Force Structure: Better Management Controls Are Needed to Oversee
the Army's Modular Force and Expansion Initiatives and Improve	 
Accountability for Results (14-DEC-07, GAO-08-145).		 
                                                                 
The Army's modular force restructuring is a multiyear $52.5	 
billion initiative to redesign operational Army units. The Army  
also plans to spend $70 billion through fiscal year 2013 to	 
expand the force by 74,200 military personnel. Congress mandated 
that GAO report annually through fiscal year 2012 on the Army's  
modular force. For this report, GAO assessed to what extent the  
Army has (1) implemented and established management controls for 
its modular force and force expansion initiatives, and (2)	 
assessed its modular unit designs. GAO assessed Army plans and	 
funding requests; visited brigades that were reorganizing; and	 
examined key Army planning documents, performance metrics, and	 
testing plans. Both brigade combat teams and support brigades	 
were visited, including units from the active component Army,	 
Army National Guard, and Army Reserve.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-145 					        
    ACCNO:   A78948						        
  TITLE:     Force Structure: Better Management Controls Are Needed to
Oversee the Army's Modular Force and Expansion Initiatives and	 
Improve Accountability for Results				 
     DATE:   12/14/2007 
  SUBJECT:   Accountability					 
	     Army modularity					 
	     Cost analysis					 
	     Force planning					 
	     Force structure					 
	     Funds management					 
	     Internal controls					 
	     Lessons learned					 
	     Program evaluation 				 
	     Program management 				 
	     Reporting requirements				 
	     Strategic planning 				 
	     Program goals or objectives			 
	     Program implementation				 
	     Transparency					 

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GAO-08-145

   

     * [1]Results In Brief
     * [2]Background
     * [3]Modular Restructuring Is Progressing, but the Army Lacks Suf

          * [4]The Army Continues to Transform Its Operational Force into M
          * [5]The Army's Cost Estimate for Funding Modular Units Contained
          * [6]The Army Has Substantially Revised Its Timeline for Fully Eq
          * [7]The Lack of Transparency and Clear Linkages between the Army

     * [8]The Army Is Applying Lessons Learned but Still Lacks a Compr

          * [9]Lessons Learned from Ongoing Operations Are Being Applied to
          * [10]The Army Has Not Established Outcome-Oriented Metrics for Me
          * [11]OSD Oversight of the Army's Modular Force Transformation Ini

     * [12]Conclusions
     * [13]Recommendations
     * [14]Agency Comments and Our Evaluation
     * [15]Matter for Congressional Consideration
     * [16]GAO Contact
     * [17]Acknowledgments
     * [18]GAO's Mission
     * [19]Obtaining Copies of GAO Reports and Testimony

          * [20]Order by Mail or Phone

     * [21]To Report Fraud, Waste, and Abuse in Federal Programs
     * [22]Congressional Relations
     * [23]Public Affairs

Report to Congressional Committees

United States Government Accountability Office

GAO

December 2007

FORCE STRUCTURE

Better Management Controls Are Needed to Oversee the Army's Modular Force
and Expansion Initiatives and Improve Accountability for Results

GAO-08-145

Contents

Letter 1

Results In Brief 4
Background 7
Modular Restructuring Is Progressing, but the Army Lacks Sufficient
Management Controls to Provide Decision Makers with Complete and
Transparent Information to Gauge Progress and Assess Funding Requirements
12
The Army Is Applying Lessons Learned but Still Lacks a Comprehensive
Approach for Assessing Modular Unit Designs and Performance 26
Conclusions 31
Recommendations 32
Agency Comments and Our Evaluation 33
Matter for Congressional Consideration 35
Appendix I Scope and Methodology 37
Appendix II Comments from the Department Of Defense 39
Appendix III GAO Contact and Staff Acknowledgments 42

Tables

Table 1: Actual and Planned Army Modular Unit Restructuring 14
Table 2: Funding Plan for Modular Restructuring, Fiscal Years 2005-2011,
as Reported to OMB in January 2007 18
Table 3: Sources of Army Funding for Modular Restructuring and Expansion
24

Figure

Figure 1: Time Lag between Establishing Units, Funding Equipment, and
Delivering Equipment for Modular Units 15

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United States Government Accountability Office
Washington, DC 20548

December 14, 2007

Congressional Committees

Two major Army initiatives--one to restructure the Army and another to
expand its size--will have significant implications for the Army's combat
capabilities and funding requests in the coming years. The Army's modular
force restructuring---sometimes referred to as Army Modularity--is a
multiyear undertaking that involves the total redesign of the operational
Army and was initiated, in part, to support current operations in Iraq and
Afghanistan. In early 2007, the Department of Defense (DOD) announced a
plan to expand the size of the Army in response to the high pace of
operations the Army has experienced over the past several years and the
need to increase capacity to meet future strategic demands. Under the
Army's new construct, the Brigade Combat Team, rather than a division,
will be the centerpiece of the Army's combat forces and the lowest unit of
organization capable of self-sustained operations. The Army's modular
restructuring initiative includes its entire operational force consisting
of active, National Guard, and reserve units. The Army obtained Secretary
of Defense approval to spend $52.5 billion on this initiative through
fiscal year 2011.^1 To date, Congress has appropriated over $18 billion
for Army modularity, and DOD has requested an additional $10.4 billion in
the President's fiscal year 2008 budget request.

In addition, to meet the increasing strategic demands and to help reduce
stress on the force, the Secretary of Defense plans to expand the Army
from a total of 1,037,000 to 1,112,000 active and reserve soldiers by
fiscal year 2013--an increase of 74,200 military personnel. This planned
expansion includes building six additional, active modular combat brigades
plus an undetermined number of modular support units, which requires a
substantial increase in funding for personnel, equipment, and
infrastructure. Currently, the Army estimates this expansion may require
$70 billion or more in increased funding through fiscal year 2013 and a
significant amount in annual funding thereafter to sustain the expanded
Army. The President's fiscal year 2008 budget request, currently before
Congress, contains $7.7 billion specifically to expand the size of the
Army.

^1This figure does not include Army expansion costs.

Taken together, these initiatives will entail significant costs that must
be carefully evaluated in the context of both the current and future
strategic environment and weighed against other funding priorities. In
January 2007, we testified before the House Committee on Armed Services,
Subcommittee on Military Personnel, that federal agencies have a
responsibility to provide sufficient transparency over significant
decisions affecting requirements for federal dollars so that Congress can
effectively evaluate the benefits, costs, and risks.

We initiated a body of work to assist Congress in assessing the Army's
plans for its modular force restructuring as well as plans to expand the
size of the force. Because of the cost and magnitude of the Army's modular
force initiative, and broad congressional interest, we initially began
work analyzing both the force structure and cost implications of the
Army's move to a modular force under the Comptroller General's authority
to conduct evaluations on his own initiative. Our work resulted in two
published reports and two congressional testimony statements.^2 We
recommended that the Army develop a detailed plan estimating the costs of
establishing modular units; provide details about the Army's equipping
strategy, including a comparison of equipment plans with unit design
requirements; and develop performance metrics and plans for conducting
further evaluation of modular designs.

The John Warner National Defense Authorization Act for Fiscal Year 2007
directed the Comptroller General to report annually through fiscal year
2012 to the congressional defense committees an assessment of the Army's
progress in equipping and staffing modular units in the regular and
reserve components, the use of funds by the Army for equipping and
staffing its modular units, and progress by the Army in conducting further
testing and evaluation of the Army's modular unit designs. In accordance
with this legislative mandate for fiscal year 2007, we briefed your
offices in March 2007 and April 2007 on our preliminary observations. This
report expands on the information reported in those briefings. We are
submitting this report to you because of your oversight responsibilities
on defense matters. For this report, we assessed to what extent the Army
has (1) implemented its modular force initiative and established
management controls that provide transparency for assessing progress and
funding for equipping modular units and expanding the force, and (2)
developed a comprehensive plan to assess its modular unit designs.

^2See the following GAO reports and testimony statements: GAO, Force
Structure: Actions Needed to Improve Estimates and Oversight of Costs for
Transforming Army to a Modular Force, [24]GAO-05-926 (Washington, D.C.:
Sept. 29, 2005); Force Structure: Army Needs to Provide DOD and Congress
More Visibility Regarding Modular Force Capabilities and Implementation
Plans, [25]GAO-06-745 (Washington, D.C.: Sept. 6. 2006); Force Structure:
Preliminary Observations on Army Plans to Implement and Fund Modular
Forces, [26]GAO-05-443T (Washington, D.C.: Mar. 16, 2005); and Force
Structure: Capabilities and Cost of Army Modular Force Remain Uncertain,
[27]GAO-06-548T (Washington, D.C.: Apr. 4, 2006).

To determine the extent to which the Army has implemented its modular
force initiative and established management controls that provide
transparency for assessing progress and funding for equipping modular
units and expanding the force, we reviewed current Army plans, funding
requests, and reports to Congress on Army Modularity and the Army
expansion initiatives. We assessed the completeness of these plans and
reports and analyzed to what extent Army funding requests were linked to
the Army's modular design requirements, particularly for the procurement
of new equipment. We supplemented this information with visits to 10
brigades that were already reorganized or were in the process of
reorganizing to gain an understanding of the Army's progress in
organizing, staffing, and equipping these brigades. The brigades we
visited included Brigade Combat Teams as well as the Combat Aviation and
Sustainment Multi-Function Support Brigades in the active component Army,
Army National Guard, and Army Reserves. We selected these brigades in
order to compare brigades of the same design within the different
components and discuss progress in meeting Army goals with staff from each
of the components. While the Brigade Combat Teams are only in the active
Army and National Guard, the Multi-Function Support Brigades we selected
to assess have units in the regular Army, National Guard, and Army Reserve
components.

To analyze the Army's approach for assessing its modular designs, we
examined key Army planning documents, and lessons learned, and discussed
objectives, performance metrics, and testing plans with Army officials. We
compared the Army's current methods of assessing its modular units with
methods used by high-performing organizations, drawing from our prior work
evaluating the performance of organizations that have undertaken
significant reorganizations. Finally, we analyzed the extent of the Army's
progress in developing outcome-related metrics and evaluating modular unit
performance across the full spectrum of operations. We conducted our
review in accordance with generally accepted government auditing standards
from August 2006 through August 2007 and determined that the data used
were sufficiently reliable for our objectives. The scope and methodology
used in our review are described in further detail in appendix I.

