Industrial Base: Contractors Have Ability to Meet Requirements for
Rations During Wartime (Letter Report, 08/09/94, GAO/NSIAD-94-180).

In response to a requirement by the House Committee on Armed Services,
GAO reviewed the ability of the industrial base to meet wartime
requirements for individual rations called Meal Ready-to-Eat (MRE) and a
group ration called Tray pack that contains multiple servings of food.
GAO's investigation showed that the current MRE and Tray pack suppliers
have surge capacity that substantially exceeds current wartime
requirements.  If the MRE contractors were to produce rations at maximum
capacity for 150 days, not only would all the required MREs be procured,
but the MRE inventory could be more than doubled.  Similarly, the Tray
pack inventory could be increased by more than 20 percent.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-94-180
     TITLE:  Industrial Base: Contractors Have Ability to Meet 
             Requirements for Rations During Wartime
      DATE:  08/09/94
   SUBJECT:  Industrial mobilization
             Defense contingency planning
             Defense capabilities
             Defense industry
             Department of Defense contractors
             Combat readiness
             Food industry
             Food services contracts
             Surveys
IDENTIFIER:  DLA Meals-Ready-To-Eat Program
             Desert Storm
             
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Cover
================================================================ COVER


Report to Congressional Requesters

August 1994

INDUSTRIAL BASE - CONTRACTORS HAVE
ABILITY TO MEET REQUIREMENTS FOR
RATIONS DURING WARTIME

GAO/NSIAD-94-180

Industrial Base


Abbreviations
=============================================================== ABBREV

  CINPAC - Cincinnati Packaging, Inc. 
  DLA - Defense Logistics Agency
  DOD - Department of Defense
  DPSC - Defense Personnel Support Center
  MRE - Meal Ready-to-Eat
  RAFCO - Right Away Foods Corporation
  SOPAKCO - Southern Packaging and Storage Company

Letter
=============================================================== LETTER


B-257248

August 9, 1994

The Honorable Ronald V.  Dellums
Chairman
The Honorable Floyd D.  Spence
Ranking Minority Member
Committee on Armed Services
House of Representatives

The Honorable John Spratt
House of Representatives

In response to a requirement by the House Committee on Armed Services
we reviewed the ability of the industrial base to surge to meet
wartime requirements for individual rations called Meal Ready-to-Eat
(MRE) and a group ration called Tray pack.\1

Also, as subsequently requested by Congressman Spratt, we also
independently examined contractors' surge capacity, focusing our
efforts on current assemblers in the MRE industrial base, and
reviewed the difference between Desert Storm and current MRE wartime
requirements. 


--------------------
\1 The requirement is contained in the Committee's report number
103-200 on the National Defense Authorization Act for Fiscal Year
1994. 


   BACKGROUND
------------------------------------------------------------ Letter :1

In a military operation, large numbers of deployed troops require
significant quantities of rations that will not spoil during transit
to the combat area.  The Defense Logistics Agency's (DLA) Defense
Personnel Support Center (DPSC) in Philadelphia, Pennsylvania,
purchases and provides the armed services with MREs and Tray packs to
fill that need.  The demand for these rations is high in wartime and
low in peacetime, since they are consumed primarily in field
operations and training.  To maintain an industrial base capable of a
large surge in production to meet wartime needs, contractors need to
(1) receive enough peacetime orders to keep them viable, (2) sell
similar products commercially, or (3) do both.  The operational
ration industrial base includes MRE retorters (contractors that cook
food in special ovens), MRE assemblers (contractors that assemble
food pouches and accessories into food bags), and Tray pack retorters
(contractors that cook and seal food in large pans).\2 In fiscal year
1993, DPSC obligated about $90 million for 21.6 million MREs and
about $28 million for 1.4 million Tray packs. 

The Department of Defense's (DOD) current wartime scenario calls for
deployment of 614,000 troops (excluding sailors, who eat on ships) to
two areas of operations over a 150-day period.  During this period,
the troops are expected to consume about 276 million meals.  The
wartime scenario calls for 70 million meals (25 percent) to be MREs
and 21 million meals (8 percent) to be Tray packs.  The remaining 67
percent would be fresh (A rations) or canned food (B rations) or
meals at home while troops wait to be deployed.  Appendix I contains
additional information on the rations required under DOD's current
wartime scenario. 

