Defense Inventory: Army War Reserve Spare Parts Requirements Are 
Uncertain (10-MAY-01, GAO-01-425).				 
								 
The ultimate test for the military, according to the current	 
National Military Strategy, is for the United States to be able  
to win two major theater wars occurring nearly simultaneously.	 
Department of Defense policy calls for each of the services to	 
acquire and maintain sufficient war material inventories to	 
execute and sustain a two-war scenario until the industrial base 
can establish resupply. In part because of the Army's significant
shortfall in meeting its reported war reserve spare parts	 
requirement and its current funding plans, there is some risk	 
associated with executing the two major theater war scenario,	 
assuming requirements have been adequately identified. Because of
limitations in the Army's process for determining war reserve	 
spare parts requirements, uncertainties exist regarding the	 
accuracy of the war reserve spare parts requirements and funding 
needs. These limitations include (1) not using the best available
data on the rate at which spare parts would be consumed during	 
wartime for its war reserve spare parts requirements		 
calculations, (2) having a potential mismatch between the Army's 
process for determining spare parts requirements for war reserves
and how the Army plans to repair equipment on the battlefield,	 
and (3) lacking a fact-based assessment of industrial base	 
capacity to provide needed parts for the two major theaters of	 
war scenario. Some uncertainties are likely to remain for the	 
foreseeable future as the Army contemplates a significant	 
transformation of its forces and other changes are considered	 
affecting military strategy and force structure. However,	 
improvements in the above areas could lessen the degree of	 
uncertainties that exist.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-425 					        
    ACCNO:   A00984						        
  TITLE:     Defense Inventory: Army War Reserve Spare Parts	      
             Requirements Are Uncertain                                       
     DATE:   05/10/2001 
  SUBJECT:   Inventory control					 
	     Military inventories				 
	     Warfare						 
	     Spare parts					 
	     Defense contingency planning			 
	     Logistics						 

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GAO-01-425
     
Report to Congressional Committees

United States General Accounting Office

GAO

May 2001 DEFENSE INVENTORY

Army War Reserve Spare Parts Requirements Are Uncertain

GAO- 01- 425

Page 1 GAO- 01- 425 Defense Inventory

May 10, 2001 Congressional Committees The ultimate test for the military,
according to the current National Military Strategy, 1 is for the United
States to be able to win two major theater wars occurring nearly
simultaneously. Department of Defense policy calls for each of the services
to acquire and maintain sufficient war materiel inventories to commence
execution of the two- war scenario and sustain operations until the
industrial base can establish resupply. Section 364 of the National Defense
Authorization Act for Fiscal Year 2000 requires us to evaluate the adequacy
of spare parts needed for the U. S. military to respond to the two major
theaters of war scenario.

As discussed with your offices, we are responding to this mandate with a
series of reports based on the current National Military Strategy. 2 In this
report, we address the adequacy of spare parts in the Army?s war reserve. 3
Specifically, we (1) examine reports on the availability of Army spare parts
needed for two major theater wars and (2) evaluate the accuracy of the
Army?s estimated war reserve requirements for spare parts.

The most recent Quarterly Readiness Report to the Congress (October-
December 2000) indicates that the status of the Army?s prepositioned stocks
and war reserves is of strategic concern because of shortages in spare
parts. Other Army documents indicate that the Army has on hand about 35
percent of its stated requirements of prepositioned spare parts and has
about a $1- billion shortfall in required spare parts for its war reserves.
The Army has advised the Office of Management and Budget that the planned
funding for fiscal years 2000 to 2005 for spare

1 The National Military Strategy is the Joint Chiefs of Staff?s document on
the strategic direction of the armed forces. 2 See Defense Logistics:
Actions Needed to Enhance Success of Reengineering Initiatives (GAO/ NSIAD-
00- 89, June 23, 2000). We have additional reviews underway to address other
issues in the mandate, including existing spare parts shortages in each of
the services. In the near future, we plan to review the Air Force?s and the
Navy?s spare parts plans for the two major theater war scenario.

