    Defense Logistics: Better Management and Oversight of
    Prepositioning Programs Needed to Reduce Risk and Improve Future
    Programs (06-SEP-05, GAO-05-427).

    The importance of prepositioned stocks to the U.S. military was
    highlighted during recent operations in Iraq, as much of the
    equipment and supplies stored at land sites in the region and
    aboard prepositioning ships were used to support operations.
    Long-standing problems in the Department of Defense's (DOD)
    prepositioning program are systematic of the inventory management
    issues, and more recently supply chain management issues, that
    GAO has considered as high-risk areas since 1990. GAO was asked
    to review the risks facing DOD's prepositioning programs,
    including an assessment of (1) the near-term operational risk
    given the continuing use of these stocks, (2) the sufficiency of
    DOD and service-level oversight of these prepositioning programs,
    and (3) whether DOD has developed a coordinated plan for the
    future of the department's prepositioning programs that would
    meet the goals of the recently published defense strategy.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-427
        ACCNO:   A35680
      TITLE:     Defense Logistics: Better Management and Oversight of
    Prepositioning Programs Needed to Reduce Risk and Improve Future
    Programs
         DATE:   09/06/2005
      SUBJECT:   Air Force supplies
    	     Army supplies
    	     Defense capabilities
    	     Equipment inventories
    	     Equipment maintenance
    	     Internal controls
    	     Inventory control
    	     Military inventories
    	     Military materiel
    	     Naval supplies
    	     Program evaluation
    	     Program management
    	     Risk assessment
    	     Strategic planning

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    GAO-05-427

                     United States Government Accountability Office

    GAO	Report to the Subcommittee on Readiness, Committee on Armed Services, House
                                   of Representatives

    September 2005

    DEFENSE LOGISTICS

    Better Management and Oversight of Prepositioning Programs Needed to Reduce Risk
                              and Improve Future Programs

                                           a

    GAO-05-427

    [IMG]

    September 2005

    DEFENSE LOGISTICS

    Better Management and Oversight of Prepositioning Programs Needed to Reduce Risk
    and Improve Future Programs

      What GAO Found

    DOD faces some near-term operational risks should another large-scale
    conflict emerge because it has drawn heavily on its prepositioned stocks
    to support ongoing operations in Iraq. And, although remaining stocks
    provide some residual capability, many of the programs face significant
    inventory shortfalls and in some cases, maintenance problems. For example,
    the Army has drawn equipment from virtually all of its prepositioned
    stocks to support operations in Iraq. Some of its storage sites have
    shortfalls of equipment and sustainment items, like spare parts, and some
    stocks are in poor condition. Additionally, the Marine Corps has used a
    significant portion of the stocks downloaded from 5 of its 16
    prepositioning ships to support operations in Iraq and it is unclear when
    this equipment will be refilled. The Air Force is also continuing to use a
    considerable amount of its prepositioned stocks to support combat
    operations in Iraq and it is unclear when these stocks will be refilled.
    The precise operational risk created by these shortfalls is difficult to
    assess. However, should a new conflict arise in the near term, the
    combatant commander would likely face difficult operational challenges.

    The department and the military services have provided insufficient
    oversight over DOD's prepositioning programs. This inattention has allowed
    long-standing problems with determining program requirements and managing
    inventory to persist. DOD has not enforced its directive that could
    provide centralized oversight over its prepositioning programs. Officials
    told us they did not enforce this directive because they were able to
    provide adequate oversight through other mechanisms. Even if the
    department had enforced its directive, however, the requirements
    underpinning some of DOD's prepositioning programs are questionable and
    the services do not have sufficient information on the inventory level and
    maintenance condition of some prepositioned stocks. Without reliable
    information on requirements, inventory levels, and maintenance condition,
    DOD cannot provide sufficient oversight over its programs, which
    potentially leaves war fighters at risk of not having needed stocks in the
    future.

    DOD has not developed a coordinated departmentwide plan or joint doctrine
    to guide the future of its prepositioning programs, despite the heavy use
    of prepositioned stocks in recent conflicts and the department's plans to
    rely on them in the future. DOD's recently published defense strategy
    indicates that prepositioning programs should be more innovative,
    flexible, and joint. In the absence of a departmentwide plan or joint
    doctrine to coordinate the reconstitution and future plans for these
    programs, the services have been recapitalizing stocks and developing
    future plans without an understanding of how the programs will fit
    together to meet the evolving defense strategy. Without a framework that
    establishes priorities for prepositioning among competing initiatives, DOD
    cannot provide assurances to Congress that the billions of dollars that
    will be required to recapitalize the stocks and develop future programs
    will produce programs that operate jointly, support the needs of the war
    fighter, and are affordable.

    United States Government Accountability Office

    Contents

    Letter

    Results in Brief
    Background
    Inventory Shortfalls and Poor Equipment Condition Leave Many of

    DOD's Prepositioning Programs at Risk DOD and Some of the Military
    Services Have Provided Insufficient

    Oversight Over Their Prepositioning Programs DOD Lacks A Plan To
    Coordinate Future Prepositioning Programs Conclusions Recommendations for
    Executive Action Agency Comments and Our Evaluation

                                           1

                                          3 7

    10

    19 26 33 34 35

    Appendix I	Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

    Appendix II Scope and Methodology

    Appendix III Comments from the Department of Defense

    Appendix IV GAO Contact and Staff Acknowledgments

    Tables

    Table 1: Description of DOD's Prepositioning Programs 8 Table 2: Current
    Status and Operations and Maintenance Funding

    for Army Prepositioned Stocks at Key Locations as of

    January 2005 11 Table 3: GAO Products 37 Table 4: Other Products 40

    Figures

    Figure 1: Locations of Army (USAR), Marine Corps (USMC), Navy (USN), and
    Air Force (USAF) Prepositioned Stocks 9

    Figure 2: Sustainment Stocks Stored Outside at Camp Carroll, South Korea
    13

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office Washington, DC 20548

    September 6, 2005

    The Honorable Joel Hefley
    Chairman
    The Honorable Solomon P. Ortiz
    Ranking Minority Member
    Subcommittee on Readiness
    Committee on Armed Services
    House of Representatives

    With fewer troops permanently stationed overseas, prepositioned stocks
    of equipment and supplies have become an integral part of the Department
    of Defense's (DOD) ability to project forces into conflict areas faster.
    The
    importance of prepositioned stocks to the U.S. military was highlighted
    during recent operations in Iraq. The military used equipment and supplies
    stored at land sites in the region and offloaded much of the stocks from
    its
    prepositioning ships. Perhaps more importantly, the availability of the
    sites gave the United States the facilities it needed to assemble forces
    for
    combat. Recognizing the importance of the department's prepositioning
    programs, Congress has made significant investments in these programs.
    In recent years, the services have collectively used over $1 billion each
    year to operate and maintain their prepositioning programs; by fiscal year
    2005 this amount had declined to about $724 million, since a large portion
    of these stocks were used to support military operations in Iraq. However,
    billions of dollars in future investments will be needed to recapitalize
    equipment and develop future programs. The recently published National
    Defense Strategy indicates that prepositioning will continue to be an
    important aspect of DOD's defense posture in the future.1 The strategy
    establishes several goals for the future of these programs, including the
    need for the programs to be more flexible and increasingly joint in
    character.

    Each of the military services prepositions combat or support equipment
    and supplies in order to speed response times of U.S. forces to operating
    locations and reduce the strain on scarce airlift or slower sealift
    assets.
    For example, the Army stores sets of combat brigade equipment and

    1 The Department of Defense, The National Defense Strategy of the United
    States of America (March 2005).

    supporting supplies at land sites in several countries and aboard
    prepositioning ships in the Pacific and Indian Oceans. The Marine Corps
    stores equipment and supplies for its forces aboard squadrons of maritime
    prepositioning ships located around the world and at land sites in Norway.
    The Navy stores equipment and supplies to support ship offloading,
    deployable hospitals, and construction projects also aboard the maritime
    prepositioning ships and at land sites around the world. The Air Force
    stores ammunition at land sites and aboard prepositioning ships and
    prepositions base support equipment, vehicles, and supporting supplies at
    several land sites.

    In 1998, we reported on problems ranging from poor inventory visibility to
    unreliable requirements-setting processes in the Army and Air Force
    prepositioning programs.2 Similar problems were more recently identified
    in numerous after-action assessments of the war in Iraq, and we testified
    in March 2004 before the Subcommittee about the performance of the Army
    and Marine Corps' prepositioning programs during Operation Iraqi Freedom.3
    We found that although the programs performed well in general, some Army
    units faced equipment shortfalls and there were instances where certain
    types of equipment were outdated or did not match unit needs. We stated
    that DOD may need to rethink its prepositioning programs to ensure that
    they are compatible with overall transformation goals and the evolving
    military strategy. Following our testimony, Congress directed the
    Secretary of Defense to submit a report on its prepositioning plans by
    October 1, 2005.4 Inventory management issues, and more recently supply
    chain management, have been considered high-risk areas by GAO since 1990.
    To further assist the Subcommittee in its oversight, you asked that we
    assess the status and plans for DOD's prepositioning programs in advance
    of the department's report. Specifically, you asked us to review the risks
    facing the department's prepositioning programs, including an assessment
    of: (1) the near-term operational risk given the continuing use of these
    stocks, (2) the sufficiency of DOD and service-level oversight of these
    prepositioning programs, and (3) whether DOD has developed a coordinated
    plan for the

    2 GAO: Military Prepositioning: Army and Air Force Programs Need to Be
    Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998).

    3 GAO, Military Prepositioning: Observations on Army and Marine Corps
    Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T
    (Washington, D.C.: Mar. 24, 2004).

    4 Pub. L. No. 108-375, S: 1046, (2004).

    future of the department's prepositioning programs that would meet the
    goals of the recently published defense strategy.

    To assess the near-term operational risk given the continuing use of
    prepositioned stocks, we obtained reports prepared by the military
    services on the inventory levels of their prepositioned stocks compared to
    program requirements5 and discussed the potential near-term operational
    and long-term program risks associated with inventory shortfalls and
    maintenance deficiencies. We visited selected prepositioning sites and
    reviewed available maintenance reports or other data used by the services
    to measure the condition of the prepositioned stocks. To assess the
    sufficiency of DOD and the services' oversight of these programs, we
    discussed the processes used by DOD to oversee its prepositioning programs
    with officials from the Office of the Secretary of Defense, the Joint
    Staff, and the military services. To assess whether DOD has developed a
    coordinated plan for the future of its prepositioning programs that would
    meet the goals of the recently published defense strategy, we reviewed the
    recently published National Defense Strategy and discussed the future
    direction of the department's prepositioning programs with officials in
    the Office of the Secretary of Defense, the Joint Staff, and the military
    services. We also collected and analyzed information from the military
    services on the future plans for their prepositioning programs. We also
    discussed the time frames and costs needed to repair or replace
    prepositioned stocks used in recent military operations. We conducted our
    work from July 2004 through May 2005 in accordance with generally accepted
    government auditing standards. Our assessments of data reliability
    revealed significant concerns that are discussed later in the report. A
    more detailed discussion of our scope and methodology is contained in
    appendix II.

    DOD faces some near-term operational risks should another large-scale
    conflict emerge because it has drawn heavily on its prepositioned stocks
    to support ongoing operations in Iraq. And, although remaining stocks
    provide some residual capability, many of the programs face significant
    inventory shortfalls and in some cases, maintenance problems.6 There is

    5 We will refer to stocks on hand as compared against required levels as
    "inventory fill" in this report.

    6 As discussed later in this report, reliable data needed to assess
    inventory fill and maintenance condition were unavailable in many cases.
    Therefore, the precise readiness of prepositioned stocks and the impact of
    any shortfalls are difficult to determine.

      Results in Brief

    currently no strategy in place to mitigate the operational risks created
    by inventory shortfalls and poor maintenance condition of prepositioned
    equipment. Combatant commanders rely on prepositioned stocks being
    available and in good maintenance condition; otherwise U.S. forces must
    bring needed stocks with them or spend valuable time repairing equipment.
    The current status of the services' programs is summarized as follows:

    o  	The Army has drawn equipment from virtually all of its prepositioned
    stocks to support operations in Iraq and little of the equipment has been
    returned. Some stocks are currently stored in South Korea, or are afloat
    on prepositioning ships near Guam/Saipan and Diego Garcia. However, these
    sites have shortfalls of equipment and sustainment items like spare parts.
    Some of these shortfalls have existed in these and other Army programs for
    years, however, and are not attributable to the war in Iraq. In addition,
    we found that some of these stocks were in poor maintenance condition,
    especially those stored in South Korea.

    o  	The Marine Corps is currently using a significant portion of the
    stocks offloaded from 5 of its 16 prepositioning ships to support ongoing
    operations in Iraq. It is unclear when this equipment will be returned to
    prepositioned stocks because much of this equipment will be left in Iraq
    to support the continuing deployment of Marine Corps forces there.
    Conversely, while the Navy used prepositioned assets like field hospitals
    in Iraq, it currently reports few shortfalls.

    o  	The Air Force also has a reduced capability in its prepositioned
    stocks because it is continuing to use a considerable amount of these
    stocks to support combat operations in both Afghanistan and Iraq. For
    example, it used approximately 43 percent of the total number of its
    prepositioned bare base sets7 to house deployed forces supporting
    Operations Enduring Freedom and Iraqi Freedom. It is unclear when these
    stocks will be refilled. The precise operational risk created by these
    shortfalls is difficult to assess. Operation Iraqi Freedom revealed
    significant issues with the status of prepositioned stocks, such as
    shortages in spare parts and lessthan-modern equipment. These problems
    still exist today. While the military planners we spoke with told us that
    they would find a way to work around the shortfalls, they offered little
    in the way of concrete plans. Should a new conflict arise in the near
    term-especially one where U.S. forces did not control the timing-the
    combatant commander would likely face even more difficult operational
    challenges.