In September 1993, DLA awarded MRE assembly contracts to two of three
competing contractors.  The potential loss of surge capacity from the
non-selected contractor raised concerns about the ability of the two
selected contractors to meet wartime surge requirements. 

A member of the House Armed Services Committee expressed concern that
the requirement in the current wartime scenario for MREs may be
understated because in December 1990, during the buildup for
Operations Desert Shield and Desert Storm, the services requested
that DPSC order 245 million MREs.  DPSC subsequently terminated for
convenience over half of the MREs on order and still had large
quantities on hand and to be delivered. 

In December 1991, DPSC began conducting surge capacity studies of the
MRE contractors.  DPSC staff evaluated each contractor's production
facility.  They observed and identified assembly processes and
verified MRE equipment listed by the contractor.  With the use of a
production formula agreed upon by both DPSC and the contractors, an
adjusted monthly surge capacity was calculated for each machine,
assembly area, and the plant as a whole.  The surge capacity
requirement is included in DPSC contracts.  Appendix II discusses
DPSC's study in further detail. 


--------------------
\2 Unlike MREs, which are assembled by contractors, DLA assembles
Tray pack meal modules (pans placed into boxes and then onto pallets)
at its depots.  A Tray pack pan holds at least 5 servings and as many
as 18 depending on the food type. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Data provided by DPSC and confirmed by our independent examination
shows that the current MRE and Tray pack suppliers have surge
capacity that substantially exceeds current wartime requirements.  If
the MRE contractors were to produce rations at maximum capacity for
150 days, not only would all the required MREs be produced, but the
MRE inventory could be more than doubled.  Similarly, the Tray pack
inventory could be increased by more than 20 percent. 

The current DOD wartime requirement of 70 million MREs is more
realistic than the 245 million MREs ordered to support Operation
Desert Storm because, for Desert Storm, the services ordered this
large quantity to be delivered over a 12-month period.  DPSC believes
the services over ordered during Desert Storm because the war only
lasted for several weeks rather than 1 year and the services have
historically switched to A or B rations whenever possible. 


   CAPACITY TO MEET SURGE
   REQUIREMENTS
------------------------------------------------------------ Letter :3

Our review of DPSC data and visits to contractor plants revealed that
MRE and Tray pack suppliers have surge capacity that substantially
exceeds wartime requirements.  If the MRE contractors were to produce
rations at maximum capacity for 150 days, not only would all the
required meals be produced, but the MRE inventory could increase from
56 million to about 121 million meals.\3

Similarly, the Tray pack inventory could increase from about 9.5
million to 11.3 million meals.  Appendix III discusses the
contractors' ability to meet surge requirements. 


--------------------
\3 The limiting factor for MREs is the capacity of the assemblers. 


   CAUSES OF DIFFERENCES BETWEEN
   DESERT STORM AND CURRENT DOD
   WARTIME REQUIREMENTS
------------------------------------------------------------ Letter :4

DLA officials told us that, in the fall of 1990, the services
requested that DPSC award contracts to obtain as many MREs as
possible in preparation for the possibility of a long war.  DPSC
ordered 245 million MREs in December 1990 for delivery over the next
12 months.  DLA officials said that the services over ordered during
Operation Desert Storm because the war ended after only a few weeks
of combat and because the services switched to A and B rations as
soon as the tactical situation permitted to maintain the troops'
morale. 

We compared consumption rates for Desert Storm and the current DOD
wartime scenario.  In the current wartime scenario, 25 percent of all
meals are to be MREs.  If the 614,000 troops were to eat MREs in a
12-month operation at the same rate (25 percent) as in the current
150-day scenario, they would eat 168 million MREs over 12 months.\4
This amount is 31 percent less than the 245 million meals ordered for
Desert Storm.  The 245 million meal figure was based on service
estimates of the number of MREs needed to support the next 12 months
of the conflict. 

We believe the current assemblers have the capacity to produce even
more MREs if needed.  If the current MRE base with two assemblers
were ordered to produce at maximum surge capacity for 12 months, they
could produce substantially more than the 245 million ordered for
Desert Storm.\5 Also, there are currently at least 56 million MREs in
DOD's inventory available for use in contingencies. 


--------------------
\4 We arrived at this number by multiplying 614,000 service members
by 3 meals a day by 365 days by the 25 percent MRE consumption rate. 

