Defense Logistics: Army and Marine Corps Cannot Be Assured That
Equipment Reset Strategies Will Sustain Equipment Availability
While Meeting Ongoing Operational Requirements (19-SEP-07,
GAO-07-814).
Congress has appropriated billions of dollars for equipment
repair, replacement, and recapitalization, collectively known as
equipment reset. Because of the potential for equipment reset
costs to affect the Department of Defense's (DOD) future budget
requirements and related readiness concerns, GAO initiated this
review under the Comptroller General's authority. GAO's
objectives were to determine the extent to which the Army and
Marine Corps (1) track and report equipment reset expenditures in
a way that confirms that funds appropriated for reset are
expended for that purpose and (2) can be assured that their reset
strategies will sustain equipment availability while meeting
ongoing operational requirements. GAO reviewed equipment reset
policies and analyzed related budget data.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-814
ACCNO: A76498
TITLE: Defense Logistics: Army and Marine Corps Cannot Be
Assured That Equipment Reset Strategies Will Sustain Equipment
Availability While Meeting Ongoing Operational Requirements
DATE: 09/19/2007
SUBJECT: Appropriated funds
Army procurement
Combat readiness
Defense budgets
Defense procurement
Equipment maintenance
Financial management
Logistics
Military budgets
Military forces
Military materiel
Military procurement
Program evaluation
Reporting requirements
Strategic planning
Program goals or objectives
Program implementation
Afghanistan
Iraq
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GAO-07-814
* [1]Results in Brief
* [2]Background
* [3]Army and Marine Corps Do Not Report Expenditures within Proc
* [4]Army and Marine Corps Cannot Be Assured That Reset Implement
* [5]Reset Implementation Strategies Do Not Target Shortages of E
* [6]Reset Implementation Strategies Do Not Give Priority to Depl
* [7]Conclusions
* [8]Recommendations for Executive Action
* [9]Matter for Congressional Consideration
* [10]Agency Comments and Our Evaluation
* [11]GAO's Responses to DOD's Technical Comments
* [12]GAO Contact
* [13]Acknowledgments
* [14]GAO's Mission
* [15]Obtaining Copies of GAO Reports and Testimony
* [16]Order by Mail or Phone
* [17]To Report Fraud, Waste, and Abuse in Federal Programs
* [18]Congressional Relations
* [19]Public Affairs
* [20]PDF6-Ordering Information.pdf
* [21]Order by Mail or Phone
Report to Congressional Committees
United States Government Accountability Office
GAO
September 2007
DEFENSE LOGISTICS
Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies
Will Sustain Equipment Availability While Meeting Ongoing Operational
Requirements
GAO-07-814
Contents
Letter 1
Results in Brief 5
Background 10
Army and Marine Corps Do Not Report Expenditures within Procurement
Accounts in a Way That Confirms That Funds Appropriated for Reset Are
Expended for That Purpose 17
Army and Marine Corps Cannot Be Assured That Reset Implementation
Strategies Will Sustain Equipment Availability While Meeting Ongoing
Operational Requirements 21
Conclusions 26
Recommendations for Executive Action 27
Matter for Congressional Consideration 27
Agency Comments and Our Evaluation 28
Appendix I Scope and Methodology 34
Appendix II Marine Corps Reset Categories 36
Appendix III Army and Marine Corps Ground Equipment and Rotary Aircraft
Deployed and Total Equipment on Hand as of March 2007 38
Appendix IV Comments from the Department of Defense 40
Appendix V GAO Contact and Staff Acknowledgments 59
Tables
Table 1: Breakdown of Army and Marine Corps Fiscal Year 2007 Reset
Execution Funding Plans 14
Table 2: Comparison of Army and Marine Corps Sub-cost Categories within
the FMR for Operation and Maintenance and Procurement Accounts 19
Table 3: Army Equipment Deployed to OIF/OEF and Total Equipment on Hand as
of March 2007 38
Table 4:: Marine Corps Equipment Deployed to OIF/OEF and Total Equipment
on Hand as of March 2007 39
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
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copyright holder may be necessary if you wish to reproduce this material
separately.
United States Government Accountability Office
Washington, DC 20548
September 19, 2007
Congressional Committees
Continuing military operations in Iraq and Afghanistan are taking a toll
on the condition and readiness of military equipment. Harsh combat and
environmental conditions in theater over sustained periods of time
exacerbate equipment repair, replacement, and recapitalization problems
that existed before the onset of combat operations in Iraq and
Afghanistan. Upon returning from operations, equipment is reset in
preparation for future operations. Although the Army and Marine Corps
continue to meet mission requirements and report high readiness rates for
deployed units, these services are operating with increasing risk to
overall readiness due to equipment shortages and equipment readiness
shortfalls. As a result, costs to repair, replace, and recapitalize
equipment, collectively known as reset, will increase significantly in
future Department of Defense (DOD) annual budgets. Continuing military
operations in Iraq and Afghanistan are taking a toll on the condition and
readiness of military equipment. Harsh combat and environmental conditions
in theater over sustained periods of time exacerbate equipment repair,
replacement, and recapitalization problems that existed before the onset
of combat operations in Iraq and Afghanistan. Upon returning from
operations, equipment is reset in preparation for future operations.
Although the Army and Marine Corps continue to meet mission requirements
and report high readiness rates for deployed units, these services are
operating with increasing risk to overall readiness due to equipment
shortages and equipment readiness shortfalls. As a result, costs to
repair, replace, and recapitalize equipment, collectively known as reset,
will increase significantly in future Department of Defense (DOD) annual
budgets.
In response to DOD's request for funds to meet its needs for equipment
reset, Congress has appropriated tens of billions of dollars. Congress has
provided the Army and Marine Corps with more than $49 billion in
supplemental^1 appropriations since fiscal year 2002 for the reset of
equipment in addition to the billions of dollars provided to DOD to
sustain military equipment in its annual or baseline budgets.^2 In fiscal
year 2007 alone, the Army received $17.1 billion for equipment reset,
almost double the $8.6 billion in funding the Army received for equipment
reset programs in fiscal year 2006. Of the $17.1 billion, the Army plans
to fund reset with $8.6 billion from operation and maintenance
appropriations and $8.5 billion from procurement appropriations. The
Marine Corps received $5.8 billion in fiscal year 2007, slightly more than
the $5.1 billion it received in fiscal year 2006. Of the $5.8 billion,^3
the Marine Corps plans to In response to DOD's request for funds to meet
its needs for equipment reset, Congress has appropriated tens of billions
of dollars. Congress has provided the Army and Marine Corps with more than
$49 billion in supplemental^1234 appropriations since fiscal year 2002 for
the reset of equipment in addition to the billions of dollars provided to
DOD to sustain military equipment in its annual or baseline budgets. In
fiscal year 2007 alone, the Army received $17.1 billion for equipment
reset, almost double the $8.6 billion in funding the Army received for
equipment reset programs in fiscal year 2006. Of the $17.1 billion, the
Army plans to fund reset with $8.6 billion from operation and maintenance
appropriations and $8.5 billion from procurement appropriations. The
Marine Corps received $5.8 billion in fiscal year 2007, slightly more than
the $5.1 billion it received in fiscal year 2006. Of the $5.8 billion, the
Marine Corps plans to fund reset with $0.9 billion from operation and
maintenance appropriations and $4.9 billion from procurement
appropriations.
^1Supplemental appropriations for reset are used to fund the incremental
costs above the baseline budget that are necessary to repair and replace
equipment needed for ongoing operations.
^2The baseline budget funds equipment maintenance for nondeployed
equipment and the purchase of equipment to fulfill longer-term equipment
requirements.
^3The total $5.8 billion reset funding includes $0.7 billion initially
appropriated for procurement of Mine Resistant Ambush Protected vehicles,
which was later reclassified as a cost of war, not reset.
The Army Chief of Staff^5 and Commandant of the Marine Corps^6 have
testified about the extraordinary demands placed on the services'
equipment and concerns regarding their abilities to support extensive
reset efforts while also transforming to a more flexible and more
deployable force. According to the Army Chief of Staff, only through a
fully funded reset program can the Army extend the life of its equipment
and remain ready for future conflicts. The Commandant of the Marine Corps
also stated that timely delivery of replacement equipment through reset
funding is crucial to sustaining high readiness rates in theater as well
as improving readiness rates for forces at home.
As we have testified before the House Committee on Armed Services,^7 the
Army and Marine Corps will face a number of ongoing and long-term
challenges that will affect the timing and cost of equipment reset, such
as Army and Marine Corps transformation initiatives, depot capacity
issues, the potential transfer of U.S. military equipment to Iraqi
Security Forces, and the possibility of continuing logistical support for
Iraqi Security Forces. We also observed that while the precise dollar
estimate for the reset of Army and Marine Corps equipment will not be
known until operations in Iraq and Afghanistan cease, it will likely cost
billions of dollars to repair and replace equipment. While the services
are working to refine overall requirements, the total requirements and
costs are unclear and raise a number of questions as to how the services
will afford them. We concluded that until the services are able to firm up
these requirements and cost estimates, neither the Secretary of Defense
nor Congress will be in a sound position to weigh the trade-offs between
competing requirements and risks associated with degraded equipment
readiness.
^4Reset is funded through two appropriations--operation and maintenance
appropriations and procurement appropriations. Operation and maintenance
appropriations fund repair and maintenance of equipment while procurement
appropriations primarily fund replacement of equipment. Recapitalization
of equipment is further subdivided into rebuild, which is funded with
operation and maintenance appropriations, and upgrade (enhanced
capability), which is funded with procurement appropriations.
^5Army Posture Statement, Statement before the House Committee on Armed
Services, 110th Cong. (2007) (statement of Gen. Peter J. Schoomaker, U.S.
Army Chief of Staff). Statement on the Army's Reset Strategy and Plan for
Funding Reset Requirements, Statement before the House Committee on Armed
Services, 109th Cong. (2006) (statement of Gen. Peter J. Schoomaker, U.S.
Army Chief of Staff).
^6Marine Posture Statement, Statement before the Senate Committee on Armed
Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps). Statement before the House Committee on
Armed Services, 109th Cong. (2006) (statement of Gen. Mike Hagee,
Commandant of the Marine Corps).
^7GAO, Defense Logistics: Preliminary Observations on the Army's
Implementation of Its Equipment Reset Strategies, [22]GAO-07-439T
(Washington, D.C.: Jan. 31, 2007), and Defense Logistics: Preliminary
Observations on Equipment Reset Challenges and Issues for the Army and
Marine Corps, [23]GAO-06-604T (Washington, D.C.: Mar. 30, 2006).
Over the past several years, we also have reported on related equipment
issues, including the lack of equipment program strategies;^8 poor
condition of pre-positioned equipment, which could lead to near-term
operational risks in the event of another large-scale conflict;^9 and
challenges related to replacing Army National Guard equipment left in the
Operation Iraqi Freedom (OIF) theater to support ongoing operations.^10
Furthermore, we have reported on the lack of transparency and inaccuracies
in reported Global War on Terrorism (GWOT) obligations,^11 and that DOD
was unable to accurately track and report equipment reconstitution costs
in its supplemental budget requests because the services' accounting codes
were capturing GWOT and other obligations that were not incurred
exclusively for equipment reconstitution. In addition to these issues, we
have also reported on long-standing problems with DOD's accounting
systems^12 and personnel issues.^13 Moreover, the John Warner National
Defense Authorization Act for Fiscal Year 2007 directed the Secretary of
the Army to submit a report to the congressional defense committees in
conjunction with the President's annual budget submission, which includes
information about reset expenditures as well as future funding for reset
requirements.^14
^8GAO, Military Readiness: DOD Needs to Reassess Program Strategy, Funding
Priorities, and Risks for Selected Equipment, [24]GAO-04-112 (Washington,
D.C.: Dec. 19, 2003), and Military Readiness: DOD Needs to Identify and
Address Gaps and Potential Risks in Program Strategies and Funding
Priorities for Selected Equipment, [25]GAO-06-141 (Washington, D.C.: Oct.
25, 2005).
^9GAO, Defense Logistics: Improved Oversight and Increased Coordination
Needed to Ensure Viability of the Army's Prepositioning Strategy,
[26]GAO-07-144 (Washington, D.C.: Feb. 15, 2007), and Defense Logistics:
Better Management and Oversight of Prepositioning Programs Needed to
Reduce Risk and Improve Future Programs, [27]GAO-05-427 (Washington, D.C.:
Sept. 6, 2005).
^10GAO, Reserve Forces: Army National Guard's Role, Organization, and
Equipment Need to Be Reexamined, [28]GAO-06-170T (Washington, D.C.: Oct.
20, 2005).