3 War reserves are stocks of materiel amassed in peacetime to meet the
increase in military requirements consequent upon an outbreak of war. They
are intended to provide the interim support essential to sustain operations
until resupply can be effected.

United States General Accounting Office Washington, DC 20548

Results in Brief

Page 2 GAO- 01- 425 Defense Inventory

parts would result in a high risk 4 of not having the needed parts for the
two major theater war scenario.

Notwithstanding the reported shortfall in funding for war reserve spare
parts, our review showed uncertainties about the accuracy of the Army?s
requirements. Specifically, we found that

 the best available data regarding the rate at which spare parts would be
consumed during wartime have generally not been used in determining the
Army?s war reserve requirements for spare parts;

 a potential mismatch exists between the Army?s methodology for determining
parts requirements (which focuses primarily on piece parts to repair
components and subassemblies) and the Army?s planned battlefield maintenance
practices (which focus more on removing and replacing components and
subassemblies);

 the capacity of the industrial base to support the parts requirements of
the two major theaters of war scenario is not well defined or based on
industry data and not addressed in the Department of Defense?s Annual
Industrial Capabilities Report to Congress; and

 emerging issues, such as force restructuring actions, could significantly
affect future war reserve requirements.

Because of the significant shortfall in the Army?s reported spare parts
requirements to support two major theater wars fought nearly simultaneously
and the uncertainties that surround those requirements, we are making
recommendations designed to (1) assess the priority and level of risk
associated with the Army?s planned funding, (2) improve the needs
determination process, (3) ensure that the Army is optimizing acquisition of
parts meeting its needs, and (4) better understand industry?s ability to
supply critical parts for two major theater wars.

In its written comments on a draft of this report, the Department of Defense
generally concurred with the report and its recommendations and indicated
actions planned that it believed would address them. The Department agreed
that the Army must validate war reserve requirements for spare parts and
prioritize the support for those requirements. It also agreed that
developing a strategy for determining industrial base capability was an
important step in this process. While the Department outlined

4 Greater than the ?moderate risk? expected for the first of the two major
theater wars.

Page 3 GAO- 01- 425 Defense Inventory

actions planned to address these issues, additional actions will be needed
to fully address the recommendations.

Department of Defense policy states that, to reduce the reaction time and to
sustain combat forces until resupply channels are established, war materiel
inventories shall be sized, managed, and positioned to maximize flexibility
to respond, while minimizing the investment in inventories. 5 The U. S. Army
Materiel Command is responsible for managing war materiel, including war
reserve spare parts, with policy guidance from the War Reserve Division of
the Army?s Office of the Deputy Chief of Staff for Logistics.

The Army plans to rely heavily on its specifically designated war reserve
weapon systems, equipment, and spare parts 6 when its units arrive in a
combat theater of operations. For the Army, war reserves consist of major
end items such as trucks and secondary items such as spare parts, food,
clothing, medical supplies, and fuel. Spare parts for maintenance represent
the largest dollar value of the Army?s war reserve secondary item
requirements. War reserves are protected go- to- war assets that are not to
be used to improve peacetime readiness or to fill unit shortages. Some of
these assets are prepositioned in Southwest Asia, the Pacific, Europe, and
on special war reserve ships. The Army would also use available peacetime
stocks and what industry could promptly supply.

As part of their budget submission process, the services are to develop
information on what they need to effectively implement the Department of
Defense war materiel inventory policy. During the 1990s, the Army focused on
acquiring its major end items for war reserves but funded few associated
spare parts. 7 In the Fiscal Years 2000- 2005 Program Objective Memorandum
for its fiscal year 2000 budget submission, the Army developed plans to fund
$265 million for spare parts, with most of the funding planned for the later
years. However, for fiscal year 2000, the

5 Department of Defense Directive 3110.6, dated November 9, 2000, and
Department of Defense Regulation 4140. 1- R, dated May 1998, provide war
reserve materiel policy. 6 Spare parts are defined as repair parts and
components, including kits, assemblies, and subassemblies (both reparable
and non- reparable) required for the maintenance support of all equipment.