\5 The maximum number is proprietary. 


   CURRENT ACTIONS INVOLVING THE
   MRE INDUSTRIAL BASE
------------------------------------------------------------ Letter :5

DPSC has taken actions to ensure sufficient wartime surge capacity
for MREs.  For example, DPSC adopted a peacetime strategy to minimize
the costs of maintaining this capacity by leveling off the
fluctuations in peacetime demand and awarding contracts based on a
best-value basis considering a combination of surge capacity, price,
minimum sustaining rates, quality, past performance, and other
factors.  DPSC also plans to closely monitor the industrial base for
MREs and Tray packs to prevent ordering unneeded rations and preclude
maintaining unneeded and unaffordable contractor capacity. 

Short-term decreases in the use of operational rations may occur due
to fiscal year 1994 Army direction to conserve overall operations and
maintenance funding by decreasing consumption of operational rations. 
An MRE or Tray pack meal costs about $4 to $5--more than twice the
cost of A and B rations.  The Army told us that they were reluctant
to order more operational rations from DLA because they were having
difficulty in consuming on-hand operational rations in peacetime due
to cutbacks in training, reductions in personnel, and the anticipated
adverse effect on troop morale of serving MREs in military dining
facilities. 

DPSC is encouraging contractors to obtain more commercial business
because of anticipated reduced peacetime consumption of operational
rations.  One method being pursued is contractor participation in
shared production agreements in which a contractor agrees in advance
to shift from producing commercial items to producing government
items when hostilities begin and therefore requires less dependence
on government peacetime orders. 

In its source selection process for assembler contracts awarded in
September 1993, DPSC used a selection criteria that included, among
other factors, comparing the contractor's wartime surge capacity to
the minimum peacetime sustaining rate.  High ratios indicated high
wartime capacity and low dependence on government contracts.  The
larger the difference, the higher the score.  Each of the three MRE
assemblers had unique minimum sustaining rates and maximum surge
capacities at the time of source selection.  DPSC awarded contracts
to two of the three assemblers and included an option clause in their
contracts for fiscal years 1995 and 1996.  DPSC is currently
conducting a market survey to determine if (1) the options should be
exercised or (2) the options should not be exercised and a new source
selection process should take place for assembler contracts to be
awarded in September 1994. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :6

To accomplish our objectives, we reviewed DOD documents, interviewed
appropriate DLA, Army, Navy, and Air Force officials, and visited
DPSC.  We also interviewed contractors including retorters,
assemblers, and condiment suppliers.  We relied on DOD data for
ration consumption.  We visited several retorters and Tray pack
producers to gain an understanding of their processes. 

As part of our independent examination of the MRE assembly surge
capacity, we evaluated DOD's assessment of assembler capacity by
reviewing DPSC's methodology and visiting plants to verify DPSC data. 
We also performed our own assessment of assembler capacity by
visiting plants, observing and timing processes, identifying
machinery, discussing process flows with supervisors and workers, and
preparing estimates of plant capacity with managerial staff and
quality assurance personnel.  Appendix IV contains additional
information on our independent examination, and appendix V provides a
current list of MRE and Tray pack contractors. 

We performed our work between December 1993 and July 1994 in
accordance with generally accepted government auditing standards. 
Officials from the Office of the Secretary of Defense, Army, Navy,
Air Force, and Defense Logistics Agency reviewed the information in
this report and generally agreed with the facts as presented.  We
have incorporated the officials' comments where appropriate. 


---------------------------------------------------------- Letter :6.1

We are sending copies of this report to the Chairmen of the Senate
Committee on Armed Services and the House and Senate Committees on
Appropriations; the Secretaries of Defense and the Army, the Navy,
and the Air Force; and the Director of the Defense Logistics Agency. 
Copies will also be made available to others on request. 

If you or your staff have any questions concerning this report,
please contact me at (202) 512-4587.  Major contributors to this
report are listed in appendix VI. 

David E.  Cooper
Director, Acquisition Policy, Technology,
 and Competitiveness Issues


MRE AND TRAY PACK WARTIME RATION
REQUIREMENTS
=========================================================== Appendix I

For Defense Personnel Support Center (DPSC) planning purposes, the
military services require that meals be available for 614,000 troops
that have been transported to operational areas over a 150-day
period.  Table I.1 shows the number of troops from each of the
services that would be deployed under the Department of Defense's
(DOD) wartime scenario. 



