Army weapon system acquisition accounts may be raided to finance a $2 billion shortfall in other critical accounts in 2007, with money needed for soldiers' paychecks, retention bonuses, health care services and other ballooning personnel costs, according to service officials.

Army leaders are hoping to limit such fiscal management practices in the future -- which officials say breeds instability that ultimately hurts the readiness of the force and results in short-term contracts that erode the Army's spending power -- with a significant boost from the White House to increase the size of its fiscal year 2008 budget.

An FY-07 cut to the modernization accounts would be the second consecutive year the Army has siphoned substantial sums from procurement coffers to pay personnel costs that were not properly priced in its budget submission; service officials began FY-06 by raiding acquisition accounts to pay $1.2 billion in fixed personnel costs.

“We had to raid procurement accounts to pay people bills,” said Lt. Gen. David Melcher, deputy chief of staff for programs (G-8), told reporters today. “That doesn't make sense when you're trying to outfit people for war. That means people weren't priced correctly.”

This practice is emblematic, Army leaders say, of a budget share that should be bigger -- and the challenge to accurately budget the total cost of the personnel accounts is a key exhibit in the service's case for tens of billions of dollars more the next fiscal year, 2008.  

“What we're trying to do is fix that in FY-08,” said Maj. Gen. Ross Thompson, director of program analysis and evaluation in the G-8 office.  

Thompson and other Army generals are among those making the case to the White House Office of Management and Budget for increasing the service's budget by more than $20 billion in fiscal year 2008. They said this week that unpredictable funding practices have forced the Army to enter into short-term contracts that carry a premium of 15 percent to 25 percent.

“It's like you shopping for groceries at a 7-Eleven on your way home every night instead of going to Safeway or Giant,” said Thompson, naming two large grocery store chains in the Washington area. “You pay a premium when you buy on the spot.”

Service officials, in Washington for the annual meeting of the Association of the United States Army, said the Army is awaiting a verdict from OMB on its request for more money. Service officials are confident that the Army, which is shouldering the bulk of the work in Iraq and Afghanistan, will receive a boost; the question is how much.

The answer will both allow the Army to finalize its budget submissions and indicate how much risk the administration is willing to accept in executing the strategy set forth for in the Quadrennial Defense Review, Army officials said.

The key areas of the Army budget that the service is aiming to recalibrate are the cost of soldiers, individual equipment, unit equipment, training, reset costs and military construction bills.

Over fiscal years 2001 through 2008, the “fully burdened” cost for each solider -- an average figure that accounts for troops of all ranks, which includes salary, health care benefits, recruiting bonuses, retirement benefits, individual training and moving costs -- has climbed 70 percent for active component troops and 100 percent for reserve component soldiers.

Thompson said that in 2001, the “fully burdened” cost for 10,000 active component troops was $700 million; in 2008 the cost for the same number of troops is $1.2 billion.  For reservists, the Army in 2001 paid $340 million per 10,000 troops; the cost in 2008 for these soldiers is $680 million, he said.  

In FY-06, the Army spent $1.5 billion more on recruiting and retention bonuses than it spent in FY-05, Thompson said.

Military construction bills, which have averaged $1.9 billion a year since 2001, are set to leap to $5.6 billion annually over the next six years to pay for facilities that will house Army forces being moved around the country as part of last year's base realignment and closure decisions, as well as forces in Europe and Asia that are being moved in accordance with changes to the U.S. global military posture, according to Thompson.

An analysis of Pentagon spending between 1990 and 2005 found the Army received only 16 percent of the nearly $2 trillion the Pentagon has spent on new weapons between 1990 and 2005, Thompson said. That relatively small percentage is part of why the Army in 2001 faced a $56 billion shortfall in its weapon system requirements, he added.

In total, the Army is seeking $138 billion in fiscal year 2008. This sum was generated by an internal analysis, prepared this spring by the Army's financial management and comptroller's office, designed to identify the cost of running the Army, Melcher said.  

Army leaders first brought its concerns about the adequacy of its portion of the budget to the Office of the Secretary of Defense in April. In May, the leadership laid out its case for more money to Gordon England, the deputy defense secretary, and Adm. Edmund Giambastiani, the vice chairman of the Joint Chiefs of Staff, as well as the high-ranking members of the Deputies Advisory Working Group. The following month Defense Secretary Donald Rumsfeld was briefed.

In July, Army leaders made their case to Vice President Dick Cheney; the following month, Gen. Pete Schoomaker met with President Bush to explain the Army's need for more money.

Following the meeting with Bush, OMB officials sat down with Army and Pentagon budget and program officials to review the service's spending requirements, officials said.