^11GAO, Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are
Within Funding Levels and Significant Multiyear Procurement Funds Will
Likely Remain Available for Use in Fiscal Year 2007, [29]GAO-07-76
(Washington, D.C.: Nov. 13, 2006), and Defense Management: Processes to
Estimate and Track Equipment Reconstitution Costs Can Be Improved,
[30]GAO-05-293 (Washington, D.C.: May 5, 2005).
Because of the potential for reset costs to significantly affect DOD's
budget requirements in the coming years and related equipment readiness
issues, this report focuses on tracking and reporting reset costs and the
relationship between Army and Marine Corps equipment reset implementation
strategies and their ability to sustain equipment availability. We
performed our work under the authority of the Comptroller General^15 to
conduct reviews on his own initiative and are reporting the results to you
because of your oversight roles. Our objectives were to identify the
extent to which the Army and Marine Corps (1) track and report equipment
reset expenditures in a way that confirms that funds appropriated for
reset are expended for that purpose and (2) can be assured that their
reset implementation strategies will sustain equipment availability while
meeting ongoing operational requirements.
To address our first objective, we reviewed the monthly Supplemental and
Cost of War Execution Reports, analyzed equipment reset funding requests,
and discussed equipment reset tracking and reporting systems with Army and
Marine Corps officials to determine the extent to which their financial
management systems confirmed that funds appropriated for reset are
expended for that purpose. We reviewed reported obligations and
expenditures and budget estimates for Army and Marine Corps equipment
reset funding and determined that the reliability of these data was
sufficient for our purposes. To address our second objective, we examined
service policies and processes for developing reset plans and discussed
with Army and Marine Corps officials the services' equipment reset
implementation strategies and how they plan to sustain equipment
availability while meeting ongoing operational requirements. We did not
review the services' overall equipping strategies. We also selected five
pieces of high-demand equipment for review and compared the services'
planned reset activities to equipment requirements.^16 These equipment
items were identified by service officials as well as previous GAO reports
as items critical to ongoing operations, and large numbers of these
equipment items have gone through multiple rotations or have been in
constant use in the OIF theater. Our review included only major end items,
primarily ground equipment and rotary aircraft. We reviewed inventory
numbers, location of equipment (e.g., items deployed or nondeployed), and
acquisition plans for future procurement of new equipment. For work under
both objectives, we held discussions at service headquarters responsible
for developing and executing equipment reset implementation strategies,
met with officials from commands responsible for executing reset programs,
met with an Army Division preparing to deploy to Iraq in 2007, and met
with officials in the Office of the Secretary of Defense (OSD) to discuss
overall reset policies and programs. We reviewed reported obligations and
expenditures and budget estimates for Army and Marine Corps equipment
reset funding and determined that the reliability of these data was
sufficient for our purposes. We performed our work from October 2005
through April 2007 in accordance with generally accepted government
auditing standards. Appendix I contains more detailed information about
our scope and methodology.
^12 [31]GAO-05-293 .
^13GAO, Reserve Forces: Plans Needed to Improve Army National Guard
Equipment Readiness and Better Integrate Guard Into Army Force
Transformation Initiatives, [32]GAO-06-111 (Washington, D.C.: Oct. 4,
2005).
^14Pub. L. No. 109-364, S 323 (2006).
^1531 U.S.C. S 717.
Results in Brief
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they do
not report detailed equipment reset expenditures within the procurement
accounts in a way that confirms that funds appropriated for reset are
expended for that purpose because there is no requirement to report
procurement expenditures beyond what is required by the DOD Financial
Management Regulation (FMR).^17 While the Conference Report accompanying
the DOD appropriations act for 2007 directed the Secretary of Defense to
periodically provide a detailed accounting of obligations and expenditures
of funds provided in Title IX of the act, which includes funds provided
for reset, by program and subactivity group and to provide a listing of
equipment procured using funds appropriated under Title IX of this act,^18
the Army and Marine Corps are not legally required to provide this
detailed accounting. The Army and Marine Corps currently provide detailed
reports of obligations and expenditures within the operation and
maintenance accounts, but have chosen not to provide the same detailed
accounting of obligations and expenditures within the procurement
accounts. Consequently, neither DOD nor Congress can be assured that
procurement funds appropriated for equipment reset are being obligated and
expended for equipment reset for deploying units and units preparing to
deploy to Iraq and Afghanistan instead of other, more long-term equipment
needs. As we recently testified,^19 as of fiscal year 2007, the Army has
begun to track and report reset obligations and expenditures in its
operation and maintenance account. According to Army officials, the Army
segregates the cost of reset from other costs and tracks expenditures to
ensure that funds appropriated for this purpose are expended for this
purpose. Unlike the Army, the Marine Corps began tracking and reporting
reset execution in its operation and maintenance account when it began
receiving reset funding in fiscal year 2006. The Marine Corps established
a special identification code within its financial management systems to
identify obligations and expenditures related to equipment reset. With
regard to the procurement accounts, however, the Army's and the Marine
Corps' monthly Supplemental and Cost of War Execution Reports^20 identify
the costs of equipment reset as just one line, instead of reporting these
costs at lower sub-cost categories,^21 such as vehicle procurement. The
Army provides additional monthly reports to Congress detailing the status
of procurement reset obligations in total dollars as well as a summary of
the number of equipment items replaced or recapitalized; however, it does
not provide a breakdown of the dollars associated with those quantities.
The Marine Corps does not provide these additional reports because it was
not required or requested to provide such reports but could provide
reports at the budget line item level if requested. Until the Army and
Marine Corps are required to report the obligation and expenditure of
funds appropriated for reset in the procurement accounts at lower sub-cost
category levels, similar to the level of detail they report for
obligations and expenditures in the operation and maintenance accounts,
Congress will not have the visibility it needs to exercise effective
oversight and to determine if the amount of funding appropriated for
equipment reset has been most appropriately used for the purposes
intended, such as addressing the short-term needs of deploying units and
units preparing to deploy to Iraq and Afghanistan. Furthermore, because
the Army was not required to track the execution of its reset
appropriations from the onset of operations, it does not have historical
execution data upon which to base future cost estimates.^22 As we have
reported, historical execution data would provide a basis for estimating
future funding needs.^23
^16The five equipment items we profiled are the M1 Tank, Bradley Fighting
Vehicle (Army only), High Mobility Multi-Purpose Wheeled Vehicle, Heavy
Expanded Mobility Tactical Truck (Army only), and the Marine Corps CH-53E
helicopter.
^17DOD Financial Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," S 230406. According to an OSD
official, the updated version referred to in this report, although not yet
available online, was adopted in January 2007.
^18H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
^19 [33]GAO-07-439T .
^20DOD provides monthly Supplemental and Cost of War Execution Reports to
Congress by service, defense agency, contingency operation, and
appropriation.
^21DOD Financial Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," S 230406 refers to these more
detailed costs as sub-cost categories.
The Army and Marine Corps cannot be assured that their reset
implementation strategies will sustain equipment availability for deployed
units as well as units preparing for deployment to Iraq and Afghanistan
while meeting ongoing operational requirements because neither the Army's
nor the Marine Corps' reset implementation strategies target shortages of
available equipment and prioritize equipment needs of units preparing for
deployment over longer-term modernization goals. According to the Army's
Army Force Generation Model (ARFORGEN) implementation strategy and reset
implementation guidance,^24 the primary goal of reset is to prepare units
for deployment and to improve next-to-deploy units' equipment-on-hand
levels. However, the Army's reset implementation strategy is based on
resetting equipment that it expects will be returning to the United States
in a given fiscal year and not on targeting shortages of equipment for
units preparing for deployment to Iraq and Afghanistan. Similarly, the
Marine Corps' reset goal is to ensure that the Corps is equipped to
perform both ongoing operations and future missions. However, neither the
Army nor the Marine Corps can ensure that their reset implementation
strategies can achieve these goals because neither service's reset
implementation strategies target shortages of available equipment needed
to equip deploying units and units preparing for other missions and
contingencies in order to minimize operational risk. For example, as part
of their fiscal year 2007 reset strategy, the Army plans to recapitalize
more than 7,500 High Mobility, Multi-Purpose Wheeled Vehicles (HMMWV) at a
cost of $455 million; however, these recapitalized HMMWVs will not be
available to train or equip units deploying for OIF missions due to
inadequate force protection and will have limited training value to
deploying units primarily because the unarmored HMMWVs have different
handling characteristics and configurations than the armored HMMWVs used
in Iraq. In addition, the Army's fiscal year 2007 reset strategy includes
plans to modernize Abrams Tanks and Bradley Fighting Vehicles (Bradley) to
accelerate achieving long-term strategic goals under the Army's modularity
initiative. While deploying Army units have not experienced shortages of
these items, accelerating modernization programs in general to achieve a
modular force structure may be sacrificing other short-term needs for
longer-term goals. According to Army officials, reset prepares units for
the next mission, which can be either current (e.g., OIF/Operation
Enduring Freedom (OEF)) or future (e.g., full-spectrum contingency
operations) missions; thus, accelerating modernization of the Abrams Tanks
and Bradleys would prepare units for future missions.^25 Although deployed
Army and Marine Corps units and units about to deploy generally report
high readiness rates, the services have reported a decrease in nondeployed
units' reported readiness rates,^26 in part due to equipment shortages.
The Army Chief of Staff has testified that the Army has had to take
equipment from nondeployed units in order to provide it to deployed units,
which increases risk to next-to-deploy units and limits the Army's ability
to respond to emerging contingencies. In contrast, the Marine Corps reset
planning process emphasizes replacing equipment; however, actions required
to support this strategy have adversely affected readiness of nondeployed
Marine Corps units. For example, as the Commandant of the Marine Corps has
testified,^27 the Marine Corps has had to choose between providing
equipment to units preparing to deploy to Iraq and Afghanistan and unit
training for other contingencies while also deploying troops to support
other operations, such as humanitarian and disaster relief efforts in
Pakistan and the Philippines, Theater Security Cooperation events in
Central America and parts of Africa, and protecting our embassies. Until
the services' reset implementation strategies target shortages of
equipment needed to equip units preparing for deployment and ensure that
those units are given priority over longer-term equipment needs, the Army
and Marine Corps will be unable to minimize operational risk by ensuring
that the needs of deploying units can be met.
^22Army officials initially stated that because they were not required to
track execution data at the onset of operations, they could not provide
those historical data. Subsequently, Army officials provided execution
data as of fiscal year 2002 broken down by operation and maintenance
(i.e., field-level repair, depot-level repair, Army pre-positioned stock,
and recapitalization--rebuild) and procurement (i.e.,
recapitalization--upgrade and replacement). However, Army officials stated
that they had to extrapolate these numbers because the data were not
tracked that way at the onset of operations.
^23 [34]GAO-07-76 and [35]GAO-05-293 .
^24Army FRAGO, FY07 Reset FRAGO (Sept. 29, 2006).
^25Equipment reset is one element of the services' overall equipment
strategies. For example, the Army leverages all available equipment such
as left behind equipment, theater-provided equipment, and new procurement
as part of its overall equipping strategy within the ARFORGEN
implementation strategy of which reset is a component. The Marine Corps'
strategic ground equipment working group (SGEWG) implements the
Commandant's guidance and prioritizes equipment distribution as part of an
overall decision-making process employed by the Commandant of the Marine
Corps.
^26Nondeployed units reporting readiness under the Unit Status Reporting
System include units preparing to deploy.
We are recommending that the Secretary of Defense direct the Under
Secretary of Defense, Comptroller to amend the FMR to require a more
detailed accounting of obligations and expenditures within the procurement
accounts for equipment reset, similar to the services' reporting of reset
obligations and expenditures within the operation and maintenance
accounts.^28 We are also recommending that the Secretary of Defense direct
the Secretary of the Army and Commandant of the Marine Corps to assess
their approaches to equipment reset to ensure that their priorities
address equipment shortages in the near term to minimize operational risk
and meet the needs of deploying units.
In commenting on a draft of this report, the department did not agree with
either of our two recommendations. DOD stated that formalizing procedures
by amending the FMR would be unwieldy and cost prohibitive and that
creating additional line items for each procurement program would add
complexity and duplication to existing reports. The intent of our
recommendation is not that the department create a complex accounting
system within each procurement account. Rather, we are recommending that
the department report reset obligations and expenditures at the sub-cost
category level, similar to the operation and maintenance accounts to
provide Congress with the visibility it needs to identify the types of
equipment that are being procured with the reset funds it appropriates,
such as aircraft, vehicles, or communication and electronic equipment. We
have modified our recommendation to be clearer as to the level of detail
we are recommending for the reporting of obligations and expenditures in
the procurement accounts and added a matter for congressional
consideration suggesting that Congress should consider directing the
Secretary of Defense to direct the Under Secretary of Defense,
Comptroller, to amend the FMR. Regarding our second recommendation, DOD
stated that there is no need to direct the services to assess their
approaches to reset because the services already continually assess their
approaches to reset. We continue to believe that the Army's and Marine
Corps' equipment reset implementation strategies should target short-term
equipment shortages for deploying units and units preparing for deployment
rather than long-term modernization goals, which would be more consistent
with both the Army's and Marine Corps' definitions and goals for their
reset programs. DOD also provided a number of technical comments, which we
considered and incorporated as appropriate. DOD's comments and our
evaluations are discussed in detail in a later section of this report.