                          Table I.1
           
            Total Troops in DOD's Wartime Scenario

                                                   Number of
Service                                            personnel
----------------------------------------  ------------------
Army                                                 300,000
Marines                                              130,000
Air Force                                            182,000
Navy                                                 2,000\a
============================================================
Total                                                614,000
------------------------------------------------------------
\a Sailors on ships are not included. 

Source:  DOD. 

According to DPSC, many of the troops would be eating either at home
until deployed or be eating A (fresh) or B (canned) rations in mess
halls.  A rations are both perishable and semi-perishable items and
include meat, poultry, vegetables, and fruits.  The perishable items
require refrigeration, whereas the semi-perishable items do not. 
These items are used for everyday feeding.  B rations do not require
refrigeration and are prepared by trained food service personnel in
organized food facilities. 

Rations for troops entering combat areas include the Meal
Ready-to-Eat (MRE), Tray pack, and A and B rations if available. 

The MRE is used by the services to sustain individuals during
operations that preclude use of organized food service facilities. 
The 12 different meals contain an entree and accessories.\1 The
packaged foods are heat processed in airtight pouches.  The Tray pack
is designed to sustain the Army in mobile field situations with
heat-and-serve meals.  The meals are thermally processed,
pre-prepared, shelf-stable foods that have been packaged in airtight,
half-size steam table metal containers.\2 Since the Tray pack is
pre-prepared, its use requires fewer food personnel and less
preparation time, water, and fuel than A or B rations.  Table I.2
shows the amount of funds that DPSC obligated for MREs and Tray packs
in fiscal years 1990-93, and table I.3 shows the number of rations
that DOD would require during wartime. 



                          Table I.2
           
           MRE and Tray Pack Obligations for Fiscal
                        Years 1990-93

                    (Dollars in millions)


                                1990    1991    1992    1993
----------------------------  ------  ------  ------  ------
MREs                            $150   $ 943    $137    $ 90
Tray packs                        52     150      20      28
============================================================
Total                           $202  $1,093    $157    $118
------------------------------------------------------------
Source:  DLA. 



                          Table I.3
           
            Number of Meals for 614,000 Troops for
                           150 Days

                    (Figures in millions)

                 A and B
                 rations     A and B
               and meals  rations in            Tray
Days             at home    war zone    MREs   packs   Total
------------  ----------  ----------  ------  ------  ======
0-30                44.2         0.2     9.3     1.6    55.3
31-60               27.8        13.7    10.6     3.1    55.3
61-90               11.3        25.3    14.2     4.5    55.3
91-120               4.5        27.5    17.5     5.8    55.3
121-150                0        30.0    18.9     6.4    55.3
============================================================
Total               87.8        96.7    70.5    21.4   276.4
------------------------------------------------------------
Note:  Figures may not add due to rounding. 

Source:  DLA. 


--------------------
\1 Examples of MRE entrees include pork, chicken stew, spaghetti,
omelet, beef stew, ham slice, meatballs, and tuna.  Accessories
include utensils and condiments. 

\2 Examples of Tray packs include omelets with sausage or bacon
pieces, ham, hash, chicken breast, lasagna, pot roast, barbecue pork,
beef strips, hamburger, spaghetti, and turkey. 


DPSC'S STUDY OF MRE ASSEMBLER
CAPACITY
========================================================== Appendix II

The objective of the MRE assembly process is to assemble all of the
separate food and accessory pouches into food bags that are cased for
shipping.  Assemblers do not cook (retort) the meals in the assembly
plant; the meals arrive at the assembly plant already in their
pouches.  Some assemblers purchase prepackaged items (e.g., crackers
or applesauce) if they lack in-house capacity.  Generally, assemblers
have functional staging and packaging areas (e.g., meal pouch staging
area, cracker packaging, accessory packaging, and applesauce
packaging).  Once food and accessory items have been packaged in
small plastic pouches, they are transferred to 1 of 12 menu lines. 
The pouches are placed into individual MRE bags and then sealed.  The
sealed MREs are placed on the final assembly line where the 12
different MREs are placed into a cardboard box for shipment.  The
cases are stacked on pallets and strapped for shipment. 