    7 The term "bare base sets" refers to tents for troops, latrines,
    kitchens, aircraft hangers, maintenance shops, generators, and
    environmental controls. The sets support earlyarriving combat forces and
    are especially critical in austere environments.

    DOD and the military services have provided insufficient oversight over
    the department's prepositioning programs. This inattention has allowed
    long-standing problems with determining program requirements and managing
    inventory to persist. Management principles, such as those embraced in the
    Government Performance and Results Act of 1993, provide federal agencies
    with a framework for effectively implementing and managing programs.8
    Management principles include sufficient information to support sound
    decision making and enable Congress to provide proper oversight. However,
    DOD has not implemented its directive on war reserve materiel policy that
    could provide centralized oversight over its prepositioning programs.9
    Officials from the Office of the Secretary of Defense told us they did not
    implement this directive because they did not believe they had the
    authority to enforce its provisions. In addition, officials told us they
    were able to provide adequate oversight over the department's
    prepositioning programs through other mechanisms, such as reviewing
    quarterly readiness assessments and the services' budget submissions.
    While these mechanisms provide DOD with important information on gaps in
    capabilities and resource allocations, they provide only a vague and broad
    description of shortfalls or readiness problems and, therefore, are not
    effective as an oversight tool. Based on our analysis, even if the
    department had implemented its directive, the requirements underpinning
    some of DOD's prepositioning programs are questionable and the Army and
    Air Force do not have reliable information on the inventory fill and
    maintenance condition of some prepositioned stocks. For example, as
    recently as February 2005, information contained in the Army's readiness
    reporting system showed the maintenance condition of prepositioned
    equipment in South Korea to be at a high level. However, during our work
    we found that much of the Army's prepositioned combat equipment stored in
    South Korea had not been properly maintained. Without reliable information
    on requirements, inventory levels, and maintenance condition, DOD cannot
    provide sufficient oversight over its programs, which potentially leaves
    war fighters at risk of not having needed stocks in the future.

    DOD has not developed a coordinated departmentwide plan or joint doctrine
    to guide the future of its prepositioning programs, despite the heavy use
    of prepositioned stocks in recent conflicts and the department's

    8 Pub. L. No. 103-62.

    9 DOD Directive 3110.6, War Reserve Materiel Policy (Nov. 9,
    2000-certified current as of Dec. 1, 2003).

    plans to rely on them in the future. The 2005 National Defense Strategy
    specifically notes the importance of prepositioning in the future and
    indicates that prepositioning programs should be more innovative,
    flexible, and joint in character, but provides few details on how it will
    accomplish these goals. The independent Overseas Basing Commission
    recently echoed the continued importance of the department's
    prepositioning programs in the future. DOD officials told us that the
    future of its prepositioning programs is unclear and dependent on the
    outcome of several interrelated studies ongoing within the department,
    especially reviews of mobility and an additional study being led within
    the department on overseas presence and basing. In the absence of a
    departmentwide plan or joint doctrine to coordinate the reconstitution10
    and future plans for these programs, the military services have been
    recapitalizing some stocks and developing future plans for their programs
    without a clear understanding of how they will fit together to meet the
    evolving defense strategy. This service-centric approach to prepositioning
    is out of step with the department's goals of transforming the military to
    be more joint and expeditionary, and potentially misses opportunities to
    achieve greater efficiencies where service programs overlap in making
    future investment decisions. For example, the Army and Air Force maintain
    separate service-centric bare base programs, although the basic
    capabilities of these programs are the same. Furthermore, the Navy and
    Marine Corps are proposing multibillion dollar procurement programs to
    support new concepts, such as sea basing, while the Defense Logistics
    Agency is proposing floating depots to resupply troops in theater. Without
    an overarching framework that establishes priorities for prepositioning
    among competing initiatives and identifies the resources required to
    implement the future programs, DOD cannot provide assurances to Congress
    that the billions of dollars that will be required to recapitalize the
    stocks and develop future programs will ultimately produce programs that
    will operate jointly, support the needs of the war fighter, and are
    affordable.

    We are making several recommendations to address the risks of inventory
    shortfalls and improve DOD's management and oversight of its
    prepositioning programs. In commenting on a draft of this report, DOD

    10Reconstitution includes the costs to clean, inspect, maintain, replace,
    and restore equipment to the required condition at the conclusion of a
    contingency operation or unit deployment.

    Background

    partially or fully concurred with our recommendations and indicated that
    it had initiated several actions to address our recommendations.

    Prepositioning is an important part of DOD's overall strategic mobility
    framework. It allows DOD to field combat-ready forces in days rather than
    the weeks it would take if the forces and all necessary equipment and
    supplies had to be brought from the United States to the location of the
    conflict. The U.S. military can deliver equipment and supplies in three
    ways: by air, by sea, or by prepositioning. While airlift is fast, it is
    expensive to use and impractical for moving all of the material needed for
    a large-scale deployment. Although ships can carry large loads, they are
    slower than airlift. Prepositioning lessens the strain of using expensive
    airlift and reduces the reliance on slower sealift deliveries. Concerned
    about the reduction in U.S. forces overseas and their ability to move
    forces in the time required to resolve potential conflicts quickly, the
    services have expanded prepositioning programs ashore and on ships in
    potential areas of conflict.

    The military services have prepositioning programs to store combat or
    support equipment and supplies near areas with a high potential for
    conflict and to speed response times and reduce the strain on other
    mobility assets. The Defense Logistics Agency prepositions food and bulk
    fuel to support a range of contingency operations and training exercises.
    The Special Operations Command relies on the military services to
    preposition common support items for its forces, such as base support
    items and vehicles.

    The Army's program involves three primary categories of stocks: combat
    brigade sets, operational projects, and war reserve sustainment stocks
    stored at land sites and aboard prepositioning ships around the world. The
    Marine Corps also prepositions equipment and supplies aboard
    prepositioning ships and at land sites in Norway. The Navy's
    prepositioning efforts are comparatively small, used mainly to support the
    Marine Corps' prepositioning program and deploying forces. The Navy
    prepositions equipment and supplies at land sites and aboard the maritime
    prepositioning ships. The Air Force prepositions stocks of war reserve
    equipment and supplies to meet initial contingency requirements and to
    sustain early deploying forces. The Air Force's prepositioned war reserve
    stocks include bare base sets; vehicles; munitions; and a variety of
    consumable supplies, such as rations, fuel, support equipment, aircraft
    accessories, and medical supplies. DOD's prepositioning programs are
    briefly described in the table below.

    Table 1: Description of DOD's Prepositioning Programs

    Service Types of stocks Description

    Army Combat brigade o    Stored at land sites and aboard prepositioning
                                                     ships
                 sets      o      Sets are designed to support 3,000 to 5,000
                                                   soldiers
                           o   Heavy weaponry such as tanks and Bradley fighting
                                                   vehicles
                           o   Support equipment such as trucks and High Mobility
                                                   Multi-purpose Wheeled Vehicles
                           o  Spare parts and other sustainment stocks to support
                                        the early stages of a conflict

    Sustainment  o  Stored at land sites and aboard prepositioning ships
    stocks  o  Replacement equipment for losses in early stages of operations
    or until resupply is established

    o  Includes major end-items such as aircraft engines and tracked vehicles

    o  	Secondary items such as meals, clothing, petroleum supplies,
    construction materials, ammunition, medical materials, and repair parts

    Operational  o  Stored at land sites and aboard prepositioning ships

    project stocks  o  	Authorized material above unit authorizations designed
    to support Army operations or contingencies

    o  	Equipment and supplies for special operations forces, bare base sets,
    petroleum and water distribution, mortuary operations, and prisoner-of-war
    operations

    Navy/Marine Maritime  o  Consists of 16 prepositioning ships organized
    into three squadrons

    Corps	prepositioning  o  Each squadron supports about 15,000 Marines for
    up to 30 daysforce

    o  	Includes combat systems, communications systems, construction
    equipment, munitions, medical supplies, and sustainment stocks

    Prepositioning  o  Several land sites located in central Norway

    program-  o  Designed to support 13,000 Marines for up to 30 days

    Norway  o  	Includes vehicles, weapons, munitions, rations, and other
    equipment that will be used to support any geographic combatant command

    Navy prepositioned assets  o  Assets are stored aboard maritime
    prepositioning ships and at land sites

    o  	Equipment to offload prepositioning ships, including material handling
    equipment, ramps and barges, landing and amphibious craft, and bulk fuel

    o  Construction equipment such as cranes, forklifts, trucks, and tractor
    trailers

                                           a

    o  Includes six 500-bed fleet hospitals Bare base sets  o  Base operating
    support equipment used to house forces, and equipment and supplies
    neededAir Force

                             to support airfield operations

    Vehicles  o  Includes trucks, buses, and High Mobility Multi-purpose
    Wheeled Vehicles

    Other support  o  Includes materiel handling equipment, rations, fuel,
    fuel support equipment, aircraft
    equipment and accessories, and medical supplies at land sites and
    munitions aboard four prepositioning ships
    supplies

    Source: GAO.

    aThe Navy is in the process of transitioning from 500-bed fleet hospitals
    to smaller modular units.

    The military services preposition these stocks of equipment and supplies
    at several land sites and aboard prepositioning ships around the world.
    Most of the military services preposition equipment and supplies in
    southwest Asia, the Pacific theater, Europe, and aboard prepositioning
    ships. Figure 1 shows the locations of DOD's prepositioned stocks.

    Figure 1: Locations of Army (USAR), Marine Corps (USMC), Navy (USN), and
    Air Force (USAF) Prepositioned Stocks

    Note: DOD also prepositions smaller stocks of equipment and supplies at
    other locations not identified on this map.

      Inventory Shortfalls and Poor Equipment Condition Leave Many of DOD's
      Prepositioning Programs at Risk

    DOD faces some near-term operational risks should another large-scale
    conflict emerge due to inventory shortfalls and poor maintenance condition
    of some of its prepositioned stocks. For example, the department has drawn
    heavily on its prepositioned stocks to support ongoing operations in Iraq
    and relatively little has been reconstituted. In addition, while remaining
    stocks provide some residual capability, many have significant inventory
    shortfalls and in some cases, maintenance problems. Combatant commanders
    rely on prepositioned stocks being available and in good maintenance
    condition; otherwise U.S. forces must bring needed stocks with them or
    spend valuable time repairing equipment. Since these stocks are typically
    used in the early stages of a conflict, it is important for DOD to
    determine the operational risk associated with any shortfalls. Operation
    Iraqi Freedom revealed significant issues with the status of prepositioned
    stocks, such as shortages in spare parts and less-than-modern equipment.
    The same problems continue to exist today in some programs.

        The Army Is Reporting Low Inventory Fill and Poor Maintenance Condition for
        Some Prepositioned Stocks

    The Army is currently reporting low inventory fill for the combat brigade
    sets, operational project stocks, and sustainment stocks that comprise its
    prepositioning program, and some stocks not used in recent operations are
    in poor maintenance condition. For example, the Army used much of the
    equipment and supplies associated with the combat brigade sets stored at
    land sites in Kuwait and Qatar and aboard prepositioning ships afloat near
    Diego Garcia to support operations in Iraq. In addition, the Army used
    some equipment from its other prepositioned stocks in Europe, South Korea,
    and from other prepositioning ships located near Guam/Saipan.

    The Army is also reporting low inventory fill for its operational projects
    and sustainment stocks. The Army has a total of 14 operational projects
    that contain equipment and supplies needed for unique mission
    requirements, such as special operations forces, mortuary operations, and
    prisoner handling. Sustainment stocks provide replacement equipment and
    supplies, such as repair parts, petroleum items, and tracked vehicles,
    until normal resupply channels are established. The Army is reporting
    inventory fills for operational projects and sustainment stocks-
    approximately 26 percent and 20 percent respectively-that are considerably
    lower than the program requirements. Some of the Army's shortfalls have
    been long-standing, however, including shortfalls in critical

    areas like spare parts, and are not attributable to the war in Iraq. For
    example, we reported in 2003 that DOD experienced equipment readiness
    problems because of a lack of key spare parts.11 Table 2 provides an
    overview of the inventory levels, maintenance condition, and operations
    and maintenance funding of the Army's prepositioned stocks.

    Table 2: Current Status and Operations and Maintenance Funding for Army
    Prepositioned Stocks at Key Locations as of January 2005

                                  Dollars in millions

                                  Total funding fiscal

    Location Current status years 2000-2005

    Europe 	Low inventory fill, with limited combat $277.6 equipment,
    operational projects, and other stocks stored at sites in Germany, Italy,
    Luxembourg, and the Netherlands. Some stocks were taken out to support
    operations in Iraq, while stocks from Italy were used to temporarily
    refill the prepositioning ships now positioned near Diego Garcia.

    Kuwait/Qatar 	Equipment in use in Iraq and storage $304.2 warehouses in
    Qatar have been converted to become Central Command's regional
    headquarters.