DOD's written comments are reprinted in appendix IV.
^27Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
^28In response to a recommendation from a GAO report ( [36]GAO-05-293 ),
DOD modified its Cost of War report to break down into further detail the
operation and maintenance reconstitution category into field-,
intermediate-, and depot-level maintenance. According to an OSD official,
in January 2007, DOD amended its financial management regulations to
establish reset-specific categories within operation and maintenance
(i.e., field-, intermediate-, and depot-level maintenance) and one overall
reset-specific category within procurement.
Background
As a result of operations related to OIF, the Army and Marine Corps
continue to face an enormous challenge to reset their equipment due to the
increased usage of equipment, pace of operations, and amount of equipment
to be reset. At the onset of operations in 2003, the Army and Marine Corps
deployed with equipment that in some cases was already more than 20 years
old. As of January 2007, about 25 percent of the Army's total on-hand
wheeled and tracked vehicles and about 19 percent of the Army's rotary
wing aircraft were deployed to OIF/ OEF. In addition, in March 2007 the
Commandant of the Marine Corps testified that approximately 30 percent of
all Marine Corps ground equipment and nearly 25 percent of Marine Corps
active duty aviation squadrons are engaged overseas.^29 Most of the Marine
Corps equipment is not rotating out of theater at the conclusion of each
force rotation due to low equipment density. Appendix III provides a
comparison of Army and Marine Corps ground equipment and rotary aircraft
deployed to OIF/OEF to total equipment on hand.
^29Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
As we stated in our January 2007 testimony,^30 the services are operating
this equipment at a pace well in excess of peacetime operations. The harsh
operating environments in Iraq and environmental factors such as heat,
sand, and dust have taken a toll on sensitive components. Troop levels and
the duration of operations are also factors that affect funding
requirements. Army officials have recently testified that the Army's truck
fleet is experiencing an operational tempo that is five to six times the
peacetime rate, causing excessive wear that is further exacerbated by the
addition of heavy armor kits required to enhance force protection.^31
Marine Corps officials also testified that ground equipment and rotary
wing aircraft are experiencing operational tempos from two to five times
the peacetime rate, thus increasing equipment maintenance and replacement
costs.^32
The Army generally defines equipment reset as the repair,^33
recapitalization, or replacement of equipment in accordance with the
standardized definition OSD and the services began using in 2006.^34
Repairs can be made at the field level or sustainment (depot) level. Army
field level maintenance is intended to bring equipment back to the 10/20
series Technical Manual standard, and is usually performed at
installations where the equipment is stationed.^35 Sustainment-level
maintenance is work performed on equipment that exceeds field-level reset
capabilities. Sustainment-level maintenance may be done at Army depots by
contractors, by installation maintenance activities, or a combination of
the three, and is coordinated by the Army Materiel Command. Army officials
testified in January 2007 that from the beginning of combat operations
through the end of fiscal year 2006, the Army has reset more than 200,000
pieces of equipment and plans to reset about 117,000 major items of
equipment in fiscal year 2007.
^30 [37]GAO-07-439T .
^31Army Equipment Reset, Gen. Charles Anderson, Director Force
Development, Army G-8, et al., Statement before the House Committee on
Armed Services, Subcommittees on Readiness and Air and Land Forces (Jan.
31, 2007).
^32U.S. Marine Corps and U.S. Navy Reset Requirements, Statement before
the House Committee on Armed Services, Subcommittees on Readiness and
Seapower and Expeditionary Forces, 110th Cong. (2007) (statement of Lt.
Gen. Emerson N. Gardner, Jr., Deputy Commandant Programs and Resources,
U.S. Marine Corps).
^33Repair includes the special technical inspection and repair of
aircraft.
^34According to an OSD official, during the summer of 2006, OSD and the
services began using a standardized definition of reset. Reset is defined
as actions taken to restore units to a desired level of combat capability
with the units' future mission. It encompasses maintenance and supply
activities that restore and enhance combat capability to unit and
pre-positioned equipment that was destroyed, damaged, stressed, or worn
out beyond economic repair due to combat operations by repairing or
rebuilding the equipment or procuring replacement equipment. Included are
major repairs/overhauls and recapitalization (rebuild or upgrade) funded
by procurement; research, development, test, and evaluation; and operation
and maintenance that enhance existing equipment through the insertion of
new technology or restore selected equipment to a zero-miles/zero-hours
condition.
The Marine Corps initially defined equipment reset as restoring/enhancing
combat capability to its pre-OIF/OEF condition and included
recapitalization, reconstitution, and modernization of equipment.^36 The
Commandant of the Marine Corps recently testified that the Marine Corps
moved depot maintenance and attrition losses from cost of war^37 to reset,
which increased its fiscal year 2007 reset estimate, following the
adoption of the standardized definition of reset costs across the services
during the summer of 2006.^38 Reset estimates are in addition to cost of
war estimates. Equipment returning from combat theaters is evaluated and
transported to either a maintenance depot or to a Marine Corps unit's home
station for repair. Equipment is repaired to a "Code A" condition, which
means that the unit restores a majority of the usable life remaining on
all major components or to like-new condition but is not considered to be
in a zero-miles/zero-hours condition.
Recapitalization includes rebuilding or repairing equipment to a level
that improves the performance capabilities of the equipment or returns the
equipment to a zero-miles/zero-hours level. The objectives of the Army's
recapitalization process include extending sequipment service life;
reducing operating and support costs; enhancing capability; and improving
system reliability, maintainability, safety, and efficiency. The Army
recapitalizes equipment either at depots/arsenals with Army Materiel
Command, the original equipment manufacturer, or a partnership of the two
overseeing operations. The Marine Corps has established a principle end
item rotation plan, which essentially rebuilds equipment and extends its
service life. This maintenance is done at the depot level.
^35Army reset cost estimates do not include contractor logistics support
for equipment readiness, field-level maintenance required to keep
equipment operational, or the replacement of ammunition.
^36The Marine Corps reset model further breaks down recapitalization,
reconstitution, and modernization into a total of 16 categories, for
example, pre-positioned equipment. See app. II for a complete list of the
16 reset categories.
^37Costs of war are the costs associated with personnel, personnel
support, operations, and transportation.
^38Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
Replacement is the procurement of new equipment to replace battle losses,
washouts, and critical equipment deployed and left in theater but needed
for homeland defense and homeland security and other critical missions.
Army officials recently testified that the Army is replacing and upgrading
more than 50,000 pieces of equipment in fiscal year 2007. The types of
equipment the Army plans to replace range from Apache, Black Hawk, and
Chinook helicopters; ground combat vehicles such as Abrams Tanks and
Bradleys; and wheeled vehicles such as Strykers and HMMWVs. The Army's
fiscal year 2007 requirement for procurement or investment of major items
of equipment is $8.5 billion, which includes $2.5 billion to replace
reserve component equipment left in theater as theater-provided
equipment.^39 Marine Corps officials testified^40 that a significant
portion of their reset requirement is for the replacement of equipment.
For example, of the total $10.2 billion requirement, the Marine Corps has
received $8.8 billion from fiscal year 2006 through fiscal year 2007 for
procurement of new equipment.
Army and Marine Corps reset funding generally includes ground and aviation
equipment, combat losses, and pre-positioned equipment. The services fund
field-level and some depot-level maintenance from the operation and
maintenance appropriations, while procurement appropriations fund most
recapitalization and all procurement of new equipment as part of reset.
The Army's fiscal year 2007 reset execution plan includes about 46 percent
operation and maintenance funding and 54 percent procurement funding,
while the Marine Corps plan includes about 16 percent operation and
maintenance funding and 84 percent procurement funding. Table 1 provides a
breakdown of Army and Marine Corps reset execution funding plans for
fiscal year 2007.
^39Theater-provided equipment includes major equipment items, such as
up-armored HMMWVs left in theater by units returning to the United States
and retained in theater to hand off to follow-on units. The Army has
designated these items as critical for OIF/OEF missions.
^40U.S. Marine Corps and U.S. Navy Reset Requirements, Statement before
the House Committee on Armed Services, Subcommittees on Readiness and
Seapower and Expeditionary Forces, 110th Cong. (2007) (statement of Lt.
Gen. Emerson N. Gardner, Jr., Deputy Commandant Programs and Resources,
U.S. Marine Corps).
Table 1: Breakdown of Army and Marine Corps Fiscal Year 2007 Reset
Execution Funding Plans
Army Marine Corps
Dollars
in Percentage Dollars in Percentage
Reset category billions of total billions^a of total
Repair (operation
and maintenance) $7.8 46 $0.9 16
Field-level
maintenance 3.7
Sustainment-level
maintenance 4.1
Recapitalization 4.3 25
Rebuild (operation
and maintenance) 0.7
Upgrade
(procurement) 3.6
Replacement
procurement) 5.0 29 4.9 84
Total FY 07
funding^b $17.1 100 $5.8 100
Sources: Army G-8 and Marine Corps' Programs and Resources Contingency
Cell.
aTotal $5.8 billion reset funding includes $0.7 billion initially
appropriated for procurement of Mine Resistant Ambush Protected vehicles
(MRAP) that was later reclassified as a cost of war, not reset.
bArmy and Marine Corps reset funding includes funding for ground and
aviation equipment, combat losses, and pre-positioned equipment. In
addition to operation and maintenance and procurement appropriations, the
Marine Corps also receive funds from Operation and Maintenance Navy, Navy
Aircraft Procurement, Navy Weapons Procurement, and Navy Other Procurement
appropriation accounts. The Marine Corps reset funding also includes about
$8 million from the Research and Development appropriation account.
The services' fiscal year 2007 reset execution plans reflect assumptions
made about the condition of equipment at the end of operations and each
service's equipping philosophy. For example, prior to OIF/OEF, Army units
traditionally deployed and redeployed with their own equipment sets and
rotated equipment back to the United States when equipment required
repairs that exceeded field-level maintenance capabilities. After
operations began, the Army developed and implemented initiatives to keep
large amounts of equipment in theater (known as theater-provided
equipment) in order to maintain high equipment readiness rates for combat
units and improve availability of equipment in theater. The Army
calculates reset funding requirements each year based on the projected
amount of equipment returning during the following fiscal year that can be
repaired in that fiscal year and on the documented losses that have
occurred. Army officials estimate that about 15 percent of equipment will
be recapitalized or replaced and about 85 percent will be repaired after
operations cease. In contrast, the Marine Corps, as an expeditionary
service, traditionally leaves equipment in theater for subsequent rotating
forces. Equipment remains in use on a near-continuous basis at an
operating tempo that far exceeds normal peacetime usage. Rotation of
equipment was not possible after operations began because spare equipment
was not available for use while equipment was in depot maintenance. Marine
Corps officials recently testified that they have developed a principal
end item rotation plan that allows equipment to be sent back to the United
States for depot-level maintenance cycles. This rotation plan extends the
service life and applies the latest technology available to ensure that
the best possible equipment is returned to theater. Marine Corps officials
estimate that more than 80 percent of equipment will be replaced and about
20 percent will be repaired after operations cease.
Over the past several years, we have reported on equipment reset concerns,
including the lack of equipment program strategies, poor condition of
pre-positioned equipment, and challenges related to replacing Army
National Guard equipment left in the OIF theater to support ongoing
operations. For example, for certain equipment items, the Army and Marine
Corps have not developed complete sustainment, modernization, and
replacement strategies or identified funding needs for all priority
equipment such as the Army's Bradley and Marine Corps' CH-46E Sea Knight
helicopter.^41 Also, because DOD has drawn heavily on pre-positioned
stocks to support ongoing operations in Iraq, it faces some near-term
operational risks should another large-scale conflict emerge.^42 Moreover,
Army National Guard inventories have been depleted by strategies requiring
large amounts of equipment to be left in theater to equip other units, and
the Guard will likely face growing shortages and challenges in regaining
readiness for future missions until plans to replace this equipment are
implemented and completed.^43 In our report on reliability of contingency
operations obligations data, we found that while DOD had taken steps to
improve its cost-reporting procedures, lack of transparency and
inaccuracies in reported contingency operations obligations continue to
exist.^44 Similarly, we have reported that DOD was unable to accurately
track and report equipment reconstitution^45 costs in its supplemental
budget requests because the services' accounting codes were capturing
contingency operations and other obligations that were not incurred
exclusively for equipment reconstitution. We recommended that the
Secretary of Defense direct the services to develop comprehensive and
consistent methods for tracking and reporting equipment reconstitution
obligations, which include equipment repair, replacement, and
recapitalization, collectively known as reset. In response to our
recommendation, DOD has revised its FMR to improve reporting of equipment
reconstitution by providing a more detailed breakdown of the equipment
reconstitution category within the operation and maintenance account for
the monthly Supplemental and Cost of War Execution Reports but did not
address the procurement accounts. DOD now reports operation and
maintenance equipment reconstitution costs by organizational-level
maintenance, intermediate-level maintenance, depot-level maintenance, and
contractor logistics support. However, until additional actions are taken,
such as improving the services' financial systems' ability to track
obligations, we stated that our recommendation will not be fully
implemented. In addition to these concerns, we also have reported on
long-standing concerns about DOD's accounting systems^46 and personnel
issues,^47 which could also have an impact on equipment reset. Moreover,
Congress has required the Secretary of Defense to submit detailed
information on reset expenditures for each of the services with their
annual budget requests as part of the Fiscal Year 2007 National Defense
Authorization Act.^48
^41 [38]GAO-04-112 and [39]GAO-06-141 .