Results In Brief

The Army is making progress in establishing modular units in the active
and reserve components, but has not established sufficient management
controls to provide accountability for results and transparency of overall
funding needs for establishing modular units and expanding the force. By
the end of fiscal year 2007, the Army established 138 of its 190 planned
modular units. However, all 10 modular units we visited continue to have
some equipment and personnel challenges, including shortfalls in key
equipment items, and mismatches in skill levels and specialties of
assigned personnel. Also, the Army's funding plan is not fully
synchronized with its schedule for establishing units. Moreover, neither
the Office of the Secretary of Defense (OSD) or the Army has implemented
our past recommendations to enhance accountability for achieving the
planned benefits of a modular force. As a result, it is difficult to gauge
the Army's progress in moving toward its goal of fully staffing and
equipping units in both the active and reserve components. In addition,
although the Army estimated in 2004 that it could largely equip and staff
modular units by spending $52.5 billion through fiscal year 2011, the Army
now believes it will require additional funding through fiscal year 2017
to fully equip its units. Our analysis shows that the Army believes it
will need additional funding to fully equip modular units because its
$52.5 billion funding plan

           o was developed before some modular unit designs had been
           finalized;
           o assumed that Army National Guard and reserve units would retain
           some older models of equipment that were not comparable to the
           active component's equipment, whereas the Army has recently
           learned from its experience in Iraq that all deploying units need
           to have modern equipment; and
           o assumed that significant quantities of equipment would be
           returned from Iraq in good enough condition to help equip modular
           units.

           Army officials have not fully identified the amount of additional
           funds needed to fully equip Army modular units but told us they
           plan to request funds for additional equipment needs beyond fiscal
           year 2011 incrementally through DOD's annual budget process.
           However, in the absence of a complete cost estimate, the Army will
           not be in a good position to identify and provide transparency to
           Congress of its total funding needs. Moreover, the Army is seeking
           a combination of regular and supplemental appropriations to fund
           its expansion and accelerate modular conversions, which further
           complicates decision makers' ability to obtain a full picture of
           the Army's needs for both initiatives and understand how these
           requests are linked and will contribute to meeting the Army's
           goals. Our work has shown that major transformation initiatives
           have a greater chance of success when their funding plans are
           transparent, analytically based, executable, and link to the
           initiative's implementation plans. Effective management controls
           are needed to establish such linkage. Office of Management and
           Budget (OMB) guidance explains that it is management's
           responsibility to take systematic and proactive measures to
           develop and implement management controls that ensure
           accountability for results. Without improvements to its management
           controls, the Army will be unable to fully assess the costs of
           equipping modular units and expanding the force, and quantify
           progress in equipping units to meet modular unit requirements.
           Lacking such controls, senior DOD leaders and Congress will be
           limited in their ability to evaluate future funding requests,
           assess the Army's progress, and weigh near-term Army requirements
           with long-term transformation initiatives. We are recommending
           that the Secretary of Defense require the Army to (1) develop a
           plan that fully identifies funding needs based on the Army's
           requirements for staffing and equipping the modular force and
           report its estimate to Congress, and (2) provide management
           controls for measuring progress. We are also recommending that the
           Deputy Secretary of Defense review the Army's plans and develop an
           updated Office of the Secretary of Defense funding plan,
           consistent with the department's overall priorities and current
           and expected resource levels, and report its results to Congress.

           While the Army is evaluating lessons learned from its ongoing
           counterinsurgency operations and applying these lessons to
           identify necessary changes to its modular designs, it lacks (1) a
           comprehensive testing and evaluation plan to determine whether
           fielded modular unit designs meet the Army's original goals for
           modular units across the full spectrum of operations and (2)
           outcome-oriented metrics on the benefits the Army expected to
           achieve with its modular restructuring. First, in seeking approval
           to establish modular units, the Army identified a number of
           planned benefits associated with them, such as that they would be
           as effective in combat as the Army's division-based brigades.
           However, the Army has limited its evaluations to the performance
           of modular units during pre-deployment exercises and
           counter-insurgency operations and not across the full spectrum of
           combat operations that include large-scale, high-intensity combat
           operations. As a result, the Army does not have a clear way to
           measure the extent to which new modular brigades are as effective
           as its older brigades under a range of conditions. Although we
           previously recommended that the Army develop a more comprehensive
           test and evaluation strategy, the Army has not taken action
           because it believes its current efforts are sufficient in light of
           its focus on managing ongoing operations. However, officials with
           the Army's Training and Doctrine Command have identified as a
           challenge the need for a broader-based assessment of the Army's
           modular unit designs and the Army Science Board and U.S. Army
           Infantry Center have identified potential capability gaps.^3
           Furthermore, methodical testing, exercising, and evaluation of new
           doctrines and concepts is an established practice throughout the
           military. Until these efforts are expanded to include a wider
           range of potential missions, the Army may miss opportunities to
           further strengthen its designs. Second, with respect to
           outcome-oriented metrics, we previously recommended that the Army
           develop these metrics to which the Army responded it would explore
           the development of expanded metrics; but the Army has not taken
           specific action on our recommendation. A 2005 program assessment
           by OMB noted that the Army's current metrics are output-related
           (i.e., how many units have been transformed) as opposed to
           outcome-related. As a result, the Army does not have a clear way
           to measure the extent to which it is achieving desired benefits.
           Therefore, we are recommending that the Secretary of Defense
           require the Army to develop a comprehensive assessment, which
           includes steps to evaluate modular units under high-intensity
           combat and provide oversight for the Army's assessment program.

           In commenting on a draft of this report, DOD concurred with our
           recommendations to (1) direct the Army to develop a comprehensive
           strategy and funding plan, (2) task the Director, Program Analysis
           and Evaluation, to review and assess the Army's plan to ensure
           that the plan links funding needs to requirements, (3) revise the
           existing DOD approved funding plan and communicate funding
           requirements to Congress, and (4) have DOD include additional
           exhibits in its annual budget submissions which show what
           requirements the funding request will fulfill and what
           requirements remain to be funded. We agree that the steps DOD
           plans to take in response to these recommendations, if fully
           implemented, will introduce more effective oversight and
           management controls of the Army's initiative within the
           Department, and will better inform the Congress of the Army's
           progress in staffing and equipping the modular force. DOD also
           concurred with our two recommendations directing (1) the Secretary
           of the Army to develop a comprehensive assessment plan that
           includes steps to evaluate modular units in full spectrum combat
           operations and (2) requiring DOD to oversee the Army's assessment
           program. However, DOD commented that it believed that the Army and
           DOD were already evaluating modular units in full spectrum
           operations via ongoing Army processes and did not indicate what,
           if any, additional actions it would take to develop a
           comprehensive assessment plan. We continue to believe that the
           Army should develop and execute a comprehensive analysis plan to
           assess its modular force designs and that DOD should be overseeing
           the Army's assessment plan. Without such a plan, DOD may not be
           able to fully gauge the need for additional refinements in its
           modular unit designs. For this reason, we are adding a matter for
           congressional consideration to require the Army to develop a
           comprehensive assessment plan for the modular force and require
           OSD to review the plan and transmit it to Congress. DOD's comments
           are in appendix II and our evaluation of its comments is on page
           33.
			  
^3The Army's Training and Doctrine Command is, among other things,
responsible for ensuring that the modular force it designs is capable of
conducting operations across the full spectrum of warfare.

           Background

           The Army's modular restructuring initiative began in 2004 as part
           of the overall Army transformation initiative. The foundation of
           modular restructuring is the creation of new, standardized,
           modular units that change the Army's legacy division-based force
           structure to smaller, more numerous brigade formations embedded
           with significant support elements. These new modular Brigade
           Combat Teams and Multi-Functional Support Brigades are designed to
           be stand-alone, self-sufficient units that are more rapidly
           deployable and better able to conduct joint and expeditionary
           combat and support operations than their larger division-based
           predecessors. These units, along with Functional Support Brigades
           and modular Headquarters Units, comprise the Army's new modular
           force. In most cases, modular brigades require some new modern
           equipment and a different personnel skill level mix than the
           earlier brigades they replace. As opposed to the Army's legacy
           units, the standardized modular unit designs are being implemented
           in the National Guard and Army Reserves with the same
           organizational structure, equipment, and personnel requirements.

           During the development of the new modular Brigade Combat Team
           designs, the Army Chief of Staff directed the Army to develop
           designs that would be "as capable as" the legacy designs the Army
           wanted to replace. The Army, via its Task Force Modularity
           organization working under the Army's Training and Doctrine
           Command, approved an initial Brigade Combat Team design, which was
           assessed and approved by the Army Chief of Staff as "good enough"
           for the Army's modular restructuring. The Army made this decision
           based upon the designs' performance during combat simulations and
           scenario-driven table-top exercises, the Army's ability to
           resource the unit designs within its equipment fielding plans and
           existing industrial capacity, and the Army's ability to quickly
           stand up new brigades and restructure its existing brigades by
           fiscal year 2011.

           The Army's approved designs were similar to modified versions of
           the legacy Brigade Combat Team organization the Army previously
           employed when it would "task organize" units within its legacy
           divisions and assign them to a division's combat brigades prior to
           deploying the division for combat operations. These task-organized
           brigades would be temporarily expanded with additional battalion
           and company-sized units that provided additional combat support
           and combat service support capabilities, allowing the brigade to
           conduct self-sustained combat operations. By permanently
           structuring a Brigade Combat Team with these capabilities, the
           Army eliminated the need to task organize combat units. In
           addition, the Army believed it would have considerable advantages
           in operations by ensuring these units worked, trained, and
           deployed together.

           The Army also considered DOD's strategic plan as it restructured
           to a brigade-based force. For example, the Army's Brigade Combat
           Team designs were intended to be effective across the full
           spectrum of operations and warfare including global war, major
           theater war, smaller scale contingencies,
           insurgency/counter-insurgencies, and stability and support
           operations. DOD's most recent strategic plan, the 2006 Quadrennial
           Defense Review, now refers to Army combat power in terms of
           Brigade Combat Teams rather than number of divisions, consistent
           with the Army's new structure. The Army's Training and Doctrine
           Command (TRADOC) is responsible for analyzing whether the modular
           force is capable of successfully conducting operations required
           across the full spectrum of warfare. TRADOC does this by using its
           analytical centers, such as the TRADOC Analysis Center, to analyze
           the capabilities of the modular design and make design changes
           when deemed necessary and approved by Army headquarters.

           The Army's original restructuring plan called for a total of 43
           active component Brigade Combat Teams--33 restructured from
           existing combat brigades and 10 newly created brigades. These 43
           active Brigade Combat Teams would be joined with 34 restructured
           National Guard brigades, giving the Army a total of 77 modular
           Brigade Combat Teams. This plan was modified by the 2006
           Quadrennial Defense Review, which reduced the number to a total of
           70 Brigade Combat Teams consisting of 42 active Army and 28
           National Guard brigades.