    South Korea 	As of March 2005, the brigade set had most $245.9 of its
    authorized equipment on hand, though a recent maintenance inspection
    revealed maintenance deficiencies. The Army plans to correct the
    maintenance problems with the set in September 2005, as well as
    reconfigure it to be consistent with the Army's new modular configuration.

    Afloat near Diego Two squadrons, each with a partial brigade $1,835.8
    Garcia and set, are available.
    Guam/Saipan

    Source: GAO analysis of Army data.

    Some stocks that were taken from prepositioned storage locations and used
    during operations in Iraq are either still in use, or have experienced
    extreme wear and tear. For example, the Army continues to use equipment
    taken from prepositioned stocks to support its units in Iraq, delaying the
    reconstitution and redistribution of the equipment. According to Army
    officials, this equipment may not be returned to the prepositioned stocks

    11 GAO, Defense Inventory: The Army Needs a Plan to Overcome Critical
    Spare Parts Shortages, GAO-03-705 (Washington, D.C.: June 27, 2003).

    because the Army is giving priority to transforming its forces into more
    deployable and expeditionary brigade-based formations and may use formerly
    prepositioned equipment to fill additional equipment requirements
    associated with the new formations. Importantly, this heavy stress on
    equipment is a problem across much of the Army's equipment that has been
    used in Iraq, not just the equipment taken from prepositioned stocks.

    We also found that some other prepositioned stocks in storage were in poor
    maintenance condition, even though they had not been used in Operation
    Iraqi Freedom. For example, during a March 2005 visit to Camp Carroll,
    South Korea, we found that some of the Army's prepositioned stocks at this
    location were in poor maintenance condition and that much of the equipment
    was overdue for periodic maintenance. Army officials confirmed that
    required cyclic maintenance had not been performed on the equipment in the
    brigade set, operational projects, and sustainment stocks for several
    years. To address this, the Army has stepped up its maintenance efforts by
    bringing in contractor support and setting up temporary maintenance
    facilities to assist in repairing the equipment to standard. Moreover, as
    shown in figure 2, certain stocks were stored outside and had been for
    many years and corrosion was evident on some pieces of equipment.
    Corrosion can significantly affect the readiness of prepositioned
    equipment: DOD spends an estimated $20 billion each year to repair the
    damage to military equipment and infrastructure caused by this problem. In
    this regard, we have called for improvements to DOD's long-term corrosion
    strategy, including better planning and establishment of a long-term
    funding mechanism.12 Because of continuing concerns over corrosion, we are
    currently conducting a congressionally directed review of its impact on
    DOD's overall prepositioned assets.

    12 See GAO, Defense Management: Opportunities to Reduce Corrosion Costs
    and Increase Readiness, GAO-03-753 (Washington, D.C.: July 7, 2003), and
    Defense Management: Opportunities Exist to Improve Implementation of DOD's
    Long-Term Corrosion Strategy, GAO-04-640 (Washington, D.C.: June 23,
    2004).

    Figure 2: Sustainment Stocks Stored Outside at Camp Carroll, South Korea

    Source: GAO.

    The Army also maintains European prepositioning storage sites in Germany,
    Italy, Luxembourg, and the Netherlands. However, few stocks remain there
    because they have been drawn out to support operations in other locations,
    including Bosnia and Iraq. The mission in Europe has steadily declined
    since the European drawdown of the early 1990s, and the remaining sites
    are the last remnants of the Army's large-scale prepositioning program
    developed during the Cold War. Army officials told us that they are
    currently using the local national workforce at these locations to perform
    other maintenance workloads, including fixing equipment from Iraq. In past
    reports, we have recommended that the Army align its workforce and
    facilities to meet the reduced post-Cold War mission in Europe.13
    Officials told us that they have reduced infrastructure in response to our
    recommendations, and are contemplating further reductions. In Italy,
    however, the Army has requested about $55 million to construct new storage
    and maintenance facilities that it has said will become the centerpiece of
    its land prepositioning in the region. This region still receives
    considerable funding, as shown in table 2. The Army

    13 GAO, Army War Reserves: DOD Could Save Millions by Aligning Resources
    With the

    Reduced European Mission, GAO/NSIAD-97-158 (Washington, D.C.: July 11,
    1997) and

    Military Prepositioning: Army and Air Force Programs Need to Be
    Reassessed,

    GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998).

    spent nearly $290 million during fiscal years 2000-2004, even though the
    sites have had an uncertain mission and reduced stocks for much of that
    time.

        The Marine Corps Is Reporting Low Inventory Fill for Some Prepositioned
        Stocks, While the Navy Reports Few Shortfalls

    The Marine Corps has offloaded about 75 percent of the major end-items
    stored on 5 of its 16 prepositioning ships to support combat operations in
    Iraq. The remaining 11 prepositioning ships are reporting inventory fills
    of 95 percent or greater and good maintenance condition for major
    end-items and sustainment stocks. The Marine Corps also used some of its
    prepositioned major end-items stored at several land sites in Norway to
    support operations in Iraq and Afghanistan and to fill shortfalls at
    Marine Corps bases and on some of the prepositioning ships. As a result,
    these sites are currently reporting an inventory fill of about 71 percent.

    It is unclear when this equipment will be returned to prepositioned stocks
    because, according to a Marine Corps official, a large portion of the
    Marine Corps' equipment offloaded from prepositioning ships to support the
    deployment of the I Marine Expeditionary Force to Iraq is currently being
    kept in Iraq to support the rotation of the II Marine Expeditionary Force.
    In a recent congressional testimony on the status of its military
    equipment, a Marine Corps official reported that in addition to higher
    usage rates, equipment is being used under extreme conditions which have
    increased the maintenance requirements. For example, to date, more than
    1,800 equipment items have been destroyed and an additional 2,300 damaged
    equipment items will require depot maintenance.14

    For the Norway stocks, the Marine Corps is in the process of updating the
    requirements for its program there so that it will be capable of providing
    a global response capability to any regional combatant commander. During
    our September 2004 visit to the prepositioning sites in Norway, we
    discussed this change in the scope of the program and Marine Corps
    officials confirmed that the facilities in Norway can support any
    combatant commander and the stocks are globally deployable via air, rail,
    and sea. This shift in scope is in response to concerns about the
    continued

    14 Statement of the Deputy Commandant for Plans, Policies, and Operations,
    United States Marine Corps, before the Subcommittee on Readiness, House
    Armed Services Committee, Concerning Requirements to Reconstitute Military
    Equipment, April 6, 2005.

    relevance of land stocks in Norway.15 According to Marine Corps officials,
    however, these stocks are important to Norway, cost relatively little to
    maintain (about $3.9 million in operational costs per year), are stored in
    excellent facilities, and can be taken out to respond to crises as needed.

    The Navy is reporting high inventory fill for its prepositioned assets.
    According to Navy officials, most of its equipment used to offload the
    maritime prepositioning ships was not used in direct combat and has not
    required extensive reconstitution, and other equipment was available to
    backfill the field hospitals and construction forces deployed to support
    operations in Iraq.

        The Air Force Is Reporting Low Inventory Fill and Some Stocks in Poor
        Condition

    The Air Force has used a considerable amount of its prepositioned
    equipment and supplies to support combat operations in Afghanistan and
    Iraq and, as a result, the inventory fill of many of these stocks is low.
    For example, it used approximately 43 percent of the total number of its
    prepositioned bare base sets to support Operations Enduring Freedom and
    Iraqi Freedom, and due to the extreme desert conditions, many of these
    sets will have to be replaced. A U.S. Central Command, Air Forces,
    official told us that the command is continuing to issue prepositioned
    base operating support equipment and vehicles to forces that have been
    deployed to the area of responsibility. While the Air Force is working on
    refilling its prepositioned equipment and supplies, if a conflict arises
    in the near term, these stocks may not be available for use as it is
    unclear when these stocks will be refilled.

    In addition, the Air Force is experiencing shortfalls in its inventory of
    fuel bladders. These bladders are used to store fuel for Air Force
    aircraft at austere operating locations. Air Force officials stated that
    to support combat operations in Iraq, Central Command, Air Forces, has
    used a considerable number of its prepositioned war reserve fuel bladders.
    As combat operations continue, the Air Force is depleting its supply of
    these bladders, and officials have characterized the impact of potential
    shortfalls in these bladders as its "highest operational risk." At the
    same time, the Air Force is undergoing an initiative to modernize its fuel
    support equipment, including its fuel bladders. As part of this
    initiative, the Air Force

    15 Naval Audit Service: The Norway Air-Landed Marine Expeditionary Brigade
    Prepositioning Program, N2003-0079 (September 2003) and Final Report of
    the Commission on Review of Overseas Military Facility Structure of the
    United States (Arlington, Va.: Aug. 15, 2005).

    requested that Central Command, Air Forces, officials not purchase the
    type of fuel bladders that had previously been used. To mitigate the risk,
    the Air Force has allowed Central Command, Air Forces, to purchase some
    replacement fuel bladders; however, it is unclear when its modernization
    initiative will be fully implemented.

    During our review, we were also told that some bare base sets that the Air
    Force prepositions at Andersen Air Force Base on Guam are in poor
    maintenance condition and are unusable. According to a Pacific Air Forces
    official, the sets stored at Andersen Air Force Base have deteriorated due
    to a lack of required maintenance. Air Force maintenance personnel are
    responsible for the war reserve stocks prepositioned at this location as
    an additional duty to the maintenance of operating stocks also stored at
    the base. The official told us that the quality of maintenance performed
    by Air Force personnel on the war reserve bare base sets has been a
    longstanding problem at this location. Air Force officials told us that
    bare base sets stored in Southwest Asia and South Korea did not have these
    same maintenance problems because contractors have been hired to maintain
    these sets.

    When we discussed these issues with Air Force officials, they told us that
    they believed they could overcome shortfalls and any maintenance problems
    in the event of a conflict by using supplemental funding or crossleveling
    equipment from other theaters. Additionally, Pacific Air Forces officials
    told us that they would be able to obtain some vehicles from countries
    where they will operate by using contracts already in place.

        Shortfalls in Inventory Fill Exist for Stocks Prepositioned to Support
        Special Operations Forces

    The Army, Air Force, and Navy preposition common support equipment and
    supplies for use by their special operations forces.16 However, the
    services have traditionally underfunded these stocks and, as a result,
    inventory shortfalls exist in most of these stocks. Lessons learned from
    recent military operations in Iraq further highlighted the need for
    special operations forces to have stocks of prepositioned equipment and
    supplies to support these forces in multiple austere environments. Special
    Operations Command officials told us that special operations forces are
    often among the first units to deploy and, therefore, have a need to draw

    16 Common support equipment and supplies include items adopted by a
    military service for use by its own forces and their activities, including
    standard issue military items, base support items, and the supplies and
    services provided by the military service to support and sustain its own
    forces.

    prepositioned stocks. The department recognized this and recent guidance
    issued by DOD directs the military services to fully fund inventory
    shortfalls in these stocks of common items prepositioned to support
    special operations forces.17 The military services have agreed to provide
    funding for prepositioned stocks for special operations forces beginning
    in fiscal year 2006.

        Shortfalls Create Some Operational Risks

    Since prepositioned stocks are integral to the military's war plans,
    shortfalls in these programs create risks that combatant commanders would
    have to mitigate in the event of a new conflict. It could cost time or
    manpower to fill shortages or fix equipment. Since these stocks are
    typically used in the early stages of a conflict, it is important for DOD
    to determine the operational risk associated with any shortfalls. The
    military planners we spoke to told us that they would find a way to work
    around the shortfalls, but offered little in the way of concrete plans.

    Operation Iraqi Freedom revealed significant lessons for DOD's
    prepositioning managers, especially in the Army, such as shortages in
    spare parts and less-than-modern equipment. Prior to the onset of combat
    operations in Iraq, the Army had significant shortages in its
    prepositioned stocks, especially in spare parts. The Army overcame these
    shortfalls by having the units that were drawing the prepositioned stocks
    bring their own spare parts, in addition to obtaining spare parts from
    nondeploying units.18 However, according to the Army's after-action
    assessments of the war, the Army had shortages in these and other items,
    including food, water, fuel, construction materials, and ammunition. The
    available stocks of these supplies were insufficient to meet sustainment
    requirements at the outset of the deployment and it took the supply chain
    months to respond. At the time of our work, we found that many of the same
    shortfalls that existed in the Army's program are still evident, and may
    be getting worse. For example, as of mid-March 2005, the Army had only 21
    percent of its authorized prepositioned repair parts on hand in South
    Korea. According to Army officials, if a military conflict should arise
    there,

    17 Department of Defense, (U) Joint Programming Guidance for Fiscal Years
    2006-2011, June 2004.

    18 GAO, Military Prepositioning: Observations on Army and Marine Corps
    Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T
    (Washington, D.C.: Mar. 24, 2004).

    their strategy to mitigate these shortfalls would be to cross-level
    required parts from available sustainment stocks as needed.

    Although the precise operational risks created by shortfalls in the Marine
    Corps and Air Force's prepositioned stocks are difficult to assess,
    officials from these services told us that these risks can be managed.
    This is because the Marine Corps has kept about two-thirds of its
    prepositioned combat capability available for potential contingencies and
    that equipment is reported to be in good condition. Moreover, Air Force
    officials stated that if a conflict arises, they will be able to fill
    shortfalls and repair equipment as needed by using supplemental funding
    and obtaining some vehicles and other stocks in other countries through
    contracts already in place. Air Force officials stated, however, that this
    presumes that they will have the time and necessary funding available to
    address the shortfalls.

