Defense Ammunition: Significant Problems Left Unattended Will Get Worse
(Chapter Report, 06/21/96, GAO/NSIAD-96-129).

Pursuant to a congressional request, GAO reviewed the status of the
Department of Defense's (DOD) ammunition stockpile, focusing on: (1) the
amount of excess ammunition in the stockpile; and (2) problems related
to the stockpile's management.

GAO found that: (1) of the $80 billion in usable and unusable ammunition
as of September 1994, about $31 billion was excess ammunition and about
$22 billion was ammunition that was still usable; (2) the excess in
usable ammunition is primarily due to the collapse of the Soviet Union
and reduced U.S. military requirements; (3) while shortages of some
specific ammunition types exist, the services generally have inventories
that exceed their wartime and peacetime requirements; (4) in 1993 and
1994, the services spent about $125 million for ammunition that exceeded
their fiscal year 1995 requirements; (5) the services have stored and
continue to manage significant amounts of ammunition for weapons that
are no longer in the active inventory; (6) increases in the ammunition
stockpile and decreases in budget, workforce, and storage space could
degrade the forces' readiness to meet wartime and peacetime needs; (7)
DOD has not been able to conduct adequate ammunition testing and
inspections to ensure the stockpile's usability and readiness; (8) DOD
does not know the extent of excess ammunition stored at the services
facilities; and (9) the ammunition stockpile will continue to grow until
the services' are given incentives to relinquish ownership of the
ammunition and the single manager is provided with the funding and
information necessary to expedite ammunition disposal.

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

 REPORTNUM:  NSIAD-96-129
     TITLE:  Defense Ammunition: Significant Problems Left Unattended 
             Will Get Worse
      DATE:  06/21/96
   SUBJECT:  Combat readiness
             Military inventories
             Inventory control systems
             Federal property management
             Spare parts
             Defense contingency planning
             Defense cost control
             Federal supply systems
             Ammunition
IDENTIFIER:  F-5 Aircraft
             M60A2 Tank
             M42 Self-Propelled Gun
             M551 Tank
             NIKE-HERCULES Missile System
             Air Force Standard Depot System Data Base
             MK-25 Mine
             M60A1 Tank
             PHOENIX Missile
             AIM-54C Missile
             High Speed Anti-Radiation Missile
             Patriot Missile System
             DOD Joint Defense Total Asset Visibility Program
             Desert Storm
             Europe
             DOD Integrated Ammunition Stockpile Management Plan
             MK66 Rocket
             M864 Projectile
             Army Tactical Missile System
             
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Cover
================================================================ COVER


Report to Congressional Requesters

June 1996

DEFENSE AMMUNITION - SIGNIFICANT
PROBLEMS LEFT UNATTENDED WILL GET
WORSE

GAO/NSIAD-96-129

Defense Ammunition

(703064)


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

  ATACMS - Army Tactical Missile System
  DOD - Department of Defense
  GAO - General Accounting Office
  HARM - High-Speed Anti-Radiation Missile
  IG - Inspector General
  O&M - operation and maintenance
  RDAISA - Research Development Acquisition Information System Agency
  WARS - Worldwide Ammunition Reporting System

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


B-260167

June 21, 1996

The Honorable Herbert H.  Bateman
Chairman, Subcommittee on Military Readiness
The Honorable Duncan Hunter
Chairman, Subcommittee on Military Procurement
Committee on National Security
House of Representatives

In March 1995, you asked us to review the status of the Department of
Defense's ammunition stockpile and production facilities available to
support the military's ammunition requirements.  This report
addresses your concerns about the ammunition stockpile, including
conventional ammunition, explosives, and missiles.  Our review
focused on the amount of ammunition excess to established
requirements and problems with the ammunition stockpile management,
which threaten readiness.  We issued a separate report addressing
your concerns about the production facilities available to support
the military's ammunition requirements (Ammunition Industrial Base: 
Information on DOD's Assessment of Requirements, GAO/NSIAD-96-133,
May 31, 1996). 

We are sending copies of this report to the Secretaries of Defense
and each of the military services; the Commanding General, Army
Materiel Command; the Commanding General, Army Industrial Operations
Command; and other interested parties.  We will also make copies
available to others upon request. 

Please contact me at (202) 512-5140 if you or your staffs have any
questions concerning this report.  Major contributors to this report
are listed in appendix II. 