7 According to the Army, war reserve spare parts have not been funded since
1989, with the exception of $45.3 million in fiscal year 1995 for repair of
on- hand unserviceable spares. Background

Page 4 GAO- 01- 425 Defense Inventory

Army reported that it had obligated $95 million for war reserve spare parts.

The Army reports its war reserve status in the Department of Defense?s
Quarterly Readiness Report to the Congress. These reports assess each
service?s readiness to fight various war scenarios, including the two major
theater war scenario. The status of equipment availability and spare parts
is included in these assessments. The Department of Defense also prepares an
annual report on industry?s capabilities to support the military needs.

The U. S. Army Materiel Command is responsible for determining requirements
for war reserve spare parts. It uses a computer model to do this. The model
takes war- planning guidance from the Department of Defense as well as Army
information on anticipated force structure. It combines this data with a
list of the end items and associated spare parts planned to be used in war.
For each end item or part, the model uses data on expected end- item use and
spare parts consumption rates due to breakage, geography, and environment.
Also, the model uses data on rates of equipment loss due to battle damage.

The most recent Quarterly Readiness Report to the Congress (October-
December 2000) indicates that the current status of the Army?s war reserve
parts is of strategic concern. This strategic concern was raised for the
first time in the unclassified version of this report, although prior
reports? classified Annexes A have addressed spare parts concerns. The
report states that the Army is between 85 and 95 percent filled in its
prepositioned equipment, but shortages still exist in spare parts. The
report points out that warfighting and functional commanders in chief of the
unified commands continue to express strategic concerns over the status of
some prepositioned stockpiles of spare parts. However, the report says that
the Department of Defense has taken action to address the critical
shortfalls in this area. We were told by a Department official that the
action referred to is the Army?s planned future funding for war reserve
spare parts.

The report concludes that forces can execute the National Military Strategy,
but the risk caused by parts shortages and other problems to the first war
is moderate and to the second remains high. The risk is defined as the
likelihood of failing to accomplish theater objectives within planned
timelines and means an increase in the potential for higher casualties to U.
S. forces. Military Documents

Highlight Concerns About Shortfalls in War Reserve Spare Parts

Page 5 GAO- 01- 425 Defense Inventory

During our review, we found Army documents that provide more information on
spare parts shortages. For example, in a May 2000 information paper, the
Chief of the Army War Reserve Division in the Office of the Deputy Chief of
Staff for Logistics advised the Office of Management and Budget that the
planned funding for spare parts would result in moderate risk of not having
the needed parts in the first major theater war and greater risk in the
second. In addition, an internal Army Materiel Command analysis of war
reserve spare parts on hand shows the Army has on hand only about 35 percent
of its stated prepositioned war reserve spare parts requirement as of the
December 2000 budget stratification report done by the Army Materiel
Command, expressed in monetary terms, not number of parts. 8

Another internal document dated November 1999 prepared by the Army War
Reserve Division also addressed the availability of spare parts for war
reserves. 9 The purpose of this document was to show the requirement and
shortfall for war reserve spare parts, based on parts on hand or expected to
be available in the future for the Army?s Fiscal Years 2000- 2005 Program
Objective Memorandum. It indicates that the Army has a stated requirement of
$3.3 billion in spare parts needed for two major theater wars. To meet this
requirement, the Army calculates that

 it has $1.3 billion in parts prepositioned or otherwise set aside for war
reserve,

 it has $0.627 billion in on- hand peacetime inventory that could be used
to meet its requirement, and

 it expects to acquire $0.131 billion in parts from the industrial base.
This leaves a shortfall of about $1.24 billion. However, the Army expects to
get $0.265 billion in future years budget authority through fiscal year 2005
(mostly in the out- years) to help address war reserve spare parts needs.
This would still leave a shortfall of about $0.975 billion.

8 We did not analyze the types and quantities of specific parts on hand or
required. 9 The data in this document cannot be compared to the earlier
document?s data because, in addition to war reserve parts on hand, it
includes peacetime parts on hand and parts expected to be available from the
industrial base but not now on hand. It also is a projection to fiscal year
2005, whereas the other is war reserve parts on hand as of December 2000.
However, both documents indicate that the Army lacks a significant amount of
its spare parts requirement for war reserves.