^42 [40]GAO-07-144 and [41]GAO-05-427 .
^43 [42]GAO-06-170T .
^44 [43]GAO-07-76 and [44]GAO-05-293 .
^45At the time of that report ( [45]GAO-05-293 ), the term
reconstitution,was used instead of reset. Reconstitution was defined as
units restoring their equipment to a condition that enables them to
conduct training exercises, achieve required readiness levels, and prepare
for future deployments.
^46 [46]GAO-06-111 .
^47 [47]GAO-05-293 .
Army and Marine Corps Do Not Report Expenditures within Procurement Accounts in
a Way That Confirms That Funds Appropriated for Reset Are Expended for That
Purpose
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they do
not report detailed equipment reset expenditures within the procurement
accounts in a way that confirms that funds appropriated for reset are
expended for that purpose because there is no requirement to report
procurement expenditures beyond what is required by the DOD FMR. While the
Conference Report accompanying the DOD appropriations act for 2007
directed the Secretary of Defense to periodically provide a detailed
accounting of obligations and expenditures of funds provided in Title IX
of the act, which includes funds provided for reset, by program and
subactivity group^49 and to provide a listing of equipment procured using
funds appropriated under Title IX of this act,^50 the Army and Marine
Corps are not legally required to provide this more detailed level of
accounting. The Army and Marine Corps currently track and report
obligations and expenditures at detailed levels within the operation and
maintenance accounts, consistent with this guidance. However, despite the
fact that they track reset obligations and expenditures in detail within
the procurement accounts, they do not report those expenditures at the
same level of detail. Between fiscal years 2003 through 2007 the Army
received more than $14 billion in reset funding for procurement of new
equipment. The Marine Corps received about $8 billion from fiscal year
2006 through fiscal year 2007 for procurement of new equipment as well.
Army and Marine Corps officials stated that they could provide an
historical accounting of those reset obligations and expenditures if
required to do so. As we recently testified, as of fiscal year 2007, the
Army has begun to track and report obligations and expenditures in its
operation and maintenance account, as directed by the Conference Report.
According to Army officials, the Army segregates the cost of reset from
other costs and tracks expenditures to ensure funds appropriated for this
purpose are expended for this purpose. The Army has also designated
separate codes to capture cost data within the financial accounting system
within the operation and maintenance accounts broken down by Army
pre-positioned stocks, depot maintenance, recapitalization, aviation
special technical inspection and repair, and field maintenance. Each of
the Army's commands uses these codes to record the execution of operation
and maintenance reset funds. The Defense Finance and Accounting Service
collects these reset cost data and provides them to the Army for various
reports on the status of reset obligations and expenditures. Unlike the
Army, the Marine Corps began tracking reset execution in its operation and
maintenance account when it began receiving reset funding in fiscal year
2006. The Marine Corps established a special interest code within its
financial management systems to identify operation and maintenance
obligations and expenditures related to equipment reset.
^48John Warner National Defense Authorization Act for Fiscal Year 2007,
Pub. L. No. 109-364, S 323 (2006).
^49While the Conference Report does not specifically make reference to the
operation and maintenance and procurement accounts, these are the two
accounts through which DOD funds equipment reset.
^50H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
Neither the Army's nor the Marine Corps' monthly Supplemental and Cost of
War Execution Reports further breaks down the procurement accounts similar
to the way the services break down the operation and maintenance accounts
at the sub-cost category level. Currently, the DOD FMR does not require
accounting for reset obligations and expenditures at detailed sub-cost
category levels within the procurement accounts.^51 The monthly reports
reflect one line item for reset within the procurement accounts. The FMR
reset sub-cost category includes the funding for major repairs/overhauls
and recapitalization of equipment^52 within the procurement and research,
development, test, and evaluation accounts. Table 2 compares sub-cost
categories for the operation and maintenance and procurement accounts for
the monthly Supplemental and Cost of War Execution Reports as prescribed
by the Financial Management Regulation.
^51DOD Federal Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," S 230406. The reset sub-cost
category applicable to procurement funds, 6.1.7, encompasses procurement
activities that restore and enhance combat capability to unit and
pre-positioned equipment that was destroyed, damaged, stressed, or worn
out beyond economic repair due to combat operations by procuring
replacement equipment and includes major repairs, overhauls, and
recapitalization funded through both procurement and research,
development, test, and evaluation.
^52Recapitalization within the procurement sub-cost category includes
rebuilds or upgrades that enhance existing equipment through new
technology or restore selected equipment to a zero-miles/zero-hours
condition.
Table 2: Comparison of Army and Marine Corps Sub-cost Categories within
the FMR for Operation and Maintenance and Procurement Accounts
Procurement sub-cost
Operation and maintenance sub-cost categories categories
Reset organizational-level maintenance Reset
Reset intermediate-level maintenance
Reset depot-level maintenance
Reset contractor logistic support
Sources: DOD Supplemental and Cost of War Execution Reports.
As shown in table 2, the Army and Marine Corps report reset costs at a
more detailed level within the operation and maintenance accounts than the
procurement accounts. Operation and maintenance reset organizational-level
and intermediate-level maintenance includes equipment repairs/overhauls,
and reset depot-level maintenance includes equipment rebuilding that would
improve performance capabilities or extend the service life of the
equipment. Procurement reset funds the replacement or upgrade of
equipment.
The Army provides additional monthly reports to Congress detailing the
status of procurement reset obligations in total dollars as well as a
summary of the number of equipment items replaced or recapitalized;
however, it does not provide a breakdown of the dollars associated with
those quantities. The Marine Corps does not provide these additional
reports because it was not required or requested to provide such reports
but could provide reports at the budget line item detail level if
requested. The process for tracking the execution of reset funding within
the Army's procurement account involves communications with the individual
program executive offices and managers for the purchase of equipment
included under reset. Funds that come from reset appropriations are
designated as such in funding authorization documents that are sent to the
program executive offices and managers. Once the program managers receive
these funds, they execute the funding according to the specifications
outlined in the funding authorization documents. The program managers
update and report back to Army headquarters on a monthly basis on the
numbers of equipment procured as well as the dollar amounts associated for
reset. The Army tracks procurement obligations and expenditures manually
outside the financial accounting system. As it has done with the operation
and maintenance account, the Marine Corps established a special interest
code within its financial management system beginning in fiscal year 2006
to identify obligations and expenditures related to equipment reset within
the procurement account.
Until the Army and Marine Corps are required to report the obligation and
expenditure of funds appropriated for reset in the procurement accounts at
a more detailed level, similar to reporting of obligations and
expenditures in the operation and maintenance accounts, they will be
unable to ensure that these funds are being obligated and expended for
equipment reset for deploying units and units deploying to Iraq and
Afghanistan instead of other, more long-term equipment needs. Furthermore,
Congress will not have the visibility it needs to exercise effective
oversight and to determine if the amount of funding appropriated for
equipment reset has been most appropriately used for the purposes
intended. In addition, because the Army was not required to track the
execution of its reset appropriations from the onset of operations, it
initially did not have historical execution data^53 upon which to base
future cost estimates. As we have reported, historical execution data
would provide a basis for estimating future funding needs.^54 The
Congressional Budget Office has also testified that better estimates of
future reset costs could be provided to Congress if more information was
available on expenditures incurred to date.^55 Without historical
execution data, the Army must rely on assumptions and models based on its
own interpretations of the definition of reset, and may be unable to
submit accurate budget requests to obtain future reset funding.
^53Army officials initially stated that because they were not required to
track execution data at the onset of operations they could not provide
that historical data. Subsequently, Army officials provided execution data
as of fiscal year 2002 broken down by operation and maintenance (i.e.,
field-level repair, depot-level repair, Army pre-positioned stock, and
recapitalization--rebuild) and procurement (i.e.,
recapitalization--upgrade and replacement). However, Army officials stated
that they had to extrapolate these numbers because the data were not
tracked that way at the onset of operations.
^54 [48]GAO-07-76 and [49]GAO-05-293 .
^55Congressional Budget Office, Issues in Budgeting for Operations in Iraq
and the War on Terrorism (Washington, D.C.: Jan. 18, 2007).
Army and Marine Corps Cannot Be Assured That Reset Implementation Strategies
Will Sustain Equipment Availability While Meeting Ongoing Operational
Requirements
The Army and Marine Corps cannot be assured that their reset
implementation strategies will sustain equipment availability for deployed
units as well as units preparing for deployment to Iraq and Afghanistan
because neither the Army's nor the Marine Corps' reset implementation
strategies target shortages of equipment on hand and prioritize needs of
units preparing for deployment over longer-term modernization goals.^56
According to the Army's ARFORGEN implementation strategy and reset
implementation guidance,^57 the primary goal of reset is to prepare units
for deployment and to improve next-to-deploy units' equipment-on-hand
levels. However, the Army's reset implementation strategy is not based on
aggregate equipment requirements to improve the equipment-on-hand levels
of units preparing for deployment to Iraq and Afghanistan. Instead, the
Army's reset implementation strategy is based on resetting equipment that
it expects will be returning to the United States in a given fiscal year.
Similarly, the Marine Corps' reset goal is to ensure that the Corps is
equipped to perform both ongoing operations and other future missions;
however, more than 80 percent of the Marine Corps' fiscal year 2006 and
fiscal year 2007 reset budget requests are for procurement of new
equipment that will not be available for many months. Although deployed
Army and Marine Corps units and units about to deploy generally report
high reported readiness rates, the services have reported a decrease in
nondeployed units' reported readiness rates. Furthermore, the Army's and
Marine Corps' reset implementation strategies do not ensure that reset of
equipment needed to support units that are preparing for deployment are
given priority over other longer-term equipment needs, such as equipment
modernization in support of the Army's modularity initiative, because
reset implementation strategies are not linked to meeting deploying unit
equipment needs.
^56Equipment reset is one element of the services' overall equipment
strategies. For example, the Army leverages all available equipment, such
as left behind equipment, theater-provided equipment, and new procurement
as part of its overall equipping strategy within the ARFORGEN
implementation strategy of which reset is a component. The Marine Corps'
SGEWG implements the Commandant's guidance and prioritizes equipment
distribution as part of an overall decision-making process employed by the
Commandant of the Marine Corps.
^57Army FRAGO, FY07 Reset Frago (Sept. 29, 2006).
Reset Implementation Strategies Do Not Target Shortages of Equipment on Hand to
Mitigate Operational Risk
The Army and Marine Corps reset implementation strategies do not
specifically target shortages of equipment on hand among units preparing
for deployment to Iraq and Afghanistan in order to mitigate operational
risk.^58 Although deployed Army and Marine Corps units and units about to
deploy generally report high reported readiness rates, the services have
reported a decrease in nondeployed units' reported readiness rates, in
part due to equipment shortages. According to the Army's ARFORGEN
implementation strategy and reset implementation guidance,^59 the primary
goal of reset is to prepare units for deployment and to improve
next-to-deploy units' equipment-on-hand levels. Army officials stated that
reset prepares next-to-deploy units for missions that could include either
current (e.g., OIF/OEF) or future (e.g., full-spectrum contingency
operations) missions. However, as we have testified,^60 some units
preparing for deployment have reported shortages of equipment on hand, as
well as specific equipment item shortfalls that affect their ability to
carry out their missions. For example, according to an Army unit preparing
to deploy, the model HMMWVs the unit was given to train with were limited
in number and were significantly different from the armored HMMWVs it was
expecting to use while in theater. While the Army's plan to recapitalize
more than 7,500 (HMMWV) in fiscal year 2007 at a cost of $455 million may
raise overall HMMWV equipment-on-hand levels of nondeployed units in the
United States, Army officials have stated that this recapitalization
program will not directly provide HMMWVs to train or equip units deploying
for OIF missions. This is because the HMMWVs produced by the
recapitalization program are unarmored and do not offer adequate force
protection, and thus are not being deployed to the OIF theater. Moreover,
these HMMWVs have limited training value for deploying units primarily
because the unarmored HMMWVs have different handling characteristics and
configurations than the armored HMMWVs used in Iraq. In addition, Army^61
and Marine Corps^62 unit commanders preparing for deployments may
subjectively upgrade their units' overall readiness levels, which may mask
the magnitude of equipment shortfalls. For example, some deploying units
may report high readiness rates even though unit commanders have noted
equipment shortages in the readiness reports' remarks sections with plans
to fall in on theater-provided equipment.^63 As we have testified,^64
since 2003, deploying units have continued to subjectively upgrade their
overall readiness as they approach their deployment dates, despite
decreasing overall readiness levels among those same units. Units can
continue to report shortages throughout their training cycles that affect
their ability to train. Army leaders have testified to Congress that
timely reset of equipment is fundamental to enabling them to sustain their
current global commitments as well as prepare for emerging threats.