Mark E.  Gebicke
Director, Military Operations
 and Capabilities Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0

The military services have over 5 million tons of conventional
ammunition, explosives, and missiles (hereafter referred to as
ammunition) valued at about $80 billion as of September 30, 1994. 
This ammunition, if loaded onto railroad cars, would stretch over 800
miles--the distance from Washington, D.C., to Orlando, Florida. 
Because of concerns about the condition and readiness of this
ammunition, the Chairmen, Subcommittee on Military Readiness and
Subcommittee on Military Procurement, House Committee on National
Security, asked GAO to determine (1) whether the ammunition stockpile
meets wartime and peacetime requirements and (2) what problems the
Army single manager has in managing much of the military services'
ammunition stockpile. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Under the national military strategy, the military services are
required to maintain enough ammunition for two nearly simultaneous
major regional conflicts and for peacetime needs, such as training. 
The Defense Planning Guidance lays out general guidelines for the
services to determine how much ammunition they need to conduct
operations under the strategy.  Ammunition that exceeds these
requirements is to be shared among the services or disposed of
through sale to other nations, recycling, or destruction.  In 1977,
the Army assumed single manager responsibility for storing, managing,
inspecting, testing, and disposing of most of the services'
ammunition.  In this role, as of September 30, 1995, the single
manager was responsible for managing 3 million tons of ammunition
owned by the services.  The individual services also manage
additional stocks of ammunition in their own facilities. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:2

The services have to do a better job of managing their ammunition
needs.  As of September 30, 1994, the total stockpile of usable and
unusable ammunition was worth about $80 billion.  GAO estimates that
about $31 billion of this total ammunition stockpile was excess. 
This excess amount includes about $22 billion worth of ammunition
that was still usable. 

This situation has occurred primarily as a result of the collapse of
the Soviet Union in the early 1990s and the change in the primary
threat to the United States.  As a consequence, the services'
ammunition requirements were drastically reduced, and more of the
ammunition stockpile became excess.  The Army's war reserve
requirements, for example, were reduced by 74 percent. 

Of the various types of ammunition in the stockpile, GAO found that
almost half have amounts that exceed the services' needs in varying
quantities.  For some types of ammunition, the services have over 50
times their stated needs.  While there are shortages of some specific
ammunition types, overall the services generally have enough
ammunition to meet their wartime and peacetime requirements. 

Increases in the single manager's ammunition stockpile due to the
return of massive amounts of ammunition from Europe and Operation
Desert Storm, combined with a decrease in the single manager's
budget, workforce, and storage space, have created a situation that
could, if allowed to continue, degrade the forces' readiness to meet
wartime and peacetime needs.  The single manager's ability to manage
ammunition has been severely taxed.  As a result, ammunition
inspections and tests have fallen so far behind that the single
manager cannot ensure the usability and readiness of the ammunition
stockpile.  Moreover, the single manager does not know how much of
the ammunition is excess to stated requirements, in part, because the
single manager does not know the services' requirements or what
ammunition they also own and store in their own facilities.  In
addition, the services have not identified what ammunition the single
manager stores for them is required and what is above stated
requirements.  Because the services' total ammunition needs and the
extent of ammunition above stated requirements are both unknown,
ammunition that exceeds one service's needs is not always used to
fill another service's requirements, and services have bought
ammunition that could have been redistributed from other services'
excess ammunition. 

Finally, the single manager faces two problems in disposing of the
increasing amount of excess ammunition.  First, the single manager
must continue to store excess ammunition until the services identify
and relinquish ownership of it.  Currently, the services have no
incentives to identify their excess ammunition, in part, because the
single manager is responsible for and pays for its care; that is,
storage, inventories, surveillance, and disposal.  Second, although
the Congress has recently provided more funds for ammunition
disposal, the single manager cannot meet existing demands for
disposal.  As a result, the stockpile continues to grow. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:3


      MUCH OF THE AMMUNITION IS
      EXCESS OR OLD
-------------------------------------------------------- Chapter 0:3.1

When the Cold War ended, the Department of Defense's (DOD) ammunition
requirements decreased substantially.  Army war reserve requirements
alone decreased from 2.5 million tons to 650,000 tons.  When GAO
compared the amount of usable ammunition on hand to each service's
requirements to support two major regional conflicts and training and
testing needs for 7 years (6 years of testing for the Army), it found
that almost 50 percent of the different types of ammunition include
amounts that exceed the services' needs.  For example, the Air Force
and the Army have enough .30-caliber carbine ball ammunition to meet
their stated requirements
58 and 517 times, respectively. 

