Military Readiness: DOD Needs to Reassess Program Strategy,	 
Funding Priorities, and Risks for Selected Equipment (19-DEC-03, 
GAO-04-112).							 
                                                                 
GAO was asked to assess the condition of key equipment items and 
to determine if the services have adequate plans for sustaining, 
modernizing, or replacing them. To address these questions, we	 
selected 25 major equipment items, and determined (1) their	 
current condition, (2) whether the services have mapped out a	 
program strategy for these items, (3) whether current and	 
projected funding is consistent with these strategies, and (4)	 
whether these equipment items are capable of fulfilling their	 
wartime missions.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-112 					        
    ACCNO:   A09011						        
  TITLE:     Military Readiness: DOD Needs to Reassess Program	      
Strategy, Funding Priorities, and Risks for Selected Equipment	 
     DATE:   12/19/2003 
  SUBJECT:   Budget cuts					 
	     Combat readiness					 
	     Equipment maintenance				 
	     Equipment management				 
	     Maintenance costs					 
	     Strategic planning 				 
	     C-5 Aircraft					 
	     CH-46E Helicopter					 
	     CH-47D Helicopter					 
	     EA-6B Aircraft					 
	     KC-135 Aircraft					 
	     Tomahawk Cruise Missile				 
	     F-16 Aircraft					 
	     Galaxy Aircraft					 
	     Sea Knight Helicopter				 
	     Prowler Aircraft					 
	     Chinook Helicopter 				 

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GAO-04-112

                    United States General Accounting Office

GAO

                                 December 2003

MILITARY READINESS

DOD Needs to Reassess Program Strategy, Funding Priorities, and Risks for
                               Selected Equipment

                                       a

GAO-04-112

Highlights of GAO-04-112, a report to congressional requesters

GAO was asked to assess the condition of key equipment items and to
determine if the services have adequate plans for sustaining, modernizing,
or replacing them. To address these questions, we selected 25 major
equipment items, and determined (1) their current condition, (2) whether
the services have mapped out a program strategy for these items, (3)
whether current and projected funding is consistent with these strategies,
and (4) whether these equipment items are capable of fulfilling their
wartime missions.

GAO recommends that the Secretary of Defense reassess program strategies
and funding priorities for key equipment items to ensure that the
equipment items are sustained until replacement items are fielded. The
department should also highlight for the Congress risks involved in
sustaining these equipment items and steps the department is taking to
address those risks. In its written comments on a draft of this report,
the department partially concurred that it needed to reassess program
strategies and funding priorities, but did not agree that it needed to
provide the Congress with additional information on the potential risks.
Because the department did not agree, the report includes a Matter for
Congressional Consideration suggesting that the Congress may wish to
require the department to provide this information.

December 2003

MILITARY READINESS

DOD Needs to Reassess Program Strategy, Funding Priorities, and Risks for
Selected Equipment

Many of our assessments of 25 judgmentally selected critical equipment
items indicated that the problems or issues we identified were not severe
enough to warrant action by the Department of Defense, military services,
and/or the Congress within the next 5 years. The condition of the items we
reviewed varies widely from very poor for some of the older equipment
items like the Marine Corps CH-46E Sea Knight Helicopter to very good for
some of the newer equipment items like the Army Stryker vehicle. The
problems we identified were largely due to (1) maintenance problems caused
by equipment age and a lack of trained and experienced technicians, and
(2) spare parts shortages.

Although the services have mapped out program strategies for sustaining,
modernizing, or replacing most of the equipment items we reviewed, some
gaps exist. In some cases, such as the KC-135 Stratotanker and the
Tomahawk missile, the services have not fully developed or validated their
plans for the sustainment, modernization, or replacement of the items. In
other cases, the services' program strategies for sustaining the equipment
are hampered by problems or delays in the fielding of replacement
equipment or in the vulnerability of the programs to budget cuts.

For 15 of the 25 equipment items we reviewed, there appears to be a
disconnect between the funding requested by the Department of Defense or
projected in the Future Years Defense Program and the services' program
strategies to sustain or replace the equipment items. For example, we
identified fiscal year 2003 unfunded requirements, as reported by the
services, totaling $372.9 million for four major aircraft-the CH-47D
helicopter, F-16 fighter aircraft, C-5 transport aircraft, and CH-46E
transport helicopter.

The 25 equipment items we reviewed appear to be capable of fulfilling
their wartime missions. While we were unable to obtain sufficient data to
definitively assess wartime capability because of ongoing operations in
Iraq, the services, in general, will always ensure equipment is ready to
go to war, often through surging their maintenance operations and
overcoming other obstacles. Some of the equipment items we reviewed,
however, have capability deficiencies that could degrade their wartime
performance in the near term.

www.gao.gov/cgi-bin/getrpt?GAO-04-112.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact William M. Solis at (202)
512-8365 or [email protected].

Contents

  Letter

Results in Brief
Background
Overall Condition of Selected Equipment Items Varies Widely
Services Have Mapped Out Long-Range Program Strategies for

Sustaining and Modernizing Most Equipment Items but Some Gaps Exist
Requested Funding Does Not Reflect the Services' Long-Range Program
Strategies Equipment Is Generally Capable of Fulfilling Wartime Missions

despite Some Limitations Conclusions Recommendations for Executive Action
Matter for Congressional Consideration Agency Comments and Our Evaluation

                                                                    1 5 12 13

16

18

20 21 22 23 23

  Appendixes

Appendix I: Scope and Methodology 27

Appendix II: Assessments of Selected Equipment Items 32

Appendix III: Comments from the Department of Defense 94

Appendix IV: GAO Contact and Staff Acknowledgments103 103

Tables Table 1: Assessment Summary 7 Table 2: Unfunded Requirements for
Selected Aircraft Equipment Items, Fiscal Year 2003 19

Figures  Figure 1: Abrams Tank Figure 2: AH-64A/D Apache Helicopter  33 36 
                                 Figure 3: Stryker                         39 
                       Figure 4: CH-47D/F Chinook Helicopter               41 
                 Figure 5: Heavy Expanded Mobility Tactical Truck          43 
                             Figure 6: Patriot Missile                     46 
                  Figure 7: Guided Multiple Launch Rocket System           48 
                      Figure 8: F-16 Fighting Falcon Aircraft              50 
                            Figure 9: B-2 Spirit Bomber                    53 
                     Figure 10: C-5 Galaxy Transport Aircraft              55 
                      Figure 11: KC-135 Stratotanker Aircraft              57 

Figure 12: Conventional Air Launched Cruise Missile
Figure 13: Joint Direct Attack Munition
Figure 14: DDG-51 Arleigh Burke Class Destroyer
Figure 15: FFG-7 Oliver Hazard Perry Class Frigate
Figure 16: F/A-18 Hornet/Super Hornet Aircraft
Figure 17: EA-6B Prowler Aircraft
Figure 18: LPD-4 Amphibious Transport Dock Ship
Figure 19: Standard Missile-2 Surface-to-Air Missile
Figure 20: Tomahawk Cruise Missile
Figure 21: AH-1W Super Cobra Helicopter
Figure 22: CH-46E Sea Knight Helicopter
Figure 23: Assault Amphibian Vehicle-Personnel
Figure 24: Light Armored Vehicle-Command & Control
Figure 25: AGM-65E Maverick Missile

60 62 64 67 70 72 75 78 81 83 85 87 90 92

Abbreviations

AAV Assault Amphibian Vehicle
AAW anti-air warfare
ACC Air Combat Command
ASW anti-submarine warfare
ATGM Anti-Tank Guided Missile Vehicle
CALCM Conventional Air Launched Cruise Missile
CBR Center Barrel Replacement

Commander Vehicle DOD Department of Defense DPICM Dual Purpose Improved
Convention Munition EFV Expeditionary Fighting Vehicle (formerly the

AAAV-Advanced Amphibious Assault Vehicle) ERAM Extended Range Active
Missile ESV Engineer Squad Vehicle FLE Fatigue life expenditure FSV Fire
Support Vehicle FYDP Future Years Defense Plan GMLRS-Guided Multiple
Launch Rocket System HEMTT Heavy Expanded Mobility Tactical Truck HME
hull, mechanics, and electrical ICAPIII Improved Capability 3rd Generation
ICV Infantry Carrier Vehicle JDAM Joint Direct Attack Munition LAR Light
Armored Reconnaissance

LAV-C2 Light Armored Vehicle-Command & Control
MC Mortar Carrier
MEV Medical Evacuation
MGS Mobile Gun System
NBCRV Nuclear Biological and Chemical Reconnaissance Vehicle
OMB operation and maintenance
O&S Operation and Support
PAC-3 Patriot Missile
QDR Quadrennial Defense Review
RAM Rolling Airframe Missile
RAM/RS Reliability, Availability and Maintenance/Rebuild to

Standard RHIB Ridged Hull Inflatable Boat RV Reconnaissance Vehicle SEP
Systems Enhancement Program SLEP Service Life Extension Program TACTOM
Tactical Tomahawk

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A

United States General Accounting Office Washington, D.C. 20548

December 19, 2003

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

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

The Honorable Norm Dicks House of Representatives

Many of the weapons and support equipment items in the Department of
Defense's inventory were purchased in the 1970s and 1980s, and are likely
to reach the end of their expected useful lives in this decade unless
major modernizations are made. Equipment age as well as delays in fielding
replacement systems can adversely affect maintenance costs, and
ultimately, equipment readiness and wartime capabilities. The added
effects of simultaneous military deployments and recent increases in
operating tempo place additional stress on equipment that is, in some
cases, more than 30 years old.

The department is faced with the challenges of both sustaining and
transforming the current military force structure, including replacing
aging equipment. The costs associated with meeting these challenges are
likely to be significant. For example, a 2001 Joint Chiefs of Staff
analysis of the funding needed to sustain the current force structure
concluded that a procurement budget of $100 billion to $110 billion would
be required annually. The President's fiscal year 2004 budget request
included a total of about $72.7 billion for Defense procurement, an amount
significantly less than that identified by the Joint Chiefs of Staff. In
addition, the Congressional Budget Office estimated that the investment
needed to develop and purchase new Defense equipment would likely increase
from $137 billion in fiscal year 2004 to a peak of about $223 billion in
fiscal year 2013 if cost risk is considered.1 The impending reconstitution
of equipment resulting from Operation Iraqi Freedom will also require
billions of dollars. Competing for these funds for sustainment and
modernization are the Department of Defense's efforts to transform its
current force structure

into a force that maintains or improves its lethality but deploys faster,
is lighter, and relies on information rather than brute force to defeat
its adversary.

You asked us to assess the condition of key equipment items and to
determine if the services had adequate plans to address identified
deficiencies. Specifically, you asked that we determine which items
warranted immediate attention by the department and/or the Congress. You
also asked us to identify whether the department's procurement plans and
projected budgets are sufficient to sustain or improve these equipment
items. To address these objectives, we determined:

o  the current condition of key military equipment items;

o 	whether the services have mapped out a long-range program strategy for
sustaining, modernizing, or replacing2 these equipment items consistent
with the current condition and expected service life;

o 	whether current and projected funding for these equipment items through
fiscal year 2009 is consistent with the services' program strategies for
sustaining, modernizing, or replacing the equipment; and

o 	whether these equipment items are generally capable of fulfilling their
wartime missions.

As agreed with your offices, we worked with the military services to
judgmentally select 25 equipment items that are key in terms of meeting
the strategy outlined in the September 2001 Quadrennial Defense Review. We
selected approximately two weapons equipment items, two support equipment
items, and two munitions from the Army, Air Force, Navy, and Marine
Corps.3 We relied extensively on input from the military services and
prior GAO work to select equipment items that have been in use for a
number of years and are critical to supporting the services' missions. The

1 Congressional Budget Office, The Long-Term Implications of Current
Defense Plans: Summary Update for Fiscal Year 2004 (Washington, D.C.: July
2003).

2 Modernizing refers to upgrading equipment items or replacing specific
parts; replacing refers to complete replacement of one equipment item with
a new equipment item, e.g., the Marine Corps plans to replace the CH-46E
helicopter with the MV-22 Osprey.

3 The 25 equipment items we selected for review include 7 Army equipment
items, 6 Air Force equipment items, 7 Navy equipment items, and 5 Marine
Corps equipment items.

25 equipment items we selected were those that the military services
agreed were critical to meeting current capability requirements and
defined as essential to meet the strategy laid out under the Quadrennial
Defense Review. Our assessments apply only to the 25 equipment items we
reviewed. Consequently, the results of our assessments cannot be projected
to the entire inventory of Department of Defense equipment.

Our analysis of the condition of these 25 equipment items focused on a
number of key metrics, including equipment age, performance, and use from
fiscal year 1998 to fiscal year 2002. To assess condition, we obtained
data on equipment age and expected service life and other specific service
performance indicators such as mission capable rates,4 utilization rates,5
and various other metrics. While we limited our observations and
assessments to equipment in the active duty inventory, the readiness data
and other metrics we collected from the military services also includes
equipment in the guard and reserve forces. Our review of the program
strategy for these equipment items focused on the extent to which the
services have developed or updated their plans for the sustainment,
modernization, or recapitalization of the equipment items to the end of
the items' useful service lives in order to meet mission requirements. Our
review of the funding for these equipment items focused on the extent to
which the services' requests for sustainment, modernization, and
recapitalization funds in the current and historical defense budgets and
the projected funding envisioned in the Future Years Defense Program
reflect their long-range program strategies. The Future Years Defense
Program reflects the department's official projection of the forces and
resources needed to support the programs approved by the Secretary of
Defense for the prior year, current year, biennial budget years, and the
following four years. According to Department of Defense officials, the
Future Years Defense Program takes the services' priorities into
consideration, balancing future investment and risk. Our review of the
wartime capability of the selected equipment items focused on the extent
to which each of the equipment items is capable of fulfilling its wartime
mission. Because of ongoing operations in Iraq and our limited access to
the deployed units and equipment performance indicators during these
operations, we were unable to obtain sufficient data to definitively
assess wartime capability for

4 Mission capable rates are measures of aircraft material condition that
indicate the aircraft can perform at least one and potentially all of its
designated missions.

5 Utilization rates refer to flying hours, tank miles, and steaming days.

all of the 25 equipment items we reviewed. Therefore, our assessments of
wartime capability are limited to anecdotal evidence obtained primarily
through discussions with military service officials, program managers, and
equipment operators and maintainers. In some cases we were able to obtain
specific data regarding wartime capability for specific equipment items;
however, data availability was not consistent across all of the military
services.

We met with officials from all four of the military services, one selected
combatant command,6 and several major commands. We also visited selected
units and maintenance facilities to observe the equipment items during
operation or under maintenance, and discussed condition and wartime
capability issues with program managers and equipment operators and
maintainers.

To determine which equipment items require immediate attention by the
department, the military services, and/or the Congress, we developed an
assessment framework based on three criteria: (1) the extent of the
existence of a problem or issue, (2) the severity of the problem or issue,
and (3) the estimated time frame within which the problem or issue needs
to be addressed. To assess the relative ranking of the 25 equipment items,
we used a traffic light approach-red, yellow, or green-to indicate the
existence, severity, and urgency of the problem as follows:

o Red indicates a problem or issue that is severe enough to warrant action
by the Department of Defense, the military services, and/or the Congress
within the next 1-3 years;

o 	Yellow indicates a problem or issue that is severe enough to warrant
action by the Department of Defense, the military services and/or the
Congress within the next 3-5 years; and

o Green indicates that we did not identify any specific problems or issues
at the time of our review, or that any existing problems or issues we
identified are not of a severe enough nature that we believe warrant
action by the Department of Defense, the military services and/or the
Congress within the next 5 years.

6 Our scope was limited to one combatant command, Pacific Command, due to
the remaining combatant commands' participation in Operation Iraqi
Freedom.

While we attempted to obtain consistent metrics for each of the other
three categories across all four of the military services, data
availability varied significantly by service and type of equipment. Our
assessments, therefore, are based on the data available to us from
multiple sources. Our assessments represent the problems and issues we
identified at the specific point in time that we conducted our work, and
can change quickly given current events. Although our assessments for each
of the four categories-condition, program strategy, funding, and wartime
capability-are largely qualitative in nature, our analyses are based on
data and information provided by the military services and discussions
with military service officials and program managers for the individual
equipment items. We do not provide color-coded assessments for the wartime
capability of each equipment item in this report because, as previously
mentioned, we were unable to obtain adequate data to perform a definitive
assessment of wartime capabilities.

For a complete description of our methodology, see appendix I. Appendix II
contains our detailed assessments for each of the 25 equipment items. We
performed our review from September 2002 through October 2003 in
accordance with generally accepted government auditing standards.