However, since the Army's current reset planning process is based on
resetting equipment that it expects will be returning to the United States
in a given fiscal year, and is not based on aggregate equipment
requirements to improve the equipment-on-hand levels of deploying units,
the Army cannot be assured that its reset programs will provide sufficient
equipment to train and equip deploying units for ongoing and future
requirements.
^58The Army defines operational risk as the ability to achieve military
objectives in a near-term conflict or other contingency.
^59The Army's fiscal year 2007 framework for reset, FRAGO, provides
details on equipment-related reset with the desired end state of rapidly
restoring the capability of the Army to meet current and future Combatant
Commander operational demands.
^60 [50]GAO-07-439T .
^61Army Regulation 220-1Field Organizations: Unit Status Reporting (Dec.
19, 2006).
^62Marine Corps Order P3000.13D, Marine Corps Status of Resources and
Training System Standing Operating Procedures (Apr. 17, 2002).
While the Marine Corps' reset implementation strategy is focused on
ensuring that the Marine Corps is equipped to perform both ongoing
operations and future missions, their priority for equipment reset is to
support deployed forces. This strategy reflects Marine Corps leaders'
expectations that short-term deployed unit requirements can be met by
using equipment currently deployed to the OIF theater, and that in the
long term, much of that deployed equipment will ultimately need to be
replaced, based on the expectation that many items will be damaged or
degraded beyond economical repair. In order to maintain high mission
capable rates for deployed forces and ensure that units preparing to
deploy have sufficient equipment to conduct predeployment training
programs, the Marine Corps has supplemented the equipment deployed to the
OIF theater by drawing additional equipment from its maritime
pre-positioning ships and pre-positioned stocks in Norway. In addition, it
continues to cross-level and redistribute equipment across the Corps.
Actions required to support this strategy have adversely affected
readiness of nondeployed units with a decrease in nondeployed Marine Corps
unit readiness. As a result, the Marine Corps has had to make trade-offs
between unit training for other types of contingencies and units preparing
to deploy to OIF. Marine Corps leaders have testified on the critical role
that reset plays in ensuring that deployed and nondeployed reported
equipment readiness rates remain acceptable. While the reported readiness
rates of Marine Corps units deployed to the OIF theater remain high,
Marine Corps officials have recognized the need to continue to invest in
the readiness of deployed equipment--both through the purchase of
replacement equipment and through increased rotation of major deployed
equipment items in maintenance facilities in the OIF theater and the
United States. The Marine Corps' goal for its reset funding requests for
fiscal year 2006 and fiscal year 2007 was to address the aggregate set of
equipment shortfalls created by the impact of OIF and OEF on its equipment
inventories. Beginning in fiscal year 2005, the Marine Corps conducted a
detailed appraisal of the impact of OIF and OEF on its equipment based on
a set of business rules and assumptions on what types of shortfalls could
be included in its reset estimate, and like the Army, made item-by-item
decisions on whether to repair, recapitalize, or replace each item. Its
final reset requirement addressed three major categories of equipment
needs: requirements to replace equipment committed to OIF operations in
Iraq, Afghanistan, and the Horn of Africa as well as related shortfalls in
the United States; reconstitution of pre-positioned equipment and other
strategic reserves; and modernization requirements to provide equipment
needed to support OIF-related force structure needs, such as special units
created to train Iraqi forces and other foreign military forces.
Reflecting the emphasis on replacing equipment, more than 80 percent of
the Marine Corps' reset funding for fiscal years 2006 and 2007 is for
procurement.^65
^63Army and Marine Corps commanders report readiness for deployments using
"percent effective" ratings that capture the unit commander's overall
assessment of his/her unit's ability to perform its current mission
despite low levels of equipment on hand, equipment serviceability, or
personnel readiness categories that would result in lower overall
"C-Ratings," which units typically use to report readiness.
^64 [51]GAO-07-439T .
Until the services' reset implementation strategies target shortages of
equipment needed to equip units preparing for deployment, the Army and
Marine Corps will be unable to minimize operational risk by ensuring that
the needs of deploying units can be met.
^65According to DOD officials, the level of spending on replacement versus
recapitalization is high because of low equipment density.
Reset Implementation Strategies Do Not Give Priority to Deploying Unit Equipment
Needs over Longer-Term Equipment Needs
The Army's and Marine Corps' reset implementation strategies do not ensure
that the repairing, replacing, and recapitalization of equipment needed to
support units that are preparing for deployment are being given priority
over other longer-term equipment needs because reset implementation
strategies are not linked to meeting deploying unit equipment needs.
Although Army reset implementation strategies are primarily based on plans
for repairing, recapitalizing, or replacing equipment returning from
overseas theaters in a given fiscal year, the Army's reset strategy also
has included funding requests for certain items to accelerate achieving
longer-term strategic goals under the Army's modularity initiative. For
example, in addition to the planned fiscal year 2007 sustainment-level
reset of almost 500 tanks and more than 300 Bradleys expected to return
from the OIF theater, the Army also intends to spend approximately $2.4
billion in fiscal year 2007 reset funds to take more than 400 Abrams Tanks
and more than 500 Bradleys from long-term storage or from units that have
already received modernized Bradleys for depot-level upgrades. These
recapitalizations will allow the Army to accelerate its progress in
achieving a modular force structure^66 by providing modernized Abrams
Tanks and Bradleys to several major combat units 1 or 2 years ahead of
schedule. Army officials believe achieving these modularity milestones for
Abrams Tanks and Bradleys will achieve greater commonality in platforms
and reduce overall logistical and financial requirements by reducing the
number of variants that must be supported. However, accelerating
modernization programs to achieve a modular force structure may be
sacrificing short-term needs for longer-term goals.
The Marine Corps' reset planning process does not include an evaluation of
trade-offs between the shorter-term need to improve the degraded readiness
of Marine Corps units in the United States against longer-term
requirements for procurement to replace deployed items that may not affect
readiness for some time.^67 For example, the Marine Corps has requested
supplemental appropriations to procure 3,700 MRAPs to replace HMMWVs,
while also planning to procure additional HMMWVs as part of reset to
replace older variants and deployed A2 HMMWVs severely degraded due to OIF
missions.^68 However, many of these HMMWVs will not be fielded for more
than 2 years. In the short term, the Marine Corps needs the MRAPs for
increased force protection while the requirement for HMMWV replacements
will continue beyond OIF/OEF. Until reset implementation strategies are
linked to equipment needs of deploying units, the Army and Marine Corps
will be unable to prioritize their reset plans and funding to ensure that
the short-term needs of deploying units can be met.
^66The Army Modular Heavy Brigade Combat Team (HBCT) force structure calls
for 31 HBCTs equipped with combinations of two different types of Abrams
Tanks and Bradleys. Seventeen HBCTs would be equipped with the digitized
Abrams M1A2 System Enhancement Program Tanks and digitized M2A3 Bradleys.
The remaining 14 HBCTs would be equipped with the Abrams M1A1 Integrated
Management Tanks and Bradley Operation Desert Storm upgraded vehicles.
^67According to DOD officials, the Marine Corps' reset strategy of
replacement versus recapitalization is high because of low equipment
density.
Conclusions
Since fiscal year 2002, Congress has appropriated more than $38 billion
for Army equipment reset and about $10.9 billion for the Marine Corps. In
addition, the Army estimates that future funding requirements for
equipment reset will be about $12 billion to $13 billion per year for the
foreseeable future. The Marine Corp estimates that its future funding
requirements for equipment reset will be about $2 billion to $3 billion.
At a time when the nation faces increased financial constraints, it is
important for both DOD and Congress to be in a position to weigh the
trade-offs between competing requirements and risk associated with
degraded equipment readiness, so that they can make sound investment
decisions on the use of the reset funding. Until the Army and Marine Corps
are required to report the obligation and expenditure of funds
appropriated for reset in the procurement accounts at a more detailed
level, similar to reporting of obligations and expenditures for the
operation and maintenance accounts, they will be unable to ensure that
these funds are being obligated and expended for equipment reset for
deploying units and units deploying to Iraq and Afghanistan instead of
other, more long-term equipment needs. Furthermore, Congress will not have
the visibility it needs to exercise effective oversight and to determine
if the amount of funding appropriated for equipment reset has been most
appropriately used for the purposes intended.
The Army's and Marine Corps' reset implementation strategies need to
ensure that priority is given to repairing, replacing, and modernizing the
equipment that is needed to equip units preparing for deployment to Iraq
and Afghanistan. The current shortages of equipment on hand for units that
are preparing for deployment could potentially decrease overall force
readiness if equipment availability shortages are not filled prior to
these units' deployments. Without prioritizing reset implementation
strategies and funding so that shortages of equipment on hand are
targeted, the Army and Marine Corps will be unable to minimize operational
risk by ensuring they maintain their ability to equip deploying units.
Until reset implementation strategies are linked to equipment needs of
deploying units, the Army and Marine Corps will be unable to prioritize
their reset plans and funding to ensure that the short-term needs of
deploying units are filled. Furthermore, as the Army and Marine Corps move
forward with equipment reset, they will need to establish more transparent
linkages among the objectives of their reset implementation strategies,
the funds requested for reset, the obligation and expenditure of
appropriated reset funds in both the operation and maintenance and
procurement accounts, and equipment requirements and related priorities.
^68According to DOD officials, MRAPs are being procured exclusively for
OIF and, as such, are considered a cost of war. Accordingly, the Marine
Corps reclassified $0.7 billion of fiscal year 2007 reset funding as cost
of war funding.
Recommendations for Executive Action
We are making the following two recommendations.
To provide Congress with the visibility it needs to exercise effective
oversight and to determine if the funding appropriated for equipment
replacement and recapitalization within the procurement accounts has been
most appropriately used for the purposes intended, we recommend that the
Secretary of Defense direct the Under Secretary of Defense, Comptroller,
to amend the FMR to require that the monthly Supplemental and Cost of War
Execution Reports identify expenditures within the procurement accounts
for equipment reset at more detailed sub-cost category levels, similar to
reporting of obligations and expenditures in the operation and maintenance
accounts.
To ensure that the Army's and Marine Corps' reset implementation
strategies target shortages of equipment needed to equip units preparing
for deployment to Iraq and Afghanistan, we recommend that the Secretary of
Defense direct the Secretary of the Army and Commandant of the Marine
Corps to assess their approaches to equipment reset to ensure that their
priorities address equipment shortages in the near term to minimize
operational risk and ensure that the needs of deploying units can be met.
Matter for Congressional Consideration
Congress should consider directing the Secretary of Defense to direct the
Under Secretary of Defense, Comptroller to amend the FMR in order to
require a more detailed accounting of reset obligations and expenditures
within the procurement accounts, similar to the department's reporting of
reset obligations and expenditures within the operation and maintenance
accounts. Specifically, as stated in our recommendations, the reporting of
reset obligations and expenditures within the procurement accounts at more
detailed sub-cost category levels would enhance the monthly Supplemental
and Cost of War Execution Reports as well as provide greater visibility to
Congress for exercising effective oversight and determining if the amount
of funding appropriated for equipment reset has been most appropriately
used for the purposes intended.
Agency Comments and Our Evaluation
In written comments on a draft of this report, DOD did not concur with our
two recommendations. DOD's written comments are reprinted in appendix IV.