Of the $80 billion in usable and unusable ammunition, GAO estimates
the total value of excess ammunition to be about $31 billion.  This
includes about $22 billion of usable ammunition that exceeded stated
needs and about $9.4 billion in unusable assets excess to stated
needs.  In addition, over $2.9 billion of excess assets that were on
the single manager's inventory records did not appear on the
services' inventory records.  Also, over $2 billion in ammunition was
identified for disposal. 

Moreover, the services spent about $125 million for ammunition in
fiscal years 1993 and 1994 that exceeded their fiscal year 1995
stated requirements.  In addition, ammunition is being stored and
managed for weapon systems that either have been purged or are no
longer in the active inventory.  For example, the Marine Corps had
about 3 million .50-caliber cartridges for the M85 machine gun, even
though the Marine Corps has removed the M85 gun from its inventory
and no other weapon system uses this type of .50-caliber ammunition. 

The age of over half of the ammunition stockpile managed by the
single manager is not in the single manager's database.  Of the
ammunition for which the age is known, almost 25 percent is over 25
years old.  Even when this old ammunition is usable, it is not always
easily accessible in storage facilities, and commanders prefer not to
use it.  During Operation Desert Storm, battlefield commanders opted
to use more modern ammunition.  Moreover, commanders want to train
with ammunition they will use on the battlefield, not the "old
stuff." As a result, old ammunition continues to age and takes up
storage space. 

Of the services' 2,781 types of ammunition, 752 types have shortages
when compared to the services' requirements databases.  However, the
services generally believe that the ammunition shortages are
manageable because they have substitute items and procurements
planned to fill these shortages. 


      STOCKPILE MANAGEMENT
      PROBLEMS THREATEN READINESS,
      AND PLANNED IMPROVEMENTS
      HAVE BEEN DELAYED
-------------------------------------------------------- Chapter 0:3.2

Much of the huge amount of ammunition returned after Operation Desert
Storm and from bases closed in Europe came to the single manager's
depots in small, broken lots.  Also, the single manager's budget and
workforce have been greatly reduced.  These factors have combined to
make management of the stockpile difficult.  A 1993 Joint Ordnance
Commanders Group's report noted major deficiencies in the maintenance
of the ammunition managed and maintained by the single manager that
could affect readiness.  The single manager's main concern has been
the receipt of ammunition and quick delivery to customers at the
expense of efficient storage, disposal, inspection, and maintenance. 
Many problems affect the ammunition stockpile.  For example: 

  -- The condition of some ammunition is unknown because of delays in
     inspections and testing, which are important to ensure that war
     reserve items are usable, properly classified as to condition,
     and safe.  In addition, the single manager's database shows
     ammunition as usable, even though defect codes show it is
     overdue for inspection.  Although the single manager's database
     shows that only about 6,600 lots were past due for inspection,
     other records the single manager considers more accurate show
     that about 68,000 lots--10 times as many--were actually past due
     for inspection.  Also, 25 percent of the war reserve items were
     overdue for tests.  Both these backlogs are expected to double
     over the next
     3 to 5 years. 

  -- About 29 percent of the services' top priority wartime
     ammunition items, such as motors for the MK66 2.75-inch rocket,
     could not be issued as of March 1995 because they needed to be
     repaired or inspected or could not be fixed.  Eighteen percent
     of the top priority items needed repairs costing an estimated
     $99 million. 

The single manager has made little progress in implementing its 1994
Integrated Ammunition Stockpile Management Plan, which is intended to
streamline the stockpile.  Part of the problem is that the services
have not yet identified which of their ammunition is required and
which is excess to stated requirements.  Without this information,
the single manager cannot give priority to the storage and care of
required ammunition to ensure readiness.  In addition, ammunition
that exceeds one service's needs is not always used to fill another
service's requirements, and a service may make unnecessary purchases
of ammunition that is excess in another service.  GAO's analysis of
requirements and ammunition on hand identified opportunities for
cross-sharing among the services.  GAO found that (1) the services
spent about $185 million for ammunition items during fiscal years
1993-95, even though amounts in excess of stated requirements were
available in another service; (2) $1.2 billion in ammunition in
excess of stated requirements could be shared among the services to
alleviate shortages; and (3) $19 million in costs could also be
avoided if usable ammunition in excess of stated requirements was
shared with a service that planned maintenance on the same type of
ammunition. 

In addition, the single manager historically has not received the
funding requested or needed to manage the stockpile adequately and to
dispose of excess ammunition, in part, because of competition with
other Army funding needs.  In recognition of this problem, the
Congress statutorily established a funding minimum for the care and
maintenance of ammunition in 1995.  In addition, the conferees on the
DOD appropriations act directed that a minimum for fiscal year 1996
be expended for the same purpose.  This has helped, and in fiscal
year 1995, the single manager was able to do a complete ammunition
inventory to restore the accuracy of ammunition inventory records. 