Results in Brief	As table 1 indicates, many of our assessments of the
condition, program strategy, and funding for each of the 25 equipment
items we reviewed indicate that the problems or issues we identified were
not severe enough to warrant action by the Department of Defense, military
services, and/or the Congress within the next 5 years. However, the table
also indicates that some equipment items have severe enough problems
related to condition, program strategy, and funding to warrant more
immediate action by the Department of Defense, the military services,
and/or the Congress. Specifically, as shown in the table, we identified
problems and issues related to the Army's CH-47D, the Marine Corps'
CH-46E, the Air Force's KC-135, and the Navy's EA-6B Prowler, Standard
Missile-2, and Tomahawk missile that we believe warrant action within the
next 1 to 3 years. The remaining items, while not yet severe enough to
warrant immediate action by the Department of Defense, the military
services, and/or the Congress, showed signs of problems related to
condition, program strategy, or funding that, if not addressed within the
next 3 to 5 years, could become severe. While we did not definitively
assign a color-coded assessment of the wartime capability for each of the
25 equipment items, military service

officials, program managers, operators, and maintainers we met with
identified a number of concerns that are discussed later.

Table 1: Assessment Summary

                                Assessment area

Equipment Condition Program strategy Funding

Source: GAO analysis of military service data.

aThe Marine Corps does not track trend data such as mission capable rates
or operational readiness rates for munitions as it does for aircraft or
other equipment.

Condition	The condition of the selected equipment items we reviewed varies
widely from very poor for some of the older equipment items like the
Marine Corps CH-46E helicopter to very good for some of the newer
equipment items like the Army Stryker vehicle. The three equipment items
for which we assessed the current condition as red and in our opinion
warrants attention within 1 to 3 years are the CH-47D helicopter, the
Standard Missile-2 munitions, and the CH-46E helicopter. These items
generally did not meet mission capable or operational readiness goals for
sustained periods and were either older equipment items and/or had high
utilization rates. The 11 items for which we assessed the condition as
yellow also may have failed to meet mission capable or operational
readiness goals, but to a lesser extent. Left unattended, the condition of
some of these yellow items may worsen. There were various reasons for the
degraded condition of these equipment items including maintenance problems
due to parts or personnel inadequacies. Parts inadequacies include parts
shortages, unreliable parts, or obsolete parts due to the advanced age of
the equipment. Equipment operators believed a lack of trained and
experienced technicians also affected equipment items' condition.

Program Strategy	Although the services have mapped out program strategies
for sustaining, modernizing, or replacing most of the equipment items we
reviewed, some gaps exist. In some cases, such as the KC-135 Stratotanker
and the Tomahawk missile, the services have not fully developed or
validated their plans for the sustainment, modernization, or replacement
of the equipment items. For example, in the case of the KC-135, the Air
Force developed a long-term program strategy to modernize the aging KC-135
tanker fleet but as we have previously reported7 has not demonstrated the
urgency of acquiring replacement aircraft and has not defined the
requirements for the number of aircraft needed. In other cases, the
services' program strategies for sustaining the equipment are hampered by
problems or delays in the fielding of replacement equipment or in the
vulnerability of the programs to budget cuts. As a result, the services
may incur increased costs due to maintenance to sustain aging equipment
items in the event that the replacement equipment is not fielded as
scheduled. For example, the planned replacement equipment for the Marine
Corps CH-46E helicopter (i.e., the MV-22 Osprey) has been delayed by about
3 years and is not

7 U.S. General Accounting Office, Military Aircraft: Observations on the
Air Force's Plan to Lease Aerial Refueling Aircraft, GAO-03-1143T
(Washington, D.C.: Sept. 3, 2003).

scheduled to be fielded until 2007; as a result, the Marine Corps will
have to retain more CH-46E helicopters in its inventory longer than it had
planned. Similarly, procurement of the replacement equipment for the
Marine Corps' Assault Amphibian Vehicle has been delayed. The program
strategy for the Assault Amphibian Vehicle includes overhauls, but for
only 680 of the 1,057 vehicles in the inventory.8 Other program strategies
which we assessed as yellow may need to be validated or updated because
the programs are highly susceptible to budget cuts as the equipment item's
mission changes. For example, planned modernization programs for Navy
frigates are susceptible to budget cuts, according to Navy officials,
because their future role is uncertain given the development of the
Littoral Combat ship. In the meantime, the frigates are being used
increasingly for homeland defense missions, yet their program strategy
does not reflect that they are being used more often and in different
ways.

Funding	There appears to be a disconnect between the funding requested by
the Department of Defense or projected in the Future Years Defense Program
and the services' program strategies to sustain or replace many of the
equipment items we reviewed. According to Department of Defense officials,
the Future Years Defense Program strikes a balance between future
investment and program risk and takes into consideration the services'
stated requirements as approved by the department. Specifically, we
assessed the funding for 15 of the 25 equipment items we reviewed as
either red or yellow because current and projected Department of Defense
funding is not consistent with the services' stated requirements to
support their program strategies for these equipment items. For example,
we identified fiscal year 2003 unfunded requirements, as reported by the
services, totaling $372.9 million for four major aircraft equipment
items-the CH-47D helicopter, F-16 fighter aircraft, C-5 transport
aircraft, and CH-46E transport helicopter.9 We did not, however,
independently verify these unfunded requirements. The most significant
funding shortfalls occurred when parts, equipment upgrades, and
maintenance were not fully

8 In its written comments on a draft of this report, the department stated
that they plan to upgrade an additional 327 vehicles for a total of 1,007
vehicles, assuming funding is provided.

9 In its written comments on a draft of this report, department officials
stated that the Navy lists CH-46E safety improvements as an unfunded
requirement of $10 million to $14 million based upon the retirement
schedule of the CH-46E and the fielding schedule of the MV-22 replacement.

funded. In addition, according to service officials, requests for funds
for some older equipment items are sometimes reduced on the basis of
anticipated fielding of replacement equipment items in the near future.
Gaps in funding also result when fielding of the replacement equipment
items is delayed and the older equipment must be sustained longer than
anticipated. Funding for the older equipment items may also be a target
for funding reductions to support higher service transformation
priorities, such as new equipment or new technology. Other funding
shortfalls occur when the services subsequently identify additional
maintenance requirements that were not planned in the budget request. Army
officials expressed concerns that operation and maintenance funding to
sustain these aging equipment items in the future may not be sufficient to
cover the costs of retaining these items in the inventory longer than
expected.

Wartime Capability	Although there were some limited capabilities,
according to service officials, the equipment items we reviewed are
generally capable of fulfilling their wartime missions. In general the
services will always ensure equipment is ready to go to war, often through
surges in maintenance and overcoming obstacles such as obsolete parts,
parts availability, and cannibalization of other pieces of equipment.
These officials pointed out, however, that some of these equipment items
have capability deficiencies that could degrade their wartime performance
in the near term. For example, only 26 out of 213 Marine Corps Assault
Amphibian Vehicles at Camp Lejeune had been provided enhanced protective
armor kits prior to Operation Iraqi Freedom. According to Marine Corps
officials at Camp Lejeune, lack of the enhanced protective armor left the
vehicles vulnerable to the large caliber ammunition used by the Iraqi
forces. Similarly, according to Navy officials, there is an impending
negative impact on the Navy's wartime capabilities without an increase in
the number of available Navy EA-6B Prowler aircraft with upgraded
capabilities. Only one of the equipment items we reviewed, the Marine
Corps CH-46E helicopter, could not accomplish its intended mission because
of significant degradation in its lift capacity. Marine Corps officials
stated, however, that they were generally satisfied with the CH-46E
performance in Operation Iraqi Freedom despite its lift limitations.

We are recommending that the Secretary of Defense, in conjunction with the
Secretaries of the military services, reassess the program strategies for
the sustainment, modernization, and recapitalization of key legacy
equipment items, and reconcile funding requests for these equipment items
to ensure that the equipment will be adequately sustained until

replacement equipment items can be fielded. In reconciling these program
strategies to funding requests, the Secretary of Defense should highlight
for the Congress the risks involved in sustaining key legacy equipment
items if adequate funding support is not requested and the steps the
department is taking to address those risks. As part of this process, the
Secretary of Defense should identify the key equipment items that, because
of impaired conditions and their importance to meeting the department's
military strategy, should be given the highest priority for sustainment,
recapitalization, or replacement. To strengthen congressional oversight of
the department's major equipment programs, we are also suggesting that the
Congress may wish to consider having the Secretary of Defense provide an
annual report, in conjunction with the department's annual budget
submissions, on the condition, program strategy, and funding for major
equipment items.

In written comments on a draft of this report, the Department of Defense
partially concurred with our recommendation that it should reassess the
program strategies for equipment modernization and recapitalization, and
reconcile those strategies to the services' funding requests. However, the
department did not concur with our other two recommendations that it
should (1) highlight for the Congress the risks involved in sustaining key
equipment items if adequate funding support is not requested and the steps
the department is taking to address those risks, and (2) identify the
equipment items that should be given the highest priority for sustainment,
recapitalization, modernization, or replacement. Specifically, the
department stated that its current budget processes and its annual budget
submission to the Congress are already designed to identify, at the
corporate Department of Defense level, the department's highest funding
priorities. While we recognize that the budget process is designed to
identify the department's highest funding priorities, the budget
information presented to the Congress does not identify the trade-offs and
risks associated with the department's budgeting decisions. Therefore, we
continue to believe that the Congress needs to be better informed of
specific equipment condition deficiencies, the long-range strategies and
required funding to address those deficiencies, and the risks associated
with not adequately funding specific equipment modernization and
recapitalization requirements. This report, for example, specifically
identifies significant equipment condition deficiencies that were not
adequately reflected in the department's budget documents, and a lack of
specific program strategies and funding plans to address those
deficiencies.

The department also noted in its written comments that our report
identifies the CH-47D, CH-46E, KC-135, E/A-6B, Standard Missile-2, and the
Tomahawk Missile as equipment items with problems and issues that warrant
action within the next 1 to 3 years. The department stated that it will
continue to reassess these equipment items as it goes through its resource
allocation process. Lastly, the department provided technical comments
related to our assessments of specific equipment items in appendix II. We
reviewed and incorporated these technical comments, as appropriate.

The department's comments and our evaluation are on pages 23-25 of this
report.

Background	The September 2001 Quadrennial Defense Review (QDR) outlined a
strategy to sustain and transform the military force structure that has
been in place since the mid-1990s.10 In this review, the Department of
Defense (DOD) committed to selectively recapitalize older equipment items
to meet near-term challenges and to provide near-term readiness. DOD
recognized that the older equipment items critical to DOD's ability to
defeat current threats must be sustained as transformation occurs. DOD
also recognizes that recapitalization of all elements of U.S. forces since
the end of the Cold War has been delayed for too long.11 DOD procured few
replacement equipment items as the force aged throughout the 1990s, but it
recognizes that the force structure will eventually become operationally
and technologically obsolete without a significant increase in resources
that are devoted to the recapitalization of weapons systems.

The annual Future Years Defense Plan (FYDP) contains DOD's plans for
future programs and priorities. It presents DOD estimates of future
funding needs based on specific programs. Through the FYDP, DOD projects
costs for each element of those programs through a period of either 5 or 6
years on the basis of proposals made by each of the military services and
the policy choices made by the current administration. The 2003 FYDP
extends

10 Force structure includes 10 active and 8 reserve Army divisions, 12
Navy Carrier Battle Groups and 10 active and 1 reserve Carrier Air Wing, 3
active and 1 reserve Marine Expeditionary Force, 12 active and 7 reserve
Air Force Fighter Wings, and 112 combat-coded heavy bombers.

11Quadrennial Defense Review Report (Washington, D.C.: Sept. 30, 2001).

from fiscal year 2003 to fiscal year 2007, and the 2004 FYDP extends from
fiscal year 2004 to fiscal year 2009. Congress has expressed concerns that
the military modernization budget and funding levels envisioned in the
FYDP appear to be inadequate to replace aging equipment and incorporate
cutting-edge technologies into the force at the pace required by the QDR
and its underlying military strategy.

                              Overall Condition of
                               Selected Equipment
                              Items Varies Widely

As shown in table 1, of the 25 equipment items we reviewed, we assessed
the current condition of 3 of these equipment items as red, 11 as yellow,
and 10 as green. We were not able to obtain adequate data to assess the
condition for the Marine Corps Maverick Missile because the Marine Corps
does not track readiness trend data, such as mission capable or
operational readiness rates, for munitions as they do for aircraft or
other equipment.

Rotary wing lift helicopters, specifically the CH-46E and the CH-47D
helicopters, had the lowest condition rating among the equipment items we
reviewed, followed by fixed wing aircraft. Although we assessed the
condition as green for several equipment items such as the Army's Abrams
tank and the Heavy Expanded Mobility Tactical Truck, and the Marine Corps
Light Armored Vehicle-Command and Control Variant, we identified various
problems and issues that could potentially worsen the condition of some
equipment items in the near future if not attended to. Specifically, for
the Abrams tank, and similarly for the Heavy Expanded Mobility Tactical
Truck, Army officials cited supply and maintenance challenges at the unit
level such as repair parts shortages, inadequate test equipment, and lack
of trained technicians that could impact the tank's condition in the near
future. While the Marine Corps has a Light Armored Vehicle-Command and
Control Variant upgrade program under way, Marine Corps officials caution
that any delays in the upgrade program could affect future readiness.
According to service officials and prior GAO reports, the services are
currently able to alleviate the effects of these problems, in many cases,
through increased maintenance hours and cannibalization of parts from
other equipment.12

12 U.S. General Accounting Office, Military Aircraft: Services Need
Strategies to Reduce Cannibalizations, GAO-02-86 (Washington, D.C.: Nov.
21, 2001); Military Aircraft: Cannibalizations Adversely Affect Personnel
and Maintenance, GAO-01-93T (Washington, D.C.: May 22, 2001).

The military services use a number of metrics to measure equipment
condition. Examples include mission capable rates for aircraft,
operational readiness rates for equipment other than aircraft,13 average
age, and utilization rates (e.g., flying hours). The equipment items we
assessed as red did not meet mission capable or operational readiness
goals for sustained periods, were older equipment items, and/or had high
utilization rates. For example, 10 of 16 equipment items for which
readiness data were available did not meet mission capable or operational
readiness goals for extended periods from fiscal year 1998 through fiscal
year 2002. The average age of 21 of the equipment items ranged from about
1 year to 43 years.14

Some equipment items for which we assessed the condition as yellow also
failed to meet mission capable or operational readiness goals and were
more than 10 years old. However, offsetting factors, such as how
frequently the equipment items did not meet readiness goals or by what
percentage they missed the goals, indicated less severe and urgent
problems than items we assessed as red. Other equipment items may have had
high mission capable rates, but because of overall age and related
corrosion problems, we assessed these equipment items as yellow to
highlight the fact that these items could potentially present problems if
not attended to within the next 3-5 years.

The equipment items for which we assessed the condition as green generally
met mission capable and operational readiness goals. While three of these
equipment items-the Army Heavy Expanded Mobility Tactical Truck, the Air
Force F-16, and the Marine Corps Light Armored Vehicle-Command and Control
Variant-did not meet mission capable or operational readiness goals, we
assessed the condition as green because the condition problems identified
were less severe than the items we assessed as red or yellow. For example,
an equipment item may have been slightly below the goal but only for
non-deployed units, or the fleet-wide goals may have been met for the
equipment item overall, although the specific model we reviewed did not
meet the goals. In addition, although the rates for an equipment item may
be slightly below its goal, it may be able to meet operational
requirements. We also considered any upgrades

13 Operational readiness refers to the capability of equipment items other
than aircraft to perform the missions or functions for which it is
organized or designed and may be used in general terms to express a level
or degree of readiness.

14 However, the services do not use a uniform methodology to calculate
average age.

that were underway at the time of our review that would extend the service
life of the equipment.

Maintenance problems were most often cited by the Army and Marine Corps
officials we met with as the cause for equipment condition deficiencies
for the equipment items we reviewed. Equipment operators and maintainers
that we met with believed equipment degradation was the result of
maintenance problems in one of two categories-parts or personnel. The
parts problems include availability of parts or logistics and supply
system problems. Availability problems occur when there are parts
shortages, unreliable parts, or obsolete parts due to the advanced age of
the equipment items. Logistics and supply system problems occur when it
takes a long time to order parts or the unit requesting the parts has a
low priority. In June, July, and August of 2003, we issued six reports
highlighting deficiencies in DOD's and the services' management of
critical spare parts.15 We also issued a report on problems DOD and the
services are having dealing with corrosion for military equipment and that
they had not taken advantage of opportunities to mitigate the impact of
corrosion on equipment.16 Maintenance problems due to personnel include
(1) lack of trained and experienced technicians and (2) increases in
maintenance man-hours required to repair some of these aging equipment
items. We reported in April 2003, for example, that DOD has not adequately
positioned or trained its civilian workforce at its industrial activities
to meet future requirements.17 Consequently, the Department may continue
to have difficulty maintaining adequate skills at its depots to meet
maintenance requirements.