           Since the Army introduced its modular restructuring initiative,
           the Army has adjusted its cost estimate and changed the scope of
           its plans for restructuring its operational force several times.
           In January 2004, the Army developed a rough order of magnitude
           estimate which indicated it would cost $20 billion to restructure
           the Army's existing combat brigades and build additional ones for
           anticipated overseas combat rotations. This estimate was updated 6
           months later by adding $8 billion to restructure the National
           Guard divisions and brigades into modular Brigade Combat Teams.
           The Army has since increased the scope of its modular
           restructuring initiative to include its entire operational force
           structure and in late 2004 obtained Deputy Secretary of Defense
           approval to spend $52.5 billion on this initiative through fiscal
           year 2011.

           A year after the Quadrennial Defense Review, in February 2007, the
           President submitted his fiscal year 2008 budget request to
           Congress that included a plan to increase Army military personnel
           by 74,200 over the next 5 years and increase the number of
           brigades. The plan would increase active Army end strength by
           65,000 personnel to 547,400, Army National Guard end strength by
           8,200 personnel to 358,200, and Army reserve end strength by 1,000
           to 206,000. Army officials have stated this plan will add six
           additional active Army Brigade Combat Teams to the 42 brigades
           called for in the 2006 Quadrennial Defense Review, giving the Army
           a total of 76 Brigade Combat Teams. The Army's preliminary cost
           estimate indicates that expanding the Army will require
           approximately $70.2 billion from fiscal year 2007 through 2013 for
           personnel, equipment, operations, maintenance, and facility costs.

           Our previous reports on the Army's modular restructuring
           initiative included several recommendations intended to improve
           the information DOD provides Congress for making decisions on Army
           modularity. In our September 2005 report, we recommended that the
           Army provide Congress a detailed plan estimating the costs of
           modularity and develop an approach for tracking modular
           transformation costs that clearly identifies obligations for the
           modular force.^4 In our September 2006 report, we recommended that
           DOD direct the Army to provide Congress with details about the
           Army's equipping strategy, including a comparison of equipment
           plans with unit design requirements.^5 In another of our
           recommendations, we suggested that DOD direct the Army to develop
           a comprehensive plan for assessing progress toward achieving the
           benefits of a modular force, to include specific, quantifiable
           performance metrics and plans and milestones for conducting
           further evaluation of modular designs.

^4GAO, Force Structure: Actions Needed to Improve Estimates and Oversight
of Costs for Transforming Army to a Modular Force, [28]GAO-05-926
(Washington, D.C.: Sept. 29, 2005).

           In addition to our work on the Army's modular restructuring
           initiative, we have recently completed work on other related Army
           issues. In August 2007, we issued a report on the Army and Marine
           Corps reset programs, which recommends that DOD improve its
           reporting of obligations and expenditures for resetting equipment
           and assess the Army and Marine Corps approaches for resetting
           equipment to ensure priority is given to address equipment
           shortages in the near term to equip units that are preparing for
           deployment.^6 We have also assessed the Army's modular brigade
           training strategy and recommended that the Army take a series of
           actions to assess unit training and identify funding needs by
           developing specific goals and metrics and revising its funding
           model.^7 This same report also recommended that the Army revise
           its training strategy to account for the high level of operational
           demands, clarify the capacity modular units require at the combat
           training centers, and complete testing of its exportable training
           capability to verify it is the most appropriate approach to meet
           the additional capacity requirements for training modular units.^8
           Finally, we recently provided a classified report to both the
           House and Senate Armed Services Committees which assessed the
           Army's current readiness challenges and offered a series of
           recommendations to improve Army unit readiness.

           The Army's modular restructuring involves substantial resources
           for which management controls are needed in order to provide
           accountability for results. Guidance issued by OMB ^9 explains
           that the proper stewardship of federal resources is an essential
           responsibility of agency managers and staff. Federal employees
           must ensure that federal programs operate and federal resources
           are used efficiently and effectively to achieve desired
           objectives. Also, management control should be an integral part of
           the entire cycle of planning, budgeting, managing, accounting, and
           auditing. The Army's initiative to establish modular units is a
           major transformation effort that is considered to be the Army's
           most extensive restructuring since World War II. OMB guidance
           explains that as agencies develop and execute strategies for
           implementing or reengineering agency programs and operations, they
           should design management structures that help ensure
           accountability for results.^10

^5GAO, Force Structure: Army Needs to Provide DOD and Congress More
Visibility Regarding Modular Force Capabilities and Implementation Plans,
[29]GAO-06-745 (Washington, D.C.: Sept. 6. 2006).
 
^6GAO, Defense Logistics: Army and Marine Corps Cannot Be Assured
Equipment Reset Strategies Will Sustain Equipment Availability while
Meeting Ongoing Operational Requirements, [30]GAO-07-814 (Washington,
D.C.: Aug. 2007).

^7GAO, Military Training: Actions Needed to More Fully Develop the Army's
Strategy for Training Modular Brigades and Address Implementation
Challenges, [31]GAO-07-936 (Washington, D.C.: Aug. 2007).

^8 [32]GAO-07-936 .

^9OMB, Circular A-123, Management's Responsibility for Internal Control,
Revised (Washington, D.C.: Dec. 2004).

^10In addition to the OMB guidance, GAO has issued Standards for Internal
Control in the Federal Government, [33]GAO/AIMD-00-21.3.1 (Washington,
D.C.: Nov. 1999). Both OMB and GAO consider "internal control" to be
synonymous with "management control." GAO explains that internal control
helps government program managers achieve desired results through
effective stewardship of public resources. Internal control comprises the
plans, methods, and procedures used to meet missions, goals, and
objectives in support of performance-based management. Throughout this

           Modular Restructuring Is Progressing, but the Army Lacks Sufficient
			  Management Controls to Provide Decision Makers with Complete and
			  Transparent Information to Gauge Progress and Assess Funding
			  Requirements

           The Army is making progress in transforming its operational force
           into modular units but has not established sufficient management
           controls to provide accountability for results and facilitate
           transparency of its overall funding needs for modular units and
           force expansion. Additionally, the Army has substantially revised
           its timelines for fully staffing and equipping its modular units.
           The Army established 138 of 190 planned modular units by the end
           of fiscal year 2007. However, the 10 units we visited were
           experiencing some equipment and personnel shortages. Moreover,
           because the Army's funding plan is not transparent and fully
           synchronized with its schedule for establishing units, it is
           difficult to gauge the Army's progress in moving toward its goal
           of fully staffing and equipping units in both the active and
           reserve components. In addition, although the Army's 2004 cost
           estimate of $52.5 billion was initially expected to largely equip
           and staff its modular units by fiscal year 2011, an as yet
           undetermined amount of additional funding will be needed through
           2017, according to Army officials. This change has occurred
           because the Army's earlier estimate had limitations and was built
           on several assumptions that no longer appear valid. Although we
           previously recommended that the Army update its cost estimate, the
           Army has not yet identified the full costs of equipping modular
           units. Moreover, DOD and congressional oversight of Army plans and
           progress has become more complicated because the Army has
           requested funding for its modular force initiative and force
           expansion plan using multiple sources of funding which do not
           clearly show the linkage between funding needs, progress to date,
           and the Army's requirements. Our work has shown that successful
           transformation initiatives have funding plans that are
           transparent, analytically based, executable, and link to the
           initiative's implementation plans. This requires effective
           management controls that provide accountability for the quality
           and timeliness of initiatives' performance, as well as cost. OMB
           guidance explains that it is management's responsibility to take
           systematic and proactive measures to develop and implement
           management controls that ensure accountability for results.
           Lacking sufficient controls, DOD may be limited in its ability to
           manage resources effectively and reduce risk to the force because
           its does not have the complete picture of the Army's resource
           requirements going forward and cannot weigh these against other
           competing priorities in order to provide a balanced and affordable
           force across all service components.
			  
			  The Army Continues to Transform Its Operational Force into Modular
			  Units, but Modular Units We Visited Experienced Some Challenges
			  and Assessing Progress in Staffing and Equipping Units Is Difficult

           Because of the urgency to create more units for rotations to Iraq
           and Afghanistan, the Army decided to reorganize units into modular
           brigades before funding was available to procure all of the new
           equipment required by modular designs. The Army's strategy has
           been to allocate its existing equipment, along with new equipment
           procured to date, to Army modular units in accordance with a
           conversion schedule approved by the Army senior leadership. This
           strategy has allowed the restructuring to proceed generally on
           schedule, even though the Army does not have sufficient quantities
           of all the equipment required by Army-approved modular unit
           designs. The Army plans to provide units with additional equipment
           as it becomes available through fiscal year 2011 under the Army's
           $52.5 billion funding plan ($43.6 billion of which is allocated to
           equipment). Additional equipment procured through other sources of
           funding, such as reset funds, could also be allocated to units
           once it enters the Army's inventory. However, because the Army's
           funding plan is not fully synchronized with its schedule for
           establishing units, it is difficult to gauge the Army's progress
           in moving toward its goal of fully staffing and equipping units in
           both the active and reserve components.

           In accordance with its strategy, the Army restructured 138 of 190
           modular units, about 73 percent, by the end of fiscal year 2007,
           as shown in table 1. Prior to the recently announced expansion
           plans, the Army was to have a total of 70 modular Brigade Combat
           Teams. For the active Army, the Army projected it will have
           reorganized 11 of 18 headquarters units, 38 of 42 active Army
           Brigade Combat Teams, and 30 of 37 active Multi-Functional Support
           Brigades by the end of fiscal year 2007. In the National Guard,
           the Army expected to have reorganized 6 of 8 headquarters units,
           25 of 28 Brigade Combat Teams, and 23 of 46 Multi-Functional
           Support Brigades by the end of fiscal year 2007. Finally, the Army
           projected it will have reorganized 5 of 11 Multi-Function Support
           Brigades in the Army reserve by the end of fiscal year 2007.^11
			  
^11In addition the Army plans to restructure approximately 118 functional
support brigades across all three components by the end of fiscal year
2011; however, details on the Army's plans for these brigades are still
limited.