Page 6 GAO- 01- 425 Defense Inventory

Notwithstanding the apparent shortfall in funding for war reserve spare
parts, our review found uncertainties about the accuracy of the Army?s
requirements in that area. How the Army determines its war reserve spare
parts requirements has been a matter of concern within the Department of
Defense for several years. After considerable effort to improve the process,
the central improvement- using better consumption factors in the
requirements calculations- has not been widely implemented. Other issues
raise further concerns about the validity of the Army?s stated requirements
for war reserve spare parts. They include (1) the potential mismatch between
the Army?s methodology for calculating spare parts requirements and the way
it intends to maintain and repair equipment on the battlefield, (2) the
contributions the industrial base can provide in the way of spare parts
support, and (3) the effect of emerging issues such as force structure
actions on spare parts requirements.

In the 1990s, the Office of the Secretary of Defense expressed concern about
the Army?s stated requirements for war reserve spare parts and questioned
the determination process used to arrive at those requirements. These
concerns were related to the rate at which spare parts would be consumed
during wartime. To assuage these concerns, the Army indicated in 1998 that
it would change its process for calculating requirements by updating its
consumption factors to obtain more realistic information. The change is to
replace prior consumption factors that were based on peacetime usage with
new factors, referred to as Equipment Usage Profiles and Mean Usage Between
Replacement factors, that would better reflect expected usage of parts in
wartime. Studies by the Institute for Defense Analyses in 1997 and Coopers &
Lybrand in 1998 endorsed the use of the new consumption factors in
calculating the requirements. 10

We found that the Army has been slow in implementing this new determination
process. To date, about 85 percent of the Army?s stated requirements has not
been updated using the new consumption factors. After we brought this
condition to the Army?s attention, Army officials in the War Reserve
Division of the Office of the Deputy Chief of Staff for Logistics and the
Army Materiel Command?s Readiness Division told us that they plan to make
all new factors available to those doing the

10 Institute for Defense Analyses, IDA Review of the Army War Reserve
Program, April 1997, and Coopers & Lybrand, Final Reports for Phase I and II
on Army War Reserve Secondary Items, March 31, 1998, and June 11, 1998.
Accuracy of the

Army?s Stated Spare Parts Requirements Is Questionable

Army Has Not Updated Requirements Calculations

Page 7 GAO- 01- 425 Defense Inventory

calculations so that the fiscal year 2004 to 2009 Program Objective
Memorandum budget package will be based on more accurate data.

We found that Army- sponsored studies made in 1997 and 1998 showed that some
requirements increased while others decreased when the new consumption
factors were tested. For example, the Coopers and Lybrand study sampled
various parts requirements and found that aviation parts requirements
increased from $78 million to $160 million, while nonaviation parts
requirements decreased from $531 million to $218 million. Using a limited
analysis for the M1 tank, the Institute for Defense Analyses study found
that the parts requirements for this end item decreased by over 50 percent.
Until the Army fully incorporates the best consumption factors into its
requirements determination process, it cannot ensure that it is not buying
the wrong amounts of individual items and consequently failing to adequately
supply the spare parts needed for the two major theaters of war scenario.

A potential mismatch exists between the results from the Army?s process for
determining spare parts requirements for the war reserve and how the Army
plans to repair equipment on the battlefield.

The Army has specified that war reserve parts requirements calculations are
to optimize parts requirements for specified readiness goals at the least
cost, based on Department of Defense guidance. 11 What this means in
practice is that the Army?s stated requirements include numerous parts to
repair components and subassemblies rather than the components and
subassemblies themselves. However, the Army?s current maintenance policy
calls for fighting units to remove and replace components and subassemblies
rather than repair them on the battlefield. The policy of removing and
replacing components and subassemblies appears to conflict with the results
of the readiness based sparing methodology. After we discussed this apparent
inconsistency with Army officials, we were told that the Army is currently
evaluating this issue and that it plans to change the next parts
requirements calculation to reflect the current maintenance policy. Army
officials in the War Reserve Division of the Office of the Deputy Chief of
Staff for Logistics and the Army Materiel Command?s Readiness Division could
not tell us when this evaluation is to

11 This methodology is referred to as readiness based sparing by the
Department of Defense. Requirements

Determination Methodology Might Not Be Consistent With Planned Battlefield
Maintenance Practices

Page 8 GAO- 01- 425 Defense Inventory

be completed, but they expect the evaluation will change the specific parts
and quantities required.