Regarding the first recommendation that DOD direct the Office of Secretary
of Defense, Comptroller, to amend the FMR to provide for a more detailed
accounting of obligations and expenditures within the procurement accounts
for equipment reset to enhance monthly Supplemental and Cost of War
Execution Reports, DOD did not concur and stated that formalizing
procedures at the DOD level through amending the FMR would be unwieldy and
cost prohibitive. The department believes that the creation of additional
detailed line items for each program involved in reset would add too much
complexity and duplication to existing reports. DOD also stated that a
single line item in each procurement account for all equipment reset,
similar to the operation and maintenance account, would not adequately
describe the individual equipment undergoing reset, whether replacement or
overhaul. The intent of the recommendation is not that the department
creates a complex accounting system within each procurement account.
Rather, we are recommending that the department report reset obligations
and expenditures at more detailed sub-cost category levels, similar to the
operation and maintenance accounts, to provide Congress with the
visibility it needs to identify the types of equipment that are being
procured with the reset funds it appropriates, such as aircraft, vehicles,
or communication and electronic equipment. We have modified our
recommendation to be clearer as to the level of detail we are recommending
for the reporting of obligations and expenditures in the procurement
accounts.
While the department believes handling the procurement accounts in the
same manner as the operation and maintenance accounts would not be
informative because the procurement accounts are considerably more complex
than the operation and maintenance accounts, we continue to believe that
the department should amend the DOD FMR to incorporate a more detailed
breakdown of the procurement accounts similar to the way the Army and
Marine Corps already track and report those obligations and expenditures
in the operation and maintenance accounts. DOD further cited an
alternative accounting method it is pursuing with the Defense Finance and
Accounting Service, which DOD believes may increase visibility within the
procurement account but not at the individual item level. However, DOD
officials did not provide documentation on this new proposed accounting
method when we requested it.
Furthermore, subsequent to receiving agency comments, we noted that the
June 2007 Supplemental and Cost of War Execution Report, received in
mid-August, reflected a more detailed reporting of procurement sub-cost
categories similar to what was suggested in our recommendation. According
to DOD officials, this is an out-of-cycle change to improve visibility of
reset and other program details related to GWOT. The FMR does not reflect
this change nor does it define the new sub-cost categories. Consequently,
we were unable to determine what funding was included in each sub-cost
category. We believe that requiring a more detailed accounting of
obligations and expenditures within the procurement accounts at the
sub-cost category level, similar to reporting of obligations and
expenditures in the operation and maintenance accounts, would provide
Congress the visibility it needs to exercise effective oversight and
determine if the amount of reset funding appropriated for equipment
replacement and recapitalization is most appropriately used for the
purposes intended. Army and Marine Corps officials have stated that they
are currently able to track reset obligations and expenditures within the
procurement accounts and already provide a similar level of detail in
their budget justifications. Because the department did not agree with our
recommendation, we have added a matter for congressional consideration
suggesting that Congress should consider directing the Secretary of
Defense to direct the Under Secretary of Defense, Comptroller, to amend
the FMR in order to require a more detailed accounting of reset
obligations and expenditures within the procurement accounts as is done
within the operation and maintenance accounts. Specifically, as stated in
our recommendations, a more detailed accounting of obligations and
expenditures within the procurement accounts would enhance monthly
Supplemental and Cost of War Execution Reports as well as provide greater
visibility to Congress to exercise effective oversight and determine if
the funding provided for reset within the procurement accounts is most
appropriately used for the purposes intended.
In response to our second recommendation that the Secretary of Defense
direct the Secretary of the Army and Commandant of the Marine Corps to
assess their approaches to equipment reset to ensure that their priorities
address equipment shortages in the near term to minimize operational risk
and ensure that the needs of deploying units can be met, DOD did not
concur, stating that there is no need to direct the services to assess
their approaches to reset because the services already continually assess
their approaches to equipment reset. The department believes that the
Army's overall equipping strategy, of which reset is a component, along
with its prioritization scheme (the Dynamic Army Resource Priority List)
address equipment shortages in the near term to equip units that are
deployed or deploying. The department also stated in its comments that the
Marine Corps employs a documented, standardized, and flexible reset
strategy designed to meet both current operational requirements and
long-term reconstitution strategies. While we acknowledge that reset is
only one component of the services' overall equipping strategies and that
the services have stated that their overall equipping strategies ensure
that deployed units or deploying units are equipped as required, as we
stated in our report, the Army's primary goal for equipment reset is to
prepare units for deployment and to improve next-to-deploy units'
equipment-on-hand levels, and the Marine Corps' priority for equipment
reset is to support deployed forces. However, the Army's and Marine Corps'
implementation of their reset strategies do not necessarily address
shortages of equipment in the short term. Instead, the Army's
implementation of its reset strategy is based on plans for repairing,
recapitalizing, or replacing equipment returning from overseas theaters in
a given fiscal year, while the Marine Corps' implementation of its reset
strategy is based on ensuring that Marine Corps units are equipped to
perform both ongoing operations and other future missions. Congress has
appropriated tens of billions of dollars since fiscal year 2002
specifically to address equipment reset concerns raised by the Army and
Marine Corps about equipment degraded by military operations in Iraq and
Afghanistan. However, as we stated in our report, the Army planned to
spend $2.4 billion in fiscal year 2007 reset funding to take more than 400
Abrams Tanks and more than 500 Bradleys from long-term storage for
depot-level upgrades, which would accelerate its modernization program by
1 to 2 years. As we stated in our report, the Army's primary goal for
equipment reset is to prepare units for deployment and to improve
next-to-deploy units' equipment-on-hand levels. Thus, we believe reset
funding should address shortages of equipment needed to equip deploying
units and units preparing for deployment rather than accelerating
modernization programs in general by procuring equipment, which may not be
available for several years, for other equipment strategies such as
homeland defense and homeland security. Therefore, we continue to believe
our recommendation is appropriate and relevant.
Lastly, DOD provided technical comments to improve the accuracy and
clarity of the report, which we have reviewed and incorporated in the
report as appropriate. DOD's specific comments and our responses to them
are discussed in detail in appendix IV. In summary, DOD disagreed with our
statements regarding reporting requirements for funds appropriated for
equipment reset through operation and maintenance and procurement
appropriations and Army and Marine Corps equipment reset implementation
strategies. While we agree that DOD is currently not required to itemize
the types of equipment replaced or recapitalized within the procurement
accounts, we continue to believe that the Conference Report accompanying
the DOD appropriations act for 2007 directed the Secretary of Defense to
periodically provide a detailed accounting of reset obligations and
expenditures of funds provided in Title IX of the act, which includes
funds for reset, by program and subactivity group and to provide a listing
of equipment procured using funds appropriated under Title IX of the act.
Furthermore, we believe that detailed reporting of reset obligations and
expenditures within the procurement accounts would provide Congress with
the visibility it needs to exercise effective oversight over reset
funding. Similarly, while we agree that reset is only one component of the
Army and Marine Corps overall equipping strategies, we continue to believe
Army and Marine Corps reset implementation strategies should target
shortages of equipment needed to equip units preparing for deployment to
Iraq and Afghanistan in the near term rather than using supplemental reset
appropriations to fund longer-term modernization goals.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, the Secretary of the Army, 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 [52]http://www.gao.gov .
If you or your staff has any questions, please contact me at (202)
512-8365 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Key contributors to this report are listed in appendix V.
William M. Solis
Director, Defense Capabilities and Management
List of Congressional Committees
The Honorable Carl Levin
Chairman
The Honorable John McCain
Ranking Member
Committee on Armed Services
United States Senate
The Honorable Daniel K. Inouye
Chairman
The Honorable Ted Stevens
Ranking Member
Subcommittee on Defense
Committee on Appropriations
United States Senate
The Honorable Ike Skelton
Chairman
The Honorable Duncan L. Hunter
Ranking Member
Committee on Armed Services
House of Representatives
The Honorable John P. Murtha
Chairman
The Honorable C.W. Bill Young
Ranking Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives
Appendix I: Scope and Methodology
To determine the extent to which the Army and the Marine Corps can track
and report equipment reset expenditures in a way that confirms that funds
appropriated for reset are expended for that purpose, we examined
equipment reset funding requests submitted by the Army and the Marine
Corps and amounts appropriated by Congress to the services for reset for
fiscal years 2002 through 2007.^1 We collected data related to equipment
reset cost estimates and met with Army and Marine Corps headquarters
officials to discuss the services' definitions of reset and their reset
assumptions. We reviewed reported obligations and expenditures and budget
estimates for Army and Marine Corps equipment reset funding and determined
that the reliability of these data was sufficient for our purposes. We
also met with Army Budget Office and Marine Corps Programs and Resources
officials to discuss and collect documentation on how their financial
management systems track and report reset costs.
To address whether the Army and Marine Corps can be assured that their
equipment reset implementation strategies will sustain future equipment
readiness for deployed as well as nondeployed units while meeting ongoing
requirements, we examined the processes the services used to develop their
reset funding requests and plans, as well as policies in place to execute
reset. We did not review the services' overall equipping implementation
strategies. To compare planned equipment reset activities to the Army's
and Marine Corps' equipment requirements, we developed equipment profiles
for five equipment items.^2 These equipment items were identified by
service officials as well as previous GAO reports as items critical to
ongoing operations. In addition, we selected these items based on the
large number of vehicles that have gone through multiple rotations or have
been in constant use in the Operation Iraqi Freedom (OIF) theater and
because most of these equipment items may be undergoing repair,
replacement, or recapitalization simultaneously. We conducted interviews
and discussions with officials from Army Tank-automotive and Armaments
Command and program managers for the various equipment items. Our review
included only major end items, primarily ground equipment and rotary
aircraft. We reviewed inventory numbers, location of equipment (e.g.,
items deployed and nondeployed), and acquisition plans for future
procurement of new equipment. We also collected and analyzed Army and
Marine Corps readiness data.
^1The Marine Corps began receiving reset funding in fiscal year 2002.
Prior to fiscal year 2002, the Marine Corps used the term reconstitution.
^2The five equipment items we profiled are the M1 Tank, Bradley Fighting
Vehicle (Army only), High Mobility Multi-Purpose Wheeled Vehicle, Heavy
Expanded Mobility Tactical Truck (Army only), and the Marine Corps CH-53E
helicopter.
For work under both objectives, we held discussions at service
headquarters, met with officials from commands responsible for executing
reset programs, met with an Army division preparing to deploy to Iraq in
2007, and met with officials in the Office of the Secretary of Defense to
discuss overall reset policies and programs.^3 We reviewed reported
obligations and expenditures and budget estimates for Army and Marine
Corps equipment reset funding and determined that the reliability of these
data was sufficient for our purposes.
We performed our work from October 2005 through April 2007 in accordance
with generally accepted government auditing standards.
We interviewed officials, and obtained documentation when applicable, at
the following locations:
o U.S. Army Headquarters, Washington, D.C.
o Army Budget Office, Pentagon, Virginia
o U.S. Army Materiel Command, Fort Belvoir, Virginia
o U.S. Army Forces Command, Fort McPherson, Georgia
o U.S. Army 3rd Infantry Division, Fort Stewart, Georgia
o Institute for Defense Analysis, Alexandria, Virginia
o U.S. Army National Guard, Arlington, Virginia
o U.S. Army Tank-automotive and Armaments Command Headquarters,
Warren, Michigan
o U.S. Marine Corps Headquarters, Washington, D.C.
o Marine Corps Programs and Resources, Pentagon, Virginia
o Office of the Secretary of Defense, Washington, D.C.
^3 [54]GAO-06-141 .
Appendix II: Marine Corps Reset Categories Appendix II: Marine Corps Reset
Categories
Category Definition
OIF equipment density Unit list of combat, combat support, and combat
list (EDL) service support equipment that is
authorized/required by MARCENT for operations in
the CENTCOM Area of responsibility (AOR).
Operation Enduring Unit list of combat, combat support, and combat
Freedom (OEF) EDL service support equipment that is
authorized/required by MARCENT for operations in
the CENTCOM AOR.
Joint Task Force Horn of Unit list of combat, combat support, and combat
Africa (HOA) EDL service support equipment that is
authorized/required by MARCENT for operations in
the CENTCOM AOR.
Home station shortfalls Equipment that was removed from a
facility/activity in order to support operations
in the CENTCOM AOR and therefore results in a
shortfall that cannot be addressed from remaining
inventory. The equipment is essential for the
facility/activity to achieve its training
objectives, mission readiness, or both prior to
deploying to the CENTCOM AOR. A home station is
the garrison location, usually in the continental
United States, for a unit that is not deployed
for training or operational mission requirements.
Training system Equipment that was removed from a training
shortfalls facility/activity activity in order to support
operations in the CENTCOM AOR and therefore
results in a shortfall that cannot be addressed
from remaining inventory. The equipment is
essential for the facility/activity to achieve
its training goals/objectives.
Global War on Terror Other GWOT-related equipment requirements (e.g.,
(GWOT) support equipment vehicle armoring and commercialization of
communications equipment in Iraq).
Combat losses Equipment that was destroyed as a result of use
in support of OIF, OEF, or HOA.