      OPTIONS FOR HANDLING
      AMMUNITION STORAGE AND
      DISPOSAL PROBLEMS
-------------------------------------------------------- Chapter 0:3.3

GAO believes that the single manager will face difficulties for years
in managing the ammunition stockpile.  The single manager has
tremendous backlogs of ammunition to dispose of, and these backlogs
will increase for the foreseeable future, especially if the services
begin to identify ammunition that is excess to requirements.  One
problem is that the services are not inclined to declare ammunition
excess as they do not have to pay the single manager to store it. 
Also, once ammunition is declared excess, the owning service is not
reimbursed for its cost if another service wants it.  An option for
persuading the services to relinquish ownership of excess, old, and
obsolete ammunition, as pointed out in the Joint Ordnance Commanders
Group's 1993 report, would be for the single manager to charge the
services a storage fee.  The report also suggested that additional
storage space could be made available if excess ammunition were used
in training, included in foreign military sales or grant aid
programs, or was destroyed.  In addition, as GAO recommended in
1979,\1 the single manager could own, manage, and control the
ammunition stockpile and thus know what ammunition is excess to
stated requirements and distribute it to other services that need the
ammunition or dispose of it, if unneeded. 

Disposing of excess ammunition is a time-consuming, expensive
process.  For example, at the installation with the largest disposal
capacity,
1,300 tons of ammunition were destroyed at a cost of about $1 million
during 1 week GAO visited.  With over 375,000 tons of ammunition
awaiting disposal at the end of fiscal year 1995 and additional
ammunition identified for disposal each year, it will take years to
dispose of the ammunition.  And because of the expense associated
with disposing of this much ammunition, finding the funds to
facilitate disposal is difficult.  One option would be to require the
services to include the cost to dispose of ammunition being replaced
in budgets for new ammunition.  While this option would not eliminate
the significant quantities of ammunition that already exist, it would
focus earlier attention on the ammunition disposal problem, provide
additional funds for disposal, and over time significantly reduce the
quantities awaiting disposal. 


--------------------
\1 Centralized Ammunition Management--A Goal Not Yet Achieved
(LCD-80-1, Nov.  26, 1979). 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 0:4

To impress upon the services the need to address the problem of
excess ammunition, the Congress may wish to consider requiring the
Secretary of Defense to report annually the amount of ammunition on
hand and the amount that exceeds established requirements.  This
report could also cite progress made in addressing specific
ammunition stockpile management problems, including identifying
ammunition in excess of established requirements, cross-sharing of
ammunition in excess of established requirements among services that
have shortages, inspecting and testing ammunition, and disposing of
excess ammunition that it no longer makes sense to retain.  With this
information, the Congress could make more informed annual budget
decisions related to the ammunition stockpile. 


   RECOMMENDATION
---------------------------------------------------------- Chapter 0:5

To facilitate implementation of the single manager's plan for
storing, maintaining, and disposing of ammunition, GAO recommends
that the Secretary of Defense develop incentives to encourage the
military services to categorize their ammunition as required or as
excess to established requirements, to update this information
annually, and to relinquish control of their excess ammunition to the
Army single manager for distribution to other services that have
shortages of ammunition or for disposal when it no longer makes sense
to retain it.  Possible changes in ammunition management, among
others, include (1) requiring the services to pay the single manager
a fee for storing their ammunition; (2) authorizing the single
manager to own, manage, and control the stockpile and/or be aware of
the services' total requirements and ammunition in their own storage
facilities, so the manager can identify ammunition excess to
requirements and coordinate redistribution of it to services that
need the ammunition or dispose of it when appropriate; and (3)
including the services' cost to dispose of excess ammunition in their
budgets for new ammunition. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

DOD partially concurred with the findings in this report and the
matter for congressional consideration.  DOD disagreed with the
recommendation and the options for handling ammunition storage and
disposal problems. 

DOD stated that it took exception to the criteria that GAO used in
determining excess inventory and that GAO infers that stocks above
established requirements are excess and should therefore be disposed
of.  GAO agrees that not all the ammunition in excess of stated
requirements should be disposed of, and this report does not state
that all excess ammunition should be disposed of.  However, GAO
believes that the usable assets in excess of stated requirements
(about $22 billion) should be made available for cross-sharing with
other services to avoid one service purchasing assets that another
service has in excess of its requirements.  In addition, GAO believes
there are many items being stored that will never be used and should
be identified for disposal.  Other items may not need to have dollars
expended on them to convert them from unusable to usable ammunition. 
Without some sort of prioritization or identification of ammunition
required to meet wartime and peacetime requirements, only the $2
billion of ammunition identified for disposal would be treated
differently by the single manager. 