    Combatant commanders rely on prepositioned stocks being available and in
    good maintenance condition. Prior to Operation Iraqi Freedom, the
    combatant commander built up the required forces over a period of months,
    and had time to overcome any inventory shortages in the prepositioned
    stocks or resolve any maintenance issues with prepositioned equipment.
    However, should a new conflict arise in the near term-especially one where
    U.S. forces did not control the timing-the combatant commander would
    likely face even more difficult operational challenges. During our visit
    to South Korea, officials told us that their strategy to mitigate
    maintenance issues with the Army's prepositioned stocks stored there,
    should a conflict arise, would be to surge maintenance personnel as needed
    to fix equipment, use arriving personnel to assist in maintenance
    execution, and cross-level required parts from available sustainment
    stocks. Officials acknowledged, however, that it could take longer than
    planned to get the equipment ready in the event of a conflict.

    Another factor making it difficult to assess the potential operational
    risks is the lack of sound information available to assess and manage
    DOD's prepositioning programs. Such programs need valid inventory
    requirements that meet the needs of the war fighters, and reliable
    information about inventory levels and maintenance condition for those
    requirements. These long-standing management problems are discussed in the
    next section of this report.

      DOD and Some of the Military Services Have Provided Insufficient Oversight
      Over Their Prepositioning Programs

    Oversight over prepositioning programs by DOD and the military services
    has been insufficient, despite the importance of prepositioning to the
    military. This inattention has allowed long-standing problems to linger.
    Management principles, such as those embraced in the Government
    Performance and Results Act of 1993,19 provide federal agencies a
    framework for effectively implementing and managing programs. Management
    principles include sufficient information to support sound decision making
    and enable Congress to provide proper oversight. However, DOD has not
    adhered to its directive on war reserve materiel policy that could provide
    oversight over its prepositioning programs. In addition, service oversight
    has been inadequate, particularly in the Army's processes for determining
    requirements and the Army and Air Force processes for assessing inventory
    shortfalls and maintenance condition. This limited oversight unnecessarily
    leaves the programs at risk of being unavailable when required and lacking
    the right mix of equipment and supplies to support the war fighter.

        Oversight Has Been Insufficient

    The overarching departmental guidance is contained in DOD directive
    3110.6, updated in December 2003, which provides policy guidance on the
    department's war reserve materiel program and assigns oversight and
    accountability responsibilities within the department. The secretaries of
    the military departments, directors of defense agencies, and the combatant
    commands are responsible for setting program requirements and the Defense
    Logistics Agency has responsibility for storage and distribution of the
    stocks. At the department level, their responsibilities are as follows:

    o  	The Undersecretary of Defense for Acquisition, Technology, and
    Logistics is required to assess the adequacy of war reserve stocks
    annually.

    o  	The Undersecretary of Defense for Policy is required to provide
    planning guidance that includes war reserve requirements.

    o  	The Chairman of the Joint Chiefs of Staff is required to validate the
    operational requirements of the geographic combatant commands.

    A provision of the directive related to oversight states that the
    department is to assess the adequacy of its war reserve stocks. In order
    to assess adequacy, the directive requires the secretaries of the military
    departments and the directors of defense agencies to submit annual reports
    on war reserve materiel levels to the Under Secretary of Defense for
    Acquisition,

    19 Pub. L. No. 103-62.

    Technology, and Logistics within the Office of the Secretary of Defense.
    Officials within the Deputy Under Secretary of Defense for Supply Chain
    Integration told us that this oversight responsibility had been delegated
    to their office. However, the directive has not been implemented and,
    therefore, the reporting requirement contained in the directive has not
    been enforced. Neither the services nor the Under Secretary's office could
    provide us with copies of these reports. Officials told us that they had
    suspended this reporting requirement in 2002; however, the directive had
    been updated in late 2003 and the reporting requirement was maintained.
    Officials also stated that although they had been given responsibility for
    implementing the oversight provisions of the directive, since their office
    primarily deals with only sustainment issues, they did not have sufficient
    authority or personnel to meet the requirements stated by the directive,
    specifically to assess the adequacy of the services' prepositioning
    programs.

    Officials further told us they did not believe the reporting requirement
    in the directive was necessary because they were able to provide adequate
    oversight of the department's prepositioning programs through other
    mechanisms, such as reviewing the services' budget submissions and
    quarterly readiness assessments. Quarterly readiness reviews and
    integrated priority list submissions allow the combatant commanders and
    others to identify issues that have reached critical thresholds that may
    limit war-fighting capabilities. These assessments, some of which have
    included issues related to prepositioned stocks, are briefed to DOD's
    senior leadership and may be included in a legislatively mandated
    quarterly readiness report to Congress. However, we have previously
    reported that these reports provide a vague and broad description of
    readiness problems and, therefore, are not effective as an oversight
    tool.20 Furthermore, officials at one combatant command told us that these
    assessments do not provide a sufficient mechanism to determine the
    inventory readiness of stocks prepositioned in their area of
    responsibility. Also, a DOD official told us that they review the budget
    submissions from the military services and approve how much the services
    allocate to their prepositioning programs. In our view, while such
    mechanisms provide the department with important information on gaps in
    capabilities and

    20 GAO, Military Readiness: Reports to Congress Provide Few Details on
    Deficiencies and Solutions, GAO/NSIAD-98-68 (Washington, D.C.: Mar. 30,
    1998) and Military Readiness: New Reporting System Is Intended to Address
    Longstanding Problems, but Better Planning is Needed, GAO-03-456
    (Washington, D.C.: Mar. 28, 2003).

    resource allocation, they do not constitute sufficient, sustained program
    oversight.

    Such oversight problems have existed for years and several prior reports
    have cited the lack of centralized oversight and direction in the
    department's prepositioning programs, particularly in the Army. For
    example, the Institute for Defense Analyses concluded in a 1997 report
    that the military services do not coordinate their war reserve planning
    among themselves or with the combatant commanders. The report specifically
    called on the Army to reinvent the entire war reserve process, and work
    with the unified combatant commands and other Army commands to build
    credible requirements and better planning factors. The Army Materiel
    Command Inspector General also reported in 2001 that the Army and the
    combatant commands had not uncovered, mitigated, or elevated issues about
    the readiness of the Army's prepositioning programs to the department
    level. Further, the report stated that the lack of centralized oversight
    fostered inefficiencies and impacted the effectiveness of the Army's
    prepositioning program.

        Lack of Valid Requirements and Insufficient Information Makes Oversight
        Difficult

    Questionable Requirements

    The Army does not have sound requirements for some of its prepositioning
    programs and both the Army and Air Force do not have sufficient
    information about inventory levels and maintenance condition, making
    oversight difficult. Without valid requirements underpinning the services'
    prepositioning programs, it is impossible to reliably assess the impact of
    reported shortfalls or equipment in poor maintenance condition. As a
    result, the services cannot assess the overall readiness of their
    prepositioning programs, which potentially leaves war fighters at risk of
    not having needed stocks in the future. In addition, assessing the
    readiness of prepositioned stocks requires reliable information about
    inventory levels and maintenance condition. Inventory levels are measured
    against requirements set by the services, while maintenance condition
    describes whether on-hand items work well enough to perform their mission.
    Because prepositioned stocks are intended to be used in the early stages
    of a conflict, the stocks need to be completely filled and in working
    order. Otherwise, the purpose of prepositioning is likely defeated. Such
    problems with questionable requirements and insufficient information are
    longstanding, and make it difficult for the services and the department to
    assess readiness, provide oversight, and support sound decision making
    about where to make program investments.

    During our review, we found that the requirements underpinning some of the
    Army's prepositioning programs are questionable, which may make the

    impact of shortfalls difficult to assess. Specifically, Army officials
    told us that the war reserve information system used to calculate the
    requirements for some sustainment stocks had not been successfully updated
    since 1999, although Army officials told us that they are required to
    compute these requirements on an annual basis.21 While the Army is
    planning on recalculating these requirements by the end of 2005, it is
    currently unclear what the requirements for these stocks should be. As a
    result, program managers cannot be sure what to buy because they do not
    know if inventory shortfalls are valid. We reported on the operational
    impacts of this problem in our March 2004 testimony on prepositioned
    stocks used during Operation Iraqi Freedom.22 Additionally, in our April
    2005 report, we found that because the process used to determine
    requirements for Army war reserve spare parts had not been updated, the
    war reserve inventories for some spare parts were inadequate in Operation
    Iraqi Freedom and could not meet initial wartime demands.23 In addition,
    inaccurate and inadequately funded Army war reserve requirements
    contributed to shortages in other items, such as track shoes for Abrams
    tanks and Bradley Fighting Vehicles and lithium batteries.

    Additionally, we identified problems with DOD's process for establishing
    requirements for prepositioned munitions. For example, during our visit to
    U.S. Forces Korea, officials told us that the command is not afforded the
    opportunity to proactively participate in the determination of either
    total munitions requirements or, more specifically, prepositioned
    munitions requirements. In October 2002, we reported that DOD's munitions
    requirements determination process did not fully consider the combatant
    commander's preferences for munitions and weapon systems that will be used
    against targets identified in projected scenarios.24 We recommended that
    the Secretary of Defense establish a direct link between the munitions
    needs of the combatant commands and the munitions requirements
    determinations and purchasing decisions made by the military services. In

    21 The Army uses the Army War Reserve Automated Process to determine its
    requirements for spare parts in the war reserve.

    22 GAO, Military Prepositioning: Observations on Army and Marine Corps
    Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T
    (Washington, D.C.: Mar. 24, 2004).

    23 GAO, Defense Logistics: Actions Needed to Improve the Availability of
    Critical Items during Current and Future Operations, GAO-05-275
    (Washington, D.C.: Apr. 8, 2005).

    24 GAO, Defense Management: Munitions Requirements and Combatant
    Commander's Needs Require Linkage, GAO-03-17 (Washington, D.C.: Oct. 15,
    2002).

                                 Unreliable Information

    October 2003, DOD issued instruction 3000.4, which required that the
    munitions requirements developed by each of the military services address
    the operational objectives of the combatant commanders against potential
    threats. In addition, it directed the military services to work directly
    with the military service component and the combatant commands to develop
    near- and out-year munitions requirements. Finally, it directed combatant
    commanders to review the military services' generated munitions
    requirements and report any issues needing resolution during the planning
    and programming process. We found that these requirements are not being
    met. Only the Air Force visits the command prior to developing total
    munitions requirements to support purchasing decisions. The other services
    do not coordinate with the command prior to generating munitions
    requirements. Further, U.S. Forces, Korea, officials told us that they do
    not have the opportunity to review the service-generated munitions
    requirements prior to purchasing decisions and have no input to what
    munitions will be prepositioned or where those munitions will be located.
    While officials in the Office of the Secretary of Defense and Joint Staff
    expressed skepticism about the way U.S. Forces, Korea, had developed their
    munitions requirements, they agreed that the proper coordination was not
    occurring. As a result, the needed linkage between the combatant command's
    needs and the munitions purchases made by the services continues to be
    inadequate and raises questions as to whether combatant commands will have
    what they need should a conflict arise.

    We also found that the Army and Air Force lack reliable information on the
    inventory fill and maintenance condition for some prepositioned stocks.
    The lack of reliable inventory information may provide program managers
    with an unrealistic view on the preparedness of these programs.

    o  	Army officials told us that its information management system does not
    provide reliable information on the inventory levels and maintenance
    condition of its operational projects and sustainment stocks. Army
    managers told us that this lack of inventory visibility has persisted for
    many years, and sometimes the only way to get reliable information is to
    contact the storage site directly.

    o  	As recently as February 2005, the Army reported in the unclassified
    inventory information that it extracts from its main readiness reporting
    system25 that a high percentage of the combat brigade set prepositioned in

    25 The Army's Status of Resources and Training System is the counterpart
    to the Global Status of Resources and Training System, which is an
    automated system that assesses the extent to which military units possess
    the required resources and training to undertake their wartime missions.

    South Korea was fully mission capable. However, in an October 2004 Army
    assessment, inspectors had found that a high percentage of the equipment
    reviewed was not mission capable.

    o  Air Force officials also told us that they do not have adequate
    information

    Problems with Requirements and Reliability of Information Have Been
    Long-standing, but Remain Unresolved

    available to assess the overall readiness of their prepositioned stocks.
    While this information is decentralized and available in some cases to
    base and component commanders, information on inventory levels and
    maintenance condition is not available to Air Force managers overseeing
    the war reserve materiel program. Air Combat Command and Central Command,
    Air Forces, officials told us that in order to obtain information on the
    readiness of most prepositioned stocks, they had to contact the storage
    locations since this information is not readily available to them. Pacific
    Air Forces officials told us that they developed their own automated
    system to track the inventory levels and maintenance condition of the war
    reserve materiel prepositioned in their area of responsibility because the
    Air Force lacked a comprehensive system that provides reliable and timely
    readiness information on its war reserve program.

    The problems we found during our review with requirements determination
    and reliability of inventory information are not new. Our review of past
    reports going back to 1995 revealed that similar issues have been reported
    repeatedly, but have not been resolved. The findings from several past
    studies are described below, and appendix I provides a more comprehensive
    summary of the major findings from more than 30 past reports by us and the
    department's own studies.