Not complete combat Equipment that was damaged not beyond economical
losses repair as a result of use in support of OIF, OEF,
or HOA.
Pre-positioned equipment Comprises two different sets of equipment:
Maritime Prepositioning Ships (MPS) and Marine
Corps Prepositioning Program - Norway (MCPP-N).
Any equipment off-loaded from MPS or sourced from
stores (MCPP-N) being used in support of GWOT
operations that must be procured for
reconstitution of those strategic assets.
Depot maintenance afloat A pool of assets used to exchange serviceable for
allowance (DMFA) unserviceable equipment. The use of 30 percent of
Marine Corps ground equipment and 25 percent of
aviation assets in OIF/OEF has resulted in a
situation where the rotatable pool of equipment
used to sustain depot rework inductions is no
longer available and must be restored to continue
timely equipment restoration efforts. Selected
equipment in critical demand/low density was
identified in the DMFA component of the reset
estimate.
Net war reserve material Equipment required to reconstitute war reserve
requirements material consumed or used in support of OIF, OEF,
or HOA.
Force Structure Review This initiative involves a rebalancing of the
Group force to provide optimal capabilities and force
structure to prosecute the GWOT. Additional funds
are required to access, train, equip, and house
the new units and capabilities. If funding is not
received it will delay the availability of the
required capabilities necessary to successfully
prosecute the GWOT until the fiscal year
2008-2010 time frame.
Iraqi training teams Equipment procured for transition training of
Iraqi Security Forces.
Foreign military Equipment procured for units specifically
training units designated to train foreign security forces,
excluding Iraqi Security Forces.
Urgent universal needs Equipment determined critical for mission
statements (UUNS) contingency accomplishment that is not already
included in a deploying unit's table of allowance
or available in the existing inventory for which
an urgent need exists such that expedited
fielding is required (e.g., explosive ordnance
disposal robots and X-Ray Backscatter machines
for checkpoints). All UUNS requests are
validated/approved by the Marine Corps Oversight
Council.
Operational enhancements Modernization requirements recommended by the
Marine Corps Equipment Review Group. This
includes equipment that is an update to the
existing Marine Corps table of equipment (T/E)
that increases capability over current gear,
which enhances individual warfighter
effectiveness, mission performance, and unit
readiness. The equipment procured will replace
existing unit T/E items.
Modernization Replacing legacy equipment with new, updated, and
different capabilities (e.g., Advanced Combat
Optical Gunsights where no rifle optics existed
before).
Source: Appendix 2 of the U.S. Marine Corps' RESET Report to the
House Appropriations Committee.
Appendix III: Army and Marine Corps Ground Equipment and Rotary
Aircraft Deployed and Total Equipment on Hand as of March 2007
Tables 3 and 4 show the Army's and the Marine Corps' ground
equipment and rotary aircraft deployed to OIF/OEF compared to the
total equipment on hand as of March 2007.
Table 3: Army Equipment Deployed to OIF/OEF and Total Equipment on
Hand as of March 2007
Equipment Deployed Percentage
Items inventory inventory deployed
Wheeled vehicles
HEMTT 12,836 3,282 25.6
HET 2,394 912 38.1
HMMWV 95,970 23,818 24.8
Tracked vehicles
Bradley Fighting Vehicle 3,021 679 22.5
Abrams Tank 3,406 366 10.7
M88 1,832 192 10.5
Wheeled/tracked vehicles
total 119,459 29,249 24.5
Rotary wing aircraft
AH-64A/D 689 120 17.4
CH-47D 392 63 16.1
OH-58D 354 60 16.9
UH-60A/L 1,362 293 21.5
Rotary wing aircraft
total 2,797 536 19.2
Legend: HEMTT = Heavy Expanded Mobility Tactical Truck; HET =
Heavy Equipment Transporter; HMMWV = High Mobility Multi-Purpose
Wheeled Vehicle.
Source: Army G-8.
Table 4: Marine Corps Equipment Deployed to OIF/OEF and Total
Equipment on Hand as of March 2007
Equipment Deployed Percentage
Items inventory inventory deployed
Wheeled and tracked combat vehicles (WTCV)
Amphibious assault vehicle 1,218 95 8
Light armored vehicle 552 70 13
M1A1 Tank 366 34 9
M88 Tank Retriever 59 6 10
Armored vehicle launched bridge 18 0 0
WTCV total 2,213 205 9
Tactical vehicles
Light tactical vehicle (HMMWV) 15,480 4,207 27
Medium tactical vehicle 6,898 1,189 17
Logistics vehicle system 1,770 251 14
5-ton trucks 663 160 24
Tactical vehicle total 24,811 5,807 23
Support vehicles
Construction equipment 1,187 217 18
Material handling equipment 2,197 285 13
Support vehicle total 3,384 502 15
Other equipment
Communication and electronics equipment 155,446 21,617 14
Engineering support items 12,821 2,130 17
Mobile electric power 6,431 988 15
Trailers 12,124 1,520 13
Optics 36,687 19,735 54
Small arms/crew served (excluding M16 25,752 5,209 20
rifles and M9 pistols)
Other equipment total 249,261 51,199 21
Legend: HMMWV = High Mobility Multi-Purpose Wheeled Vehicle.
Source: Marine Corps Programs and Resources.
Appendix IV: Comments from the Department of Defense
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
See comment 2.
See comment 1.
See comment 3.
See comment 10.
See comment 9.
See comment 8.
See comment 7.
See comment 6.
See comment 5.
See comment 4.
See comment 13.
See comment 12.
See comment 11.
See comment 19.
See comment 18.
See comment 17.
See comment 16.
See comment 15.
See comment 14.
See comment 24.
See comment 23.
See comment 22.
See comment 21.
See comment 20.
See comment 29.
See comment 28.
See comment 27.
See comment 26.
See comment 25.
See comment 30.
The following are GAO's comments to the Department of Defense's
(DOD) technical comments dated August 3, 2007.
GAO's Responses to DOD's Technical Comments
1. DOD stated that our statement that "the Army and
Marine Corps do not report detailed equipment reset
expenditures within the procurement accounts in a way
that confirms that funds appropriated for reset are
expended for that purpose because DOD FMR does not
require them to specifically report procurement
expenditures for reset in detail" does not accurately
reflect what we were told, and suggested revising the
statement to reflect the fact that neither Congress
nor the DOD Financial Management Regulation (FMR)
require the services to specifically report
procurement expenditures for reset in detail. While
the Conference Report accompanying the DOD
appropriations act for 2007 directed the Secretary of
Defense to periodically provide a detailed accounting
of reset obligations and expenditures of funds
provided in Title IX of the act, which includes funds
for reset, by program and subactivity group and to
provide a listing of equipment procured using funds
appropriated under Title IX of this act,^1 the Army
and Marine Corps are not legally required to provide
this detailed accounting. The Army and Marine Corps
currently provide detailed reports of obligations and
expenditures within the operation and maintenance
accounts, but have chosen not to provide the same
detailed accounting of obligations and expenditures
within the procurement accounts. We have revised the
report as appropriate.
2. DOD disagreed with our statement that the Army and
Marine Corps cannot be assured that their reset
implementation strategies will sustain availability
for deployed units as well as units preparing for
deployment to Iraq and Afghanistan while meeting
ongoing operational requirements because neither the
Army's nor the Marine Corps' reset implementation
strategies target shortages of available equipment
and prioritize equipment needs of units preparing for
deployment over longer-term modernization goals. DOD
noted that the Army equipment strategy, of which
reset is a small but important component, has
sustained equipment availability for deployed and
deploying forces while meeting ongoing operational
requirements for the past 5 years. The Marine Corps
employs a documented, standardized, and flexible
reset strategy designed to meet both current
operational requirements and long-term reconstitution
strategies. While we acknowledge that reset is only
one component of the services' overall equipping
strategies, as we stated in our report, the Army's
primary goal for equipment reset is to prepare units
for deployment and to improve next-to-deploy units'
equipment-on-hand levels, and the Marine Corps'
priority for equipment reset is to support deployed
forces. However, the Army's and Marine Corps'
implementation of their reset implementation
strategies do not necessarily address shortages of
equipment in the short term. Instead, the Army's
implementation of its reset strategy is based on
plans for repairing, recapitalizing, or replacing
equipment returning from overseas theaters in a given
fiscal year, while the Marine Corps' implementation
of its reset strategy is based on ensuring that
Marine Corps units are equipped to perform both
ongoing operations and other future missions. For
example, as we stated in our report, an Army unit
preparing to deploy was given a limited number of
High Mobility Multi-Purpose Wheeled Vehicles (HMMWV),
which were significantly different from the armored
HMMWVs it was expected to use in Iraq. However, at
the same time the Army was planning to recapitalize
7,500 HMMWVs at a cost of $455 million, which would
have limited training value for deploying units
because the unarmored HMMWVs have different handling
characteristics than those they would use in Iraq.
Also, because the recapitalization did not include
armor, the HMMWVs would not be deployed and would not
fulfill the short-term needs of deploying units.
^1H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
3. GAO agrees with the suggested change and revised
the report as appropriate.
4. DOD stated that our statement that we did not
review the services' overall equipping strategies
made it impossible for an accurate conclusion as to
whether the Army and Marine Corps will sustain
equipment availability of deployed and deploying
forces, because without reviewing the services'
overall equipping strategies we would not understand
the comprehensive efforts to meet equipment demands.
While we acknowledge that reset is only one component
of the services' overall equipping strategies, our
report focuses on the services' reset implementation
strategies and related reset funding, not the overall
equipping strategies, which would include other
equipment priorities such as modernization, homeland
defense, and homeland security. Further, as we have
previously testified,^2 for certain equipment items,
the Army and Marine Corps have not developed complete
sustainment, modernization, and replacement
strategies or identified funding needs for all
priority equipment items.
^2 [55]GAO-06-604T .
5. See comment 1.
6. GAO agrees with the suggested change and revised
the report as appropriate.
7. See comment 1.
8. GAO agrees with the suggested change and revised
the report as appropriate.
9. See comment 2.
10. See comment 2.
11. DOD stated that while it is true that the HMMWVs
that will be recapitalized will have minimal training
value, these vehicles will fill critical equipment
shortfalls for the Continental United States-based
units in support of homeland defense and homeland
security missions. Prior to September 11, 2001, the
Army was short $1.1 billion worth of HMMWVs. However,
as we stated in our report, the Army's primary goal
for equipment reset is to prepare units for
deployment and to improve next-to-deploy units'
equipment-on-hand levels, and the Marine Corps'
priority for equipment reset is to support deployed
forces. Reset implementation strategies should target
shortages of equipment needed to equip deploying
units and units preparing to deploy to Iraq and
Afghanistan, rather than other longer-term equipment
goals such as modernization, homeland defense, and
homeland security.
12. DOD disagreed with our statement that the Army's
fiscal year 2007 reset strategy includes plans to
modernize Abrams Tanks and Bradley Fighting Vehicles
to accelerate achieving long-term strategic goals
under the Army's modularity initiative, stating that
the plan to modernize these vehicles is to ensure
that units have the most capable equipment available
for the next mission. However, accelerating
modernization programs in general to achieve a
modular force structure may be sacrificing other
short-term needs for longer-term goals.
13. DOD disagreed with our statement that the Marine
Corps' reset planning process emphasizes replacing
equipment but that actions required to support this
strategy have adversely affected readiness of
nondeployed Marine Corps units preparing to deploy to
Iraq and Afghanistan and unit training for other
contingencies such as humanitarian and disaster
relief. DOD stated in its comments that the Marine
Corps does not specifically train for disaster relief
efforts and it is illogical to state that the Marine
Corps must prioritize equipment for such specific
disaster relief operations as Pakistan and the
Philippines as disasters are unpredictable and not a
primary objective of Marine Corps training. We
acknowledge that disaster relief operations are not
the primary objective of the Marine Corps training.
However, as part of its decision-making process on
how to invest its reset funds, the Marine Corps has
had to make trade-offs between short-term needs, for
example, units preparing to deploy to Iraq and
Afghanistan, and unit training for nondeployed units
for other contingencies and deploying troops for
other operations such as disaster relief; that is,
potentially longer-term needs. We have revised the
report as appropriate.
14. GAO agrees with the suggested change and revised
the report as appropriate.
15. GAO agrees with the suggested change and revised
the report as appropriate.
16. See comment 13.
17. See comment 1.
18. See comment 1.
19. See comment 1.
20. GAO agrees with the suggested change and revised
the report as appropriate.