           Table 1: Actual and Planned Army Modular Unit Restructuring

                                     Total unit  Units expected               
                                    conversions to convert from Total planned 
                                 through fiscal     fiscal year          unit 
Component  Unit type               year 2007    2008 to 2011   conversions 
Active     Headquarters units             11               7            18 
              Brigade Combat                 38               4            42 
              Teams                                                           
              Multi-Function                 30               7            37 
              Support Brigades                                                
National   Headquarters units              6               2             8 
Guard                                                                      
              Brigade Combat                 25               3            28 
              Teams                                                           
              Multi-Function                 23              23            46 
              Support Brigades                                                
U.S. Army  Multi-Function                  5               6            11 
Reserve    Support Brigades                                                
Total Army Headquarters units             17               9            26 
              Brigade Combat                 63               7            70 
              Teams                                                           
              Multi-Function                 58              36            94 

              Support Brigades                                                
              Total modular                 138              52           190 
              units                                                           

           Source: GAO analysis of Army data. Department of the Army, Army
           Transformation Report to Congress, February 2007, and Department
           of the Army, Army Campaign Plan Change 5, Annex A, December 15,
           2006.

           Army officials told us these units will be organized under modular
           unit designs; however, it will take additional time to equip and
           staff units at authorized levels. As a result, Army reporting
           notes that reaching an (E-date) effective date for unit conversion
           does not imply readiness or availability for deployment.

           The following figure shows the lag between restructuring units and
           the planned appropriation of funding for equipment totaling $43.6
           billion included in the Army's modular force funding plan for
           fiscal years 2005 through 2011. This is the amount of equipment
           funding included in the Army's OSD approved plan; however, as we
           discuss later, it does not reflect the total funding needed to
           fully equip the modular force. In addition, the dotted line in
           this figure shows the expected lag between the planned
           appropriation of equipment funds and their expected delivery.

           Figure 1: Time Lag between Establishing Units, Funding Equipment,
           and Delivering Equipment for Modular Units

           Note: Data exclude additional units that will be established as
           part of the Army's expansion plans and additional funding that may
           be required beyond fiscal year 2011. The procured equipment
           estimated delivery is an Army planning estimate and we did not
           independently evaluate it.

           The Army continues to allocate available equipment and personnel
           where required to support deployed units or units designated as
           the next to deploy. Any equipment or personnel resources available
           after that are distributed in accordance with the Army's Resource
           Priority List. This approach permits the Army to increase its pool
           of available units for operational deployments to Iraq but has
           resulted in the Army assuming some risk by having to distribute
           its equipment among more units. The Army expects this situation to
           improve over time as it makes progress in filling equipment
           shortages and is able to procure the extra equipment necessary to
           proceed with scheduled unit conversions.

           Evidence of the Army's shortfalls in staffing and equipping can be
           found at the unit level where Army brigades continue to experience
           challenges in fully staffing and equipping their units at
           authorized levels. We visited and reviewed the status of 10
           modular units and found that all 10 units continue to have some
           equipment and personnel challenges. During our January 2007 visit
           to an active Army Brigade Combat Team scheduled to deploy in the
           2nd quarter of fiscal year 2007, we found the unit did not have
           its full allowance of light and heavy tactical wheeled vehicles,
           blue force tracking equipment, target acquisition equipment, and
           field artillery equipment. Unit officials we spoke with said that
           most of this equipment would be filled once the unit arrives in
           theater and before it conducted its first operations. During our
           December 2006 visit to an active Army Combat Aviation Brigade,
           unit officials told us less than 38 percent of unit aircraft were
           available for training during a 4-month period in late 2006. This
           lack of aircraft availability was caused by the unit's 18-month
           reset and training schedule between deployments and its aggressive
           maintenance schedule, which was arranged to ensure all unit
           aircraft were properly maintained and upgraded prior to the next
           deployment. Brigade staff stated that while they were capable of
           preparing the unit for deployment with a compressed reset and
           training period, any period shorter than 18 months would not be
           possible for two reasons. The first reason was the lack of
           available aircraft for training due to mandatory pre-deployment
           maintenance, and the second reason was the inability to conduct
           sufficient pilot training. The National Guard and Army reserve
           units we visited had significantly greater shortfalls in equipment
           than their counterparts in the active component. Unit officials
           consistently commented that the lack of equipment had a negative
           impact on their unit's ability to train. We also observed that
           equipment deficiencies in the Sustainment Multi-Function Support
           Brigades were significantly worse than within the Brigade Combat
           Teams.

           Regarding personnel issues, brigade officials were mostly
           concerned about mismatches in the skill levels and the specialties
           of their assigned soldiers rather than the overall number of
           personnel assigned to units. Active units we visited were
           generally staffed with the authorized number of soldiers, but
           mismatches in skill levels and specialties frequently occurred
           even though some of the units we visited were nearing their
           deployment dates. Unit officials expressed concerns that the Army
           was managing unit staffing only at the aggregate level whereby
           units were expected to "grow their own" skill-level expertise
           among noncommissioned and junior officer leaders. Unit officials
           informed us that this places a large burden on the units to ensure
           they can properly train and operate with lower-skill-level staff
           than unit authorization documents require. The National Guard and
           Army Reserve units we visited were concerned about obtaining
           soldiers trained in new specialties and retraining their existing
           soldiers for the new specialties required by the modular force
           designs. For example, National Guard officials told us that
           obtaining classroom training for National Guard members was
           complicated by the fact that National Guard members often lacked
           priority for the training, and in other cases could not take time
           from their civilian jobs to take courses exceeding several weeks
           or months. Army officials said they expect it will take several
           years to retrain personnel in new specialties required by the
           Army's modular unit designs and are working with the components to
           develop and implement training plans.

           Brigade staff also commented on the challenge of training soldiers
           for deployment when equipment is in limited supply. Deploying
           units have a higher priority for equipment and personnel while
           nondeployed units do not have the higher priority for either until
           approximately 45 days prior to their mission rehearsal exercise.
           On the basis of a unit's performance during this exercise, the
           Army will certify a unit has achieved the requisite collective
           skills to successfully perform its assigned military operations
           while deployed. However, several unit officials we spoke with
           stated that receiving the bulk of their equipment and personnel
           just 45 days before they are to conduct this exercise leaves
           insufficient time to ensure soldiers become proficient in
           operating some of the more complex technical equipment prior to
           the mission rehearsal exercise.

           To address high demand for limited quantities of equipment and
           personnel, the Army's headquarters staff along with other major
           Army commands continues to manage key equipment for modular units.
           The Army maintains an extensive list of these critically managed
           pieces of equipment controlled by its Deputy Chief of Staff G-8
           headquarters staff. These items are limited in quantity but are in
           high demand for deploying units as well as those units converting
           to the modular design. Examples of these items include the Long
           Range Scout Surveillance System, the Counter-Fire Radar System,
           and the Heavy Expanded Mobility Tactical Truck. The G-8 staff
           conducts a semiannual equipment and personnel synchronization
           conference in order to determine the requirements from units
           scheduled for upcoming deployment along with equipment
           availability given existing inventory, newly procured equipment,
           and equipment completing repair and reset work. Representatives
           from the Army's personnel management organizations also address
           upcoming personnel requirements. Even with these coordination
           efforts, some Army units still experience shortages in their
           authorized level of equipment and personnel, which may not be
           filled until shortly before the unit deploys. While the Army is
           working on improving its ability to provide equipment to units
           earlier in their training cycle, some shortages are likely to
           continue until the Army procures more equipment over time or the
           demand lessens for large numbers of Army units for overseas
           operations.
			  
			  The Army's Cost Estimate for Funding Modular Units Contained
			  Uncertainties and Was Built on Some Assumptions That No Longer
			  Appear Valid

           The Army's $52.5 billion cost estimate for its modular
           restructuring initiative, which was developed in late 2004,
           contained uncertainties and was based upon several assumptions
           that no longer appear valid. As the Army's plans for its modular
           force have evolved, some of the early uncertainties have now been
           clarified, while some of the key assumptions--particularly those
           that related to National Guard equipping, and the return of
           equipment from Iraq and Afghanistan--may no longer be valid. Army
           officials told us that the OSD-approved $52.5 billion funding plan
           will not be adequate to fully equip the modular force. As shown in
           table 2, $43.6 billion in this plan was specifically designated
           for equipment purchases from fiscal year 2005 through fiscal year
           2011.^12

Table 2: Funding Plan for Modular Restructuring, Fiscal Years 2005-2011,
as Reported to OMB in January 2007

Dollars in                                                                 
millions                                                                   
                   Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal           
Appropriation     Year   Year   Year   Year   Year   Year   Year     Total 
category          2005   2006   2007   2008   2009   2010   2011 2005-2011 
Equipment       $4,354 $5,436 $5,907 $6,855 $7,165 $7,226 $6,666   $43,609 
Sustainment and     $0 $1,022   $196   $285   $679   $744   $588    $3,514 
Training                                                                   
Construction/     $250    $13   $497   $461 $1,440 $1,358 $1,359    $5,378 
Facilities                                                                 
Total           $4,604 $6,471 $6,600 $7,601 $9,284 $9,328 $8,613   $52,501 

Source: GAO analysis of Army data.

At the time the estimate was developed, the Army's modular designs were
incomplete, so budget analysts were uncertain about the exact number of
personnel and how many and what type of equipment items would be needed
for modular units, which contributed to the analysts' challenge in
developing an accurate cost estimate. Further, because the number and
composition of National Guard units had not been decided upon at the time
the cost estimate was developed, budget analysts made certain assumptions
about how much funding would be required by National Guard units to
convert to the new modular designs. When the Army began to implement its
modular restructuring initiative, it planned for the National Guard to
establish 34 Brigade Combat Teams plus an additional number of support
brigades. The 2006 Quadrennial Defense Review, however, recommended that
the Army establish only 28 National Guard Brigade Combat Teams and convert
the remaining units to support brigades.

^12Other GAO work related to the Army's military construction requirements
and funding can be found in GAO, Defense Infrastructure: Challenges
Increase Risks for Providing Timely Infrastructure Support for Army
Installations Expecting Substantial Personnel Growth, [34]GAO-07-1007
(Washington D.C.: Sept. 13, 2007).

In addition to these uncertainties, the Army assumed that National Guard
modular units would retain some older equipment rather than acquire the
newer versions being procured for active units. However, the Army has
recently found that it cannot deploy National Guard units to Iraq with
older equipment since it was not compatible with the equipment being used
by the active Army units. Further, maintenance personnel were not able to
maintain older equipment items in theater because repair parts were
difficult to obtain.

Further, from the beginning of the Army's modular restructuring
initiative, the National Guard was recognized as having significant
equipment shortfalls. These preexisting equipment shortfalls have been
exacerbated over the past several years as National Guard units needed to
transfer equipment between units to ensure deploying units were fully
equipped. These equipment transfers, combined with the Army's practice of
leaving significant quantities of National Guard equipment in Iraq for
follow-on units, have depleted National Guard equipment stocks nationwide
to less than 49 percent of requirements. As part of the Army's original
$52.5 billion cost estimate, the Army dedicated $21 billion to purchase
new National Guard ground equipment. However, because of the National
Guard's extensive equipment requirements, the Army now plans to allocate
$37 billion for National Guard equipment through fiscal year 2013.
Moreover, senior Army officials have stated that this amount may not be
sufficient to ensure that National Guard units are equipped to their
authorized levels.