DPSC sent the MRE assemblers and retorters a letter in December 1991
that informed them about DPSC's planned study on maximum capacity and
requested specific data needed to conduct the study.  DPSC project
team members met with the contractors in January 1992 to brief them
on such matters as DPSC's methodology and how each contractor's
maximum production capacity would be used in future contracts. 

The team members (1) toured each contractor's production facility to
observe and identify unique processes and perspectives; (2) verified
on-site plant equipment; (3) interviewed managers and employees; (4)
timed production equipment in operation; (5) reviewed contractors'
quality and inspection records, maintenance, and machine logs; and
(6) interviewed on-site government inspectors.  DPSC developed
monthly maximum capacities for each machine or assembly point. 

A minimum of 5 days production from the January to March 1991 period
was analyzed to determine peak production rates during Operation
Desert Storm.  This figure was then compared to the calculated
formula rates.  In all cases, the lower of the two figures was used
to obtain a conservative estimate.  Operation Desert Storm production
numbers were used to construct a contractor's capacity when formula
factors were not obtainable. 

An individual contractor's maximum capacity was determined using a
verification process.  An estimate of the contractor's maximum
capacity was based on actual data, verified rates, and actual
deficiencies.  Once the contractor's capacity was formulated, DPSC
then verified this figure further through the use of production
records from Operation Desert Storm. 

DPSC's Quality Assurance Division provided defect rates for the
contractor.  This data reflected the number of defects inherent in
the contractor's production process.  Data also included losses from
product that failed acceptance inspection and were pulled out during
lot rework.  Defect rates were used to reduce the contractor's
overall production capacity. 


CONTRACTORS' ABILITY TO MEET SURGE
REQUIREMENTS
========================================================= Appendix III

DPSC data and our examination showed that the production surge
capacity of the MRE retorters and assemblers and the Tray pack
retorters is more than the demand envisioned by the military services
for a wartime scenario involving 614,000 operational troops.  The MRE
contractors generally agreed with DPSC's estimate of their surge
capacity.  If these contractors were to produce at maximum capacity,
not only would the required meals be available but DPSC's MRE
inventory could more than double from about 56 million to about 121
million meals at the end of the 150-day period.  The inventory at the
end of 150 days for Tray packs could be as much as 11 million meals. 


   DPSC ACTIONS TO MAINTAIN THE
   MRE AND TRAY PACK INDUSTRIAL
   BASES
------------------------------------------------------- Appendix III:1

DPSC has taken actions to ensure sufficient wartime surge capacity
for MREs.  DPSC adopted a peacetime strategy to minimize the costs of
maintaining this capacity by leveling off the fluctuations in the
peacetime demand curve and awarding contracts based on a combination
of surge capacity, price, minimum sustaining rates, quality, past
performance, and other factors. 

In July 1990, DPSC determined that peacetime demand for MREs would
not support all contractors in the industrial base.  DPSC's plan to
downsize the industrial base was temporarily halted when Iraq invaded
Kuwait in August 1990.  In December 1990, DPSC ordered large
quantities of MREs; however, the war ended much sooner than
anticipated on February 28, 1991.  DPSC either terminated MRE
contracts for convenience or extended the delivery dates for the
other MRE contracts, reducing the 245 million meals on order to 113
million meals.  DPSC decided to maintain the entire MRE industrial
base until individual contractor minimum sustaining rates and maximum
capacity could be determined and new wartime service requirements
were available. 

In May 1992, DPSC started planning MRE procurements based on revised
service requirements, minimum sustaining rate studies, and other
factors.  DPSC determined that a downsized MRE base could meet these
requirements and be supported by peacetime MRE projected
procurements.  However, in September 1992, Congress directed DPSC to
purchase about 35 million meals, significantly more than DPSC had
planned to procure, which delayed DPSC's plans to downsize the
industrial base.  By leveling off the buys in fiscal years 1993-95 to
about 21 million meals a year, DPSC has been able to maintain and
stabilize the MRE industrial base. 