    Inventory management issues, and more recently supply chain management,
    have been considered high-risk areas by us since 1990. Specific to the
    prepositioning programs, we have previously reported numerous times on
    long-standing management problems. For example, we reported in our last
    review of prepositioning programs in 1998 that the Army and Air Force had
    poorly defined, outdated, and otherwise questionable requirements in their
    programs.26 Our 1998 report also noted that it was difficult for DOD to
    assess the readiness of its prepositioned stocks and the impact of any
    shortfalls due to the poor information the services used to manage these
    programs. We also reported in 2001 that, among other things, a potential
    mismatch existed between the Army's methodology for determining spare
    parts requirements and the Army's

    26 GAO, Military Prepositioning: Army and Air Force Programs Need to Be
    Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998).

    anticipated battlefield needs.27 And more recently, we reported in January
    2005 that DOD does not have the ability to provide timely or accurate
    information on the location, movement, status, or identity of its supplies
    due to long-standing data accuracy and reliability problems within
    existing inventory management systems.28

    The department's own auditors and an Army command have also been sharply
    critical of program management, especially how program requirements have
    been determined. For example, the Army Materiel Command reported in 2003
    that the requirements computation for war reserve stocks and stockage
    lists for prepositioned stocks did not accurately portray what was needed
    for Operation Iraqi Freedom. These stockage lists did not contain the most
    critical items needed to sustain combat equipment during the operation.29
    In addition, the Army Audit Agency reported in 2004 that Army program
    managers had not reviewed the requirements for many of the operational
    projects it examined. As a result, some operational projects contained
    inaccurate, overstated, or questionable requirements. Of $1.5 billion in
    requirements examined, about $727 million were valid, $472 million were
    invalid, and about $280 million were questionable.30 In addition, the Air
    Force Audit Agency reported in May 2003 that Air Force personnel did not
    properly segregate certain war reserve requirements from peacetime
    operating spare parts requirements, resulting in more than $118.8 million
    of overstated requirements for peacetime.31

    Past reports have also revealed problems with the reliability of inventory
    information. In 2001, Army auditors reported that the lack of reliable
    data on operational projects and sustainment stocks impeded the overall
    readiness capability of the Army's prepositioning program. In addition,
    the Army reported that there was a general lack of confidence in the

    27 GAO, Defense Inventory: Army War Reserve Spare Parts Requirements Are
    Uncertain, GAO-01-425 (Washington, D.C.: May 10, 2001).

    28GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: January
    2005).

    29 U.S. Army Materiel Command, Iraq Lessons Learned Conference (Redstone
    Arsenal, Ala.: Sept. 10-11, 2003).

    30 Army Audit Agency, Operational Project Stocks Phase II, Report
    A-2004-0108-AML (Alexandria, Va.: Feb. 12, 2004).

    31 Air Force Audit Agency, Other War Reserve Materiel, F2003-0010-FC4000
    (Washington, D.C.: May 2003).

    information management system used to provide information on inventory
    levels.32 More recently, the Army Materiel Command's 2003 report on
    lessons learned in Iraq also found that different automated systems
    provided different inventory levels at the same storage location during
    operations in Iraq.33 Similarly, a June 2004 CNA Corporation after-action
    report on the Marine Corps' prepositioning program in Operation Iraqi
    Freedom found that the Marine Corps did not have reliable information on
    the status of some prepositioned equipment used to support operations in
    Iraq.34 Specifically, due to a lack of automated tracking systems, the
    Marine Corps had to use manual methods for tracking equipment with hand
    counts and written reports. As a result, Marine Corps commanders did not
    have clear and accurate tools for determining where cargo was in the
    pipeline, and more importantly, forecasting when equipment would arrive
    and when integration would be complete.

      DOD Lacks A Plan To Coordinate Future Prepositioning Programs

    DOD has not developed a coordinated departmentwide plan or joint doctrine
    to guide the future of its prepositioning programs, despite the heavy use
    of prepositioned stocks in recent conflicts and the department's plans to
    rely on them in the future. The 2005 National Defense Strategy
    specifically notes the importance of prepositioning in the future and
    indicates that prepositioning programs should be more innovative,
    flexible, and joint in character, but provides few details on how DOD
    plans to accomplish these goals. In addition, the independent Overseas
    Basing Commission recently echoed the continued importance of the
    department's prepositioning programs in the future. In the absence of a
    departmentwide plan or joint doctrine to coordinate the reconstitution and
    future plans for these programs, the military services have been
    recapitalizing some stocks and developing future plans for their programs
    without a clear understanding of how they will fit together to meet the
    evolving defense strategy. Without an overarching framework that
    establishes priorities for prepositioning among competing initiatives and
    identifies the resources required to implement the future programs, DOD

    32 U.S. Army Materiel Command Inspector General, Systematic Inspection of
    the Material Condition of Army War Reserve Sustainment Stocks (Ft.
    Belvoir, Va.: August 2001).

    33 U.S. Army Materiel Command, Iraq Lessons Learned Conference (Redstone
    Arsenal, Ala.: Sept. 10-11, 2003).

    34 CNA Corporation, Operation Iraqi Freedom (OIF) Maritime Prepositioning
    Force (MPF) Reconstitution, Regeneration, and Reembarkation Operations:
    Summary Findings (Alexandria, Va.: June 2004).

    cannot provide assurances to Congress that the billions of dollars that
    will be required to recapitalize the stocks and develop future programs
    will ultimately produce programs that will operate jointly, support the
    needs of the war fighter, and are affordable.

        National Defense Strategy and Overseas Basing Report Indicate a Reliance on
        Prepositioning in the Future

    The most recent National Defense Strategy published in March 2005 states
    that to strengthen DOD's capability for prompt global action and
    flexibility to employ military forces where needed, prepositioned stocks
    "will be better configured and positioned for global employment."35 This
    overarching defense strategy establishes key goals for the future of
    defense capabilities such as the prepositioning of support materiel and
    combat capabilities in critical regions of the world and along key
    transportation routes, and a greater reliance on joint prepositioning
    capabilities that will be in accordance with other aspects of
    transformation. However, while such goals confirm that prepositioning will
    continue to play a key role in the evolving military strategy,36 the
    National Defense Strategy provides no specific details on how the
    department and the military services will accomplish them.

    In addition, the recently released report of the Overseas Basing
    Commission states that where DOD puts prepositioned stocks, what they are
    comprised of, and how they are maintained is central to the department's
    operational capability.37 The report states that prepositioning is
    "imperative" for quick response of U.S. forces in areas of the world where
    access may be difficult, and calls for tight integration of service
    concepts, doctrines, and plans as a first step in ensuring the
    sustainability of prepositioning. Importantly, the Commission recommends
    that given the centrality of these stocks to the operational capability of
    U.S. forces, their high costs, and their anticipated heavy use over time,
    Congress should periodically review the status of prepositioned stocks.

    35 DOD, The National Defense Strategy of the United States of America
    (March 2005).

    36 Recent changes in DOD's defense posture have shifted the department's
    focus from being capable of winning two major theater wars to including
    having the capabilities needed to (1) defend the United States, (2) deter
    aggression and coercion in four critical regions, (3) swiftly defeat
    aggression in overlapping major conflicts, and (4) preserve the option to
    win decisively in one conflict.

    37 Final report of the Commission on Review of Overseas Military Facility
    Structure of the United States (Arlington, Va.: August 15, 2005).

        DOD Has Not Developed a Plan or Joint Doctrine for Its Prepositioning
        Programs

    While it seems certain that DOD will continue to rely on prepositioning in
    the future, it is unclear how prepositioning will fit into its future
    plans since DOD currently has no department-level prepositioning plan that
    provides specific details on how the department and the military services
    will work together to plan the future of their prepositioning programs or
    joint doctrine for its prepositioning programs. DOD officials told us that
    the future of its prepositioning programs has not yet been determined, in
    part because the future is dependent on the outcome of several
    interrelated studies ongoing within the department. For example, DOD is
    currently reviewing the mobility capabilities required to meet the full
    range of mobility needs for all aspects of the national defense strategy.
    According to DOD officials, the recommendations from this study will
    likely have a significant impact on the services' prepositioning programs
    since requirements for prepositioning are being factored into the mobility
    deliberations. In addition, in March 2003, the Secretary of Defense
    requested that the department develop a comprehensive and integrated
    presence and basing strategy for the next 10 years. This strategy will
    build upon multiple DOD studies and will use information from the
    combatant commanders to determine the appropriate location of the basing
    and associated infrastructure necessary to execute the U.S. defense
    strategy. DOD officials told us that the basing study will also likely
    have an impact on prepositioning as the services will need to determine
    where to preposition their stocks to support the new defense strategy.
    Although some preliminary results have been released, DOD officials stated
    that once these studies are completed, they will have a better
    understanding of how prepositioning will be able to support the war
    fighter.

    Similarly, DOD has not developed joint doctrine to guide the planning and
    employment of its prepositioning programs. DOD defines joint doctrine as
    the fundamental military principles that guide the employment of forces of
    two or more services in coordinated action toward a common objective.
    DOD's transformation guidance states that part of the department's
    transformation efforts is developing concepts to operate in a joint
    environment, and placing a continuing emphasis on the importance of
    expeditionary operations.38 DOD has published joint doctrine in a number
    of areas, including deployment and redeployment operations, multinational
    operations, and military operations other than war. However, in the
    absence of a departmentwide plan and joint doctrine for prepositioning,
    the military services currently plan and implement

    38 DOD, DOD Transformation Planning Guidance (Washington, D.C.: April
    2003).

    separate programs in an independent, service-centric manner. A
    servicecentric approach to prepositioning potentially misses opportunities
    to achieve greater efficiencies where service programs overlap. In a 2003
    Joint Staff-sponsored study on strategies for prepositioning, the
    Logistics Management Institute found that the military services continue
    to program for prepositioning materiel to meet individual service rather
    than joint requirements. As a result, the services may overstate
    operational requirements and put unnecessary burdens on limited
    transportation assets that would be required to move these prepositioned
    assets from their storage locations to the operational sites.39 For
    example, although the Army and Air Force have separate bare base programs,
    there is a lack of commonality among the design and components of these
    programs even though basic capabilities are the same.40 Moreover, this
    service-centric approach to prepositioning is out of step with DOD's
    transformation guidance, which states that developing concepts to operate
    in a joint environment and a continuing emphasis on the importance of
    expeditionary operations is key to the department's transformation
    efforts.41

        Reconstitution Likely to Be Delayed Due to Ongoing Operations, but Delay
        Offers DOD Opportunities to Set Clear Direction for Programs

    Clearly prepositioning figures prominently in the department's future
    plans, but the services do not have precise estimates of the costs and
    time required to reconstitute their prepositioned stocks since the
    services continue to use these stocks in Afghanistan and Iraq. In a recent
    report to Congress, DOD estimated that the costs to reconstitute the Army
    and Marine Corps' prepositioned equipment will be between $4 billion and
    $5 billion.42 The report acknowledges, however, that these estimates may
    change depending on several factors, including the length of time the
    equipment is in use, the number of combat losses, and any changes in the
    future plans for its prepositioning programs. However, most of the costs
    required to reconstitute and recapitalize the Army and Marine Corps'

    39 Logistics Management Institute, Strategies for Worldwide Prepositioning
    (McLean, Va.: August 2003).

    40 Science Applications International Corporation, Bare Base Assets Study
    (McLean, Va.: Aug. 31, 2004).

    41 DOD Transformation Planning Guidance, April 2003; Air Force
    Transformation Flight Plan, November 2003.

    42 DOD, Ground Force Equipment Repair, Replacement, and Recapitalization
    Requirements Resulting From Sustained Combat Operations (Washington, D.C.:
    April 2005).

    prepositioned stocks have not been budgeted for in the department's
    baseline submissions or supplemental funding requests. In the absence of a
    departmentwide plan that coordinates the reconstitution of these programs
    with the future plans of the department's prepositioning programs, the
    services are developing plans to reconstitute and recapitalize their
    prepositioned stocks without a clear understanding of how the future of
    these programs will fit together in support of the evolving defense
    strategy.

    According to Army officials, plans to reconstitute the equipment and
    return it to the combat brigade sets are uncertain because, in some cases,
    Army units are continuing to use prepositioned stocks to support
    operations in Iraq instead of bringing their own equipment. In addition,
    the Army is placing a higher priority for its resources on supporting
    ongoing operations and on its modular conversion initiative-restructuring
    its forces to make them more flexible and rapidly deployable. As a result
    of this initiative, the Army is planning to use combat equipment that was
    part of the prepositioned brigade sets to meet the increased equipment
    requirements. For example, over 11,000 pieces of prepositioned combat
    equipment used in Iraq-such as tanks, Bradley Fighting Vehicles, and
    armored personnel carriers-are slated to be repaired and turned over to
    active duty units. Furthermore, Army officials told us that decisions have
    not been made as to whether the sustainment and operational project stocks
    will be reconstituted because of the large investments required and the
    uncertainty of the future plans for the Army's prepositioning program.
    DOD's recent report to Congress estimates the costs to reset and
    reconfigure the Army's prepositioned stocks to be more than $4 billion.
    According to the report, however, these costs are not currently captured
    in DOD's baseline submissions or in any of its supplemental funding
    requests.