Last, the Army assumed that significant quantities of equipment would come
back from Iraq and be available after some reset and repair work to be
distributed to new modular units. Given the heavy use of equipment in Iraq
and Afghanistan, this assumption may no longer be valid. At the time the
cost estimate was developed, the Army assumed that at some point equipment
would begin to rotate back from Iraq and be reset at the Army's repair
depots to be redistributed to new modular units. The increased demands for
equipment used in Iraq operations, however have had a dramatic effect on
equipment availability. This demand reduces expected service life, creates
significant repair expenses, and creates uncertainty as to whether it is
economically feasible to repair and reset these vehicles.^13 Further, some
of the up-armored vehicles currently being operated in theater may be
replaced altogether by newer vehicles offering better protection at a
higher cost.

^13See [35]GAO-07-831 for additional information on reset challenges.

The Army Has Substantially Revised Its Timeline for Fully Equipping Units but
Has Not Fully Identified the Total Cost

According to senior Army staff officials, the Army cannot fully equip and
staff its modular units to meet unit design requirements by its planned
2011 completion date. The Army is requesting modularity funding in line
with its $52.5 billion plan, although the Army is also requesting
additional funding for new initiatives to accelerate conversion of two
modular brigades and to expand the size of the Army. However, Army
officials have also said they plan to request additional funding for
modular force equipment beyond 2011 and revise the timeline for fully
equipping the modular force to 2019.^14 Given the Army's reliance on the
reserve component units, senior Army staff officials said that the Army
now plans to procure 100 percent of authorized levels of equipment for
reserve component units as well as for the active Army units. The
implication of this decision will likely be to extend procurement
timelines for the additional quantities of equipment needed to equip all
units to their authorized levels. Army officials said they now plan to
fully equip the Brigade Combat Teams by 2015 and the Multi-Function
Support Brigades by 2019, regardless of component.

The practice of providing equipment to the fully authorized level
represents a departure from the Army's past practice of equipping reserve
forces with less equipment than many active component units. However, for
the units to be able to assist the active Army in meeting its operational
requirements in Iraq and Afghanistan, and elsewhere, senior Army staff
officials said this practice needed to be changed. The Army previously
believed that in the event of war or a crisis, sufficient time would be
available to fully equip reserve component units prior to deploying them.
According to Army officials, this has proven unfounded in the current
operational environments of Iraq and Afghanistan as the Army required both
National Guard and Army reserve unit capabilities early in these conflicts
and afterward to support the Army's continued rotation of forces. This
decision will drive costs higher than anticipated as equipment costs
represent the bulk of the Army's funding requests.

^14The Army plans to request funding through 2017 which will result in a
fully equipped force by 2019.

In our September 2005 report,^15 we recommended that the Secretary of
Defense direct the Army to provide Congress a detailed plan estimating the
costs of modularity sufficient to provide Congress reasonable assurance
that estimated costs reflect total costs of modular units as designed and
tested. We made this recommendation to improve the information available
to decision makers on the cost of the Army's plan and to disclose
potential risk that modularity might not be implemented as planned. OSD
did not comment on our report recommendation, and instead provided us with
comments prepared by an Army official who stated that the Army's estimate
was solid and did not include uncertainties. The Army official further
commented that while there would continue to be Army modular force design
changes subsequent to that estimate, these changes were normal in the
course of the Army's force development process and would not substantially
change the Army's estimate. Although the Army partially concurred with our
September 2005 report recommendation to provide Congress a detailed cost
estimate and recognized the need for regular reporting on the Army's
restructuring initiative, the Army decided that its current methods for
reporting to Congress were sufficient and additional information was
unnecessary. We do not agree that the Army's regular reporting on its
modular restructuring initiative fully addressed the requirements of our
recommendation. Moreover, by not commenting on our recommendation and not
requiring the Army to take positive corrective action, OSD has allowed a
lack of transparency concerning total funding needs to continue, and
decision makers do not have all the necessary information they need to
assess funding needs and weigh competing priorities.

^15 [36]GAO-05-926 .

The Lack of Transparency and Clear Linkages between the Army's Funding Requests,
Requirements, and Implementation Plans Reflect Management Control Weaknesses and
Contribute to Oversight Challenges

In addition to its modular force initiative, the Army is requesting funds
for other initiatives, such as force expansion and modular brigade
acceleration, using a combination of regular and supplemental
appropriations. These multiple funding requests also make it difficult for
DOD and congressional decision makers to assess the Army's requirements
for and progress in fully equipping the modular force and establishing new
units. Congress has required the Army to submit its assessment of progress
in transforming to a modular force. However, while the Army is submitting
regular reports to Congress in conjunction with the President's annual
budget requests, these reports include lists of modular equipment to be
purchased but do not include enough information to enable Congress to
gauge progress in meeting modular unit requirements. For example, the
reports do not compare the quantities of equipment being requested with
total requirements and quantities on hand so that senior DOD officials and
Congress can assess the need for the requested equipment and progress to
date in procuring quantities required based on the Army's modular unit
designs. As a result, these reports provide insufficient information on
which to judge the extent to which the Army's proposed equipment purchases
are addressing equipment requirements for the modular force. The lack of
linkage between requirements, funding requests, and implementation to date
impedes oversight by not providing a means to measure the progress the
Army is making in filling its modular equipment requirements, and to what
extent the Army is making the best use of its requested funding.

Similarly, the Army's reporting to OMB does not provide sufficient
information to measure the Army's progress in equipping its modular units.
In declining to implement our recommendation to provide Congress a
detailed plan estimating the cost of modularity, the Army commented that
the information it was reporting to Congress, as well as information
provided to OMB for modularity, already provided comprehensive oversight
and any additional reporting would be redundant and unnecessary. The Army
commented that it regularly submitted budget and other program management
information to OMB through the Office's Program Assessment Rating Tool
known as "PART."^16 However, information contained in PART reinforces the
need for a detailed plan estimating the modular force equipment costs. For
example, the PART shows that "risk for cost growth remains high" for Army
modularity and that increased efficiency and cost effectiveness has not
been an Army priority. On the basis of our review, we found that neither
the Army's report to Congress nor the Army's reporting under PART provides
evidence of specific plans, milestones, or resources required for the Army
to fully staff and equip its modular units.

^16The Program Assessment Rating Tool (PART) is a series of questions
designed to provide a consistent approach to rating programs across the
federal government. The PART uses diagnostic tools that rely on
professional judgment to assess and evaluate programs across a wide range
of issues related to performance.

Congressional oversight also will be complicated by the multiple sources
of funding being sought by DOD to complete the Army's modular
restructuring and expansion initiatives as well as a lack of transparency
into how the Army estimated these amounts. For example, as shown in table
3, DOD's fiscal year 2008 regular budget request includes funds for the
Army's modular restructuring initiative, as well as the Army's newly
announced force expansion plan, which will involve the creation of six
Brigade Combat Teams and an unspecified number of support units.
Additional funds required to expand the Army are included in the fiscal
year 2007 emergency supplemental request and the fiscal year 2008 Global
War on Terror supplemental request, submitted with DOD's fiscal year 2008
budget. DOD's fiscal year 2008 annual budget request includes $7.6 billion
for the modular force, an amount that is consistent with the Army's
existing $52.5 billion funding plan through fiscal year 2011. Funding to
expand the Army draws on three different funding sources with $1.3 billion
included in the fiscal year 2007 supplemental request, $3.6 billion in the
fiscal year 2008 regular budget request, and $4.1 billion in the fiscal
year 2008 Global War on Terror request. Additional funding to accelerate
the conversion of two Brigade Combat Teams is included in two
requests--$1.9 billion in the fiscal year 2008 regular budget request, and
$.9 billion in the 2008 Global War on Terror request. All of these funding
requests included substantial sums for Army equipment, but it remains
unclear how each request will support the Army's goal of fully equipping
the modular force because the Army has not provided a basis for how it
computed its cost estimates, including underlying assumptions, and has not
linked these estimates to modular force requirements and progress in
equipping the force to date. Without a fuller explanation of these
estimates, decision makers will not be in a position to assess whether the
Army is estimating costs consistently and whether requested funding for
these initiatives will meet, fall short of, or exceed Army requirements.

Table 3: Sources of Army Funding for Modular Restructuring and Expansion

Dollars in                                                                 
billions                                                                   
                                                 Fiscal year                  
                    Fiscal year                         2008 Fiscal year 2008 
                   2007 regular Fiscal year 2007     regular    Global War on 
                         budget     supplemental      budget    Terror budget 
Army Initiative      request   budget request     request          request 
Army Modular            $6.6               $0        $7.6               $0 
Restructuring                                                              
2 BCT                     $0               $0        $1.9             $0.9 
Restructuring                                                              
Acceleration                                                               
Army Expansion            $0             $1.3        $3.6             $4.1 

Source: GAO analysis of Army data.

Further, DOD has requested other funds to meet modular brigade equipment
requirements, making it even more difficult to assess the Army's progress
against its plans. As shown in table 3, funding to support the recent
decision to accelerate the modular force conversion of two Brigade Combat
Teams in order to deploy them earlier than planned includes a request for
$1.9 billion in the fiscal year 2008 budget submission and nearly $1
billion in the fiscal year 2008 Global War on Terror budget requests. We
have also reported that the Army is using some of its funds appropriated
for resetting equipment to accelerate achieving the Army's strategic goals
under its modularity initiative.^17 DOD has not fully explained the basis
for these multiple funding requests and how it distinguishes one set of
requirements from the other. For example, DOD is requesting $2.8 billion
to accelerate the conversion of two Army Brigade Combat Teams, but the
Army's $52.5 billion funding plan for modularity also included funding for
these same Brigade Combat Teams. Also, funding for DOD's plans to expand
the Army is not fully reflected in the three funding requests currently
before Congress, and the Army continues to refine its estimated costs.
Preliminary cost estimates from the Army state this initiative may require
$70 billion or more, which the Army plans to request through fiscal year
2013. Because the Army's cost estimates are still incomplete, decision
makers in DOD and Congress do not know the magnitude of funding required
to complete the expansion plans and restructure the Army's active and
reserve units into a modular force. As a result, they will not know how to
weigh those requirements against other competing priorities.

^17 [37]GAO-07-814 .