15U.S. General Accounting Office, Defense Inventory: The Army Needs a Plan
to Overcome Critical Spare Parts Shortages, GAO-03-705 (Washington, D.C.:
June 27, 2003); Defense Inventory: Air Force Plans and Initiatives to
Mitigate Spare Parts Shortages Need Better Implementation, GAO-03-706
(Washington, D.C.: June 27, 2003); Defense Inventory: The Department Needs
a Focused Effort to Overcome Critical Spare Parts Shortages, GAO03-707
(Washington, D.C.: June 27, 2003); Defense Inventory: Navy Logistics
Strategy and Initiatives Need to Address Spare Parts Shortages, GAO-03-708
(Washington, D.C.: June 27, 2003); and Defense Inventory: Several Actions
Are Needed to Further DLA's Efforts to Mitigate Shortages of Critical
Parts, GAO-03-709 (Washington, D.C.: August 31, 2003); and Defense
Inventory: Opportunities Exist to Improve Spare Parts Support Aboard
Deployed Navy Ships, GAO-03-887 (Washington, D.C.: Aug. 29, 2003).

16 U.S. General Accounting Office, Defense Inventory: Opportunities to
Reduce Corrosion Costs and Increase Readiness, GAO-03-753 (Washington,
D.C.; July 7, 2003).

17 U.S. General Accounting Office, DOD Civilian Personnel: Improved
Strategic Planning Needed to Help Ensure Viability of DOD's Civilian
Industrial Workforce, GAO-03-472 (Washington, D.C.; Apr. 30, 2003).

  Services Have Mapped Out Long-Range Program Strategies for Sustaining and
  Modernizing Most Equipment Items but Some Gaps Exist

In most cases, the services have developed long-range program strategies
for sustaining and modernizing the 25 equipment items that we reviewed.
However, some gaps exist because the services either have not validated
their plans for the sustainment, modernization, or replacement of the
equipment items, or the services' program strategies for sustaining the
equipment are hampered by problems or delays in the fielding of
replacement equipment or in the vulnerability of the programs to budget
cuts.

The two equipment items for which we assessed the program strategy as red
are the KC-135 Stratotanker and the Tomahawk Cruise Missile because,
although the services may have developed long-range program strategies for
these equipment items, they have not validated or updated their plans for
sustaining, modernizing, or replacing these items. In the case of the
KC-135 Stratotanker, the Air Force has embarked on a controversial,
expensive program to replace the tanker fleet, but as we have reported,18
it has not demonstrated the urgency of acquiring replacement aircraft and
it has not defined the requirements for the number of aircraft that will
be needed. Similarly, for the Tomahawk missile, the Navy has not
identified how many of these missiles it will need in the future, thereby
significantly delaying the acquisition process.

18 U.S. General Accounting Office, Military Aircraft: Observations on the
Air Force's Plan to Lease Aerial Refueling Aircraft, GAO-03-1143T
(Washington, D.C.: Sept. 3, 2003).

We assessed the program strategy for eight of the services' program
strategies as yellow, some of them because they will be affected by delays
in the fielding of equipment to replace the items in our review. According
to service officials, as the delivery of new replacement equipment items
is delayed, the services must continue using the older equipment items to
meet mission requirements. Consequently, the services may incur increased
costs due to maintenance that was not programmed for equipment retained in
inventory beyond the estimated service life. For example, the planned
replacement equipment for the Marine Corps CH-46E helicopter (i.e., the
MV-22 Osprey) has been delayed by about 3 years and is not scheduled to be
fielded until 2007. DOD has also reportedly cut the number of replacement
aircraft it plans to purchase by about 8 to 10 over the next few years,
thus the Marine Corps will have to retain more CH-46E helicopters in its
inventory. Program management officials have requested additional funds to
repair airframe cracks, replace seats, and move to lightweight armor to
reduce aircraft weight, engine overhauls, and avionics upgrades to keep
the aircraft safe and reliable until fielding of the replacement
equipment. According to Marine Corps officials, the CH-46E program
strategy has also been hampered by the 5-year rule,19 which limits
installation of new modifications other than safety modifications into the
aircraft unless 5 years of service are left on the aircraft. Procurement
of the replacement equipment for the Marine Corps' Assault Amphibian
Vehicle has also been delayed (by 2 years), and it is not scheduled for
full fielding until 2012. The program strategy for the Assault Amphibian
Vehicle includes upgrades, but for only 680 of the 1,057 vehicles in the
inventory.20

We also assessed the program strategy for some equipment items as yellow
if they were vulnerable to budget cuts. For example, according to Navy
officials, the Navy frigates' modernization program is susceptible to
budget cuts because the frigates' future role is uncertain as the Littoral
Combat ship is developed. In addition, the program strategy for the
frigates is questionable because of the uncertainty about the role
frigates will play. Specifically, Navy frigates are increasingly used for
homeland defense

19Public Law 105-56, title VIII, section 8053; Oct. 8, 1997; 111 Stat.
1232.

20 In its written comments on a draft of this report, department officials
stated that they plan to upgrade an additional 327 vehicles for a total of
1,007 vehicles, assuming funding is provided. They have received funding
through fiscal year 2003 supplemental funding, a fiscal year 2004
congressional plus-up, and fiscal year 2005 funding to upgrade 148
vehicles and plan to address the remaining 179 vehicles in a fiscal year
2006 Program Objective Memorandum.

missions, and their program strategy has not been updated to reflect that
they will be used more often and in different ways. The Army's CH-47D
helicopter is also vulnerable to budget cuts. The Army plans to upgrade
279 CH-47D helicopters to F models under its recapitalization program; the
upgrade includes a purchase of CH-47F model helicopters planned in fiscal
year 2004. The fiscal year 2004 budget for this purchase has already been
reduced. Program managers had also planned to purchase 16 engines, but
funding was transferred to requests for higher priority programs.

We assessed the program strategy for the remaining 15 equipment items as
green because the services have developed long-range program strategies
for sustaining, modernizing, or replacing these items consistent with
their estimated remaining service life. For example, the Army has
developed program strategies for all tracked and wheeled vehicles in our
sample. Likewise, the Air Force has developed program strategies for most
fixed wing aircraft in our sample throughout the FYDP. In the case of
munitions, with the exception of the Navy Tomahawk Cruise Missile and
Standard Missile-2, the services have developed program strategies for
sustaining and modernizing the current missile inventory in our sample.

  Requested Funding Does Not Reflect the Services' Long-Range Program Strategies

In many cases, the funding DOD has requested or is projecting for future
years in the FYDP for the equipment items we reviewed does not reflect the
military services' long-range program strategies for equipment
sustainment, modernization, or recapitalization. According to service
officials, the services submit their budgets to DOD and the Department has
the authority to increase or decrease the service budgets based upon the
perceived highest priority needs. According to DOD officials, for future
years' funding, the FYDP strikes a balance between future investment and
program risk, taking into consideration the services' stated requirements
as approved by DOD. As shown in table 1, we assessed the funding for 15 of
the 25 equipment items as red or yellow because the department's requested
funding did not adequately reflect its long-range program strategies for
modernization, maintenance, and spare parts.21 For example, as shown in
table 2, we identified fiscal year 2003 unfunded requirements totaling
$372.9 million for four major aircraft equipment items we reviewed.

21We did not independently verify the services' stated requirements.

Table 2: Unfunded Requirements for Selected Aircraft Equipment Items,
Fiscal Year 2003

                              Dollars in millions

Aircraft equipment item

Unfunded requirements

                       CH-47D Transport Helicopter $316.0

                           F-16 Fighter Aircraft 13.5

                          C-5 Transport Aircraft 39.4

CH-46E Transport Helicopter

                                  Total $372.9

Source: GAO analysis.

The most significant funding shortfalls occurred when parts, equipment
upgrades, and maintenance were not fully funded or when replacement
equipment items were not fielded as scheduled. The equipment items for
which we assessed the funding as yellow had funding shortfalls of a lesser
extent than the red items. Although we assessed the funding as green for
the remaining nine equipment items, program managers raised concerns about
the availability of operation and maintenance funds in future years, and
stated that insufficient operation and maintenance funds could potentially
result in more severe condition problems and increased future maintenance
costs.

According to service officials, funding shortfalls occurred when parts,
equipment upgrades, or maintenance were not fully funded or funds were
reduced to support higher priority service needs. As we have previously
reported, DOD increases or decreases funds appropriated by Congress as
funding priorities change.22 Other shortfalls occur when units
subsequently identify maintenance requirements that were not programmed
into the original budget requests. In addition, when replacement equipment
items are not fielded as scheduled, the services must continue to maintain
these aging equipment items for longer than anticipated. Equipment items
considered legacy systems23 such as the Marine Corps CH-46E helicopter

22U.S. General Accounting Office, Defense Budget: DOD Should Further
Improve Visibility and Accountability of O&M Fund Movements,
GAO/NSIAD-00-18 (Washington, D.C. Feb. 9, 2002).

23 Legacy systems are equipment items whose critical functionality will be
subsumed by a new system and is scheduled for termination. The Stryker,
Patriot, and Guided Multiple Launch Rocket System are not legacy equipment
items.

may not receive funding on the basis of anticipated fielding of
replacement equipment in the near future. The gaps between funding for
legacy systems (which are heavily used and critical to the services'
mission) and funding for future replacement equipment result when fielding
of the new equipment has been delayed and budgets have been reduced for
maintenance of legacy systems. Funding for these legacy systems may also
be a target for funding reductions to support higher service priority
items.

According to the program managers for some of the equipment items we
reviewed (including the Army Abrams tank, Heavy Expanded Mobility Tactical
Truck, and Navy EA-6B Prowler), as the services retain aging equipment in
their inventories longer than expected, maintenance requirements increase,
thus increasing operation and maintenance costs. Program managers raised
concerns about the availability of sufficient operation and maintenance
funding to sustain these aging equipment items in the future. Also,
program managers stated that present sustainment funds (i.e., operation
and maintenance funds) may only cover a small percentage of the
equipment's requirements, and they frequently rely on procurement funds to
subsidize equipment improvements common to multiple equipment items.24
However, once production of the equipment item has been completed and
procurement funds are no longer available for use, program managers must
compete with the rest of the service for limited operation and maintenance
funds. Program managers expressed concerns that operation and maintenance
funds are not currently available to fund equipment improvements and noted
operation and maintenance funds may not be available in the future.

  Equipment Is Generally Capable of Fulfilling Wartime Missions despite Some
  Limitations

Based on our analysis of equipment condition, the performance of the
equipment items in recent military conflicts, and discussions with service
officials, program managers, and equipment operators and maintainers, we
found that most of the equipment items we reviewed are capable of
fulfilling their wartime missions despite some limitations. In general,
the services will always ensure equipment is ready to go to war, often
through surges in maintenance and overcoming obstacles such as obsolete
parts, parts availability, and cannibalization of other pieces of
equipment. Some

24 Operating and support costs or total life-cycle costs are the total
costs of acquiring and owning a weapon or materiel system over its full
life, including development, procurement, operation, support, and
disposal. About 60 percent of O&S funding is appropriated to the operation
and maintenance accounts that pay for spare and repair parts.

of these equipment items (such as the Marine Corps CH-46E helicopter and
all Air Force aircraft except the B-2) were used in Operation Desert Storm
and have been used in other diverse operations such as those in Kosovo and
Afghanistan. With the exception of the Army Stryker and GMLRS, all of the
equipment items we reviewed were used recently in Operation Iraqi Freedom.

The services, in general, ensure that equipment is ready for deployment by
surging maintenance operations when necessary. Only one equipment item,
the Marine Corps CH-46E helicopter, could not accomplish its intended
wartime mission due to lift limitations. However, Marine Corps officials
stated that they were generally satisfied that the CH-46E met its mission
in Operation Iraqi Freedom despite these limitations. Of the remaining
equipment items we reviewed, including all Air Force fixed-wing aircraft,
all tracked and wheeled vehicles, and most munitions, service officials
believe that most of these items are capable of fulfilling their wartime
missions.

According to service officials and program managers, while final Operation
Iraqi Freedom after action reports were not available at the time of our
review, initial reports and preliminary observations have generally been
favorable for the equipment items we reviewed. However, these officials
identified a number of specific concerns for some of these equipment items
that limit their wartime capabilities to varying degrees. For example,
only 26 out of 213 Marine Corps Assault Amphibian Vehicles at Camp Lejeune
had been provided enhanced protective armor kits prior to Operation Iraqi
Freedom. According to Marine Corps officials at Camp Lejeune, lack of the
enhanced protective armor left the vehicles vulnerable to the large
caliber ammunition used by the Iraqi forces. According to Navy officials,
warfighting capabilities of the Navy EA-6B Prowler aircraft will be
degraded if their capabilities are not upgraded and the outer wing panels
are not replaced. Fleet commanders expressed concerns about potentially
deploying some ships we reviewed with only one of three weapons systems
capable of being used. However, program managers stated that plans were in
place to reduce the vulnerability of these ships by fielding two
compensating weapons systems.

Conclusions	Although the military services are generally able to maintain
military equipment to meet wartime requirements, the ability to do so over
the next several years is questionable especially for legacy equipment
items. Because program strategies have not been validated or updated and

funding requests do not reflect the services' long-range program
strategies, maintaining this current equipment while transforming to a new
force structure as well as funding current military operations in Iraq and
elsewhere will be a major challenge for the department and the services.
We do not believe, however, that the funding gaps we identified are
necessarily an indication that the department needs additional funding.
Rather, we believe that the funding gaps are an indication that funding
priorities need to be more clearly linked to capability needs and to
longrange program strategies.

The military services will always need to meet mission requirements and to
keep their equipment ready to fulfill their wartime missions. However,
this state of constant readiness comes at a cost. The equipment items we
reviewed appear to have generally fulfilled wartime missions, but often
through increased maintenance for deployed equipment and other
extraordinary efforts to overcome obstacles such as obsolete parts, parts
availability, and cannibalization of other pieces of equipment. The
reported metrics may not accurately reflect the time needed to sustain and
maintain equipment to fulfill wartime missions. Substantial equipment
upgrades or overhauls may be required to sustain older equipment items
until replacement equipment items arrive.

  Recommendations for Executive Action

While our review was limited to 25 equipment items and represents a
snapshot at a particular point in time, the department should reassess its
current processes for reviewing the condition, program strategy, and
funding for key legacy equipment items. Specifically we recommend that the
Secretary of Defense, in conjunction with the Secretaries of the Army, Air
Force, and the Navy, reassess the program strategies for equipment
modernization and recapitalization, and reconcile those strategies with
the services' funding requests to ensure that key legacy equipment,
especially those items needed to meet the strategy outlined in the
September 2001 Quadrennial Defense Review, are sustained until replacement
equipment items can be fielded. In reconciling these program strategies to
funding requests, the Secretary of Defense should highlight for the
Congress, in conjunction with the department's fiscal year 2005 budget
submissions, the risks involved in sustaining key equipment items if
adequate funding support is not requested and the steps the department is
taking to address those risks. As part of this process the department
should identify the key equipment items that, because of impaired
conditions and their importance to meeting the department's military
strategy, should be given the highest priority for sustainment,
recapitalization, modernization, or replacement.

  Matter for Congressional Consideration

If the Congress wants a better understanding of the condition of major
equipment items, the department's strategy to maintain or recapitalize
these equipment items, and the associated funding requirements for certain
key military equipment needed to meet the strategy outlined in the QDR,
the Congress may wish to consider having the Secretary of Defense provide
an annual report, in conjunction with its annual budget submissions, on
(1) the extent to which key legacy equipment items, particularly those
that are in a degraded condition, are being funded and sustained until
replacement equipment items can be fielded; (2) the risks involved in
sustaining key equipment items if adequate funding support is not
requested; and (3) the steps the department is taking to address those
risks.

  Agency Comments and Our Evaluation

In written comments on a draft of this report, the Department of Defense
partially concurred with our recommendation that it should reassess the
program strategies for equipment modernization and recapitalization, and
reconcile those strategies to the services' funding requests. However, the
department did not concur with our other two recommendations that it
should (1) highlight for the Congress the risks involved in sustaining key
equipment items if adequate funding support is not requested and the steps
the department is taking to address those risks, and (2) identify the
equipment items that should be given the highest priority for sustainment,
recapitalization, modernization, or replacement. The department's written
comments are reprinted in their entirety in appendix III.