    The Marine Corps' prepositioning programs are expected to have a reduced
    capability until 2008, at least. The department's April 2005 report to
    Congress estimates the cost to reconstitute the Marine Corps'
    prepositioned equipment is approximately $490 million. Of this amount,
    about half ($247 million) was requested in the department's most recent
    supplemental request. In the past year, the Marine Corps considered its
    options to reconstitute the equipment stored aboard the prepositioning
    ships given its continuing commitment to support operations in Iraq. The
    Marine Corps recently decided to partially refill the five ships offloaded
    to support operations in Iraq; however, due to the limited availability
    within the Marine Corps of equipment needed, such as heavy cargo trucks
    and High Mobility Multi-purpose Wheeled Vehicles, the Marine Corps
    forecasts

    that these ships will have major end-item fill rates of less than 50
    percent. Additionally, Marine Corps officials stated that the
    reconstitution of the stocks in Norway is scheduled to be completed by
    2008, at which time the fill rate of these stocks is projected to be
    approximately 88 percent.

    Air Force officials stated that they do not know when they will be able to
    reconstitute prepositioned stocks and return them to storage. As part of
    its reconstitution effort, the Air Force is in the process of replacing or
    converting all of its existing bare base sets into a smaller and more
    modular configuration.43 However, it is uncertain when the new sets will
    be available. For example, the Air Force had budgeted approximately $320
    million in fiscal year 2005 for procurement of the new bare base sets.
    However, according to an Air Force official, Congress reduced the Air
    Force's budget by $53 million because it was concerned about the large
    increase in the Air Force's procurement budget for that year. As a result,
    the official stated that the Air Force will not be able to procure all of
    the required sets. In addition, Air Force officials told us that they do
    not know when reconstitution for other categories of prepositioned stocks
    will be completed since much of this equipment is still in use.

        Without a Plan and Joint Doctrine, the Military Services and Defense
        Logistics Agency's Prepositioning Plans Are Uncoordinated

    Each of the military services and the Defense Logistics Agency are
    planning the future of their prepositioning programs without the benefit
    of an overall plan or joint doctrine to coordinate their efforts. Thus, it
    is unclear to us how the programs will fit together to meet the evolving
    defense strategy. DOD officials representing the Joint Staff and the
    services shared our assessment and concerns. And, according to these
    officials, the Joint Staff has formed a working group that is focused on
    establishing common definitions for prepositioning as a first step in
    developing joint doctrine and setting a future plan for the department's
    prepositioning programs.

    The future of the Army's prepositioning program, the largest of DOD's
    programs, is still unclear, and the Army acknowledges that it faces

    43 Formerly known as Harvest Eagle and Harvest Falcon, the new bare base
    sets are called Basic Expeditionary Airfield Resources (BEAR). Rather than
    deploying all of the assets that are part of the larger Harvest Eagle and
    Harvest Falcon sets, the Air Force established a more tailored basing
    capability. This tiered approach establishes a new 150-person set and
    replaces the Harvest Eagle/Falcon sets with 550-person initial and
    550-person followon sets. The plan for deployment is for the 150-person
    set to support the forces that open the airbase, followed by a 550-person
    initial set to establish the airbase. The 550-person follow-on sets would
    then be set up as the base capability expands, on an as-needed basis.

    continuing funding challenges as it attempts to modernize, support ongoing
    combat operations, and reconstitute its prepositioned equipment, leaving
    the future direction of its prepositioning program uncertain. The Army has
    a major effort ongoing to transform its units into more flexible, rapidly
    deployable forces at the same time it is supporting ongoing combat
    operations. The Army's future prepositioning strategy was being revised
    during our review, so we could not assess how this overall
    transformation-commonly called "modularity" by the Army-will affect the
    prepositioning program. In addition, the Army's prepositioned stocks will
    have to be reconstituted due to their heavy use in Operation Iraqi
    Freedom. According to Army officials, however, the Army is nearing
    completion on a new strategy for its prepositioning programs. They told us
    that prepositioning will continue to be important in the future and that
    the prepositioned sets would be converted to the "modular" configuration
    by 2012 or sooner.

    While the Marine Corps and Navy have identified concepts for future
    prepositioning programs, they have not developed firm schedules and cost
    estimates for these programs. For example, the Marine Corps is planning on
    changing the focus of its prepositioned stocks in Norway from their Cold
    War configuration to a more global support capability. Additionally, the
    Marine Corps is considering a fundamental change to the future of its
    prepositioning program that would replace existing Maritime Prepositioning
    Force ships with an undetermined number of new ships with a wider range of
    capabilities. These ships are intended to be an integral part of a future
    Navy sea base. The seabasing concept provides maritime platforms capable
    of supporting at-sea arrival of forces, assembly of those forces, rapid
    movement ashore, and combat sustainment without reliance on shore
    facilities. While such seabasing is envisioned by DOD to be a joint
    service capability, it is not clear how this will be accomplished.
    Furthermore, the affordability of the program is in question-this new
    concept could cost billions of dollars.44

    The Defense Logistics Agency began developing a global stock positioning
    strategy in 2004 to support its overseas customers for the items it

    44 Issues of joint service participation and affordability are discussed
    in more detail in two reports: Congressional Budget Office, The Future of
    the Navy's Amphibious and Maritime Prepositioning Forces (Washington,
    D.C.: November 2004) and Congressional Research Service Report for
    Congress, Navy-Marine Corps Amphibious and Maritime Prepositioning Ship
    Programs: Background and Oversight Issues for Congress

    (Washington, D.C.: Nov. 15, 2004).

    manages. The strategy involves a combination of fixed-forward depots, a
    floating distribution center, and a deployable distribution depot.
    Fixedforward stocking depots have been established at the following
    locations: Germersheim, Germany; Yokosuka, Japan; Pearl Harbor, Hawaii;
    Sigonella, Italy; Kuwait; Guam; and South Korea. The floating distribution
    center involves a mobile floating depot which will be capable of providing
    immediate distribution within the first 30 days of a contingency and could
    operate as part of the seabasing concept. The deployable distribution
    depot will be able to provide a full range of distribution capabilities in
    a theater of operations early in a contingency in developed or remote
    operating areas. These last two capabilities are still being developed and
    the Defense Logistics Agency does not yet have firm estimates for the
    costs of these capabilities.

    The Air Force is also planning changes for its prepositioning programs. It
    is transforming its bare base sets into a smaller, more modular
    configuration and is considering new prepositioning sites to support the
    new defense strategy. However, Air Force officials told us that it cannot
    make some decisions related to new storage sites for its prepositioned
    stocks until DOD's basing study is complete.

    Without a plan or joint doctrine to guide their efforts, the services are
    planning for the future of their programs without an overarching framework
    that establishes priorities for prepositioning among competing
    initiatives, develops performance goals to measure success, and identifies
    resources to implement plans. Until the department determines how
    prepositioning fits into future military plans, it cannot provide
    assurances to Congress that the substantial investments required to
    recapitalize the stocks will be affordable.

    Conclusions 	Prepositioning seems certain to be a key component of U.S.
    military strategy for years to come, but the department must make it a
    priority for it to overcome past management problems and ensure its
    future. In the near term, operational risks may exist should other
    military contingencies arise given the current inventory shortfalls and
    poor maintenance condition of some prepositioned stocks. However, the
    department has not developed concrete plans to overcome these challenges,
    even though inventory shortfalls and maintenance issues exist in the
    prepositioned stocks in potential trouble spots such as South Korea.

    Despite the importance of prepositioning to the military, however,
    longstanding management problems persist and the programs seem to have

    received little attention at the department level. Oversight mechanisms
    are in place, but they have been ineffective or ignored. Leadership and
    accountability begin at the top. Until DOD fully implements its own
    directive on war reserve materiel, oversight of its prepositioning
    programs will likely continue to be inadequate and the department will be
    unable to assess risks associated with any shortfalls in the programs.
    Moreover, DOD lacks reliable information in regard to its prepositioning
    programs and will be unable to make reliable assessments of the readiness
    of these programs. This could result in failure to obtain the right amount
    and types of equipment for the designated prepositioning locations, which
    could ultimately jeopardize the ability of U.S. forces to accomplish their
    warfighting missions and leave them at risk.

    Congress is also concerned about these issues and directed the Secretary
    of Defense to submit a report on its prepositioning plans by October 1,
    2005. Looking toward the future, without a coordinated plan and joint
    doctrine that identifies the role of prepositioning in the transformed
    military, the department cannot plan the future of its programs in a
    comprehensive manner. As a result, DOD cannot provide assurance to
    Congress that its prepositioning programs will be coordinated, effective,
    and affordable.

    Taking all these problems together-and considering them against the
    backdrop of growing operational and fiscal strains on the military-we
    believe the future of the prepositioning programs are at risk. Unless the
    department addresses long-standing management issues and sets a clear plan
    for the future, the department and Congress cannot make informed decisions
    about the significant investments needed to reconstitute or recapitalize
    the stocks.

    Recommendations for To address the risks and management challenges facing
    the department's prepositioning programs and improve oversight, we
    recommend that the Executive Action Secretary of Defense take the
    following five actions:

    o  	Direct the Chairman, Joint Chiefs of Staff, to assess the near-term
    operational risks associated with current inventory shortfalls and
    equipment in poor condition should a conflict arise.

    o  	Direct the Under Secretary of Defense for Acquisition, Technology, and
    Logistics to provide oversight over the department's prepositioning
    programs by fully implementing the department's directive on war reserve
    materiel and, if necessary, revise the directive to clarify the lines of
    accountability for this oversight.

    o  	Direct the Secretary of the Army to improve the processes used to
    determine requirements and direct the Secretary of the Army and Air Force
    to improve the processes used to determine the reliability of inventory
    data so that the readiness of their prepositioning programs can be
    reliably assessed and proper oversight over the programs can be
    accomplished.

    o  	Develop a coordinated departmentwide plan and joint doctrine for the
    department's prepositioning programs that identifies the role of
    prepositioning in the transformed military and ensures these programs will
    operate jointly, support the needs of the war fighter, and are affordable.

    o  Report to Congress, possibly as part of the mandated October 2005
    report,

      Agency Comments
      and Our Evaluation

    how the department plans to manage the near-term operational risks created
    by inventory shortfalls and management and oversight issues described in
    this report.

    DOD provided written comments on a draft of this report. These comments
    are reprinted in appendix III. DOD partially or fully concurred with our
    recommendations. However, in its response, DOD disagreed with the
    implementation of two of our recommendations because it had already taken
    actions to address them. In subsequent discussions with DOD, officials
    indicated that this disagreement was not related to the substance of our
    recommendations. In fact, the department has already initiated several
    actions to address our recommendations including conducting an assessment
    of risk, improving requirements and inventory visibility, and conducting a
    departmental assessment on future prepositioning. Further, DOD agreed that
    oversight policy as discussed in its directive does not reflect
    appropriate oversight roles and responsibilities. To address this issue,
    DOD plans to clarify policy and roles and responsibilities for oversight.
    With respect to our recommendation to improve requirements determination
    and the reliability of inventory data, the initial efforts taken by the
    Army and Air Force represent progress, but the planned actions should
    address all categories of the Army and Air Force's prepositioned stocks,
    as discussed in our report, and not just a portion of these programs. For
    example, the planned actions should also include the Army's operational
    project stocks and the Air Force's vehicle stocks, among others. Overall,
    we acknowledge the actions already taken by the department to address
    these issues, but DOD will need sustained management focus to resolve
    these deeply rooted and long-standing problems.

    As arranged with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days from
    the
    date of this report. At that time, we will send copies of this report to
    the
    Secretary of Defense, the Secretary of the Army, the Secretary of the Air
    Force, the Secretary of the Navy, and the Commandant of the Marine
    Corps. We will also make copies available to others upon request. In
    addition, this report will be available at no charge on the GAO Web site
    at
    http://www.gao.gov. Contact points for our Offices of Congressional
    Relations and Public Affairs may be found on the last page of this report.

    If you or your staffs have any questions, please contact me at (202) 512
    8365. Key contributors to this report are listed in appendix IV.

    William M. Solis, Director
    Defense Capabilities and Management

    Appendix I: Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

    The Department of Defense's (DOD) prepositioning programs have faced
    long-standing challenges including poor asset visibility; equipment
    excesses and shortfalls; and invalid, inaccurate, poorly defined, and
    otherwise questionable requirements. GAO, military service auditors, DOD's
    Inspector General, and others have called attention to these problems in
    products issued over the years. In 1990, we identified DOD's inventory
    management as high risk because inventory levels were too high and the
    supply system was not responsive to the needs of the war fighters.1 With
    the onset of Operation Iraqi Freedom, other supply chain issues related to
    inventory management have been reported as impediments. In a January 2005
    update, we expanded this high-risk area to include DOD's management of its
    entire supply chain, which includes distribution, inventory management,
    and asset visibility.

    Table 3 provides summaries of challenges identified in select GAO reports
    and testimonies issued between January 1995 and March 2005. Table 4
    provides summaries of issues identified in select products released by
    other organizations during the same time period.

                                 Table 3: GAO Products

    Title Key challenges identified

    Defense Inventory: Actions In March 2005, we reported on DOD's
    supply-chain management during Operation Iraqi Freedom. Needed to Improve
    the We developed detailed case studies of nine supply items that were
    reported to be in short supply Availability of Critical Items and could
    have had operational impacts, and found that U.S. troops experienced
    shortages of during Future Military Operations seven of the nine items
    that led, in some cases, to a decline in the operational capability of
    (GAO-05-275, March 2005) equipment and increased risk to troops. We
    identified five systemic deficiencies that contributed to

    shortages of the selected items, including (1) inaccurate and inadequately
    funded Army war reserve requirements, (2) inaccurate supply forecasts, (3)
    insufficient and delayed funding, (4) delayed acquisition, and (5)
    ineffective distribution.