Our work has shown that major transformation initiatives have a greater
chance of success when their funding plans are transparent,
analytically-based, executable, and link to the initiative's
implementation plans. The scope, complexity, and magnitude of the
resources required to implement the Army's modular restructuring and
expansion initiatives require a high degree of fiscal stewardship. We have
testified about the need for transparency, accountability, and enhanced
stewardship of appropriated funds as a necessary component for the success
of major military transformation efforts.^18 OMB has provided guidance to
agencies to improve accountability and the effectiveness of agency
programs and operations, emphasizing management's responsibility for
establishing accountability for results when developing new plans to
accomplish the agency's mission. Without adequate management controls over
such a broad-based initiative as the Army's modular force restructuring,
decision makers will not have the information they need to evaluate
progress, understand tradeoffs being made, and assess risk. By directive,
OSD plays a key role in providing guidance and allocating resources to
initiatives such as this. First, the OSD's responsibilities include
defining strategy, planning integrated and balanced military forces, and
ensuring the necessary framework (including priorities) to manage DOD
resources effectively for successful mission accomplishment consistent
with national resource limitations. Second, OSD is responsible for the
efficient management of resources, which includes conducting an annual
departmentwide budget review of the services' budget requests with OMB.
The Director, Program Analysis and Evaluation, plays a key role in
managing departmentwide planning and budgeting by leading and supporting a
"cost analysis improvement group" that has the expertise to make
independent cost estimates of major spending programs to provide a
comparison against service-provided estimates. By not commenting on our
prior recommendations related to the cost of the Army's modular force
restructuring, and not directing the Army to take positive corrective
action in response to our recommendations, the OSD has missed an
opportunity to improve management controls, and emphasize transparency and
accountability for an initiative costing tens of billions of dollars.
Further, the Army may be at risk of not being able to complete both its
modular force and expansion initiatives because the Army has not provided
Congress with complete cost estimates for both of these initiatives and
has already extended time frames for equipping modular units well into the
next decade.

^18Comptroller General David Walker, Fiscal Stewardship and Defense
Transformation, [38]GAO-07-600CG , speech before the U.S. Naval Academy,
Annapolis, Maryland, (Washington, D.C.: Mar. 8, 2007).

The Army has a responsibility to DOD and Congress for establishing
effective management controls over its transformation to a modular force,
particularly considering the magnitude of the dollars being requested.
Management controls include the organization, policies, and procedures
used by agencies to reasonably ensure that programs achieve results;
resources are used consistent with agency mission; and reliable and timely
information is obtained, maintained, reported, and used for decision
making. Effective management controls also mean that leadership is
responsive to outside audit recommendations and takes proper corrective
action. The lack of a transparent linkage between the Army's modular force
requirements, progress to date, and additional funding requests means that
a key management control is lacking-one that holds the agency accountable
for results. Without improvements to its management controls, the Army
will be unable to fully assess the costs of equipping modular units and
expanding the force, and quantify progress in equipping units to meet
modular unit requirements.

The Army Is Applying Lessons Learned but Still Lacks a Comprehensive Approach
for Assessing Modular Unit Designs and Performance

While the Army is evaluating lessons learned from its ongoing
counterinsurgency operations and applying these lessons to identify
changes to its modular designs, it still lacks (1) a comprehensive testing
and evaluation plan to determine whether fielded modular unit designs meet
the Army's original goals for modular units across the full spectrum of
warfare and (2) outcome-oriented performance metrics. The Army evaluated
the experiences of modular units deployed to Iraq and Afghanistan and has
made some changes in unit designs based on these lessons; however, the
Army continues to lack a plan for evaluating and testing modular brigades
in a wide variety of situations that include high-intensity combat
operations. Further, the Army has not yet defined outcome-oriented metrics
against which it could assess the modular force. As a result, the Army
does not have a clear way to measure the extent to which it is achieving
the benefits it initially envisioned when it designed the modular force
and ensure that it is doing so in a manner that is affordable and meets
DOD joint war fighting capabilities.

Lessons Learned from Ongoing Operations Are Being Applied to the Current Modular
Force, but the Army Lacks a Comprehensive Test and Evaluation Plan

The Army has not established a comprehensive approach to ensure its
original performance goals for modular units are being met by its fielded
modular designs across the full-spectrum of military operations. When a
large organization implements major transformation initiatives that
require substantial expenditures of resources, it is important to
establish a comprehensive approach to assess the extent to which the goals
of the transformation are being met. Our prior work examining
organizational change and defense transformation shows that developing
performance measures and criteria for assessing results is important for
transforming organizations to increase their likelihood for success.^19
Additionally, our prior work shows that methodically testing, exercising,
and evaluating new doctrines and concepts are an important and established
practice.^20 Prior to implementing modular restructuring, the Army
established specific expectations for how its modular designs would
improve combat performance and operational deployment and identified
significant amounts of additional resources--personnel and
equipment--these units need to meet these goals. Additionally, the Army's
modular restructuring initiative is about more than just providing units
with additional resources; it includes new doctrinal concepts that are
critical to the success of these new units.

The Army has a process to assess modular force capabilities against the
requirements of current operations; however, the Army lacks a
comprehensive approach to ensure its performance goals are met across the
full spectrum of military operations. As part of its evaluation process,
TRADOC officials formed teams that evaluate modular unit designs and make
recommendations for improvements in staffing and equipping the force based
on lessons learned from current operations. The lessons-learned process
relies on unit evaluations that take place before, during, and after
deployments to Iraq and Afghanistan. For example, on the basis of lessons
learned, the Army has reconfigured some of the modular unit designs and
has added additional capabilities in force protection and route clearance
to counter specific threats faced by deployed units. The Army adjusted the
number and skill mix of staff within its modular unit designs and changed
the number and types of equipment in modular units to increase their
ability to address current threats in Iraq and Afghanistan.

^19GAO, Military Transformation: Additional Actions Needed by U.S.
Strategic Command to Strengthen Implementation of Its Many Missions and
New Organization, [39]GAO-06-847 (Washington, D.C.: Sept. 8, 2006).

^20 [40]GAO-06-745 .

While the Army's modular designs are being evaluated based on the
operations in Iraq and Afghanistan, these are counterinsurgency or
stability operations. The Army has not taken a more comprehensive approach
to test and evaluate the modular force across the full spectrum of
warfare, which includes high-intensity combat operations. The Army's
emphasis on current operations may be understandable given the need to
ensure that Army units are ready to meet the demanding requirements of
ongoing operations. While operations in Iraq and Afghanistan are
challenging, they represent only certain specific types of operations as
opposed to the Army's broader requirements to respond to a full spectrum
of joint operations. According to TRADOC officials, the biggest challenge
in testing and evaluating modular unit design is in ensuring that the Army
is assessing these units based on full- spectrum joint operations that are
not limited to the requirements of current operations. In addition to its
current operations, the Army may also be required to deploy its modular
forces to face the challenge of protracted high intensity offensive or
defensive combat operations instead of the counterinsurgency engagements
in Iraq and Afghanistan.

The Army tested early versions of Brigade Combat Team designs via computer
simulations and desktop exercises which involved a specific scenario that
was neither prolonged nor characterized by large-scale, high-intensity
combat operations. These tested designs were also equipped with higher
levels of key equipment enablers, which so far, the Army has not yet
fielded in its Brigade Combat Teams. For example, the original designs for
Brigade Combat Teams included significantly greater numbers of specific
key-enabler equipment, such as Unmanned Aerial Vehicles and the Long-Range
Advanced Scout Surveillance System. This key-enabler equipment provided
units with a more robust intelligence surveillance and reconnaissance
capability allowing the modular units to detect and engage enemy positions
faster than without the equipment. Because of the differences between the
design tested by the Army and the current configuration of Army modular
units, we recommended in our September 2006 report that the Army formulate
a testing plan that includes milestones for conducting comprehensive
assessments of the modular force as it is being implemented.^21 While the
Army disagreed with this recommendation, believing its existing program
was adequate, we nonetheless continue to believe that this recommendation
has merit because of the narrow spectrum of operations being used to
assess modular force designs and the limited nature of the original
testing program that evaluated a more capable unit design that included
key enabler equipment that has not yet been assigned to Brigade Combat
Teams.

^21 [41]GAO-06-745 .

In addition, other organizations have released reports identifying
capability gaps with the Army's modular designs that could ultimately
affect the modular units' ability to operate effectively against some
current and predicted threats. The Army Science Board, the department's
senior scientific advisory body, released a study in 2006 asserting that
Multi-Function Support Brigades are not adequately equipped or staffed for
independent operations because they lack the communications and force
protection equipment needed to operate without the assistance of other
units. Instead of operating independently, these brigades need to rely on
Brigade Combat Teams for these capabilities, which affect the Brigade
Combat Team's mission capability. In March 2006, the U.S. Army Infantry
Center at Fort Benning, Georgia, produced a capabilities assessment of the
Infantry Brigade Combat Team, and found that these units may not have the
desired capability to operate independently against heavier enemy forces,
composed of tanks and other armored vehicles, because these units were
lighter and did not possess sufficient anti-armor capability.
Specifically, the U.S. Army Infantry Center was concerned that the
Infantry Brigade Combat Teams did not have the capability to defeat enemy
armored vehicles at a safe distance, or armored vehicles with advanced
reactive armor or active denial systems that are currently being developed
and fielded to some armies throughout the world. Without a process to
evaluate modular units of all types--heavy and light combat units and
support units--the Army cannot be sure that it will have the capability to
operate effectively in the full-spectrum of joint combat operations.

The Army Has Not Established Outcome-Oriented Metrics for Measuring its Progress
in Achieving the Benefits of a Modular Force

The Army has not established outcome-oriented metrics to ensure that its
modular designs meet its original goals, support joint warfighting
efforts, or are affordable given competing resourcing priorities.
Transforming the Army to a more modular and deployable force requires
significant resources to properly staff, train, and equip newly organized
modular units at a time when the Army must staff, equip, and train units
deploying to Iraq and Afghanistan. The Army proceeded with this modular
restructuring effort in the face of these resource challenges because it
expected this transformation to achieve certain benefits. The ultimate
goals of its modular restructuring efforts, according to the Army's
Strategic Planning Guidance, were to achieve output-oriented goals, such
as increasing the rotational pool of ready units by at least 50 percent
and outcome-oriented objectives, such as enhancing combat power by at
least 30 percent in the active component. While the Army's primary modular
force transformation plan--the Army Campaign Plan--includes
output-oriented metrics, such as the number of units organized each year,
the Army has not developed important outcome-oriented performance measures
and criteria to measure success and track the progress it is making toward
its goals, such as assessing the amount of combat power generated by these
units.