In partially concurring with our first recommendation that it should
reassess the program strategies for equipment modernization and
recapitalization, and reconcile those strategies to the services' funding
requests, the department agreed that, while the overall strategy outlined
in the September 2001 Quadrennial Defense Review may be unchanged, events
over time may dictate changes in individual program strategies, that
requires an order to meet the most current threat. The department stated,
however, that through its past Planning, Programming, and Budgeting System
and the more current Planning, Programming, Budgeting, and Execution
processes, the department had and continues to have an annual procedure to
reassess program strategies to ensure equipment maintenance,
modernization, and recapitalization funding supports the most recent
Defense strategy. While we acknowledge that these budget processes may
provide a corporate, department-level review of what is needed to
accomplish the national defense mission, the department's budget and the
information it provides to the Congress do not clearly

identify the funding priorities for individual equipment items. For
example, although the funding to sustain the department's major equipment
items is included in its Operation and Maintenance budget accounts, these
budget accounts do not specifically identify funding for individual
equipment items. We continue to believe that the department, in
conjunction with the military services, needs to develop a more
comprehensive and transparent approach for assessing the condition of key
legacy equipment items, developing program strategies to address critical
equipment condition deficiencies, and prioritizing the required funding.

The department did not concur with our second recommendation that, in
reconciling the program strategies to funding requests, it should
highlight for the Congress, in conjunction with its fiscal year 2005
budget submissions, the risks involved in sustaining key equipment items
if adequate funding support is not requested and the steps the department
is taking to address those risks. Specifically, the department stated that
its budget processes and the annual Defense budget provide the Congress a
balanced program with all requirements "adequately" funded and that the
unfunded requirements identified by the program managers or the services
may not be validated at the department level. While we agree that the
department's budget may identify its highest funding priorities at the
department wide level, it does not provide the Congress with an assessment
of equipment condition deficiencies, unfunded requirements identified by
the services, and the potential risks associated with not fully funding
the services' program strategies. In this report, we identify a number of
examples of equipment condition deficiencies and inconsistencies between
the program strategies and the funding requests to address those
deficiencies that were not fully addressed in the department's budget
documents. We believe that the Congress, in its oversight of the
department's major equipment programs, needs to be better informed of
specific equipment condition deficiencies, the longrange strategies and
required funding to address those deficiencies, and the risks associated
with not adequately funding specific equipment modernization and
recapitalization requirements.

The department also did not concur with our recommendation that it should
identify for the Congress the key equipment items that, because of
impaired condition and their importance to meeting the department's
military strategies, should be given the highest priority for sustainment,
recapitalization, modernization, or replacement. In its comments, the
department stated that, in developing the annual Defense budget, it has
already allocated resources according to its highest priorities. The

department further stated that key items that are vital to accomplishing
the department's mission are allocated funding in order to meet the
requirements of the most current Defense strategy, and that there is no
need to restate these priorities with a list. Similar to our rebuttal to
the department's response to our second recommendation as discussed above,
we do not believe that the department's annual budget provides the
Congress with sufficient information on the most severe equipment
condition deficiencies and the funding priorities for addressing those
deficiencies. We believe that a separate analysis, in conjunction with the
department's budget submissions, that highlights the most critical
equipment condition deficiencies, the planned program strategies for
addressing those deficiencies, and the related funding priorities is
needed to provide the Congress with the information it needs to make
informed budget decisions.

The department also noted in its written comments that our report
identifies the CH-47D, CH-46E, KC-135, EA-6B, Standard Missile-2, and the
Tomahawk missile as equipment items with problems and issues that warrant
action within the next 1 to 3 years. The department stated that it would
continue to reassess these equipment items as it goes through its resource
allocation process.

Lastly, the department provided technical comments concerning our
assessments of specific equipment items in appendix II, including the
KC-135 Stratotanker, Assault Amphibian Vehicle, MV-22, Tomahawk Cruise
Missile, and the CH-46E Sea Knight Helicopter. We reviewed and
incorporated these technical comments, as appropriate. The revisions that
we made based on these technical comments did not change our assessments
for the individual equipment items. In some cases, the data and
information the department provided in its technical comments resulted
from program and funding decisions that were made subsequent to our
review.

We are sending copies of this report to the Secretary of Defense; the
Secretaries of the Army, the Navy, and the Air Force; the Commandant of
the Marine Corps; and other interested parties. We will also make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.

Please contact me on (202) 512-8365 if you or your staffs have any
questions concerning this report. Major contributors to this report are
included in appendix IV.

William M. Solis, Director
Defense Capabilities and Management

Appendix I

Scope and Methodology

To determine the level of attention required by the Department of Defense,
the military services, and/or the Congress for each of the 25 equipment
items we reviewed, we performed an independent evaluation of the (1)
equipments' current condition; (2) services' program strategies for the
sustainment, modernization, or replacement of the equipment items; (3)
current and projected funding levels for the equipment items in relation
to the services' program strategies; and (4) equipments' wartime
capabilities. Based on our evaluation of the condition, program strategy,
and funding for each of the 25 equipment items, we used a traffic light
approach-red, yellow, or green-to indicate the severity and urgency of
problems or issues. We established the following criteria to assess the
severity and urgency of the problems.

o Red indicates a problem or issue that is severe enough to warrant action
by DOD, the military services, and/or the Congress within the next 1-3
years. We selected this time frame of 1-3 years because it represents the
time frame for which DOD is currently preparing annual budgets.

o 	Yellow indicates a problem or issue that is severe enough to warrant
action by DOD, the military services, and/or the Congress within the next
3-5 years. We selected this time frame of 3-5 years because it represents
the near-term segment of DOD's Future Years Defense Plan.

o Green indicates that we did not identify any specific problems or issues
at the time of our review, or that any existing problems or issues we
identified are not of a severe enough nature that we believe warrant
action by DOD, the military services, and/or the Congress within the next
5 years. We selected this time frame of 5 years because it represents the
longer-term segment of DOD's Future Years Defense Plan.

We also reviewed the wartime capability of the selected equipment items,
focusing on the extent to which each equipment item is capable of
fulfilling its wartime mission. Because of ongoing operations in Iraq and
our limited access to the deployed units and related equipment performance
data, we were unable to obtain sufficient data to definitively assess the
wartime capability for each of the 25 equipment items we reviewed, as we
did for each of the other three assessment areas.

To select the 25 equipment items we reviewed, we worked with the military
services and your offices to judgmentally select approximately two weapons
equipment items, two support equipment items, and two munitions items from
the equipment inventories of each of the four military services-Army, Air
Force, Navy, and Marine Corps. We relied extensively on input from the
military services and prior GAO work to select equipment items that have
been in use for a number of years and are critical to supporting the
services' mission. We based our final selections on the equipment items
that the military services believed were most critical to their missions.
The 25 equipment items we selected for review include 7 Army equipment
items, 6 Air Force equipment items, 7 Navy equipment items, and 5 Marine
Corps equipment items. Our assessments apply only to the 25 equipment
items we reviewed, and the results of our assessments cannot be projected
to the entire inventory of DOD equipment.

To assess equipment condition, we obtained and analyzed data on equipment
age, expected service life, and the services' equipment condition and
performance indicators such as mission capable rates, operational
readiness rates, utilization rates, failure rates, cannibalization rates,
and depot maintenance data for each of the equipment items we reviewed.
The specific data that we obtained and analyzed for each equipment item
varied depending on the type of equipment and the extent to which the data
were available. The scope of our data collection for each of the equipment
items included both the active and reserve forces. We also met with the
services' program managers and other cognizant officials from each of the
four military services for each of the 25 equipment items. In addition, we
visited selected units and maintenance facilities to observe the equipment
during operation or during maintenance and to discuss equipment condition
and wartime capability issues with equipment operators and maintainers.
Our observations and assessments were limited to equipment in the active
duty inventory.

To assess the program strategy for these equipment items, we reviewed the
services' plans for future sustainment, modernization, recapitalization,
or replacement of the equipment items in order to meet the services'
mission and force structure requirements. We met with the services'
program managers and other military service officials to discuss and
assess the extent to which the services have a strategy or roadmap for
each of the 25 equipment items, and whether the program strategy is
adequately reflected in DOD's current budget or the Future Years Defense
Plan.

To assess equipment funding, we obtained and analyzed data on historical,
current, and future years' budget requests for each of the 25 equipment
items we reviewed. We also reviewed the services' budget requests,
appropriations, and obligations for fiscal year 1998 through fiscal year
2003 to determine how the funds that had been requested and appropriated
for each of the equipment items were used. In addition, we reviewed the
Future Years Defense Program for fiscal year 2003 to fiscal year 2007 and
for fiscal year 2004 to fiscal year 2008 to determine if the projected
funding levels were consistent with the services' program strategies for
sustainment, modernization, recapitalization, or replacement of the
selected equipment items. We also met with the services' program managers
for each of the 25 equipment items to identify budget shortfalls and
unfunded requirements. We did not independently validate the services'
requirements. We were unable, however, to obtain specific information from
the Office of the Secretary of Defense or the Joint Staff on the long-term
program strategies and funding priorities for these equipment items
because officials in these offices considered this information to be
internal DOD data and would not make it available to us.

To review the wartime capability of each equipment item, we discussed with
military service officials, program managers, and equipment operators and
maintainers the capabilities of the equipment items to fulfill their
wartime missions and the equipments' performance in recent military
operations. Because of ongoing operations in Iraq and our limited access
to the deployed units and related equipment performance data, we were
unable to collect sufficient data to definitively assess wartime
capability or to assign a color-coded assessment as we did with the other
three assessment areas. We also reviewed related Defense reports, such as
after action reports and lessons learned reports, from recent military
operations to identify issues or concerns regarding the equipments'
wartime capabilities.

We performed our work at relevant military major commands, selected units
and maintenance facilities, and one selected defense combatant command.
Our access to specific combatant commands and military units was somewhat
limited due to their involvement in Operation Iraqi Freedom. The specific
military activities that we visited or obtained information from include
the following:

o  U.S. Army, Headquarters, Washington, D.C.;

o 	U.S. Army, Office of the Assistant Secretary of the Army for
Acquisitions, Logistics, and Technology, Washington, D.C.;

o  U.S. Army Forces Command Headquarters, Atlanta, Ga.;

o  U.S. Army, 1st Calvary Division, 118th Corps, Ft. Hood, Tx.;

o 	U.S. Army, Aviation and Missile Command, Redstone Arsenal, Precision
Fire and Missile Project Office, Huntsville, Al.;

o  U.S. Army, Tank and Armament Automotive Command, Warren, Mi.;

o 	U.S. Army, Cost and Economic Analysis Center, Pentagon, Washington,
D.C.;

o  U.S. Army, Pacific, Ft. Shafter, Hawaii; and

o  U.S. Army, 25th Infantry Division (Light), Schofield Barracks, Hawaii;

o 	U.S. Air Force, Headquarters, Plans and Programs Division, Washington,
D.C.;

o 	U.S. Air Force, Combat Forces Division, and Global Mobility Division,
Washington, D.C.;

o 	U.S. Air Force, Munitions Missile and Space Plans and Policy Division,
Washington, D.C.;

o  U.S. Air Force, Air Logistics Center, Robins Air Force Base, Ga.;

o 	U.S. Air Force, Air Combat Command, Directorate of Requirements and
Plans, Aircraft Division, and the Installation and Logistics Division,
Langley Air Force Base, Va.;

o  U.S. Air Force, Pacific, Hickam Air Force Base, Hawaii;

o  U.S. Navy, Naval Surface Forces, Atlantic Fleet, Norfolk Naval Base,
Va.;

o  U.S. Navy, Naval Air Force, Atlantic Fleet, Norfolk Naval Base, Va.;

o  U.S. Navy, Naval Weapons Station Yorktown, Va.;

o  U.S. Navy, Naval Surface Forces, Pacific Fleet, Pearl Harbor, Hawaii;

o 	U.S. Navy, Naval Surface Forces, Pacific Fleet, Naval Amphibious Base,
Coronado, Calif.;

o 	U.S. Navy, Naval Air Forces, Naval Air Station North Island, Coronado,
Calif.;

o  U.S. Navy, Naval Weapons Station Seal Beach, Calif.;

o 	U.S. Navy, Electronic Attack Wing, U.S. Pacific Fleet, Naval Air
Station Whidbey Island, Wash.;

o 	U.S. Navy, Naval Sea Systems Command, Washington Navy Yard, Washington,
D.C.;

o 	U.S. Navy, Naval Air Systems Command, Naval Air Station Patuxent River,
Md.;

o  U.S. Navy, Naval Air Depot, Naval Air Station North Island, Calif.; and

o  U.S. Navy, Avondale Shipyard, Avondale, La.;

o  U.S. Marine Corps, Systems Command, Quantico, Va.;

o 	U.S. Marine Corps, Aviation Weapons Branch, Pentagon, Washington, D.C.;

o 	U.S. Marine Corps, Tank Automotive and Armaments Command, Warren,
Mich.;

o 	U.S. Marine Corps, I Marine Expeditionary Force, Camp Pendleton,
Calif.;

o  U.S. Marine Corps, II Marine Expeditionary Force, Camp Lejeune, N.C.;

o  U.S. Marine Corps, Naval Research Lab, Washington, D.C.;

o  U.S. Marine Corps, AAAV Technology Center, Woodbridge, Va.; and

o  U.S. Marine Corps, Marine Forces Pacific, Camp Smith, Hawaii.

We also obtained and reviewed relevant documents and reports from DOD and
the Congressional Budget Office, and relied on related prior GAO reports.
We performed our review from September 2002 through October 2003 in
accordance with generally accepted government auditing standards.

Appendix II

                    Assessments of Selected Equipment Items

For the 25 equipment items, each assessment provides a snapshot in time of
the status of the equipment item at the time of our review. The profile
presents a general description of the equipment item. Each assessment area
contains a highlighted area indicating the level of DOD, military service,
and/or congressional attention each equipment item needs, in our opinion,
based on our observations of each equipment item, discussions with service
officials, and reviews of service-provided metrics.

  Army

Abrams Tank	First delivered in the early 1980s, the Abrams is the Army's
main battle tank and destroys enemy forces using enhanced mobility and
firepower. Variants of the Abrams include the M1, M1A1, and M1A2. The M1
has a 105mm main gun; the M1A1 and M1A2 have a 120 mm gun, combined with a
powerful turbine engine and special armor. There are 5,848 tanks in the
inventory, and the estimated average age is 14 years. The M1 variant will
be phased out by 2015. The M1 and M1A2 variant are being upgraded to the
M1A2 Systems Enhancement Program (SEP) by July 2004.

Figure 1: Abrams Tank

Source: Defense Visual Information Center.

Condition

We assessed the condition of the Abrams Tank as green because it
consistently met its mission capable goal of 90 percent from fiscal year
1998 through fiscal year 2002. Although the Abrams met its mission capable
goal, supply and maintenance operations at the unit-level are a challenge
because of repair parts shortages, unreliable components, inadequate test
equipment, and lack of trained technicians. There are concerns that the

future condition of the Abrams could deteriorate in the next 5 years due
to insufficient sustainment funds. The lack of funds could result in an
increase of aging tanks and maintenance requirements.

Program Strategy

We assessed the program strategy for the Abrams as green because the Army
has developed a long-term strategy for upgrading and phasing out certain
variants of aging tanks in its inventory. The Army's Recapitalization
Program selectively implements new technology upgrades to reduce
operations and support cost. Additionally, the Army is phasing out the
M1A2 from its inventory by 2009, and procuring 588 M1A2 SEPS. The SEP
enhances the digital command and control capabilities of the tank. The
Army also developed a program for improving the Abrams M1A2 electronics
called the Continuous Electronic Evolution Program, which is part of the
SEP. The first phase of this program has been approved and funded.
According to an Army official, the next phase is expected to start in
approximately 5 years.

Funding

We assessed the funding for the Abrams as yellow because current and
projected funding is not consistent with the Army's stated requirements to
sustain and modernize the Abrams tank inventory. The Army reduced the
recapitalization budget by more than 50 percent for the M1A2 SEP, thereby
decreasing the number of upgrades from 1,174 to 588. Unfunded requirements
for the Abrams tank include the vehicle integrated defense systems, safety
and environmental fixes, and an improved driver's viewer system. Without
adequate funding, obsolescence may become a major issue once tank
production ends and procurement funds are no longer available to subsidize
tank requirements. Procurement funding for the M1A2 SEP will be completed
by 2003 and deliveries completed by 2004. According to an Army official,
the Abrams procurement funding provides approximately 75 percent to 80
percent of the tank requirements due to commonality among the systems.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the Abrams, a detailed pre-war
assessment prepared by the program manager's office indicated that the
tank is not ready or able to

sustain a long-term war. During Operation Iraqi Freedom, the Abrams tank
was able to successfully maneuver, provide firepower, and protect the
crew. Losses were attributed to mechanical breakdown and cannibalization.
The detailed assessment by the program manager's office, however,
indicated that limited funding, war reserve spare part shortages, and
supply availability could impact the tank's ability to sustain a long-term
war.