                              High-Risk Series: An Update,

                               GAO-05-207 (January 2005)

    In January 2005, we reported that DOD's supply-chain management had
    experienced significant weaknesses in its ability to provide efficient and
    effective supply support to war fighters. While DOD reports showed the
    department owning about $67 billion of inventory, shortages of certain
    critical spare parts were adversely affecting equipment readiness and
    contributing to maintenance delays. DOD also lacked visibility and control
    over the supplies and spare parts it owned and did not have the ability to
    provide timely or accurate information on the location, movement, status,
    or identity of its supplies.

    1 In 1990, we began a special effort to review and report on the federal
    program areas we considered high risk because they were especially
    vulnerable to waste, fraud, abuse, and mismanagement. In December 1992, we
    issued a series of reports on the fundamental causes of problems in
    designated high-risk areas, including one entitled: High-Risk Series:
    Defense Inventory Management, GAO/HR-93-12 (Washington, D.C.: December
    1992).

    Appendix I: Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

                            Title Key challenges identified

    Military Prepositioning: In March 2004, we testified that during Operation
    Iraqi Freedom, the Army's prepositioning Observations on Army and program
    had some equipment that was outdated or did not match unit needs. The
    program also Marine Corps Programs During faced shortfalls, such as
    trucks, spare parts, and other items. We noted that shortages in Army
    Iraqi Freedom and Beyond, prepositioned and war reserve spare parts had
    been a long-standing systemic problem. We GAO-04-562T (March 2004)
    likewise reported that the theater supply-and-distribution system became
    overwhelmed and was

    worsened by the inability to track assets available in theater, which
    meant that war fighters did not

    know what was available.

    Defense Logistics: Preliminary Observations on the Effectiveness of
    Logistics Activities During Operation Iraqi Freedom, GAO-04-305R (December
    2003)

    Military Readiness: New Reporting System Is Intended to Address
    Long-Standing Problems, but Better Planning Is Needed, GAO-03-456 (March
    2003)

    In December 2003, we reported that during Operation Iraqi Freedom poor
    asset visibility and insufficient and ineffective theater distribution
    capabilities contributed to substantial logistics support problems. DOD
    and military service officials raised a number of issues that may have
    contributed to the logistics problems, including (1) shortages of some
    spares or repair parts needed by deployed forces, (2) a reported mismatch
    between Army prepositioned equipment and unit needs, (3) DOD contractors
    used for logistics support during Operation Iraqi Freedom were not always
    effective, and (4) physical security at ports and other distribution
    points in the theater was not always adequate to protect assets.

    In March 2003, we reported that DOD used readiness measures that varied 10
    percentage points or more to determine readiness ratings and often did not
    report the precise measurements outside DOD. We additionally reported that
    DOD had complied with most, but not all, of the legislative
    readiness-reporting requirements and, as a result, Congress was not
    receiving all the information mandated by law. DOD issued a directive in
    June 2002 to establish a new comprehensive readiness-reporting system.
    However, as of January 2003, DOD had not developed an implementation plan
    containing measurable performance goals, identification of resources,
    performance indicators, and an evaluation plan to assess progress in
    developing the new reporting system.

    Major Management Challenges In January 2003, we reported that inefficient
    inventory management practices represented one of and Program Risks:
    Department the most serious weaknesses in DOD's logistics operations.
    While DOD's inventory value had of Defense, GAO-03-98 (January been
    declining for the previous 10 years, GAO's past and current work in the
    area indicated that 2003) DOD (1) continued to store unnecessarily large
    amounts of material, with about half of its

    secondary inventory exceeding then-war reserve or current operating
    requirements; (2) purchased material for which there was no valid
    requirement; (3) experienced equipment readiness problems because of a
    lack of key spare parts; and (4) maintained inadequate visibility over
    material being shipped to and from military activities.

    Defense Management: Munitions In October 2002, we reported that a
    fundamental problem in DOD's munitions requirements Requirements and
    Combatant process remained unaddressed-inadequate linkage between the
    near-term munitions needs of Commanders' Needs Require the combatant
    commands and the purchases made by the military services based on
    computations Linkage, GAO-03-17 (October derived from the department's
    munitions requirements-determination process. This disjunction had 2002)
    resulted in the combatant commands and the services identifying different
    munitions needs and,

    ultimately, in the combatant commanders reporting shortages. A more
    fundamental reason for the disconnect, however, was because DOD's
    munitions requirements-determination process did not fully consider the
    combatant commanders' preferences for munitions and weapon systems that
    would be used against targets identified in projected scenarios.

    Defense Inventory: Improved In July 2002, we reported that the Army's
    approach to industrial-base capability assessments Industrial Base
    Assessments for lacked key attributes that included the collection of
    current industry data, the analysis of that data, Army War Reserve Spares
    Could and the creation of management strategies for improving wartime
    spare parts availability. We noted Save Money, GAO-02-650 (July that
    out-of-date data could result in reduced readiness and inflated or
    understated war reserve 2002) spare parts funding requests within budget
    submissions to Congress, and the Army's ability to

    identify long lead times and create management strategies to reduce lead
    times and thus the

    amount of inventory needed.

    Appendix I: Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

                            Title Key challenges identified

    Defense Inventory: Army War In May 2001, we reported that notwithstanding
    the apparent shortfall in funding for war reserve Reserve Spare Parts
    spare parts, our review showed uncertainties about the accuracy of the
    Army's requirements and Requirements Are Uncertain, funding needs in that
    area. Specifically, we found that (1) the best available data regarding
    the rate GAO-01-425 (May 2001) at which spare parts would be consumed
    during wartime had generally not been used in

    determining war reserve requirements for spare parts, (2) a potential
    mismatch existed between the Army's methodology for determining spare
    parts requirements and the Army's planned battlefield maintenance
    practices, (3) the capacity of the industrial base to support the parts
    requirements of the two major theaters of war scenario was not well
    defined or based on industry data, and (4) emerging issues, such as force
    restructuring actions, could significantly affect future war reserve
    requirements.

    Defense Inventory: In November 1999, we reported that the Air Force
    requirements model included prestocked Improvements Needed to requirements
    in computing the amount of inventory that needed to be purchased, but this
    inventory Prevent Excess Purchases by was not considered important enough
    to be funded. However, when the model identified contract the Air Force,
    GAO/NSIAD-00-5 quantities to be cancelled, these items were counted as
    valid. Thus, the model decreased the (November 1999) quantity to be
    cancelled by the amount of these requirements.

    Military Prepositioning: Army and Air Force Programs Need to Be
    Reassessed, GAO/NSIAD-99-6 (November 1998)

    Afloat Prepositioning: Not All Equipment Meets the Army's Readiness Goal,
    GAO/NSIAD97-169 (July 1997)

    Army War Reserves: DOD Could Save Millions by Aligning Resources With the
    Reduced European Mission,GAO/NSIAD97-158 (July 1997)

    Defense Inventory Management: Problems, Progress, and Additional Actions
    Needed, GAO/T-NSIAD-97-109 (March 1997)

    In November 1998, we reported that the Army and Air Force had poorly
    defined, outdated, or otherwise questionable requirements in the major
    programs that GAO reviewed. The Army and the Air Force had reported
    significant shortages and poor maintenance conditions in their
    prepositioning programs. In some cases, however, reliable data to assess
    inventory fill and maintenance condition were unavailable. Thus, the
    precise readiness of the prepositioned stocks- and the impact of any
    shortfalls-was difficult to determine because of the questionable
    requirements that underpinned the programs and the poor information that
    the services used to manage the programs.

    In July 1997, we reported that of the Army's unit sets considered when
    reporting the readiness of the brigade set of war reserve equipment, about
    25 percent did not meet the Army's readiness goal for full-mission
    capability. According to Army maintenance records, some equipment aboard
    prepositioning ships had been reported as nonmission capable since
    September 1995. These records also erroneously identified some
    nonmission-capable equipment as repairable aboard ship, although Army
    officials said that many repairs could not be made until the equipment was
    downloaded. One factor that contributed to lower readiness rates was that
    some equipment was not fully mission capable when it was originally loaded
    on prepositioning ships. Other factors include the deterioration of the
    equipment while in storage aboard ships and the limited ability to conduct
    maintenance on the equipment while in storage.

    In July 1997, we reported that DOD could have saved about $54 million per
    year in personnel costs once the Army removed unneeded war reserve
    equipment from central Europe and aligned its resources with the reduced
    mission. Army data showed that of 128,000 items in central Europe
    identified as available for redistribution outside of Europe, the Army had
    firm plans for about 54,000 items, had proposed-but had not funded or
    implemented-the plans for about 27,000 items, and had no plans for about
    46,000 items because it found no known requirement for them in the war
    reserve program.

    In March 1997, we testified that inventory management problems had plagued
    DOD for decades. We had recently reported that about half of DOD's
    secondary inventory was not needed to support war reserve or current
    operating requirements. Most of the problems that contributed to the
    accumulation of this unneeded inventory still existed, such as outdated
    and inefficient inventory management practices that frequently did not
    meet customer demands, inadequate inventory oversight, weak financial
    accountability, and overstated requirements. We noted that while we
    continued to see pockets of improvement, DOD had made little overall
    progress in correcting systemic problems that had traditionally resulted
    in large unneeded inventories.

           Appendix I: Past Products Identifying DOD Inventory Management and
                               Prepositioning Challenges

    Title Key challenges identified

    Defense Logistics: Much of the In February 1997, we reported that $34
    billion of DOD's $69.6 billion secondary inventory on hand Inventory
    Exceeds Current as of September 30, 1995, exceeded then-current operating
    and war reserve requirements. Needs, GAO/NSIAD-97-71 Although DOD had
    reduced its inventory from $77.5 billion since September 30, 1993, about
    half of (February 1997) the inventory continued to exceed current
    operating and war reserve requirements. Further

    analysis showed that inventory valued at $1.1 billion represented 100 or
    more years of supply.

    Defense Inventory: Spare and Repair Parts Inventory Costs Can Be Reduced,
    GAO/NSIAD97-47 (January 1997) In January 1997, we reported that $2.7
    billion of DOD's $8.3 billion in inventory at nonmajor locations was not
    needed to meet the services' then-current operating and war reserve
    requirements. We estimated the services could save about $382 million
    annually in inventoryholding costs by eliminating the excess inventory.

    Defense Programs and

    Spending: Need for Reforms, GAO/T-NSIAD-95-149 (April 1995) In April 1995,
    we testified that inventory management was an area where DOD had
    experienced long-standing problems in managing its resources. While we had
    seen some improvements over the previous several years, DOD continued to
    waste billions of dollars buying, maintaining, and storing supplies that
    became excess. For example, as of September 1993, about $1.7 billion of
    the $9 billion of inventory that DOD was buying at that time was not
    needed to meet war reserve or operational requirements.

                                      Source: GAO.

                Table 4: Other Products Title Key challenges identified

    Bare Base Assets Study, Science Applications International Corporation
    (August 2004) In August 2004, the Science Applications International
    Corporation completed a comprehensive review and assessment of DOD bare
    base capabilities across the services, and identified a number of
    problems. The study, prepared for the Joint Staff Director of Logistics,
    found that the primary deficiency was the lack of a common understanding
    of doctrine that should provide the foundation for the services' bare base
    programs. This lack of understanding of doctrine (1) impacted all aspects
    of bare base support, to include its relationship to other basing
    operations, the methods of providing bare base support, and the
    responsibilities associated with bare base support; and (2) inhibited the
    ability of combatant commanders to articulate requirements, and the
    ability of the services to develop the appropriate capabilities. The study
    also found no simple solutions to the challenge of bare base, that the
    procurement of additional or new bare base assets was not the key, and
    those material solutions that were not linked to doctrinal requirements
    and not part of a coordinated solution would result in inefficient and
    less effective support.

    Operation Iraqi Freedom (OIF) In June 2004, the Center for Naval Analyses
    reported that although Marine Corps Maritime
    Maritime Prepositioning Force Prepositioning Force operations in Iraq
    could be characterized as a success, the execution of
    (MPF) Reconstitution, reconstitution, regeneration, and reembarkation was
    neither simple nor easy. Challenges and
    Regeneration, and issues included (1) a lack of detailed published
    policies and guidance, and servicewide knowledge
    Reembarkation (R3) Operations: and experience, in planning and executing
    operations; (2) simultaneous conduct of combat and
    Summary Findings, Center for operations; and (3) a lack of effective
    systems, organizations, and procedures for tracking and
    Naval Analyses, CAB accounting for prepositioned equipment after it was
    downloaded.
    D0009974.A2/Final (June 2004)

    Operational Project Stocks - In February 2004, the Army Audit Agency
    reported that some operational projects-one of four Phase II,
    Headquarters, categories of Army prepositioned stocks-had (1) invalid
    intended purposes; (2) inaccurate, Department of the Army, U. S.
    overstated, outdated, or questionable requirements; (3) insufficient
    quantities of equipment on Army Audit Agency, A-2004-hand; or (4) a lack
    of requirements for essential equipment. Consequently, about $472 million
    of 0108-AML (February 2004) the roughly $1.5 billion in requirements
    reviewed were invalid and $280 million were questionable.