Currently, the Army is relying on an internal estimate of what industry
might contribute in the way of spare parts needed for two major theater
wars, rather than well- defined information from industry. The Army
estimates that about 4 percent of the stated spare parts requirement will be
derived from the industrial base. This estimate was developed by using
generic information on percentages of administrative and production lead
times for delivery of parts. According to Army officials, industry data is
not being used in developing this estimate because, in the past, few
companies responded to the Army?s industry spare parts surveys.

The validity of the Army?s estimate of the amount of parts to be available
from industry ($ 131 million of the $3.3 billion total requirement) is open
to question. For example, a 1998 Army study raised concerns about whether
industry could support certain spare parts requirements. 12 It found that
some requirements assumed to be supported by industry could not be and some
that were assumed not to be supported by the industrial base were. The study
pointed out that of 86 items (valued at $73 million), 44 of them (valued at
$51 million) were found not available from the industrial base, although the
Army assumed them to be available. The study further indicated that of 218
items (valued at $60 million), 176 (valued at $54 million) were found to
have existing industrial base production capacity, although the Army assumed
the items would not be available.

The Department of Defense?s most recent Annual Industrial Capabilities
Report to Congress, dated January 2001, 13 intended to address industrial
concerns, does not address the ability of industry to supply Army critical
spare parts for a wartime scenario. The contributions the industrial base
can provide have a great bearing on what the Army needs to have in its war
reserve, but the Army?s assessments of industrial capability are limited to
selected weapon systems or major end items, such as the

12 Army Industrial Base Assessment, fiscal year 1998. 13 Annual Industrial
Capabilities Report to Congress, January 2001, is the latest report
available. Section 2504 of title 10 U. S. C. requires the Secretary of
Defense to submit this annual report that identifies and addresses
industrial and technological capabilities concerns. This report indicates
that the Department is acting to maintain competitive sources in an era of
defense industrial consolidations. Industrial Base Support for

War Reserve Spare Parts Is Not Based on Industry Data

Page 9 GAO- 01- 425 Defense Inventory

Comanche weapon system. The Army and the other services have expressed
concerns about existing shortages of spare parts for current operations,
caused, in part, by firms going out of business or being reluctant to
recreate a production line to produce parts for aging equipment.

Emerging issues associated with (1) the Army?s logistics reform initiatives
resulting from its biennial analysis of force requirements known as Total
Army Analysis, (2) the Army?s planned transformation to a lighter, more
strategically responsive force, and (3) the statutorily mandated Quadrennial
Defense Review could significantly change the kinds and numbers of spare
parts that will be needed.

Because of implementation of technological improvements in battlefield
distribution and the fielding of various logistic enablers, the Army, in its
most recent Total Army Analysis, estimates a 15- percent reduction in spare
parts needed in- theater by 2007. Every 2 years the Army performs its Total
Army Analysis to (1) determine the number and types of support forces needed
by combat forces and (2) allocate end- strength to these requirements. In
the Total Army Analysis, the Army uses a series of models to simulate the
two nearly simultaneous major theater wars described in the National
Military Strategy. The analysis cites the implementation of technological
improvements in battlefield distribution and the fielding of various
logistic enablers as the reasons for the possible reduction in spare parts.