Our prior work examining organizational change and defense transformation
shows that developing outcome-oriented performance measures and criteria
for assessing progress an organization is making toward its goals is
important for transforming organizations.^22 Because of the value of these
assessments, we recommended that the Army develop specific, quantifiable
performance metrics to measure progress toward meeting the goals and
objectives established in the Army Campaign Plan.^23 The Army partially
concurred with our recommendation, but to date, has not taken any action,
and according to an OSD official, OSD has not required it to do so. OMB in
its Program Assessment Rating Tool noted the Army's current metrics for
modularity are output-related rather than focused on outcomes. According
to OMB, an outcome metric answers the question "What is the program's goal
or purpose?" Without developing outcome-related metrics, the Army will be
unable to measure whether its modular units are achieving their originally
envisioned benefits.

OSD Oversight of the Army's Modular Force Transformation Initiative Is Needed to
Ensure Efforts Support Joint Warfighting and Provide Benefits That Outweigh
Costs

Without a comprehensive evaluation of the Army's modular force, it is not
clear whether the Army's plans for the modular force are compatible with
the overall development of joint force capabilities and provide sufficient
benefits that outweigh their costs. OSD has responsibility for providing
the best allocation of DOD's resources to provide for joint warfighting
capabilities by defining strategy, planning integrated and balanced
military forces, ensuring the necessary framework (including priorities)
to manage DOD resources effectively in order to accomplish DOD's mission
consistent with national resource limitations, and providing decision
options to the Secretary of Defense. While the Army and not OSD is
primarily responsible for modular restructuring, some features of the
Army's modular force designs may affect other service roles and missions,
which suggest that OSD may need to become more involved in Army modular
design efforts. For example, Unmanned Aerial Vehicles (UAV) are critical
enablers in the Army's modular force designs, but the Air Force had
advocated that it be designated executive agent for all mid-range and
higher range UAVs. Further, as part of its modular transformation, the
Army is exploring the potential for adding precision-guided artillery to
its designs, in lieu of current reliance on joint-fires, such as the
precision strike capability provided by other services. Given the fact
that there may be duplication of effort and resources in these areas, DOD
may need to consider how to ensure the Army is capable of meeting its
requirements for UAV coverage and precision fires while minimizing the
potential for unnecessary duplication and wasted resources among the joint
force. Finally, Congress required the Army to seek out the views of the
combatant commanders, the final end users of Army units, on the Army's
modular force, but the Army has yet to transmit this assessment to
Congress. To date, according to an OSD official, OSD has not required the
Army to develop outcome-related metrics or develop a comprehensive plan
for evaluating modular units. Without further analysis of the Army's
modular force initiative in the context of joint force capabilities, OSD
will not be in a position to evaluate the Army's modular force plans and
funding requests.

^22 [42]GAO-06-847 .

^23 [43]GAO-06-745 .

Conclusions

The Army's modular restructuring is a major undertaking requiring many
billions of dollars and therefore needs sound management controls. The
lack of linkage between the Army's funding requests, progress in equipping
and staffing units, and its modular design requirements contribute to
oversight challenges. This lack of linkage impedes oversight by DOD and
congressional decision makers by not providing a means to measure the
Army's progress in filling its modular equipment requirements or to inform
budget decisions. The Army currently plans to request additional funding
from Congress and extend its timeline to equip its modular units; however,
it has not provided a complete cost estimate, or provided detailed
information, on what specific requirements remain to be filled. Moreover,
the Army has recently announced a plan to expand its force, which will
lead to requirements to fund new modular units at the same time it is
trying to implement its original restructuring plans. Until the Army
provides a comprehensive plan outlining its requirements for its modular
restructuring and expansion initiatives, identifying progress made to
date, and detailing additional equipment and other resources required, OSD
and Congress will not be in a sound position to determine the total costs
to complete modular restructuring and expand the Army and decide how to
best allocate future funding. The risk to the force is that insufficient
funds to complete both initiatives along overlapping timelines may result
in continued equipment and personnel shortfalls. Effective management
controls over these initiatives will be needed to help measure progress
and to achieve effective and efficient operations. Moreover, OSD has a
role to play in overseeing the initiatives to help ensure accountability
for results in addition to its annual reviews of the services' budget
requests. Further, while the Army continues to evaluate the performance of
its modular designs in the current counterinsurgency conflict in Iraq and
Afghanistan, the Army's testing and evaluation of its modular unit designs
still lack some important components. The lack of outcome-related metrics
prevents the Army from measuring whether its modular unit designs are
achieving their originally envisioned benefits thereby justifying the
large expenditure of funds required to implement the Army's modular
restructuring initiative. The Army's modular restructuring initiative
would benefit from an assessment of the Army's fielded modular designs
across the full spectrum of warfare since it has limited itself to the
current counterinsurgency operations and has not included protracted
high-intensity conflict. Without a comprehensive testing program for the
Army's modular initiative incorporating these elements, OSD lacks the
information necessary to evaluate the Army's modular designs in terms of
the designs' effectiveness in supporting joint warfighting requirements or
make informed decisions on the Army's modular funding plans given
competing priorities for funding.

Recommendations

To improve management controls, enhance transparency, and reduce the risk
associated with the Army modularity and force expansion initiatives'
costs, we are recommending that the Secretary of Defense take the
following four actions:

           o Direct the Secretary of the Army to develop a comprehensive
           strategy and funding plan that identifies requirements for
           equipment and personnel based on modular unit designs, identifies
           total funding needs, and includes management controls for
           measuring progress in staffing and equipping units. Also, direct
           the Secretary of the Army to report its estimates to Congress.
           o Direct the Deputy Secretary of Defense, with support from the
           Director, Program Analysis and Evaluation, to review and assess
           whether the Army's strategy and funding plan clearly identifies
           and links requirements, progress to date, and additional funding
           requirements.
           o Direct the Deputy Secretary of Defense, with support from the
           Director, Program Analysis and Evaluation and the DOD Comptroller,
           and in keeping with the overall priorities of the department and
           current and expected resource levels, to replace the Army's
           existing Office of the Secretary of Defense--approved funding plan
           for modularity that ends in fiscal year 2011, with a new approved
           Office of the Secretary of Defense funding plan that fully
           considers the Army's requirements for a modular force and is
           consistent with the Army's extended time frames to fully staff and
           equip the modular force. This plan should also be reported to
           Congress.
           o Direct the Secretary of the Army to include exhibits with the
           annual budget submissions to show how the budget requests help
           meet the equipment and personnel requirements of the Army's
           modular units and help identify what remains to be funded in
           future years.

           Further, to enhance the rigorousness of the Army's efforts to
           assess modular designs, we are recommending that the Secretary of
           Defense take the following two actions:

           o require the Army to develop a comprehensive assessment plan that
           includes steps to evaluate modular units in full spectrum combat
           and
           o oversee the Army's assessment program.
			  
			  Agency Comments and Our Evaluation

           In written comments responding to a draft of this report, the
           Department of Defense concurred with all six of our
           recommendations. The Department's comments are discussed below and
           are reprinted in appendix II.

           DOD concurred with our four recommendations intended to improve
           management controls and bring about a comprehensive Army strategy
           and funding plan for staffing and equipping modular units.
           Specifically, DOD concurred with our recommendations to (1) direct
           the Army to develop a comprehensive strategy and funding plan, (2)
           task the Director, Program Analysis and Evaluation, to review and
           assess the Army's plan to ensure that the plan links funding needs
           to requirements, (3) revise the existing DOD approved funding plan
           and communicate funding requirements to Congress, and (4) have DOD
           include additional exhibits in its annual budget submissions which
           are intended to show what requirements the funding request will
           fulfill and what requirements remain to be funded. In explaining
           how it planned to implement these recommendations, DOD stated that
           would include in its FY08 Annual Report on Army Progress under
           Section 323 of the John Warner National Defense Authorization Act
           for Fiscal Year 2007 (P.L. 109-364), the equipping and staffing
           requirements for different brigade types; the number and types of
           brigades, the status of conversions to modular design, and the
           status of the manning and equipment for the force as a whole. DOD
           also stated that the Director, Program Analysis and Evaluation
           will review and assess the Army's strategy and funding plans as
           part of DOD's budget development process. In addition, DOD stated
           it will work with the Army to reassess the accounting means for
           equipping the force and determine the appropriate path forward.
           DOD stated the Army will include additional information on
           equipping and personnel requirements for its modular forces in its
           fiscal year 2008 Annual Report on Army progress and will
           incorporate the Army's funding needs in the President's annual
           budget submission to Congress. We agree that the steps DOD plans
           to take in response to these recommendations, if fully
           implemented, will introduce more effective oversight and
           management controls of the Army's initiative within the
           Department, and will better inform the Congress of the Army's
           progress in staffing and equipping the modular force. With regard
           to developing an updated funding plan, we believe it will be
           important for the Army to identify in its report to Congress its
           overall funding needs to staff and equip the modular force through
           2017--consistent with the Army's latest plan--in addition to
           providing materials to support the President's Budget Request for
           a particular year. Such an overall plan is needed to help senior
           DOD officials and Congress weigh the Army's funding needs for
           modular units with other competing needs. In conjunction with the
           work we are undertaking to annually review and report on the
           Army's plans and progress in equipping and staffing modular units
           in response to a congressional mandate, we plan to review the
           funding information DOD submits as part of its annual report and
           fiscal year 2009 budget justification materials and assess its
           comprehensiveness.

           DOD also concurred with our two recommendations directing the
           Secretary of the Army to develop a comprehensive assessment plan
           that includes steps to evaluate modular units in full spectrum
           combat operations and requiring OSD to oversee the Army's
           assessment program. However, DOD commented that it believed that
           the Army and OSD were already evaluating modular units in full
           spectrum operations via the Training and Doctrine Command's
           modular force assessment efforts and the Total Army Analysis
           process. Our review found that the Training and Doctrine Command's
           ongoing evaluations and assessments are focused primarily on
           counterinsurgency operations rather than full spectrum warfare.
           Moreover, the primary purpose of the Total Army Analysis process
           is to develop the mix of forces (numbers and types of units)
           needed to carry out full spectrum operations; it is not a tool
           specifically intended to assess and refine individual unit
           designs. For example, Total Army Analysis may determine how many
           intelligence units the Army needs, but would not be expected to
           determine how an intelligence unit should be structured. We
           continue to believe that the Army should develop and execute a
           comprehensive analysis plan to assess its modular force designs
           and that DOD should be overseeing the Army's assessment plan.
           Without such a plan, DOD may not be able to fully gauge the need
           for additional refinements in its modular unit designs. The
           specific actions DOD has described in its comments do not fully
           meet the intent of our recommendation. For this reason, we are
           adding a matter for congressional consideration to require the
           Army to develop a comprehensive assessment plan for the modular
           force and require OSD to review the plan and transmit it to
           Congress.
			  