    Appendix I: Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

    Title Key challenges identified

    The Norway Air-Landed Marine In September 2003, the Naval Audit Service
    reported that the Marine Corps continued to store and Expeditionary
    Brigade maintain prepositioned stocks in Norway despite the program's
    original strategic purpose having Prepositioning Program, Naval ended with
    the fall of the Soviet Union. The Naval Audit Service further reported
    that none of the Audit Service, N2003-0079 inventory was sourced to an
    approved or planned Joint Chiefs of Staff war scenario and that the
    (September 2003) stocks were in excess of Marine Corps-wide requirements.

    U.S. Army Materiel Command In September 2003, the U.S. Army Materiel
    Command sponsored an Operation Iraqi Freedom (USAMC) Operation Iraqi
    lessons learned conference during which 27 major issues were identified in
    such areas as Freedom (OIF) Lessons Learned personnel, supply,
    maintenance, and distribution. For example (1) supply-related lessons
    learned Conference, 10-11 September included the need to relook at
    requirements determinations, asset management and visibility, 2003,
    Redstone Arsenal, prepositioned stocks, and ammunition warfighter support;
    (2) maintenance-related lessons learned Alabama included the need to
    improve prepositioning maintenance, readiness and other reporting,

    accountability, and forward repair activity; and (3) distribution-related
    lessons learned included the need to modify force structure and doctrine
    to support the distribution system, appoint a single DOD distribution
    manager, and develop and implement a business system.

    Other War Reserve Materiel, Air Force Audit Agency, F20030010-FC4000 (May
    2003)

    Systematic Inspection of the Material Condition of Army War Reserve
    Stocks, U.S. Army Materiel Command Inspector General (August 2001)

    In May 2003, the Air Force Audit Agency reported that Air Force personnel
    did not properly segregate Other War Reserve Materiel requirements from
    peacetime operating spares requirements for about 16 percent of items,
    resulting in more than $118.8 million of overstated peacetime operating
    spares requirements. The audit agency likewise reported that Air Force
    supply personnel inappropriately applied $4.3 million of excess war
    reserve materiel assets to offset unfunded requirements rather than using
    the excesses to offset funded peacetime operating spares requirements.

    In August 2001, the Army Materiel Command Inspector General reported the
    following problems with Army war reserve sustainment stocks related to the
    Army Prepositioned Stock program: (1) a lack of centralized strategic
    operational direction; (2) insufficient funding for program requirements;
    (3) a lack of data integrity in automated systems; (4) adverse mission
    impact caused by readiness reporting procedures and overall operational
    practices; (5) mismatches between recorded condition codes of materiel and
    true conditions; (6) no established procedures for test, measurement, and
    diagnostic equipment support; (7) an inability of the command to
    effectively support the Army's wartime mortuary affairs mission; (8)
    materiel excess to requirements stored at prepositioned sites; (9)
    ineffective government oversight of a contractor allowing decreased
    readiness and increased costs; and (10) bulk fuel, potable water, and
    other assets to support forces during deployment were not part of the
    package.

    Medical Unit Readiness Reporting, Air Force Audit Agency, 00058007
    (December 2000)

    Inventory Management of Navy Fleet Hospitals by the Fleet Hospital Support
    Office, Cheatham Annex, Virginia, Department of Defense Inspector General,
    D-2000-191 (September 2000) In December 2000, the Air Force Audit Agency
    reported that medical unit personnel inconsistently apportioned Air Force
    resources among the Aerospace Expeditionary Forces and improperly (1)
    reported war reserve materiel condition status, (2) accomplished readiness
    training, (3) monitored expiration-dated war reserve materiel items, and
    (4) controlled sensitive readiness data.

    In September 2000, the DOD Inspector General assessed the Navy's
    prepositioned fleet hospitals. It found that the Naval Fleet Hospital
    Support Office (1) improperly managed its approximate $108 million
    inventory warehoused at Cheatham Annex, Virginia; (2) fielded two fleet
    hospitals without key pieces of equipment; and (3) did not properly manage
    unliquidated obligations.

    Prepositioned Aircraft Fuel Drop In July 2000, the Air Force Audit Agency
    reported that Air Force managers did not validate, Tanks, Air Force Audit
    Agency, quantify, and correct suspected parts shortages in more than 9,000
    prepositioned, unassembled 00062006 (July 2000) drop tanks resulting in a
    possible inability to meet wartime tank requirements and consequent

    delays in critical wartime fighter sorties.

    Appendix I: Past Products Identifying DOD Inventory Management and
    Prepositioning Challenges

                            Title Key challenges identified

    Selected War and Mobilization Planning Factors, Air Force Audit Agency,
    99058006 (September 1999)

    Civil Engineer Support Equipment Assigned to Naval Mobile Construction
    Battalions, Naval Audit Service, 036-99 (May 1999)

    Accountability and Inventory Levels of Air Force Medical War Reserve
    Material at Fort Worth, Texas, Department of Defense Inspector General,
    98-163 (June 1998) In September 1999, the Air Force Audit Agency reported
    that the Central and Pacific Air Forces planning personnel did not always
    correctly prepare War and Mobilization Plan, Volume 4 data or consistently
    and correctly use program planning factors to determine war reserve
    materiel requirements.

    In May 1999, the Naval Audit Service reported that (1) 1,587 of 5,289
    assets assigned to fulfill the table of allowances for 20 naval mobile
    construction battalions could not satisfy the requirements, and (2) 37
    civil engineering support equipment assets not assigned to a table of
    allowances but kept as backup in case of a contingency could possibly
    satisfy up to $1.1 million in planned procurements for other Navy
    activities.

    In June 1998, the DOD Inspector General reported that while the Air Force
    maintained adequate accountability over medical war reserve material
    warehoused at Fort Worth, about $33 million of the medical war reserve
    material was not needed to satisfy its deployable medical systems
    requirements.

    Army Prepositioned Stock Program, Combat Equipment Group - Europe, U.S.
    Army Audit Agency, AA 98-138 (March 1998)

    Sustainment Requirements for the Army Prepositioned Stock Program, U.S.
    Army Audit Agency, AA 98-99 (February 1998)

    Total Asset Visibility-Operational Projects, U.S. Army Audit Agency, AA
    98-31 (November 1997)

    In March 1998, the Army Audit Agency reported that while the Army Combat
    Equipment Group properly accounted for its war reserve stocks stored in
    Europe, improved accounting procedures were needed for its war reserve
    stocks loaned in support of Operation Joint Endeavor in Bosnia. The audit
    agency additionally reported that repair parts had been identified during
    the audit that were not needed to support the deployable unit sets
    authorized for the war reserve program. Moreover, while war reserve
    equipment was generally maintained and stored properly, some of the combat
    equipment companies retained too many line items, maintained excess
    stockage levels, and didn't establish an effective method to monitor
    maintenance operations.

    In February 1998, the Army Audit Agency reported that a substantial number
    of undesignated war reserve assets were stored in Europe that could have
    been used to satisfy new sustainment stock requirements.

    In November 1997, the Army Audit Agency reported problems in the Total
    Asset Visibility capability for Army operational projects, including (1)
    incomplete or unreliable onhand asset balances, (2) a lack of visibility
    over loaned assets, (3) inadequate identification of key management
    controls in Army policy regulations, (4) weaknesses in data integrity, and
    (5) failure of Army managers at both the wholesale and retail levels to
    redistribute assets to improve readiness and reduce requirements.

    Equipment Pre-positioned Afloat, In December 1996, the DOD Inspector
    General reported that the Army had rapidly expanded its Department of
    Defense Inspector afloat prepositioning program without first publishing
    criteria, policy, plans, and doctrine resulting in General, 97-054
    (December a possible inability to ensure effective equipment management in
    support of the combatant 1996) commanders.

                                      Source: GAO.

                           Appendix II: Scope and Methodology

    To assess the near-term operational risk given the continuing use of
    prepositioned stocks, we obtained reports prepared by the military
    services on the inventory levels of their prepositioned stocks compared to
    program requirements. We also reviewed available maintenance reports or
    other data used by the services to measure the maintenance condition of
    the prepositioned stocks. We also observed the physical condition of
    materiel stored by the Marine Corps at its prepositioning locations in
    Norway and aboard a prepositioning ship at its maintenance facility
    located at Blount Island, Florida; and observed the maintenance condition
    of the Army's prepositioned stocks at Camp Carroll, South Korea and Sagami
    Army Depot, Japan. We interviewed program managers at each of the military
    services to determine the impact of reported shortfalls and poor
    maintenance condition in the prepositioned stocks and discussed the time
    frames and costs needed to repair or replace prepositioned stocks used in
    recent military operations.

    To assess the sufficiency of the Department of Defense's (DOD) and
    service-level oversight of these prepositioning programs, we discussed the
    processes used by DOD and the services to oversee their prepositioning
    programs with officials from the Office of the Secretary of Defense, the
    Joint Staff, and the military services. We reviewed relevant DOD
    directives and readiness reports prepared by the services and the Joint
    Staff to determine the extent to which the information contained in these
    reports could be used by DOD or the services to provide oversight. We also
    reviewed past reports prepared by GAO, the Army Audit Agency, the Air
    Force Audit Agency, the Army Materiel Command Inspector General, and the
    CNA Corporation that identified problems with the reliability of data
    regarding the preparedness of the services' prepositioned stocks and
    problems with the requirements determination processes for some of these
    stocks. We discussed issues regarding the sufficiency of data on the
    preparedness of DOD's prepositioned stocks with program managers from each
    of the services.

    To assess whether DOD has developed a coordinated plan for the future of
    its prepositioning programs that would meet the goals of the recently
    published defense strategy, we collected and analyzed information from the
    military services and the Defense Logistics Agency on the future plans for
    their prepositioning programs. We also reviewed the recently published
    National Defense Strategy and discussed the future direction of the
    department's prepositioning programs with officials in the Office of the
    Secretary of Defense, the Joint Staff, and the military services.

    Appendix II: Scope and Methodology

    We conducted our review from July 2004 through May 2005 in accordance with
    generally accepted government auditing standards. We reviewed available
    data for inconsistencies and discussed the data with DOD officials. Our
    assessments of data reliability revealed significant concerns that are
    discussed in the report.

    We interviewed officials and obtained documentation at the following
    locations:

    Army

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

    o  U.S. Army Materiel Command, Ft. Belvoir, Virginia

    o  U.S. Army Field Support Command, Rock Island, Illinois

    o  U.S. Army Forces Command, Ft. McPherson, Georgia

    o  U.S. Army Special Operations Command, Ft. Bragg, North Carolina

    o  Eighth U.S. Army, Yongsan Garrison, South Korea

    o  Combat Equipment Battalion-Northeast Asia, Camp Carroll, South Korea

    o  Materiel Support Center-Korea, Camp Carroll, South Korea

    o  Sagami Army Depot, Camp Zama, Japan

    Marine Corps

    o  U.S. Marine Corps Headquarters, Arlington, Virginia

    o  Marine Corps Combat Development Command, Quantico, Virginia

    o  Blount Island Command, Jacksonville, Florida

    o  Frigaard Storage Facility, Norway

    o  Hammerkammen Storage Facility, Norway

    o  Vaernes Aviation Storage Facility, Norway

    o  Marine Corps Logistics Command, Albany, Georgia

    Navy

    o  Chief of Naval Operations, Washington, D.C.

    o  CNA Corporation, Alexandria, Virginia

    o  Naval Facilities Engineering Command, Washington, D.C.

    o  Naval Special Warfare Command, San Diego, California

    o  Naval Audit Service, Falls Church, Virginia

    o  Naval Medical Logistics Command, Fort Detrick, Maryland

    o  Military Sealift Command, Washington, D.C.

    Air Force

    o  U.S. Air Force Headquarters, Washington, D.C.

                           Appendix II: Scope and Methodology

    o  Air Combat Command, Langley Air Force Base, Virginia

    o  	Headquarters, Central Command, Air Forces, Shaw Air Force Base, South
    Carolina

    o  Headquarters, Pacific Air Forces, Hickam Air Force Base, Hawaii

    o  U.S. Air Forces in Europe, Ramstein Air Base, Germany

    o  49th Materiel Maintenance Group, Holloman Air Force Base, New Mexico

    o  Air Force Special Operations Command, Hurlburt Field, Florida

    Unified Commands

    o  U.S. Pacific Command, Camp H.M. Smith, Hawaii

    o  U.S. Special Operations Command, MacDill Air Force Base, Florida

    o  U.S. Forces Korea, Yongsan Garrison, South Korea

    Appendix III: Comments from the Department of Defense

    Appendix III: Comments from the Department of Defense

    Appendix III: Comments from the Department of Defense

    Appendix III: Comments from the Department of Defense

    Appendix IV: GAO Contact and Staff Acknowledgments

    GAO Contact Acknowledgments

    William M. Solis, (202) 512-8365

    In addition to the contact named above, John Pendleton, Assistant
    Director, Harold Reich, Assistant Director, Aisha Cabrer, Katherine
    Chenault, Lee Cooper, Jeff Kans, Renee McElveen, John Nelson, Emmy Rhine,
    Enemencio Sanchez, Patricia Sari-Spear, Kimberly Seay, Robyn Trotter,
    Matthew Ullengren, Eddie Uyekawa, Hector Wong, and Ignacio Yanes also made
    key contributions to this report.

    (350568)

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