The Army?s planned transformation to a more strategically responsive force
is expected to reduce the number of divisional combat systems by 25 percent
and consequently reduce the number of parts needed. In October 1999, the
Army announced plans to radically change to a lighter, more strategically
responsive force. The Army?s stated vision was to be able to deploy (1) a
combat capable brigade in 96 hours, (2) a division in 120 hours, and (3)
five divisions in 30 days. The Army plans to validate the capabilities of
the first restructured brigade and then take a number of years to complete
the entire conversion to a restructured force. Part of this plan is to
reduce the number of combat systems from 58 to 45 and personnel by 3,000 in
heavy divisions. It also expects its new weapon systems will have a greater
commonality of parts. While the conversion will likely require the
acquisition of yet to be determined spare parts for war reserves, the
greater commonality should reduce the amount of spare parts required in the
long term. However, we were also told that the number of parts needed in the
shorter term would not necessarily be Emerging Issues

Total Army Analysis Army Transformation

Page 10 GAO- 01- 425 Defense Inventory

reduced because there would be both old and new systems in the force during
the transition to the new structure.

The Quadrennial Defense Review for 2001, as well as the Secretary of
Defense?s strategic review, could significantly affect the Army?s war
reserve requirements. The statutorily mandated Quadrennial Defense Review is
intended to provide a comprehensive examination of such things as potential
threats, force structure, readiness posture, military modernization
programs, and infrastructure and develop options for key decision- makers.
The previous Quadrennial Defense Review 14 addressed such decisions as
reducing the number of active duty personnel and fostered plans to reduce
the amount of logistic support to be provided. Any changes in the Army?s
force structure, its utilization of certain weapon systems, or the National
Military Strategy itself would consequently affect the kinds and quantities
of spare parts needed in the Army?s war reserve.

In part because of the Army?s significant shortfall in meeting its reported
war reserve spare parts requirement and its current funding plans, there is
some risk associated with executing the two major theater war scenario,
assuming requirements have been adequately identified.

Because of limitations in the Army?s process for determining war reserve
spare parts requirements, uncertainties exist regarding the accuracy of the
war reserve spare parts requirements and funding needs. These limitations
include (1) not using the best available data on the rate at which spare
parts would be consumed during wartime for its war reserve spare parts
requirements calculations, (2) having a potential mismatch between the
Army?s process for determining spare parts requirements for war reserves and
how the Army plans to repair equipment on the battlefield, and (3) lacking a
fact- based assessment of industrial base capacity to provide needed parts
for the two major theaters of war scenario. Some uncertainties are likely to
remain for the foreseeable future as the Army contemplates a significant
transformation of its forces and other changes are considered affecting
military strategy and force structure. However, improvements in the above
areas could lessen the degree of uncertainties that exist.

14 Report of the Quadrennial Defense Review, May 1997. Quadrennial Defense
Review

Conclusions

Page 11 GAO- 01- 425 Defense Inventory

We recommend that the Secretary of Defense assess the priority and level of
risk associated with the Army?s plans for addressing the reported shortfall
in Army war reserve spare parts.

To provide accurate calculations of the Army?s war reserve spare parts
requirements, we recommend that the Secretary of Defense direct the
Secretary of the Army to promptly

 develop and use the best available consumption factors (i. e., Equipment
Usage Profiles and Mean Usage Between Replacement factors) in calculating
all spare parts requirements for the Army?s war reserve;

 eliminate potential mismatches in how the Army calculates its war reserve
spare parts requirements and the Army?s planned battlefield maintenance
practices; and

 develop fact- based estimates of industrial base capacity to provide the
needed spare parts in the two major theater war scenario time frames.

We further recommend that the Secretary of Defense include in future
industrial capabilities reports more comprehensive assessments on industry?s
ability to supply critical spare parts for two major theater wars.

The Acting Deputy Under Secretary of Defense for Logistics and Materiel
Readiness provided written comments to a draft of this report. The
Department?s comments are reprinted in appendix I. The Department generally
agreed with the report and our recommendations. It agreed that the Army must
validate war reserve requirements and prioritize the support for those
requirements. It also agreed that developing a strategy for determining
industrial base capability was an important step in this process. While the
Department outlined actions planned to address these issues, additional
actions will be needed to fully address all of the recommendations.

