summary: Because large numbers of U.S. military personnel are located in other countries, the conduct of military activities in these countries inevitably causes damages and injuries to foreign property and citizens. Most damage claims are paid to the Federal Republic of Germany (FRG). Under the North Atlantic Treaty Organization Status of Forces Agreement (NATO SOFA), the U.S. Army Claims Service, Europe (USACSEUR) provides reimbursements to FRG for the U.S. share of claims settlements. The normal rate of U.S. reimbursement is 75 percent of amounts actually paid to claimants by FRG; the remaining 25 percent is absorbed by FRG. These reimbursements have been steadily increasing in recent years. GAO reviewed the amount and types of host nation support and cost sharing provided to U.S. forces stationed overseas. The review focused on FRG because most of the claims resulted from damages caused by military training maneuvers there. The reasons for the large increases in the amount of damage claims paid by U.S. forces overseas, the administration of the claims payment process by the Department of Defense (DOD), and the possibilities for reducing U.S. damage claim costs through more equitable cost sharing or other methods were examined.
The increasing cost of damage claims in FRG has been partly caused by factors such as larger exercises and the dollar devaluation. Claims reimbursements to FRG in recent years have been somewhat chaotic because of the inability of USACSEUR to accurately forecast its requirements. While USACSEUR believes an indefinite appropriation would solve its funding problems, GAO is not convinced that such a funding mechanism would provide the necessary discipline and control needed. GAO was impressed with the professionalism and expertise of the FRG claims examiners, and had no reason to doubt the accuracy or integrity of the FRG Defense Claims Office. However, the almost total lack of U.S. involvement in verifying even the very large dollar amount claims is questionable. Because claims have greatly increased in cost, it is reasonable to expect increased surveillance and monitoring of the claims payments. With the cost of damage claims rising and just two countries bearing the bulk of these costs, it may be time to consider an alternative funding method. Because the training exercises benefit the entire NATO alliance, not just the maneuvering force and the host country, one possible alternative would be to shift the damage claims burden to the alliance through some sort of negotiated cost sharing formula.