In September 1993, DPSC awarded MRE assembler contracts to two
assemblers--Cincinnati Packaging (CINPAC) and Right Away Foods
Corporation (RAFCO).  A third assembler, Southern Packaging and
Storage Company (SOPAKCO) subsequently filed suit.\1 DPSC then
performed retorter source selection, and contracts were awarded to
all six retort offerers.  Currently, DPSC is conducting new minimum
sustaining rate studies on the MRE contractors.  SOPAKCO informed us
that it has lowered its minimum sustaining rate significantly;
however, DPSC makes the final determination on what the minimum
sustaining rate will be for source selection purposes. 

DPSC has been concerned that the current capacity levels for MREs and
Tray packs would be reduced because lower peacetime demand would
result in a smaller industrial base.  Contractors could be expected
to respond by reducing capacity to lower costs to remain viable and
competitive.  The services were projecting lower utilization of
operational rations and the services' overall operations and
maintenance budgets were being reduced.  Accordingly, DPSC has been
encouraging contractors to participate in shared production
agreements (i.e.  contractors would shift to government production
during a war) and diversify their operations by developing commercial
markets.  DPSC is also attracting new contractors that are not solely
dependent on the government for their existence. 


--------------------
\1 On September 3, 1993, the Defense Logistics Agency (DLA) selected
RAFCO and CINPAC to receive MRE assembler contract awards.  SOPAKCO
sought injunctions to prevent DLA from acting on contracts awarded to
CINPAC and RAFCO.  On December 8, 1993, the Federal Court in
Philadelphia, Pennsylvania, stated that the applicable statutes and
regulations were not violated and that the decision by DLA to award
the contracts to RAFCO and CINPAC was rational. 


   ARMY CONCERNS ABOUT THE MRE AND
   TRAY PACK INDUSTRIAL BASES
------------------------------------------------------- Appendix III:2

A single operational meal (MRE or Tray pack) costing about $4 to $5
is more than twice the cost of A and B rations.  DPSC and Army
officials told us that DOD budget cutbacks are impacting training,
which is normally the major peacetime user of MREs and Tray packs. 
Short-term decreases in the use of operational rations may occur due
to fiscal year 1994 Army direction to conserve overall operations and
maintenance funding by decreasing consumption of operational rations. 

Inventory managers at DPSC stated that the number of requisitions
from some of the major Army training areas (e.g., Fort Irwin,
California) were not being received at the same levels as last year. 
However, the peacetime sales figures, by month, for MREs and Tray
packs show the services are using these items at approximately the
same rate as last year. 

Because the cost of a single operational meal is higher than A and B
rations, the Army is contemplating developing a new ration type for
group feeding called the Unitized Group Ration.  This new ration
might replace the Tray packs if it is cheaper to produce. 

The Army believes that serving its troops large quantities of MREs in
situations other than field training or combat (e.g., eating them in
mess halls rather than A or B rations) will adversely affect morale. 
As a result, the Army told us that they were reluctant to order more
operational rations from DPSC because they were having difficulty in
consuming on-hand operational rations in peacetime due to cutbacks in
training and reductions in personnel. 


   CONTRACTOR CONCERNS ABOUT THE
   MRE AND TRAY PACK INDUSTRIAL
   BASES
------------------------------------------------------- Appendix III:3

Even though data provided by DPSC shows that the industrial base can
easily meet surge requirements, contractors stated that the rate of
return used by DPSC in determining their minimum sustaining rates was
too low.  DPSC is currently conducting a study to determine if the
minimum sustaining rates are still appropriate. 

Contractors also said that DOD's continued shrinking budgets were
having an adverse effect on a contractors' individual operations and
the industrial base in general.  The contractors added that unless
DOD maintains a steady buying level for operational rations, firms
will have to eliminate a large portion of the trained workforce. 


ADDITIONAL INFORMATION ON OUR
SCOPE AND METHODOLOGY
========================================================== Appendix IV


   OUR EVALUATION OF DPSC'S STUDY
-------------------------------------------------------- Appendix IV:1

As part of our independent evaluation of the MRE industrial base, we
reviewed the study done by DPSC on surge capacity for the three
assemblers.  We found that the same procedures were used by DPSC in
all the analyses done for surge capacity. 

We interviewed DPSC personnel to understand DPSC's methodology,
processes, and procedures in conducting the surge studies.  DPSC
personnel explained their procedures and calculations in detail. 
They provided us with documentation for all of their assembly
studies. 