The Department concurred with the intent of our recommendation that the
Secretary of Defense assess the priority and level of risk associated with
the Army?s plans for addressing the reported shortfall in Army war reserve
spare parts, but it indicated that it would determine whether an independent
assessment is feasible by August 1, 2001. The intent of this recommendation
was not to assess the feasibility of an independent assessment but rather to
bring increased visibility to the Army?s plans for addressing the reported
shortfall in the Army?s war reserves and ensuring secretarial review and
concurrence with the Army?s plan considering Recommendations for

Executive Action Agency Comments and Our Evaluation

Page 12 GAO- 01- 425 Defense Inventory

funding priorities and risk. We continue to believe such a review is needed.

The Department concurred with the recommendation we made for improving the
accuracy of its calculation of war reserve spare parts requirements. It
outlined specific actions and time frames for accomplishing planned actions.
It noted that validation of consumption factors important to more precisely
identifying requirements would be addressed by a team the Army has
established to review the planning data used throughout the Army.

The Department also concurred with our recommendation for improving the
Army?s assessment of industry?s ability to supply critical spare parts for
two major theater wars. It indicated that it will review the need for
further industrial base assessments upon completion of an Army Industrial
Base Strategy that is expected to be completed December 1, 2001. However,
available information indicates that this study is focused on government
production and maintenance facilities, not on private industry?s ability to
provide spare parts. Accordingly, we believe that additional action will be
needed to develop fact- based estimates of the industrial base capacity to
provide the needed spare parts in the two major theater war scenario time
frames.

To ascertain what the Army was reporting about spare parts in its war
reserve, we reviewed Quarterly Readiness Reports to the Congress and Joint
Monthly Readiness Reports and discussed issues related to spare parts with
Army headquarters and U. S. Central Command and U. S. Pacific Command
officials. To compare the reported readiness status to the availability of
parts to meet requirements for the two major theater war scenario, we
obtained Army data on war reserve spare parts on hand compared to the
requirements and discussed the results with officials in Army headquarters
and the Army Materiel Command.

To determine the reliability of the Army?s war reserve spare parts
requirements, we reviewed the process and factors used for determining
requirements and analyzed data on requirements and on- hand parts from
officials of Army headquarters in the Office of the Deputy Chief of Staff
for Logistics; the U. S. Army Materiel Command and related agencies, to
include the Army Materiel Systems Analysis Agency, the Logistics Support
Agency, the Field Support Command of the Operations Support Command, and the
Aviation and Missile Command; and the Combat Arms Support Command. We
visited the U. S. Central Command and its Army component Scope and

Methodology

Page 13 GAO- 01- 425 Defense Inventory

and met with representatives of the U. S. Pacific Command to discuss the
requirements they receive from the Army. We also attended several logistics
planning conferences to learn more about how the Army plans to support the
fighting commands with parts and other supplies.

We performed our review between February 2000 and March 2001 in accordance
with generally accepted government auditing standards.

We are sending copies of this report to the Honorable Donald H. Rumsfeld,
Secretary of Defense; and the Honorable Joseph Westphal, Acting Secretary of
the Army. We will also make copies available to others upon request.

Please contact me on (202) 512- 5581 if you or your staff have any questions
concerning this report. Key contributors to this report were Joseph Murray,
Leslie Gregor, Paul Gvoth, and Robert Sommer.

Barry W. Holman, Director Defense Capabilities and Management

Page 14 GAO- 01- 425 Defense Inventory

List of Congressional Committees The Honorable John Warner Chairman The
Honorable Carl Levin Ranking Member Committee on Armed Services United
States Senate

The Honorable Ted Stevens Chairman The Honorable Daniel Inouye Ranking
Member Subcommittee on Defense Committee on Appropriations United States
Senate

The Honorable Bob Stump Chairman The Honorable Ike Skelton Ranking Minority
Member Committee on Armed Services House of Representatives

The Honorable Jerry Lewis Chairman The Honorable John Murtha Ranking
Minority Member Subcommittee on Defense Committee on Appropriations House of
Representatives

Page 15 GAO- 01- 425 Defense Inventory

Appendix I: Comments From the Department of Defense

Page 16 GAO- 01- 425 Defense Inventory (709467)

Page 17 GAO- 01- 425 Defense Inventory

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