AH-64A/D Apache The Apache is a multi-mission aircraft designed to perform
rear, close, deep

Helicopter	operations and precision strikes, armed reconnaissance and
security during day, night, and adverse weather conditions. There are
approximately 728 Apache helicopters in the Army's inventory-418 AH-64A
models and 310 AH-64D models. The fleet average age is about 12 years.

                      Figure 2: AH-64A/D Apache Helicopter

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the Apache as yellow because the Apache AH64D
model failed to meet the mission capable goal of 75 percent approximately
50 percent of the time, from fiscal year 1999 through fiscal year 2002;
however, according to officials, the Apache mission capable rates have
consistently exceeded the 75 percent goal in calendar year 2003. Aviation
safety restrictions were cited as the reason why the Apache failed to meet
mission capable goals. A safety restriction pertains to any defect or
hazardous condition that can cause personal injury, death, or damage to
the aircraft, components, or repair parts for which a medium to high
safety risk has been determined. These restrictions included problems with
the (1) aircraft Teflon bushings, (2) transmission, (3) main rotor blade
attaching pins, (4) generator power cables, and (5) the removal,
maintenance and inspection of the Auxiliary Power Unit Takeoff Clutch.

The Army's Recapitalization Program includes modifications that are
intended to address these safety restrictions.

Program Strategy

We assessed the program strategy for the Apache as green because the Army
has developed a long-term program strategy to sustain and upgrade the
aging Apache fleet. The Army's Recapitalization Program addresses costs,
reliability, and safety problems, fleet groundings, aging aircraft, and
obsolescence. The Army plans to remanufacture 501 AH-64A helicopters to
the AH-64D configuration. The goal is to reduce the fleet average age to
10 years by 2010, increase the unscheduled mean time between removal by 20
percent for selected components, and generate a 20 percent return on
investment for the top 10 cost drivers. The Army is on-schedule for
fielding the Apache AH-64D.

Funding

We assessed the funding for the Apache as green because current and
projected funding is consistent with the Army's stated requirements for
sustaining and upgrading the Apache fleet. The Apache program is fully
funded through fiscal year 2005 at a total cost of $6.7 billion. The
funding supports remanufacturing and upgrading 501 Apache AH-64A to the
newer Longbow Apache AH-64D aircraft, as well as funding other reliability
and safety issues. The Army has expended $3.6 billion to convert 284 A
models to D models from fiscal year 1996 through fiscal year 2001. The
other $3.1 billion supports upgrading the remaining 217 A models to
address reliability and safety issues, procuring Detection Systems, and
procuring Internal Auxiliary Fuel System/Ammo Flat Pack for the Apache
fleet. The Army has not made a decision to fund modifications needed in
fiscal year 2005 through fiscal year 2012, which is estimated to cost
approximately $3.4 billion

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the Apache, Army officials did not
identify any specific concerns. These officials indicated that the Apache
successfully fulfilled its wartime missions in Afghanistan and Operation
Iraqi Freedom. In Operation Iraqi Freedom, the AH-64D conducted combat
operations for both close combat and standoff engagements. Every mission
assigned was

flown and accomplished with the Apache AH-64D. The Longbow performance has
been enhanced by targeting and weapon systems upgrades that have improved
the Longbow performance over the AH-64A.

Stryker	The Stryker is a highly deployable-wheeled armored vehicle that
employs 10 variations-the Infantry Carrier Vehicle (ICV), Mortar Carrier
(MC), Reconnaissance Vehicle (RV), Commander Vehicle (CV), Medical
Evacuation Vehicle (MEV), Engineer Squad Vehicle (ESV), Anti-Tank Guided
Missile Vehicle (ATGM), and Fire Support Vehicle (FSV), the Mobile Gun
System (MGS), and the Nuclear Biological and Chemical Reconnaissance
Vehicle (NBCRV). There are 600 Stryker vehicles in the Army's inventory,
and the average age is less than 2 years. The Army plans to procure a
total of 2,121 Stryker vehicles through fiscal year 2008.

Figure 3: Stryker

Source: Defense Visual Information Center.

Condition

We assessed the condition of the Stryker as green because it has
successfully achieved the fully mission capable goal of 95 percent, based
on a 3-month average from April 2003 through July 2003. The Congress
mandated that the Army compare the operational effectiveness and cost of
an infantry carrier variant of the Stryker and a medium Army armored
vehicle. The Army compared the cost and operational effectiveness of the
Stryker infantry carrier against a medium armored vehicle. The Army
selected the M113A3, and the comparison shows the Stryker infantry carrier
vehicle is more survivable and provides better overall performance and
mobility when employed in combat operations than the M113A3.

Program Strategy

We assessed the program strategy for the Stryker as green because the Army
developed a long-term program strategy for procuring a total of 2,121
vehicles through fiscal year 2008, which will satisfy the total
requirement. Of the 600 currently in the inventory, 449 are at 2
brigades-a 3rd brigade of the 2nd Infantry Division and the 1st brigade of
the 25th Infantry Division, both of which are located at Fort Lewis,
Washington. The other 151 are at fielding sites, training centers, and the
Army Test and Evaluation Center. The remaining 1,521 will be procured
through fiscal year 2007 with expected deliveries through fiscal year
2008. The next brigade scheduled to receive the Stryker is the 172nd
Infantry Brigade at Forts Richardson and Wainwright, Alaska. The remaining
Stryker Brigades Combat Teams to be equipped with the Stryker are the 2nd
Cavalry Regiment, Fort Polk, Louisiana; 2nd Brigade, 25th Infantry
Division, Schofield Barracks, Hawaii; and 56th Brigade of the 28th
Infantry Division, Pennsylvania Army National Guard.

Funding

We assessed the funding for the Stryker as green because current and
projected funding is consistent with the Army's stated requirements to
sustain the Stryker program. The program is fully funded to field the six
Stryker brigade combat teams. Approximately $4.1 billion has been
allocated for all six combat teams through fiscal year 2009. The Secretary
of Defense has authorized the procurement of the first three brigades, but
the fourth brigade cannot be procured until the Secretary of Defense
solidify to Congress that the results of the Operational Evaluation
mandated by Congress indicated that the design for the interim brigade
combat team is operationally effective and operationally suitable. The
evaluation was completed in May 2003 and results are being finalized.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the Stryker, the Army did not identify
any specific concerns regarding the system being able to meet its wartime
mission. The Stryker has not yet been used in any conflict situation. In
May 2003, GAO reported that the Army Test and Evaluation Command concluded
that the Stryker provided more advantages than the M113A3 in force
protection, support for dismounted assault, and close fight and mobility,
and was more survivable against ballistic and non-ballistic threats.

CH-47D/F Chinook The CH-47 helicopter is a twin-engine, tandem rotor
helicopter designed for

Helicopter	transportation of cargo, troops, and weapons. The Army
inventory consists of 426 CH-47D models and 2 CH-47F models. The CH-47F
Improved Cargo Helicopter is a remanufactured version of the CH-47D and
includes a new digital cockpit and a modified airframe to reduce
vibration. The overall average age of the CH-47 is 14 years old. The Army
plans to convert 76 D model aircraft to the F model between fiscal years
2005 and fiscal year 2009.

                     Figure 4: CH-47D/F Chinook Helicopter

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the Chinook as red because it consistently
failed to meet the Army's mission capable goal of 75 percent from fiscal
year 1998 to fiscal year 2002. Actual mission capable rates ranged from 61
percent to 69 percent. Army officials attributed the failure to meet the
75 percent mission capable goal to aging equipment, supply shortages, and
inexperienced technicians. Maintaining aircraft has become increasingly
difficult with the CH-47D failing to meet the non-mission capable
maintenance goal of 15 percent, increasing from 27 percent in fiscal year
1998 to 31 percent in fiscal year 2002.

Program Strategy

We assessed the program strategy for the Chinook as yellow because the
Army has developed a long-term strategy for upgrading and replacing the
Chinook, but the strategy is not consistent with the Army's funding
priorities. There has been a delay in the plan to upgrade 279 D models to
F models between fiscal year 2003 and fiscal year 2017 under the Army's
Recapitalization Program, reducing the number of CH-47F helicopters
planned in the fiscal year 2004 budget by five due to unexpected funding
constraints. These budgetary constraints also delayed the Army's plans to
purchase 16 engines because funding was transferred to support other
nonrecurring requirements. Readiness may be adversely affected if these
engines are not procured because unit requisitions for these engines will
not be filled and aircraft will not be fully mission capable.

Funding

We assessed the funding for the Chinook as yellow because current and
projected funding is not consistent with the Army's requirements for
sustaining and upgrading the Chinook helicopter. At present, the Army has
identified unfunded requirements totaling $316 million, with $77 million
needed to procure the five CH-47Fs and the 16 engines for which the funds
had been previously diverted. The remaining $239 million would support
other improvements including common avionics system, rotor heads,
crashworthy crew seats, and engine modifications. The Army will resolve
some or all of these requirements with projected funding of $3 billion to
support the CH-47 program through fiscal year 2017.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the Chinook, Army officials indicated
that it successfully fulfilled its wartime mission for Operation Iraqi
Freedom despite current condition problems. These officials stated that
the deployed units were able to overcome these condition problems because
the deployed aircraft were provided a higher priority than non-deployed
aircraft for spare parts. As a result, the estimated mission capable rates
for deployed aircraft increased to about 86 percent during the operation.

Heavy Expanded Mobility The HEMTT provides transport capabilities for
re-supply of combat

Tactical Truck (HEMTT)	vehicles and weapon systems. The HEMTT's five basic
configurations include the cargo truck, the load handling system, wrecker,
tanker, and tractor. The HEMTT entered into the Army's inventory in 1982.
The current inventory totals about 12,500 and the average age is 13 years.

                Figure 5: Heavy Expanded Mobility Tactical Truck

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the HEMTT as green because mission capable
rates have been close to the Army's 90 percent goal, averaging 89 percent
between fiscal year 1998 and fiscal year 2002. Moreover, the overall
supply availability rates have exceeded the 85 percent goal from May 2002
to October 2002, averaging between 96 percent and 99 percent,
respectively. In some instances, however, meeting the operational goals
has been continually challenging because of aging equipment, heavy
equipment usage, and the lack of trained mechanics. The lack of trained
mechanics may also impact the Army's future ability to meet the specified
mission

capable goals. In addition, a detailed pre-war assessment by the program
manager's office indicated that concerns regarding shortages of spare
parts would significantly degrade the HEMTT readiness rates.

Program Strategy

We assessed the program strategy for the HEMTT as green because the Army
has developed a long-term program strategy for sustaining and modernizing
the HEMTT inventory. The Army's plans include procuring 1,485 new tankers
and wreckers through fiscal year 2007, which will satisfy the Army's
stated requirement. The Army also plans to rebuild some of the existing
vehicles through the HEMTT Extended Service Program. This program,
scheduled to be complete in fiscal year 2012, will insert technology
advancements and will provide continuous improvements to the vehicle.
Although there has been a reduction in the Army's budget for the Extended
Service Program, the plan is to continue rebuilding trucks in smaller
quantities and at a slower pace. The Army's Forces Command has implemented
a Vehicle Readiness Enhancement Program that serves as an interim
maintenance program for the HEMTT awaiting induction into the Extended
Service Program.

Funding

We assessed the funding for the HEMTT as yellow because current and
projected funding is not consistent with the Army's stated requirements to
sustain and modernize the HEMTT inventory. Specifically, the Army has
unfunded requirements of $10.5 million as of fiscal year 2003, of which
$3.9 million is for spare parts and $6.6 million is for war reserves. In
addition, the Army reduced the Recapitalization Program by $329 million.
The Army had planned to upgrade 2,783 vehicles currently in the inventory;
however, 1,365 will not be upgraded as a result of the reductions in the
Recapitalization Program. Consequently, according to Army officials,
maintenance and operating and support costs will likely increase.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the HEMTT, Army officials indicated that
it has successfully fulfilled its wartime requirements during recent
combat operations. Based on the program manager's preliminary
observations, the HEMTT performed successfully during Operation Iraqi
Freedom. A detailed pre-war

assessment by the program manager's office indicated that the HEMTT was
ready for war, but could experience sustainment problems due to a shortage
of war reserve spare parts. The program manager's office is currently
assessing the condition of the active and war reserve equipment used in
Operation Iraqi Freedom.

Patriot Missile (PAC-3)	The PAC-3 missile is considered a major upgrade to
the Patriot system. Sixteen PAC-3 missiles can be loaded on a launcher
versus four PAC-2 missiles. The Army plans to buy 2,200 PAC-3 missiles.
The Army had a current inventory of 88 PAC-3 missiles as of July 2003. The
average age of the PAC-3 missile is less than 1 year.

Figure 6: Patriot Missile

Source: U.S. Army.

Condition

We assessed the condition of the PAC-3 missile as green because
approximately 89 percent of the missiles in the inventory were ready for
use as of July 2003. Specifically, of the 88 PAC-3 missiles currently in
the inventory, 78 were ready for use and 10 were not. In addition, the
Army has not experienced any chronic or persistent problems during
production. The PAC-3 missile completed operational testing and was
approved for full production of 208 missiles in 2003 and 2004.

Program Strategy

We assessed the program strategy for the PAC-3 missile as green because
the Army has developed a long-term strategy for sustaining the PAC-3
inventory, including procurement of 2,200 missiles that will satisfy the
total requirement. The Army plans to purchase 1,159 PAC-3 missiles through
fiscal year 2009. The remaining 1,041 missiles will be procured after
fiscal year 2009. During the low-rate initial production, the Army
procured 164 PAC-3 missiles from 1998 to 2002 at $1.7 billion. The Army
has completed the low-rate initial production and has been granted
approval for full production of 208 PAC-3 missiles beginning in fiscal
year 2003, at a total estimated cost of $714 million.

Funding

We assessed the funding for the PAC-3 missile as green primarily because
current and projected funding is consistent with the Army's stated
requirements to sustain the PAC-3 inventory. The program manager's office
has not identified any funding shortfalls for the missile. Funding has
been approved for the production of 1,159 PAC-3 missiles through fiscal
year 2009 at an average production rate of nearly 100 missiles per year.
The total production cost of the 1,159 PAC-3 missiles equates to $4.3
billion. The remaining 1,041 missiles will be procured after fiscal year
2009.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the PAC-3 missile, Army officials
indicated that it successfully fulfilled its wartime mission during
Operation Iraqi Freedom, successfully hitting enemy targets within two
missile shots. The PAC-3 has also completed the operational testing phase
and has been approved for full production.

Guided Multiple Launch The Guided Multiple Launch Rocket System Dual
Purpose Improved

Rocket System (GMLRS)	Convention Munition (GMLRS-DPICM) is an essential
component of the Army's transformation. It upgrades the M26 series MLRS
rocket and is expected to serve as the baseline for all future Objective
Force rocket munitions. The Army plans to procure a total of 140,004 GMLRS
rockets. There are currently no GMLRS rockets in inventory, but it was
approved in March 2003 to enter low rate initial production to produce 108
missiles.

Figure 7: Guided Multiple Launch Rocket System

Source: U.S. Army.

Condition

We assessed the condition of the GMLRS as green because the system has
demonstrated acceptable performance during the System Development and
Demonstration Phase, and was approved to enter low rate initial production
in March 2003.

Program Strategy

We assessed the program strategy for the GMLRS as green because the Army
has developed a long-term program strategy for sustaining the GMLRS
inventory, including procurement of a total of 140,004 missiles that will
satisfy the total requirement. Of this total, the Army plans to procure
18,582 missiles by fiscal year 2009. The remaining 121,422 will be
procured after fiscal year 2009. The Army approved low rate initial
production for a total of 1,920 missiles through fiscal year 2005. The
initial operational capability date is scheduled for 2nd quarter fiscal
year 2006. The Army has also preplanned a product improvement to the
GMLRS-DPICM called the GMLRS-Unitary. This improvement is in the concept
development phase and is scheduled to begin a spiral System Development
and Demonstration. The Army has not decided how many of the 1,920 initial
production rockets will include the guided unitary upgrade.

Funding

We assessed the funding for the GMLRS as green because current and
projected funding is consistent with the Army's stated requirements to
sustain the GMLRS Munitions program. The GMLRS program is fully funded and
properly phased for rapid acquisition. The Army plans to purchase a total
of 140,004 GMLRS rockets for $11.7 billion. Of the 140,004 GMLRS rockets,
the Army plans to procure 18,582 through fiscal year 2009 for $1.7
billion. The remaining 121,422 rockets will cost the Army approximately
$10 billion. In March 2003, the system met all modified low rate initial
production criteria to enter the first phase to produce 108 rockets for
$36.6 million. Phases II and III will procure the remaining 1,812 rockets
during fiscal year 2004 (786 rockets) and fiscal year 2005 (1,026 rockets)
for $220.4 million.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the GMLRS, Army officials did not
identify any specific capability concerns. The GMLRS-DPICM is expected to
achieve greater range and precision accuracy. The upgraded improvement
will reduce the number of rockets required to defeat targets out to 60
kilometers or greater, and reduce collateral damage. It is also expected
to reduce hazardous duds to less than 1 percent.