			  Matter for Congressional Consideration

           Given the magnitude of the Army's initiative to transform to a
           modular force, and the range of analytical efforts the Army could
           bring to bear to assess the effectiveness of the modular designs
           in meeting 21^st century challenges, Congress should consider
           requiring DOD to develop and provide a comprehensive assessment
           plan that includes steps to evaluate modular units in full
           spectrum combat.

           We are sending copies of this report to the Secretary of Defense;
           the Deputy Secretary of Defense; and the Secretary of the Army. 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 [44]http://www.gao.gov .

           If you or your staff have any questions about this report, please
           contact me at (202) 512-4402 or [email protected]. Contact points
           for our Offices of Congressional Relations and Public Affairs may
           be found on the last page of this report. GAO staff who made major
           contributions to this report are listed in appendix III.

           Janet A. St. Laurent
			  Director, Defense Capabilities and Management

           List of Committees

The Honorable Carl Levin: 
Chairman: 
Ranking Minority Member: 
Committee on Armed Services: 
United States Senate: 

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

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan Hunter: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable John Murtha: 
Chairman: 
The Honorable C. W. Bill Young: 
Ranking Minority Member: 
Subcommittee on Defense Committee on Appropriations: 
House of Representatives: 

           Appendix I: Scope and Methodology

           To conduct our work for this engagement, we analyzed data,
           obtained and reviewed documentation, and interviewed officials
           from the Headquarters, Department of Army; National Guard Bureau;
           U.S. Army Reserve Command; U.S. Army Training and Doctrine
           Command, U.S. Army Forces Command; U.S. Army Center for Army
           Analysis; and U.S. Army Combined Arms Center. We supplemented this
           information with visits to brigades that had undergone modular
           conversions to gain an understanding of the Army's modular force
           implementation plans and progress in organizing, staffing, and
           equipping modular brigades. This included requesting data
           comparing equipment and personnel on hand versus authorized under
           the new design requirements; discussing implementation challenges
           with senior brigade and division-level officials; and researching
           future plans for completing the modular conversion. The brigades
           we visited included brigades in the regular Army, Army National
           Guard, and Army Reserve. We selected 10 nondeployed brigades to
           interview based upon whether each brigade had completed its
           restructuring to a modular organization or was in the process of
           restructuring, whether the unit was currently preparing for an
           upcoming deployment, and whether other restructured modular
           brigades of the same type were available to interview in other
           components. In the regular Army, we visited brigades in the 3rd
           Infantry Division, including the 2nd Brigade Combat Team, 3rd
           Combat Aviation Brigade, and the 3rd Sustainment Brigade. We also
           visited the 4th Infantry Brigade Combat Team of the 1st Infantry
           Division. In the Army National Guard, we visited the 29th Combat
           Aviation Brigade, Maryland; 30th Heavy Brigade Combat Team, North
           Carolina; and 116th Infantry Brigade Combat Team, Virginia. We
           also interviewed the brigade staff of the 108th Sustainment
           Brigade, Illinois, via phone. In the Army Reserve, we visited the
           55th Sustainment Brigade and interviewed the Commanding Officer of
           the 244th Theatre Aviation Brigade via phone. We selected these
           brigades in order to compare brigades of the same design within
           the different components and discuss progress in meeting Army
           goals with staff from each of the components.

           To determine the extent to which the Army implemented its modular
           force initiative and established management controls that provide
           transparency for assessing progress and funding for equipping
           modular units and expanding the force, we visited the above listed
           active and reserve component units and gathered and analyzed
           information comparing required equipment and personnel versus
           on-hand levels. From the Army's Deputy Chief of Staff for Programs
           (G8), we obtained a list of equipment the officials told us were
           vital to enabling modular brigades to operate at least as
           effectively as the brigades they replaced. We met with Army
           officials responsible for managing the equipment items Army-wide
           to determine Army plans for acquiring and fielding those equipment
           items. We updated and analyzed information on Army requirements
           for funding and funding plans and assessed areas of risk and
           uncertainty. We determined that the data used were sufficiently
           reliable for our objectives as our analysis was focused on whether
           the Army would be able to completely equip its modular units
           within the Army's current funding plan, procurement plans, and
           timeline.

           To determine how much funding the Army has been appropriated for
           modular force restructuring, we reviewed Department of the Army
           base budgets and supplemental budgets. To determine how much
           funding the Army has programmed for future modular force
           restructuring costs and Army expansion plans, we met with
           officials in the Department of Army Headquarters, specifically
           officials from the Army's Deputy Chief of Staff for Programs (G8).
           We also reviewed testimony provided by Army officials at
           congressional hearings and budget data submitted by the Army to
           OMB. To understand the Army's future plans for funding its modular
           force transformation, and current Army views on its ability to
           complete its modular force initiative, we met with senior Army
           staff officials, including the Military Deputy for Budget,
           Assistant Secretary of the Army (Financial Management and
           Comptroller); the Military Deputy, Assistant Secretary of the Army
           (Acquisition, Logistics and Technology); the Deputy Chief of Staff
           for Programs (G-8); and the Deputy Chief of Staff for Operations
           (G-3/5/7).

           To determine the extent to which the Army developed a
           comprehensive plan to assess its modular unit designs, we assessed
           the extent of progress in developing metrics and evaluating units'
           performance in full-spectrum operations. We reviewed our prior
           work on assessing organizations undertaking significant
           reorganizations. We reviewed and analyzed the Army Campaign Plan
           and discussed it with officials in the Department of the Army
           Headquarters. To analyze the Army's approach for assessing the
           implementation of its modular conversion, we examined key Army
           planning documents and discussed objectives, performance metrics,
           and testing plans with appropriate officials in the Army's
           Combined Arms Center. We also reviewed recently completed analyses
           on the Army's modular force designs from the Army Science Board
           and from the United States Army Infantry Center, Fort Benning,
           Georgia.

           We conducted our work from August 2006 through August 2007 in
           accordance with generally accepted government auditing standards.
			  
			  Appendix II: Comments from the Department Of Defense
			  
			  Appendix III: GAO Contact and Staff Acknowledgments
			  
			  GAO Contact

           Janet A. St. Laurent, (202) 512-4402 or [email protected]
			  
			  Acknowledgments

           In addition to the contact named above, Gwendolyn Jaffe, Assistant
           Director; Grace Coleman; Barbara Gannon; Harry Jobes; Nichole
           Madden; and J. Andrew Walker made major contributions to this
           report.
			  
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(350885)

To view the full product, including the scope
and methodology, click on [51]GAO-08-145 .

For more information, contact Janet St. Laurent at (202) 512-4402 or
[email protected].

Highlights of [52]GAO-08-145 , a report to congressional committees

December 2007

FORCE STRUCTURE

Better Management Controls Are Needed to Oversee the Army's Modular Force
and Expansion Initiatives and Improve Accountability for Results

The Army's modular force restructuring is a multiyear $52.5 billion
initiative to redesign operational Army units. The Army also plans to
spend $70 billion through fiscal year 2013 to expand the force by 74,200
military personnel. Congress mandated that GAO report annually through
fiscal year 2012 on the Army's modular force. For this report, GAO
assessed to what extent the Army has (1) implemented and established
management controls for its modular force and force expansion initiatives,
and (2) assessed its modular unit designs. GAO assessed Army plans and
funding requests; visited brigades that were reorganizing; and examined
key Army planning documents, performance metrics, and testing plans. Both
brigade combat teams and support brigades were visited, including units
from the active component Army, Army National Guard, and Army Reserve.

[53]What GAO Recommends

GAO recommends that (1) the Army develop a comprehensive strategy and
funding plan to improve accountability for staffing and equipping the
modular force; (2) the Army develop a plan for assessing the modular force
designs; and (3) DOD should review the Army's strategy, funding plan, and
assessment plan. DOD concurred with GAO's recommendations; however, DOD's
actions for assessing unit designs did not fully meet the intent of GAO's
recommendations. GAO added a matter for congressional consideration to
require the Army to more fully assess modular force designs in full
spectrum warfare.

The Army is making progress in establishing modular units but has not
established sufficient management controls to provide accountability for
results and facilitate transparency of the Army's overall funding needs
for modular units and force expansion. By the end of fiscal year 2007, the
Army established 138 of 190 planned modular units; however, all 10 units
GAO visited that had converted to modular designs continue to have some
equipment and personnel challenges, including shortfalls in key equipment,
and mismatches in skill levels and specialties of assigned personnel.
Although the Army originally estimated it could largely equip and staff
modular units by spending $52.5 billion through fiscal year 2011, the Army
now believes it will require additional funding to equip modular units
through fiscal year 2017. However, the Army has not identified how much
additional funding it may need to fully equip units, nor has it provided
sufficient information on progress to date. In addition, the Army is
seeking multiple sources of funding for modular unit and force expansion
equipment purchases without linking the funding to its modular unit design
requirements, thus complicating decision makers' ability to assess the
Army's progress in fully equipping the modular force. GAO's work has shown
that major transformation initiatives have greater chance of success when
their funding plans are transparent, analytically based, executable, and
link to the initiative's implementation plans. Effective management
controls are needed to establish these links. Office of Management and
Budget (OMB) guidance explains that it is management's responsibility to
take systematic and proactive measures to develop and implement management
controls that ensure accountability for results. Without better controls,
decision makers will have difficulty assessing the Army's progress in
meeting its goals, knowing what resources will be required to equip and
staff modular units, and balancing funding requests for these initiatives
with other competing priorities.

The Army is evaluating and applying lessons learned from its ongoing
counterinsurgency operations, but it lacks (1) a comprehensive assessment
plan to determine whether fielded modular unit designs meet the Army's
original goals for modular units across the full spectrum of low- and
high- intensity warfare, and (2) outcome-oriented metrics that help to
measure progress in achieving the goals of the modular force. The Army
evaluated the experiences of modular units deployed to Iraq and
Afghanistan and has made some changes in unit designs based on these
lessons; however, the Army continues to lack a plan for assessing modular
units in high-intensity combat operations. Further, the Army has not yet
defined outcome-oriented metrics against which it could assess progress,
although GAO previously made this recommendation and OMB also notes this
in its performance assessment reporting. As a result, the Army does not
have a clear way to measure the extent to which it is achieving the
benefits it initially envisioned when it designed the modular force and
that it is doing so in a manner that supports DOD joint warfighting
capabilities.

References

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