We visited the three assemblers (RAFCO, CINPAC, and SOPAKCO).  We
interviewed plant production personnel and discussed the validity of
DPSC's studies.  We compared the equipment on DPSC's lists to
equipment in the plant and discussed changes, additions, and
deletions to this equipment.  We compared DPSC data on timing studies
to current operations.  We obtained current information on machine
downtime and percent of defective product and compared it to DPSC
data. 

We reviewed DPSC's methodology and data and interviewed the DPSC
personnel who performed the analysis to determine the adequacy and
reasonableness of DPSC's efforts.  We also checked some of the
calculations for accuracy. 


   OUR METHODOLOGY USED IN
   EVALUATING SURGE CAPACITY
-------------------------------------------------------- Appendix IV:2

We examined the surge capacity of the two current MRE
assemblers--RAFCO and CINPAC.  We also examined the surge capacity of
a former assembler, SOPAKCO.  We did not evaluate the financial
capability of these contractors because our review focused on actual
production and contractor surge capacity. 

We reviewed current capacity; the DPSC study dealt with capacity as
it existed 2 years ago and was periodically updated.  However, our
results differed only slightly from DPSC's.  We cross checked the
evaluation results. 

Before our visits to the contractors' plants, we requested that they
provide us with the current total surge output for 1 month for each
functional area (e.g., crackers, accessories, applesauce, menu lines,
and final assembly). 

During our plant visits, we timed functional operations when feasible
to determine the reasonableness of the assemblers estimated maximum
machine rate.  In some cases, the functional area was not in
operation.  While we were not able to perform time studies, we used
historical data where possible. 

At the two assembly plants in operation, we observed plant workers
moving work-in-process inventory, placing it into bins and on
conveyor belts, inserting pouches into MRE food bags, and sealing
pouches and bags.  We observed items in functional areas being sealed
into pouches and MRE bags being stuffed and sealed.  We also observed
the MRE bags moving on menu lines and into final assembly where they
were placed into boxes, sealed, and placed on pallets for shipment. 

We observed quality assurance personnel performing their tasks and
discussed rejection rates with these personnel, lineworkers, and Army
Inspectors.  We obtained Army inspection documents for critical
failures and discussed the frequency of such failures with
inspectors.  We incorporated these rejection rates into our plant
capacity evaluation formula. 

At all three plants, we counted the number of machines to determine
if they matched the number in the assembler's surge plan and, when
possible, checked to see if the serial numbers on the machines
matched those on the plants' inventory sheets.  We compared our
machinery lists with lists prepared earlier by DPSC. 

We reviewed current surge hiring plans and compared them to actual
hiring rates during Operation Desert Storm.  We also reviewed some
Desert Storm output data to compare surge capacity in that operation
with current surge capacity.  In addition, we reviewed the
relationship between hiring during Desert Storm and production to
determine the lag time between new hires and output. 


LIST OF CURRENT MRE AND TRAY PACK
CONTRACTORS
=========================================================== Appendix V


   MRE ASSEMBLERS
--------------------------------------------------------- Appendix V:1

CINPAC, Cincinnati, Ohio
RAFCO, McAllen, Texas
SOPAKCO, Mullins, South Carolina\1


--------------------
\1 RAFCO and CINPAC have contracts for production in 1994 with
options for 1995 and 1996.  DPSC is conducting a market survey to
determine if SOPAKCO should be allowed to compete. 


   MRE RETORTERS
--------------------------------------------------------- Appendix V:2

Ameriqual Foods, Evansville, Indiana
Land O'Frost, Lansing, Illinois
Shelf Stable Foods, Evansville, Indiana
SOPAKCO, Mullins, South Carolina
Star Food Processing, San Antonio, Texas
CINPAC, Cincinnati, Ohio


   TRAY PACK RETORTERS
--------------------------------------------------------- Appendix V:3

Huttenbauer, Inc, Cincinnati, Ohio
Miss Kings Kitchen, Sherman, Texas
Vanee Foods, Berkley, Illinois
SOPAKCO, Mullins, South Carolina


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

James F.  Wiggins
Lester C.  Farrington
Fred Lundgren

PROGRAM EVALUATION AND METHODOLOGY
DIVISION, WASHINGTON, D.C. 

Harry M.  Conley III

CINCINNATI REGIONAL OFFICE

Rae Ann Sapp
Myra A.  Watts
Marvin E.  Bonner