  Air Force

F-16 Fighting Falcon The F-16 is a compact, multi-role fighter with
air-to-air combat and

Aircraft	air-to-surface attack capabilities. The first operational F-16A
was delivered in January 1979. The Air Force currently has 1,381 F-16
aircraft in its inventory, and the average age is about 15 years. The
F-16B is a two-seat, tandem cockpit aircraft. The F-16C and D models are
the counterparts to the F-16A/B, and incorporate the latest technology.
Active units and many reserve units have converted to the F-16C/D. The Air
Force plans to replace the F-16 with the F-35 Joint Strike Fighter
beginning in 2012.

                    Figure 8: F-16 Fighting Falcon Aircraft

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the F-16 as green because mission capable
rates have been near the current goal of 83 percent with mission capable
rates for all of the Air Force's Air Combat Command (ACC) F-16s ranging
from 75 percent to 79 percent during the past 5 years. Although these
rates are below the goal, officials said they were sufficient to provide
flying hours for pilot training, and to meet operational requirements. In
fiscal year 2002, the planned utilization rate, (i.e., the average number
of sorties per

aircraft per month) for ACC aircraft was 17.5 sorties per month, and the
actual utilization was 17.7 sorties. Although the average age of the F-16
is about 15 years, there are no material deficiencies that would limit its
effectiveness and reliability. Known and potential structural problems
associated with aging and accumulated flying hours are being addressed
through ongoing depot maintenance programs.

Program Strategy

We assessed the program strategy for the F-16 as green because the
Air Force has developed a long-term program strategy for sustaining and
replacing the F-16 inventory. The program should ensure that the aircraft
remains a viable and capable weapons system throughout the FYDP.
Subsequently, the Air Force intends to begin replacing the F-16 with the
Joint Strike Fighter (F-35), which is already in development.

Funding

We assessed the funding for the F-16 as yellow because current and
projected funding is not consistent with the Air Force's stated
requirements to sustain and replace the F-16 inventory. There are
potential shortfalls in the funding for depot maintenance programs and
modifications during the next 3-5 years. Although funding has been
programmed for this work, unexpected increases in depot labor rates have
been significant, and additional funding may be required to complete the
work. For fiscal year 2004, the Air Force included $13.5 million for the
F-16 in its Unfunded Priority List.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the F-16, the aircraft has successfully
fulfilled its recent wartime missions. F-16 fighters were deployed to the
Persian Gulf in 1991 in support of Operation Desert Storm, and flew more
sorties than any other aircraft. The F-16 has also been a major player in
peacekeeping operations including the Balkans since 1993. Since the
terrorist attack in September 2001, F-16s comprised the bulk of the
fighter force protecting the skies over the United States in Operation
Noble Eagle. More recently, F-16s played a major role in Afghanistan in
Operation Enduring Freedom, and have performed well in combat in Operation
Iraqi Freedom, in which the F-16 once again provided precision-guided
strike capabilities and suppression of

enemy air defenses. During Operation Iraqi Freedom, the Air Force deployed
over 130 F-16s that contributed significantly to the approximately 8,800
sorties flown by Air Force fighter aircraft.

B-2 Spirit Bomber	The B-2 is a multi-role heavy bomber with stealth
characteristics, capable of employing nuclear and conventional weapons.
The aircraft was produced in limited numbers to provide a low observable
(i.e., stealth) capability to complement the B-1 and B-52 bombers. Its
unique stealth capability enables the aircraft to penetrate air defenses.
The Air Force currently has 21 B-2 aircraft in its inventory, and the
average age is about 9 years. The first B-2 was deployed in December 1993,
and currently all B-2s in the inventory are configured with an enhanced
terrain-following capability and the ability to deliver the Joint Direct
Attack Munition and the Joint Stand Off Weapon.

                          Figure 9: B-2 Spirit Bomber

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the B-2 as yellow because the B-2 did not
meet its mission capable goal of 50 percent. Officials said that the
aircraft itself is in good condition, but it is the maintainability of its
stealth characteristics that is driving the low mission capable rates.
Officials pointed out that despite low mission capable rates the B-2 has
been able to meet requirements for combat readiness training and wartime
missions. For example, four B-2 aircraft were deployed and used during
Operation Iraqi Freedom, and maintained a mission capable rate of 85
percent. Mission capable rates have improved slightly, and officials said
that recent innovations in low observable maintenance technology and
planned modifications are expected to foster additional improvement.

Program Strategy

We assessed the program strategy for the B-2 as green because the Air
Force has developed a long-term program strategy for sustaining the
B-2 inventory. Program plans appear to ensure the viability of this system
through the Future Years Defense Plan. Procurement of this aircraft is
complete. The Air Force plans to maintain and improve its capabilities,
ensuring that the B-2 remains the primary platform in long-range
combat aviation.

Funding

We assessed the funding for the B-2 as green because current and projected
funding is consistent with the Air Force's stated requirements to sustain
the B-2 inventory. The programmed funding should allow execution of the
program strategy to sustain, maintain, and modify the system through the
Future Years Defense Plan. The B-2 is of special interest to the Congress,
which requires an annual report on this system, including a schedule of
funding requirements through the Future Years Defense Plan. No items
specific to the B-2 were included in the Air Force's fiscal year 2004
Unfunded Priority List.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the B-2, the aircraft has successfully
fulfilled its wartime missions despite current condition weaknesses. The
Air Force demonstrated the aircraft's long-range strike capability by
launching missions from the United States, striking targets in
Afghanistan, and returning to the States. More recently, the Air Force
deployed four B-2 aircraft to support Operation Iraqi Freedom, where they
contributed to the 505 sorties flown by bombers during the conflict. The
B-2 Annual Report to the Congress states that the B-2 program plan will
ensure that the B-2 remains the primary platform in long-range combat
aviation.

    C-5 Galaxy Transport Aircraft

The C-5 Galaxy is the largest of the Air Force's air transport aircraft,
and one of the world's largest aircraft. It can carry large cargo items
over intercontinental ranges at jet speeds and can take off and land in
relatively short distances. It provides a unique capability in that it is
the only aircraft that can carry certain Army weapon systems, main battle
tanks, infantry vehicles, or helicopters. The C-5 can carry any piece of
army combat equipment, including a 74-ton mobile bridge. With aerial
refueling, the aircraft's range is limited only by crew endurance. The
first C-5A was delivered in 1969. The Air Force currently has 126 C-5
aircraft in its inventory, and the average age is about 26 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the C-5 as yellow because it consistently
failed to meet its mission capable goal of 75 percent; however, mission
capable rates have been steadily improving and, in April 2003, active duty
C-5s exceeded the goal for the first time. Program officials pointed out
that, although the total fleet has never achieved the 75 percent goal,
there has been considerable improvement over time, with the rate rising
from about 42 percent in 1971 to about 71 percent in 2003. The Air Force
Scientific Advisory Board has estimated that 80 percent of the airframe
structural

service life remains. Furthermore, Air Force officials said that the two
major modification programs planned, the avionics modernization program
and reliability enhancement and re-engining program, should significantly
improve mission capable rates.

Program Strategy

We assessed the program strategy for the C-5 as green because the Air
Force has developed a long-term program strategy for sustaining and
modernizing the aging C-5 inventory. The Air Force has planned a two-phase
modernization program through the future years defense program that is
expected to increase the aircraft's mission capability and reliability.
The Air Force plans to modernize the C-5 to improve aircraft reliability
and maintainability, maintain structural and system integrity, reduce
costs, and increase operational capability. Air Force officials stated
that the C-5 is expected to continue in service until about 2040 and that,
with the planned modifications, the aircraft could last until then. As an
effort to meet strategic airlift requirements, the Air Force has
contracted to buy 180 C-17s, will retire 14 C-5s by fiscal year 2005, and
may retire additional aircraft as more C-17s are acquired.

Funding

We assessed the funding for the C-5 as yellow because current and
projected funding is not consistent with the Air Force's stated
requirements to sustain and modernize the aging C-5 inventory. According
to officials, the program lost production funding because of problems
during the early stage of the program. Currently 49 aircraft are funded
for the avionics program through the Future Years Defense Plan. For fiscal
year 2004, the Air Force included $39.4 million in its Unfunded Priority
List to restore the program to its prior timeline.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the C-5, Air Force officials indicated
that the aircraft has successfully fulfilled its recent wartime missions.
The Air Force has not noted any factors or capability concerns that would
prevent the C-5 from effectively performing its wartime mission.

KC-135 Stratotanker The KC-135 is one of the oldest airframes in the Air
Force's inventory, and

Aircraft	represents 90 percent of the tanker fleet. Its primary mission is
air refueling, and it supports Air Force, Navy, Marine Corps, and allied
aircraft. The first KC-135 was delivered in June 1957. The original A
models have been re-engined, modified, and designated as E, R, or T
models. The E models are located in the Air Force Reserve and Air National
Guard. The total inventory of the KC-135 aircraft is 543, and the average
age is about 43 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the KC-135 as yellow because it maintained
mission capable rates at or near the 85 percent goal despite the
aircraft's age and potential corrosion of its structural components.
Although the aircraft is about 43 years old, average flying hours are
slightly over a third of its expected life of 39,000 hours, and an Air
Force study projected the KC-135 would last until about 2040. All KC-135s
were subjected to an aggressive corrosion preventive program and underwent
significant modifications, including replacement of the cockpit.
Nevertheless, citing increases in the work needed during periodic depot
maintenance, costs, and risk of the entire fleet being grounded, the Air
Force decided to accelerate recapitalization from 2013 to about 2006.

Program Strategy

We assessed the program strategy for the KC-135 as red because the Air
Force has developed a long-term program strategy to modernize the aging
KC-135 tanker fleet, but it has not demonstrated the urgency of acquiring
replacement aircraft and has not defined the requirements for the number
of aircraft that will be needed. As we stated in testimony before the
House Committee on Armed Services, Subcommittee on Projection Forces, the
department does not have a current, validated study on which to base the
size and composition of either the current fleet or a future aerial
refueling force.1 The Air Force has a large fleet of KC-135s (about 543),
which were flown about 300 hours annually between 1995 and September 2001.
Since then utilization is about 435 hours per year. Furthermore, the Air
Force has a shortage of aircrews to fly the aircraft it has. In Operation
Iraqi Freedom, a relatively small part of the fleet was used to support
the conflict (149 aircraft). Without a definitive analysis, it is
difficult to determine if recapitalization is needed and what alternatives
might best satisfy the requirement.

Funding

We assessed the funding of the KC-135 as red because current and future
funding is not consistent with the Air Force stated requirements to
sustain and modernize the KC-135 tanker fleet. The Air Force has not
addressed recapitalization funding in the current defense budget or in the
Future Years Defense Plan. The Air Force plans to begin acquiring new
aircraft almost immediately, but does not want to divert funding from
other programs to pay for them. The Air Force proposed a unique leasing
arrangement with Boeing that will provide new tankers as early as 2006.
There remains controversy over the lease terms, aircraft pricing, and how
the Air Force will pay for the lease.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the KC-135, Air Force officials indicated
that the aircraft has successfully fulfilled its recent wartime missions
despite current condition

1 U.S. General Accounting Office, Military Aircraft: Information on Air
Force Aerial Refueling Tankers, GAO-03-938T (Washington, D.C.: June 4,
2003).

problems. The KC-135 comprised 149 of the 182 tanker aircraft the Air
Force used during Operation Iraqi Freedom, and those aircraft flew almost
6,200 sorties and offloaded over 376 million pounds of fuel. The KC-135
maintained a mission capable rate above the current goal of 85 percent
during Operation Iraqi Freedom.

    Conventional Air Launched Cruise Missile (CALCM)

The CALCM is an accurate long-range standoff weapon with an adverse
weather, day/night, and air-to-surface capability. It employs a global
positioning system coupled with an inertial navigation system. It was
developed to improve the effectiveness of the B-52 bombers and became
operational in January 1991. Since initial deployment, an upgraded
avionics package, including a larger conventional payload and a
multi-channel global positioning system receiver, has been added on all of
the missiles. The CALCM total inventory is about 478, and the average age
is about 15 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the CALCM as green because the CALCM has
demonstrated high reliability. The Air Force has not noted any chronic
factors or problems that limit the effectiveness or reliability of the
missile. However, according to officials, the diagnostics test equipment
needs to be upgraded because it is old and was designed to support less
sophisticated missiles. Currently, the Air Force uses the same test
equipment for both the conventional and nuclear weapons.

Program Strategy

We assessed the program strategy for the CALCM as green because the Air
Force has a long-term program strategy for sustaining and modernizing its
current inventory of cruise missiles. The Air Force does not have any
future plans to convert or purchase any additional nuclear missiles. The
Joint Chief of Staff must authorize the use of the conventional weapons
and approve the program in order to procure additional missiles. As the
inventory is depleted, the conventional weapon will be replaced with other
systems with similar capabilities, such as the Joint Air-to-Surface
Standoff Missile, which is currently under development. The Joint
Air-to-Surface Standoff Missile will not be a one-for-one replacement for
the conventional missile.

Funding

We assessed the funding for the CALCM as green because current and
projected funding is consistent with the Air Force stated requirements to
sustain and modernize its cruise missile inventory. Procurement of the
cruise missile is complete, and no funding has been provided for research
and development or procurement in the fiscal year 2003 budget.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the CALCM, Air Force officials indicated
that it successfully fulfilled its recent wartime missions. These
officials indicated that the cruise missile played a significant role in
the initial strikes during Operation Iraqi Freedom. During Operation Iraqi
Freedom, 153 missiles were expended, and the version that is designed to
penetrate hard targets was first employed.

    Joint Direct Attack Munition (JDAM)

The Joint Direct Attack Munition is a guidance tail kit that converts
existing unguided bombs into accurate, all-weather "smart" munitions. This
is a joint Air Force and Navy program to upgrade the existing inventory of
2,000 and 1,000-pound general-purpose bombs by integrating them with a
guidance kit consisting of a global positioning system-aided inertial
navigation system. In its most accurate mode, the system will provide a
weapon circular error probable of 13 meters or less. The JDAM first
entered the inventory in 1998. The total projected inventory of the JDAM
is about 92,679, and the current average age is less than 5 years. Future
upgrades will provide a 3-meter precision and improved anti-jamming
capability.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the JDAM as green because it consistently met
its reliability goal of 95 percent. The munitions are used as they

become available; therefore, no maintenance is involved. Although the Air
Force does not monitor the condition of munitions, they keep track of each
component of the guidance kit, which is tracked for serviceability. The
kit is under a 20-year warranty. The munitions are purchased serviceable
and are tested before used by the operational units. In addition to high
reliability, the JDAM can be purchased at a low cost and are being
delivered more than three times as fast as planned.

Program Strategy

We assessed the program strategy for the JDAM as green because the Air
Force has a long-term program strategy for sustaining and maintaining its
production of the munitions. The Joint Direct Attack Munition requirements
are driven by assessments of war readiness and training requirements.
Currently, Boeing is in full production and is increasing its production
to about 2,800 per month for the Air Force and Navy, an increase from
approximately 700-900 a month. The second production line is up and
running.

Funding

We assessed the funding for the JDAM as green because current and
projected funding is consistent with the Air Force's stated requirements
to sustain and maintain production of the munitions. The President's
fiscal year 2003 budget provided funding for the procurement of the system
through the future years defense plan. Air Force officials stated that the
munitions have all the funding it needs; however, it is limited by the
production capability of its contractor, Boeing.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the JDAM, Air Force officials indicated
that it has successfully fulfilled its recent wartime missions. The weapon
system played a role in operations in Kosovo, Afghanistan, and Iraq.
According to the Air Force, the weapon has operationally proven to be more
accurate, reliable, and effective than predicted. The Air Force has not
noted any factors or capability concerns that would prevent the Joint
Direct Attack Munitions from effectively fulfilling its wartime mission.