21. DOD disagreed with our statement that because the
Army was not required to track the execution of its
reset appropriations from the onset of operations, it
does not have historical execution data upon which to
base future cost estimates and that it is
inconsistent with the statement that Army and Marine
Corps officials said that they could provide an
historical accounting of those reset obligations and
expenditures back to 2002 if required to do so. While
we agree that the Army now has historical execution
data upon which to base future cost estimates, at the
time of our review, Army officials stated that they
did not track execution data at the onset of
operations. Subsequently, Army officials provided
execution data as of fiscal year 2002 broken down by
operation and maintenance (i.e., field-level repair,
depot-level repair, Army pre-positioned stock, and
recapitalization--rebuild) and procurement (i.e.,
recapitalization--upgrade and replacement). However,
Army officials stated that they had to extrapolate
these numbers because the data were not tracked that
way at the onset of operations. We have revised the
report to reflect the Army's position.
22. See comment 21.
23. DOD disagreed with our statements that neither
the Army's nor the Marine Corps' reset implementation
strategies target shortages of available equipment
and prioritize needs of units preparing for
deployment over longer-term modernization goals and
stated that the phrase "because reset strategies are
not linked to meeting deploying unit equipment needs"
was most objectionable. Furthermore, DOD stated that
this statement contradicts an earlier assertion that
deployed Army and Marine Corps units and units about
to deploy generally report high readiness rates. As
we stated in our report, while we acknowledge that
reset is only one component of the services' overall
equipping strategies, we continue to believe that the
Army's and Marine Corps' reset implementation
strategies should target short-term equipment
shortages rather than longer-term modernization
goals. We believe the Army and Marine Corps should
use reset funding in accordance with the services'
stated goals of reset, that is, to prepare units for
deployment and to improve the next-to-deploy units'
equipment on hand. Using reset funding to accelerate
modernization goals by procuring new equipment that
may not be available for many years may be
sacrificing short-terms needs for longer-term goals.
The statement that deployed Army and Marine Corps
units and units about to deploy generally report high
readiness rates was taken out of context. As we
stated in our report, although deployed Army and
Marine Corps units and units about to deploy
generally report high readiness rates, the services
have reported a decrease in nondeployed units'
readiness rates, in part due to equipment shortages.
While the readiness of nondeployed units may not be
as high a priority as the readiness of deployed or
deploying units, nondeployed units can be called up
at any time should other contingencies occur.
24. DOD disagreed with our statement that a unit
preparing to deploy was given HMMWVs to train with
that were limited in number and were significantly
different from the armored HMMWVs it was expected to
use while in theater. DOD stated in its comments that
if we were referring to the Marine Corps the
statement is in fact incorrect because Marine Corps
units preparing for deployment through Mojave Viper
exercises train on identical equipment sets to those
currently in theater. The unit in question was an
Army unit. We have revised the report as appropriate.
25. See comment 21.
26. DOD agreed with our statement that the Marine
Corps has had to make trade-offs between unit
training for other types of contingencies and units
preparing to deploy to OIF. DOD stated in its
comments that the Marine Corps has placed a priority
on training units for OIF as that is presently the
largest and most deadly contingency the Marine Corps
is presently involved in and the Marine Corps has
limited financial and manpower resources and must
prioritize to ensure mission accomplishment and
combat casualty minimization. As we stated in our
report, the Commandant of the Marine Corps has
testified^3 that the Marine Corps has had to chose
between providing equipment to units preparing to
deploy to Iraq and Afghanistan and unit training for
other contingencies while also deploying troops to
support other operations, such as humanitarian and
disaster relief efforts in Pakistan and the
Philippines, Theater Security Cooperation events in
Central America and parts of Africa, and protecting
our embassies. We have revised our report as
appropriate.
27. DOD disagreed with our statement that the Army
and Marine Corps' reset strategies do not ensure that
the repairing, replacing, and recapitalization of
equipment needed to support units that are preparing
for deployment are being given priority over other
longer-term equipment needs because reset strategies
are not linked to meeting deploying unit equipment
needs, stating that the Army equipping strategies do
target equipment shortages and the Marine Corps'
level of spending on replacement versus
recapitalization is high because of low equipment
density. As we stated in our report, while we
acknowledge that reset is only one component of the
services' overall equipping strategies, the Army's
primary goal for equipment reset is to prepare units
for deployment and to improve next-to-deploy units'
equipment-on-hand levels, and the Marine Corps'
priority for equipment reset is to support deployed
forces. However, the Army's and Marine Corps' reset
implementation strategies do not necessarily address
shortages of equipment in the short term. Instead,
the Army's reset implementation strategy is based on
plans for repairing, recapitalizing, or replacing
equipment returning from overseas theaters in a given
fiscal year, while the Marine Corps' reset
implementation strategy is based on ensuring that
Marine Corps units are equipped to perform both
ongoing operations and other future missions. While
we acknowledge that the Marine Corps reset
implementation strategy may be focused on longer-term
goals due to low equipment density, we continue to
believe the Army's and Marine Corps' reset
implementation strategies should target short-term
equipment shortages to equip deploying units and
units preparing to deploy to Iraq and Afghanistan
rather than longer-term modernization goals. We have
revised the report as appropriate.
^3Marine Posture Statement, Statement before the Senate Committee on Armed
Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
28. DOD disagreed with our statement that the Army's
reset strategy has included funding requests for
certain items to accelerate achieving longer-term
strategic goals under the Army's modularity
initiative. DOD stated in its comments that
sustainment-level reset does give priority to
deploying unit needs and considers the need to
upgrade equipment as part of reset implementation
strategies, and that tank and Bradley upgrades
provide improved warfighting capabilities as well as
better reliability, availability, and maintenance
improvements while saving costs. While we acknowledge
that achieving these modularity milestones for Abrams
Tanks and Bradleys will achieve greater commonality
in platforms and reduce overall logistical and
financial requirements by reducing the number of
variants that must be supported, we continue to
believe that using reset funds to accelerate
modernization programs such as these by 1 to 2 years
to achieve a modular force structure as well as
funding other longer-term equipment goals, such as
homeland defense and homeland security, may be
sacrificing short-term needs for longer-term goals.
Also, as we stated in our report, the Army has
reported that modularity requirements (i.e.,
longer-term modernization goals) mirror the equipment
that the Army already procures for its units and it
is unable to precisely track modularity funds and
distinguish those funds from reset funds. We have
revised the report as appropriate.
29. DOD disagreed with our statement that the Marine
Corps' reset planning process does not include an
evaluation of trade-offs between the shorter-term
need to improve the degraded readiness of Marine
Corps units in the United States against longer-term
requirements for procurement to replace deployed
items that may not affect readiness for some time.
DOD stated in its comments that the narrative of the
paragraph appears to confuse the purpose and intent
of reset efforts and that reset is, in broad terms
and as pointed out in the introduction of the draft
report, restoring the capabilities affected by
operations in Iraq and Afghanistan to meet future
contingencies. DOD stated that Mine Resistant Ambush
Protected vehicles (MRAPs) are an equipment set
specific to the conflict in Iraq and, consequently,
will not be incorporated into the standard Marine
Corps inventory at the levels employed for current
operations and, as such, are considered operational
costs of war, not reset, and that HMMWVs are still
required in reset for future contingencies. While we
acknowledge that funding for MRAPs is considered a
cost of war, not a reset cost, the request for HMMWVs
has not been reduced to reflect the number of MRAPs
that will replace those HMMWVs. We continue to
believe that the Marine Corps' reset planning process
should include a trade-off between the shorter-term
need for MRAPs and the longer-term need for HMMWVs.
As we stated in our report, the Marine Corps as well
as the Army have noted equipment shortages in
readiness reports' remarks sections with deploying
units planning to fall in on equipment in theater.
And, as we have testified, since 2003, deploying
units have continued to subjectively upgrade their
overall readiness rates as they approach deployment
dates, despite decreasing overall readiness levels
among those same units. We have revised the report as
appropriate.
30. DOD stated in its comments that because we did
not review the services' overall equipping
strategies, the title should be changed to reflect
the title of the draft document presented at the exit
conference, Army and Marine Corps Equipment Reset
Strategies, because the current report title is
unsupported by fact. This report discusses reset
implementation strategies only and does not include
overall Army and Marine Corps equipping strategies.
As we have discussed in our report, the Army and
Marine Corps have not developed complete sustainment,
modernization, and replacement strategies or
identified funding needs for all priority
equipment.^4 Congress has appropriated tens of
billions of dollars specifically for equipment reset
since fiscal year 2002. This report is limited to a
discussion of how the Army and Marine Corps have
tracked and reported the obligation and expenditure
of those funds and how the services' strategies for
equipment reset can sustain equipment availability
while meeting ongoing operational requirements. We
continue to believe that the title of the report,
Defense Logistics: Army and Marine Corps Cannot Be
Assured That Equipment Reset Implementation
Strategies Will Sustain Equipment Availability While
Meeting Ongoing Operational Requirements, remains
valid and supported by the facts as we have presented
them and that the report does not warrant a change in
title.
^4 [56]GAO-06-141 .
Appendix V: GAO Contact and Staff Acknowledgments
GAO Contact
William M. Solis (202) 512-8365 or [53][email protected]
Acknowledgments
In addition to the contact named above, David A. Schmitt,
Assistant Director; Renee Brown; Frank Cristinzio; Luke Hartig;
Brent Helt; Donna M. Rogers; Yong Song; and Maria Storts made key
contributions to this report.
[59]What GAO Recommends
GAO recommends that the Secretary of Defense (1) improve DOD's reporting
of obligations and expenditures within the procurement accounts and (2)
assess the services' approaches to equipment reset to ensure that their
priorities address equipment shortages in the near term to equip units
that are preparing for deployment. DOD did not agree with these
recommendations. As a result, GAO is suggesting that Congress direct DOD
to revise its Financial Management regulation pertaining to procurement
funds.
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they do
not report detailed equipment reset expenditures within the procurement
accounts in a way that confirms that funds appropriated for reset are
expended for that purpose because the DOD Financial Management Regulation
does not require them to specifically report procurement expenditures for
reset in detail. As directed by the Conference Report accompanying DOD's
appropriations act for 2007, the Army and Marine Corps report detailed
reset obligations and expenditures in their operation and maintenance
accounts. While the Army and Marine Corps track reset expenditures and
obligations in detail within the procurement accounts, they do not report
those expenditures at the same level of detail as with the operation and
maintenance accounts because they are not legally required do so. Neither
the Army's nor the Marine Corps' monthly Supplemental and Cost of War
Execution Reports identify the types of equipment at the subactivity group
level, such as aircraft or vehicles. Until the Army and Marine Corps are
required to report the obligation and expenditure of funds appropriated
for reset in the procurement accounts at a more detailed level, Congress
will not have the visibility it needs to exercise effective oversight and
to determine if the amount of funding appropriated for equipment reset has
been most appropriately used for the purposes intended.
The Army and Marine Corps cannot be assured that their reset strategies
will sustain equipment availability for deployed units as well as units
preparing for deployment to Iraq and Afghanistan while meeting ongoing
operational requirements because neither the Army's nor the Marine Corps'
reset implementation strategies target shortages of equipment on hand and
prioritize equipment needs of units preparing for deployment over
longer-term modernization goals. While the Army's Force Generation
implementation strategy and reset implementation guidance state that the
goal of reset is to prepare units for deployment and to improve
next-to-deploy units' equipment-on-hand levels, the Army's reset strategy
is based on resetting equipment that it expects will be returning to the
United States in a given fiscal year and not on targeting shortages of
equipment for units preparing for deployment to Iraq and Afghanistan.
Similarly, the Marine Corps' reset goal is to ensure that the Corps is
equipped to perform both ongoing operations and future missions; however,
over 80 percent of its reset budget is for procurement of equipment that
will not be available for many months. Units can continue to report
significant shortages during their training cycles that affect their
ability to train. Thus, the services may be sacrificing short-term
equipment needs for longer-term modernization goals. Until the services'
reset strategies target shortages of equipment needed to equip units
preparing for deployment and give priority to those units over longer-term
needs, the Army and Marine Corps will be unable to minimize operational
risk by ensuring the needs of deploying units can be met.
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Highlights of [58]GAO-07-814 , a report to congressional committees
September 2007
DEFENSE LOGISTICS
Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies
Will Sustain Equipment Availability While Meeting Ongoing Operational
Requirements
Congress has appropriated billions of dollars for equipment repair,
replacement, and recapitalization, collectively known as equipment reset.
Because of the potential for equipment reset costs to affect the
Department of Defense's (DOD) future budget requirements and related
readiness concerns, GAO initiated this review under the Comptroller
General's authority. GAO's objectives were to determine the extent to
which the Army and Marine Corps (1) track and report equipment reset
expenditures in a way that confirms that funds appropriated for reset are
expended for that purpose and (2) can be assured that their reset
strategies will sustain equipment availability while meeting ongoing
operational requirements. GAO reviewed equipment reset policies and
analyzed related budget data.
References
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