  Navy

DDG-51 Arleigh Burke Class Navy Destroyers are multi-mission combatants
that operate offensively and

Destroyer	defensively, independently, or as part of carrier battle groups,
surface action groups, and in support of Marine amphibious task forces.
This is a 62-ship construction program, with 39 in the fleet as of 2003.
The average age of the ships is 5.8 years, with the Arleigh Burke (DDG-51)
coming into service in 1991. The follow-on program is the DD(X), with
initial construction funding in 2005 and delivery beginning 2011.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the DDG-51 as yellow because work programmed
for scheduled maintenance periods is often not accomplished. Because of
budget limitations for each ship's dry-dock period and a Navy effort to
level port workloads and provide stability in the industrial base,
maintenance items are often cut from the planned work

package during dry-dock periods. Those items are then deferred to the next
scheduled docking or accomplished as possible in the ship's continuous
maintenance phase. Deferring maintenance affects corrosion issues,
particularly the ship's hull. Engineering and combat systems have priority
for resources with desirable, though not necessarily essential, crew
quality of life improvements deferred to a later time. The Navy balances
risk between available resources and deferring maintenance to make the
most cost-effective decision and ensure ships deploy without or with
minimal safety or combat system deficiencies.

Program Strategy

We assessed the program strategy for the DDG-51 as yellow because the Navy
has developed a long-term program strategy for sustaining and upgrading
the DDG-51 fleet; however, budget cuts in the Navy's shipbuilding program
affect upgrades to the warfighting systems and may lead to potential
problems in the industrial base when transitioning from DDG to DD(X)
ships. Navy officials noted that these budget cuts prevent them from
buying the latest available technologies. These technologies are usually
in warfighting systems, such as command and control and system integration
areas. Management of the transition period from DDG to DD(X) shipbuilding
between 2005 and 2008 will be key to avoid problems from major
fluctuations in the workload and workforce requirements.

Funding

We assessed the funding for the DDG-51 as yellow because current and
projected funding is not consistent with the Navy's statement requirements
to sustain and upgrade the DDG-51 fleet. Lack of multiyear budget
authority creates budget inefficiencies because the Navy is required to
spend supplemental and 1-year funds within the year in which it is
appropriated. The Navy attempts to reduce ship maintenance costs by
leveling the maintenance workload for ship contractors, which provides the
Navy and contractors greater flexibility and predictability. The lack of
multiyear budgeting and the need to spend supplemental and 1-year funds in
the current year limits that effort. Ports are not equipped or manned to
accomplish the volume of work required in the time-span necessary to
execute 1-year appropriations. In some cases, differences between the Navy
estimate of scheduled maintenance costs and the contractor bid to do

the work requires cuts to the ship's planned work package, further
contributing to the deferred maintenance backlog.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the DDG-51, Navy officials raised a
number of capability concerns. Specifically, these officials indicated
that the DDG-51 has successfully fulfilled its recent wartime mission, but
with some limitations such as communications shortfalls and force
protection issues. Although the DDG-51 class is the newest ship in the
fleet with the most up to date technologies, fleet officers said there is
insufficient bandwidth for communications during operations. Navy
officials cited effective management of available communications assets
rather than the amount of available bandwidth as the more immediate
challenge. In the current threat environment, force protection issues
remain unresolved. The use of the Ridged Hull Inflatable Boat (RHIB)
during operations at sea without onboard crew-served weapons and hardening
protection concerns commanders. The small caliber of sailors' personal and
crew-served weapons limits their effectiveness against the immediate and
close-in threat from small boat attack.

FFG-7 Oliver Hazard Perry Navy FFG-7 Frigates are surface combatants with
anti-submarine warfare

Class Frigate	(ASW) and anti-air warfare (AAW) capabilities. Frigates
conduct escort for amphibious expeditionary forces, protection of
shipping, maritime interdiction, and homeland defense missions. There are
32 FFGs in the fleet, with 30 programmed for modernization. The average
age of the fleet is 19 years. The FFGs are expected to remain in the fleet
until 2020.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the FFG-7 as yellow because work programmed
for scheduled maintenance periods is often not accomplished. Because of
budget limitations for each ship's dry-dock period and a Navy effort to
level port workloads and provide stability in the industrial base,
maintenance items are often cut from the planned work package during
dry-dock periods. These items are then deferred to the next scheduled
docking or accomplished as possible in the ship's continuous maintenance
phase. Deferring maintenance affects corrosion issues, particularly the
ship's hull. Engineering and combat systems have priority for resources
with desirable, though not necessarily essential, crew quality of life
improvements deferred to a later time. The Navy balances risk between
available resources and deferring maintenance to make the most

cost-effective decision and ensure ships deploy without or with minimal
safety or combat system deficiencies. There is the additional burden of
maintaining older systems on the frigates.

Program Strategy

We assessed the program strategy for the FFG-7 as yellow because the Navy
has developed a long-term program strategy for sustaining and modernizing
the FFG-7 fleet; however, the program is susceptible to budget cuts. The
modernization program is essential to ensure the frigates' continued
viability. There is also uncertainty about the role frigates will play as
the Littoral Combat Ship is developed.

Funding

We assessed the funding for the FFG-7 as yellow because current and
projected funding is not consistent with the Navy's stated requirements to
sustain and modernize the FFG-7 fleet. Uncertainty about modernization
program funding and budget inefficiencies created by the lack of multiyear
budget authority and the requirement to spend supplemental and 1-year
funds when they are appropriated. The Navy attempts to reduce ship
maintenance costs by leveling the maintenance workload for ship
contractors, which provides the Navy and contractors greater flexibility
and predictability. The lack of multiyear budget authority and the need to
spend supplemental and 1-year funds in the current year in which they are
appropriated limits that effort. Ports are not equipped or manned to
accomplish the volume of work required in the time span necessary to
execute 1-year appropriations. In some cases, differences between the Navy
estimate of scheduled maintenance costs and the contractor bid to do the
work requires cuts to the ship's planned work package, further
contributing to the deferred maintenance backlog.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the FFG-7, Navy officials identified a
number of capability concerns including communications shortfalls and
potential vulnerabilities to air warfare. The frigate's ability to operate
in a battle group environment is limited by insufficient bandwidth and
lack of command circuits for communications requirements. The Navy shut
down the frigate's missile launcher because of excessive maintenance
costs. Ship commanders in the

fleet expressed concern about potentially deploying with only one of three
compensating systems for anti-air warfare missions, the on-board 76-mm
rapid-fire gun (CWIS-1B, Close-In Weapons System). Officials in the
program manager's office stated fielding plans were in place for the other
two systems, the MK53 Decoy Launch System, called NULKA, and the Rolling
Airframe Missile (RAM). These systems will help mitigate the frigate's
vulnerability after shutting down the missile launcher. The frigate's
value to surface groups operating independently of carriers is as a
helicopter platform.

F/A-18 Hornet/Super Hornet The F/A-18 is an all-weather fighter and attack
aircraft expected to fly in the

Aircraft	fleet to 2030. There are six models in the current inventory of
875: A, 178; B, 30; C, 405; D, 143; E, 55; and F, 64. Average age in years
is: A, 16.4; B, 18.0; C, 10.6; D, 10.1; E, 1.7; and F, 1.5. The Navy plans
to eventually replace the F/A-18 with the Joint Strike Fighter.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the F/A-18 as yellow because it consistently
failed to meet mission capable and fully mission capable goals of 75
percent and 58 percent, respectively. Squadrons that are deployed or are
training for deployment generally exceed these goals. Maintaining the
aircraft is increasingly difficult because of personnel shortfalls,
increased flying requirements, and lack of ground support equipment. Navy
depot personnel indicated that the availability of spare parts remains the
largest issue in repairing and returning aircraft to the fleet.

Program Strategy

We assessed the program strategy for the F/A-18 as yellow because the Navy
has developed a long-term program strategy for sustaining and maintaining
the F/A-18 fleet; however, it lacks a common baseline capability for all
aircraft. Navy officials stated managing the configuration

of the various versions of the aircraft is challenging. Each version of
the aircraft has different repair parts, unique on-board equipment, and
specially trained maintainers and pilots. To increase the service life of
the aircraft, the Navy initiated the Center Barrel Replacement (CBR)
program. CBR replaces those parts of the F/A-18 fuselage that have the
greatest stress placed on them from landing on aircraft carriers. The Navy
is also initiating a Navy/Marine Tactical Air Integration program that
combines low flying-hour / low carrier-landing aircraft for carrier use
and high flyinghour / high carrier-landing aircraft for shore basing. If
CBR is adequately funded and the Tactical Air Integration initiative
proceeds, the F/A-18 will remain a viable system into the future.

Funding

We assessed the funding for the F/A-18 as yellow because current and
projected funding is not consistent with the Navy's stated requirements to
sustain and maintain the F/A-18 fleet. The Navy intends to fly the
F/A-18A-D models until 2020 and the E/F models to at least 2030. Funding
for ground support equipment for the A-D models was eliminated, leaving
operators and program managers to find resources elsewhere. Program
dollars are often drawn back, pushing modernization to the out years. This
is a problem for the CBR program that is $72 million short in the current
Future Years Defense Plan. Navy personnel state that the CBR program must
be fully funded to meet the number of aircraft required to support the
Tactical Air Integration initiative and standards in the new Fleet
Response Plan.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the F/A-18, Navy officials indicated
that the aircraft has successfully fulfilled its wartime missions despite
current condition problems. The A-D models, along with the E/F models
coming into the inventory, provide a multi-capable aircraft for the many
roles the war fighting commanders require. These multi-role capabilities
were demonstrated during Operation Iraqi Freedom with the F/A-18
performing air, ground attack, and refueling missions. Navy officials
stated that they will do whatever is necessary to accomplish the mission,
but raised concerns that maintenance costs are increasing due to current
conditions problems. Specifically these officials stated that increased
maintenance man hours per aircraft sortie, increased cannibalization
rates, and decreased readiness rates are creating more stress on the
aircraft and the personnel who fly and maintain them.

EA-6B Prowler Aircraft	The EA-6B is an integrated electronic warfare
aircraft system combining long-range, all-weather capabilities with
advanced electronic countermeasures. Its primary mission is to support
strike aircraft and ground troops by jamming enemy radar, data links, and
communications. The current inventory is 121 with an average age of 20.7
years. The follow-on aircraft is the E/A-18G Growler Airborne Electronic
Attack aircraft, a variant of the F/A-18 E/F.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the EA-6B as yellow because it consistently
failed to meet the mission capable goal of 73 percent. However, squadrons
training for deployment or those that are deployed generally exceed this
goal. Fatigue life expenditure (FLE), the predictable rate of wear and
deterioration of wing center sections and outside wing panels, is a
critical problem and has caused aircraft to be temporarily grounded or
placed under flying restrictions to mitigate risk to the aircraft. Wing
center sections are that part of the plane where the wings and fuselage
attach. Outer wing panels are that part of the wing that fold up when the
plane is onboard carriers. The Navy is aggressively managing the problem
and has programs in place to replace these items in the near term.

Program Strategy

We assessed the program strategy for the EA-6B as yellow because the Navy
has developed a long-term program strategy for upgrading the EA-6B fleet;
however, aircraft capability requirements may not be met in the future.
The Improved Capability 3rd Generation (ICAPIII) upgrade is a significant
technology leap in jamming capabilities over the current second-generation
capability. ICAPIII will counter threats through 2015 and provides an
advanced jamming capability, accurate target location, and full circle
coverage. By 2007, 30 percent of the fleet will be ICAPIII equipped. The
Navy plans for the follow-on EA-18G Growler to join the fleet between 2008
and 2012. The Navy purchase plan calls for 90 aircraft with over twothirds
(65 aircraft) procured by 2009.

Funding

We assessed the funding for the EA-6B as red because current and projected
funding is not consistent with the Navy's stated requirements to sustain
and upgrade the EA-6B fleet. The Navy relies upon additional congressional
appropriations rather than requesting funds to meet program requirements.
In fiscal year 2003, the Congress appropriated an additional 17 percent
($40 million) over DOD's request for the EA-6B. The Navy is not funding
modernization programs to the stated requirements. The Navy's requirement
for the ICAPIII electronic attack upgrade is 42 systems, although the Navy
is only funding 35 systems. According to the program manager, funding for
replacing the EA-6B's outside wing panels is still uncertain.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the EA-6B, Navy officials indicated that
the aircraft has successfully fulfilled its wartime missions with some
limitations. Potential funding shortfalls and capability limitations may
affect the aircraft's ability to perform its mission. Only 98 out of 108
aircraft in the Navy's EA-6B inventory are available to the fleet. Current
EA-6B capabilities can meet the threat, although without an increase in
the number of ICAPIII capable aircraft, the Navy may not be able to meet
future threats. According to Navy officials, there is an impending severe
impact on warfighting capabilities if the Navy does not receive fiscal
year 2003 procurement funding for outside wing panels as requested.
Specifically, the combination

of the expected wear and tear on the panels and the normal aircraft
attrition rate could reduce the total EA-6B inventory by 16 in 2005.

LPD-4 Amphibious The LPD-4 ships are warships that embark, transport, and
land elements of

Transport Dock Ship	a Marine landing force and its equipment. There are
currently 11 in the inventory with an average age of 35 years. These ships
are expected to remain in the fleet until 2014. The San Antonio-class
LPD-17 (12-ship construction program, LPD-17 through LPD-28) will
eventually replace the LPD-4.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the LPD-4 as yellow because work programmed
for scheduled maintenance periods is often not accomplished. Because of
budget limitations for each ship's dry-dock period and a Navy effort to
level port workloads and provide stability in the industrial base,
maintenance items are often cut from the planned work package during
dry-dock periods. These items are then deferred to the next scheduled
docking or accomplished as possible in the ship's continuous maintenance
phase. Deferring maintenance increases corrosion problems,

particularly for the ship's hull. There are consistent problems with the
engagement system for on-board weapons and the hull, mechanics, and
electrical (HME) systems associated with the ship's combat support system.
The age of the LPD-4 fleet directly contributes to the deteriorating
condition of the ships, particularly the hydraulic systems. The Navy
balances risk between available resources and deferring maintenance to
make the most cost-effective decision and ensure ships deploy without or
with minimal safety or combat system deficiencies.

Program Strategy

We assessed the program strategy for the LPD-4 as green because the Navy
has developed a long-term program strategy to sustain and replace
amphibious dock ships and improve support to Marine amphibious forces. The
Extended Sustainment Program was initiated because of delay in delivery of
the new LPD-17 class ships. The program will extend the service life of 6
of 11 ships for an average of 7.3 years to the 2009-2014 time frame. The
program consists of 37 prioritized work items endorsed by the Navy. The
follow-on LPD-17 ship construction program incorporates innovative design
and total ownership cost initiatives; however, no modernization or
upgrades are planned in the construction timeline from 1999 to 2013.

Funding

We assessed the funding for the LPD-4 as yellow because current and
projected funding is not consistent with the Navy's stated requirements to
sustain and replace amphibious dock ships. The age and decommissioning
schedule for the ships means funding priorities are placed elsewhere. The
Navy is seeking cost savings through efforts to level the industrial base
in ports and provide predictability and management flexibility for
programmed maintenance work. A significant limitation in that effort is
the inability to use multiyear budgeting and the need to spend
supplemental and 1-year funds in the year of appropriation. Ports are
often not equipped and manned to accomplish the volume of work required in
the time-span necessary to execute 1-year budgets.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the LPD-4, Navy officials did not
identify any specific capability concerns. These officials indicated that
the LPD-4 fulfilled its

recent wartime missions of transporting and moving Marines and their
equipment ashore.

Standard Missile-2 The Standard Missile-2 (SM-2) is a medium to
long-range, shipboard

Surface-to-Air Missile	surface- to-air missile with the primary mission of
fleet area air defense and ship self-defense, and a secondary mission of
anti-surface ship warfare. The Navy is currently procuring only the Block
IIIB version of this missile. While the actual number in the inventory is
classified, the Navy plans to procure 825 Block IIIB missiles between
fiscal years 1997 and 2007. Currently, 88 percent of the inventory is
older than 9 years. A qualitative evaluation program adjusted the initial
10-year service life out to 15 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the Standard Missile-2 as red because it
failed to meet the asset readiness goal of 87 percent and only 2 of 5
variants achieved the goal in fiscal year 2002. The asset readiness goal
is the missile equivalent of mission capable goals. The percent of
non-ready for issue missiles (currently at 23 percent of the inventory)
will increase because of funding shortfalls.

Program Strategy

We assessed the program strategy for the Standard Missile-2 as yellow
because the Navy has developed a long-term program strategy for upgrading
the Standard Missile-2 inventory; however, the Navy's strategy mitigates
risk with complementary systems as the SM-2 inventory draws down and
upgrades to counter known threats are cut from the budget. In 2002, the
Navy cancelled production of the most capable variant at the time, the
SM-2 Block IVA. Currently, the most capable missile is the SM-2 Block
IIIB, which is the only variant in production. This missile will be the
main anti-air warfare weapon on board Navy ships into the next decade.
Improved Block IIIB missiles will be available in 2004. The SM-6 Extended
Range Active Missile (ERAM) is programmed for initial production in 2008
and will be available to the fleet in 2010.

Funding

We assessed the funding for the Standard Missile-2 as red because current
and projected funding is not consistent with the Navy's stated
requirements to upgrade the Standard Missile-2 inventory. There is a $72.6
million shortfall for maintenance and a shortfall of approximately $60
million for procurement in the current Future Years Defense Plan.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the Standard Missile-2, Navy officials
indicated that it successfully fulfilled its recent wartime missions but
with some limitations. Block IIIB and improved Block IIIB missiles
successfully counter the threats they were designed to counter. However,
the most capable variant in the current inventory cannot handle the more
sophisticated known air

threats. The Navy lost a capability to intercept extended range and
ballistic missiles when development of the Block IVA variant was
cancelled. The improved Block IIIB missiles will mitigate some risk until
the SM-6 ERAM is deployed in 2010. Further, Navy officials stated that the
Navy accepts an element of risk until the SM-6 is deployed because the
threat is limited in both the number of missiles and the scenarios where
those missiles would be employed. Officials also described the Navy's
anti-air warfare capability as one of complementary systems and not
singularly dependent on the SM-2 missile. The Navy successfully increased
the deployment of these missiles to the fleet for the recent operations in
Afghanistan and Iraq, but the growing shortage of ready-for-issue missiles
in future years could severely limit the Navy's ability to meet future
requirements.

Tomahawk Cruise Missile	The Tomahawk Cruise Missile is a long-range,
subsonic cruise missile used for land attack warfare, and is launched from
surface ships and submarines. The current inventory is 1,474 missiles,
with an average age of 11.88 years and a 30-year service life. During
Operation Iraqi Freedom, 788 Tomahawk's were expended. The follow-on
Tactical Tomahawk (TACTOM) is scheduled to enter the inventory in 2005.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the Tomahawk Cruise Missile as green because
it consistently met asset readiness goals in recent years. The asset
readiness goal is classified.

Program Strategy

We assessed the program strategy for the Tomahawk Cruise Missile as red
because the Navy has developed a long-term program strategy for upgrading
the Tomahawk Cruise Missile inventory; however, the future inventory level
will not be determined until funding questions are resolved. During
Operation Iraqi Freedom, 789 Tomahawks were expended with a remaining
inventory of 1,474. The replenishment missiles are all programmed to be
the new Tactical Tomahawk missile. Even when funding is appropriated and
executed this fiscal year, the first available date for new missiles
entering the inventory will be late 2005-2006.2 A remanufacturing program
planned for 2002-2004 is upgrading the capabilities of older missiles.
There are 249 missiles remaining to be upgraded.

Funding

We assessed the funding for the Tomahawk Cruise Missile as red because
current and projected funding is not consistent with the Navy's stated
requirements to replenish the inventory and new production is unresolved.
Inventory replenishment funding was authorized by the Congress and, at the
time of our review, was in conference to resolve differences between the
two bills.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability for the Tomahawk Cruise Missile, Navy
officials indicated that it has successfully fulfilled its wartime
missions during recent operations in Afghanistan and Iraq. Improved
Tomahawks came into the inventory in 1993 and provided enhanced accuracy
on targets. The newest variant, the Tactical Tomahawk (TACTOM), is
scheduled to come into the inventory in 2005 and improves the missile with
an upgraded guidance system and inflight re-programming capability. This
upgrade program is also expected to lower the missile's production unit
and life-cycle support costs.

2 In its written comments on a draft of this report, DOD stated that the
Tactical Tomahawk is scheduled to enter the inventory in 2004 with initial
operational capability in May 2004.

                                  Marine Corps

AH-1W Super Cobra The AH-1W Super Cobra provides en route escort and
protection of troop

Helicopter	assault helicopters, landing zone preparation immediately prior
to the arrival of assault helicopters, landing zone fire suppression
during the assault phase, and fire support during ground escort
operations. There are 193 aircraft in the inventory with an average age of
12.6 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the AH-1W as yellow because it consistently
failed to meet its mission capable goals from fiscal year 1998 to fiscal
year 2002. Although Camp Pendleton and Camp Lejeune AH-1W maintainers
cited insufficient spare parts and cannibalization as problems, overall,
operators were always positive in their comments about the condition of
the AH-1W. Condition concerns will be remedied in the near term by the
AH-1W upgrade program that is proceeding as scheduled with an October 1,
2003, anticipated start date.

Program Strategy

We assessed the program strategy for the AH-1W as green because the Marine
Corps has developed a long-term program strategy for upgrading the AH-1W
helicopter to the AH-1Z, achieving 85 percent commonality with the UH-1Y
helicopter fleet. Estimated savings of $3 billion in operation and
maintenance costs over the next 30 years have been reported. Additionally,
the upgrade program will enhance the helicopter's speed, maneuverability,
fuel capacity, ammunition capacity, and targeting systems.

Funding

We assessed the funding for the AH-1W as green because current and
projected funding is consistent with the Marine Corps' stated requirements
to sustain and upgrade the AH-1W fleet. Although we assessed funding as
green, Marine Corps officials at Camp Pendleton cited the need for
additional funding for spare parts and noted that cost overruns have
occurred in recent years for the AH-1W upgrade program.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the AH-1W, Marine Corps officials
indicated that it successfully fulfilled its recent wartime missions but
with some limitations. Specifically, prior to Operation Iraqi Freedom,
Marine Corps operators at Camp Pendleton stated that the AH-1W's
ammunition and fuel capacity was insufficient for some operations, such as
Afghanistan. The AH-1Z upgrade program, however, will address these
concerns.

CH-46E Sea Knight The Sea Knight helicopter provides all weather,
day/night, night-vision

Helicopter	capable assault transport of combat troops, supplies and
equipment during amphibious and subsequent operations ashore. There are
226 aircraft in the inventory. The CH-46E is more than 30 years old. The
MV-22 Osprey is the planned replacement aircraft for the CH-46E.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the CH-46E as red because it consistently
failed to meet mission capable goals between fiscal year 1998 and fiscal
year 2002. The operational mean time between failures decreased from 1.295
hours to 0.62 hours during the course of our review. Marine Corps
officials cited concern over the aircrafts age and the uncertainty about
the fielding of the MV-22 to replace the Sea Knight. Marine Corps
officials called the current maintenance programs critical to meeting
condition requirements.

Program Strategy

We assessed the program strategy for the CH-46E as yellow because the
Marine Corps has developed a long-term program strategy to sustain and
replace the CH-46E fleet. The sustainment strategy, dated August 19, 2003,
outlines the service's plans to sustain the CH-46E until retirement in
2015 or longer. However, according to press reports, DOD has decided to
reduce the purchase of replacement systems by about 8 to 10 aircraft over
the next few years. If DOD buys fewer replacement systems, the service
will have to adjust the sustainment strategy to retain additional CH-46E
aircraft in its inventory longer.

Funding

We assessed the funding for the CH-46E as red because current and
projected funding is not consistent with the Marine Corps' stated
requirements to sustain and replace the CH-46E fleet. Marine Corps
officials asserted continued funding for maintaining the CH-46E is
essential. The fiscal year 2004 budget request included a request for
funding of safety improvement kits, long-range communications upgrade, aft
transmission overhaul, and lightweight armor. The Navy lists CH-46E safety
improvement kits as a $4 million unfunded requirement.3

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the CH-46E, Marine Corps raised a number
of specific capability concerns. Specifically, these officials stated that
the intended mission cannot be adequately accomplished due to lack of
payload. The CH-46E has lost 1,622 pounds of lift since its fielding over
35 years ago due to increased weight and can only carry a 12-troop payload
on a standard day. More recently, Marine Corps officials rated the
performance of the CH-46E during Operation Iraqi Freedom as satisfactory
despite these lift limitations.

3 In its written comments on a draft of this report, DOD stated that the
Navy lists CH-46E safety improvements as an unfunded requirement of $10
million to $14 million based upon the retirement schedule of the CH-46E
and the fielding schedule of the MV-22 replacement.

Assault Amphibian Vehicle-The AAV is an armored, fully-tracked landing
vehicle that carries troops in

Personnel (AAV)	water operations from ship to shore through rough water
and surf zone, or to inland objectives ashore. There are 1,057 vehicles in
the inventory. The Marine Corps plans to replace the AAV with the
Expeditionary Fighting Vehicle (formerly the AAAV-Advanced Amphibious
Assault Vehicle).

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the AAV as yellow because of its age and the
fact that the Marine Corps plans to upgrade only 680 of the 1,057 AAVs
currently in the inventory.4 Furthermore, the planned upgrade program will
only restore the vehicle to its original operating condition rather than

4 In its written comments on a draft of this report, DOD stated that the
Marine Corps plans to upgrade 1,007 vehicles, an additional 327 vehicles,
assuming funding is provided. The AAV program received funding for 148
vehicles through the fiscal year 2003 Operation Iraqi Freedom
supplemental, a fiscal year 2004 congressional plus-up, and fiscal year
2005 funding. DOD also stated that the Marine Corps plans to address the
remaining 179 vehicles in a fiscal year 2006 Program Objective Memorandum
initiative to upgrade 90 vehicles in fiscal year 2006 and 89 vehicles in
fiscal year 2007.

upgrading it to perform beyond its original operating condition. We could
not base our assessment of the condition on readiness rates in relation to
the readiness rate goals because the Marine Corps did not provide
sufficient trend data. Marine Corps officials at Pacific Command stated
that the heavy usage of the AAV during Operation Iraqi Freedom and the
long fielding schedule of the replacement vehicle present significant
maintenance challenges. However, we assessed the condition yellow instead
of red based on favorable comments about the current condition of the AAV
from operators and maintainers.

Program Strategy

We assessed the program strategy for the AAV as yellow because the Marine
Corps has developed a long-term program strategy for overhauling the AAV;
however, the program only restores the vehicle to its original operating
condition and does not upgrade the vehicles beyond original condition. The
Marine Corps initiated a Reliability, Availability and Maintenance/Rebuild
to Standard (RAM/RS) upgrade program in 1998 to restore capabilities and
lengthen the expected service life of the AAV to sustain the vehicles
until the replacement system, the Expeditionary Fighting Vehicle (formerly
the Advanced Amphibious Assault Vehicle), can be fielded. The RAM/RS is
expected to extend the AAV service life an additional 10 years.5 These
vehicles will be needed until the replacement vehicles can be fielded in
2012. However, the procurement of the replacement vehicles has reportedly
already been delayed by 2 years.

Funding

We assessed the funding for the AAV as yellow because current and
projected funding is not consistent with the Marine Corps' requirements to
upgrade the AAV inventory. Requested funding rose from $13.5 million in
fiscal year 1998 to $84.5 million in fiscal year 1999 as the Marines
initiated the RAM/RS program. The requested funding level declined to
$66.2 million by fiscal year 2002. The Marine Corps identified a $48.9
million unfunded program in the fiscal year 2004 budget request to extend
RAM/RS to more

5 In its written comments on a draft of this report, DOD officials stated
that the RAM/RS program is expected to extend the service life an
additional 20 years to the exit date of 2018.

vehicles. Marine Corps officials are concerned reconstitution of the
vehicles from Operation Iraqi Freedom will not include funding for
vehicles returning from Operation Iraqi Freedom for the RAM/RS program.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the AAV, Marine Corps officials indicated
that it has successfully fulfilled its wartime missions but with some
limitations. While these officials cited the AAV as integral to ground
operations during Operation Iraqi Freedom, they noted specific stresses
placed on the vehicles. For example, AAVs deployed to Operation Iraqi
Freedom traveled, on average, over 1,000 miles each, a majority of those
miles under combat conditions. Those conditions added about 5 years worth
of miles and wear and tear to the vehicles over a 6- to 8-week period. In
addition, prior to Operation Iraqi Freedom, Marine Corps officials at Camp
Lejeune highlighted problems they encountered with obtaining enhanced
armor kits to protect the vehicles from the .50 caliber ammunition that
was used by Iraqi forces. At the time of our review, only 26 of 213 AAVs
at Camp Lejeune had been provided the enhanced armor kits. Marine Corps
officials at Camp Lejeune believed the lack of kits was due to
insufficient funding.

Light Armored Vehicle-The LAV-C2 variant is a mobile command station
providing field Command & Control commanders with the communication
resources to command and control (LAV-C2) Light Armored Reconnaissance
(LAR) units. It is an all-terrain, all-weather

vehicle with night capabilities and can be made fully amphibious within
three minutes. There are 50 vehicles in the inventory with an average age
of 14 years.

                   Source: Defense Visual Information Center.

Condition

We assessed the condition of the LAV-C2 as green because the Marine Corps
has initiated a fleet-wide Service Life Extension Program (SLEP) to extend
the service life of the vehicle from 20 years to 27 years. The LAV-C2 SLEP
includes enhancements to communications capabilities. Marine Corps
officials cautioned that any delays in SLEP could affect future readiness.
While we assessed the condition as green, we noted the operational
readiness rate for the command and control variant was

90.5 percent, below the 100 percent goal but higher than the operational
readiness rate of 85 percent for the entire fleet.

Program Strategy

We assessed the program strategy for the LAV-C2 as green because the
Marine Corps has developed a long-term program strategy for upgrading the
LAV-C2 inventory. The program funded in the current FYDP will enhance
communications capabilities and power systems and may afford commonality
with Unit Operation Center and helicopter systems. The Marines Corps
intend for the upgraded LAV-C2 to provide a prototype to establish
baseline requirements for future capabilities and a successor acquisition
strategy. Marine Corps officials stated the C2 upgrade program needs to be
supported at all levels.

Funding

We assessed the funding for the LAV-C2 as green because current and
projected funding is consistent with Marine Corps stated requirements to
upgrade the LAV-C2 inventory. Marine Corps officials have requested $72.2
million in the current FYDP to support major LAV-C2 technology upgrades.
Marine Corps officials at Pacific Command recommended increased funding
for procurement of additional vehicles, citing the current inventory
deficiency as critical.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the LAV-C2, Marine Corps officials
indicated that it has successfully fulfilled its recent wartime missions.
Marine Corps reports regarding the operations in Afghanistan cited LAVs in
general as the most capable and dependable mobility platform despite the
fact that the number of available C-17 transport aircraft limited the
deployment of the vehicles. Initial reports from Operation Iraqi Freedom
also indicate that the LAV-C2 performed successfully.

AGM-65E Maverick Missile	The Maverick missile is a precision-guided,
air-to-ground missile configured primarily for the anti-tank and anti-ship
roles. It is launched from a variety of fixed-wing aircraft and
helicopters and there are laser and infrared-guided variants. The Maverick
missile was first fielded in 1985.

                   Source: Defense Visual Information Center.

Condition N/A

We assessed the condition of the Maverick missile as not applicable
because the Marine Corps does not track readiness data such as mission
capable or operational readiness rates for munitions as they do for
aircraft or other equipment.

Program Strategy

We assessed the program strategy for the Maverick missile as green because
the Marine Corps has developed a long-term program strategy for replacing
the Maverick missile with more capable missiles. Maverick missile
procurement ended in 1992 and the infrared variant will no longer

be used in 2003. According to Marine Forces Pacific Command officials, a
joint common missile is being developed and scheduled for initial
operational capability in 2008. The new missile will be a successor to the
Maverick, Hellfire, and TOW missiles. Marine Corps officials stated a
joint reactive precision-guided munition for both fixed- and rotary-winged
aircraft as a potential successor to Maverick and Hellfire missiles will
be submitted to the Joint Requirements Oversight Committee for evaluation
in fiscal year 2003.

Funding

We assessed the funding for the Maverick missile as green because current
and projected funding is consistent with the Marine Corps' stated
requirements to replace the Maverick missile inventory. Since fiscal year
1998, the Marine Corps limited funding for the Maverick to the operation
and maintenance accounts.

Wartime Capability	While we did not have sufficient data to definitively
assess the wartime capability of the Maverick missile, Marine Corps
officials indicated that it has successfully fulfilled its recent wartime
missions but with some limitations. Specifically, these officials stated
that the Maverick missile lacks an all-weather capability. Marine Corps
officials cited increased risks due to sensor limitations of the laser
variant that restricts the missile's use to low threat environments.
Although the Maverick fulfilled its wartime mission during Operation Iraqi
Freedom, Marine Corps officials stressed that its success was due to the
fact that this was the optimal environment for the Maverick-desert
environment and a lack of low cloud cover. In any other type of
environment, however, the Maverick's use is limited.

                                  Appendix III

                    Comments from the Department of Defense

Appendix IV

                     GAO Contact and Staff Acknowledgments

GAO Contact David A. Schmitt (757) 552-8124

Acknowledgments	In addition to the individual named above, Richard Payne,
Donna Rogers, Jim Mahaffey, Patricia Albritton, Tracy Whitaker, Leslie
Harmonson, John Beauchamp, Warren Lowman, Ricardo Marquez, Jason Venner,
Stanley Kostyla, Susan Woodward, and Jane Lusby made key contributions to
this report.

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