DOD stated that it recognizes that improvements to ammunition
management are needed.  It stated that its Integrated Ammunition
Stockpile Management Plan has resulted in significant progress in
many areas, such as demilitarization.  GAO agrees that the 1994
management plan is a step in the right direction but is concerned
about the plan receiving the services' full support in such areas as
identifying required and nonrequired ammunition, which is a critical
component of the plan. 

DOD partially concurred with the matter for congressional
consideration.  DOD said it already provides the Congress with
ammunition inventory data in the Supply System Inventory Report and
demilitarization information in the procurement budget
justifications.  GAO is aware of this report and the information
contained in it.  However, as currently prepared, the Supply System
Inventory Report does not provide any information on the amount of
ammunition that exceeds established requirements or stockpile
management problems. 

DOD disagreed with the recommendation and options given for potential
changes in ammunition management.  DOD stated that it considers the
present arrangement for managing much of the services stockpile to be
satisfactory.  GAO does not agree that the present arrangement for
managing the stockpile is working well and believes that existing DOD
practices will not solve the problems.  GAO continues to believe its
recommendation is valid. 


INTRODUCTION
============================================================ Chapter 1

The four military services stockpile in their retail and wholesale
inventories conventional ammunition, explosives, and missiles
(hereafter referred to as ammunition) valued at about $80 billion as
of September 30, 1994.  About $58 billion of this ammunition is
classified as usable or serviceable.\1 Serviceable ammunition valued
at about $34 billion is owned, stored, and managed by the services
(retail stocks).  The remaining serviceable ammunition, valued at $24
billion, is owned by the services but stored under Army management to
ensure that a sufficient supply is available to meet needs for
peacetime training and for war (wholesale stocks).  Including the
retail stocks, the amount of ammunition stored is over 5 million
tons, which if loaded into railway cars would stretch over 800 miles,
about the distance from Washington, D.C., to Orlando, Florida.  Under
current guidance, the services must maintain enough ammunition to
support forces fighting in two nearly simultaneous major regional
conflicts.  This requirement represents a change in national strategy
dictated by international developments and a major reduction in U.S. 
forces.  A 1993 study directed by the Joint Ordnance Commanders
Group\2 found that the changes had seriously affected stockpile
operations and readiness. 


--------------------
\1 Ammunition is coded so that its physical condition can be
identified and reported.  It is coded into three categories: 
serviceable or ready for issue, unserviceable or not suitable for
issue or use, and suspended or not suitable for issue or use pending
final classification. 

\2 The Group includes flag-rank officers from each military service
and is chaired by the Commander, Industrial Operations Command,
formerly called the U.S.  Army Armament, Munitions, and Chemical
Command. 


   MILITARY SERVICES DETERMINE
   AMMUNITION REQUIREMENTS
---------------------------------------------------------- Chapter 1:1

Each service determines the types and quantities of ammunition it
needs to meet requirements for war reserves and training.  The
requirements are based on the national military strategy, which
requires the services to be capable of fighting two major regional
conflicts.  The Defense Planning Guidance gives general direction to
the services and planning factors for the conduct of military
operations under the strategy.  Each service is to use the Department
of Defense's (DOD) capabilities-based munitions requirements process
to establish its munitions requirements.  Under this intricate
process, the services determine their requirements based on the
operational objectives of the combatant commander in chiefs against
potential threats.  The requirements determination process also
considers the services' logistics capabilities and the need for
sufficient ammunition to remain after an operation or conflict for
future contingencies.  Each service must maintain enough ammunition
to meet all those requirements.  The services assess the combination
of inventories at both wholesale and retail levels and in the
procurement pipeline to determine whether they have sufficient
ammunition to meet requirements for combat, strategic readiness,
residual readiness, training, and testing. 


   THE ARMY MANAGES THE WHOLESALE
   STOCKPILE OF CONVENTIONAL
   AMMUNITION FOR ALL THE SERVICES
---------------------------------------------------------- Chapter 1:2

In 1977, the Army became the single manager for conventional
ammunition, assuming responsibility for the storage, management, and
disposal of wholesale inventories of ammunition and explosives for
all the services.  As of September 30, 1995, this stockpile consisted
of 3 million tons of ammunition stored at nine depots, two plants,
and one arsenal (see fig.  1.1), comprising in all 37.8 million
square feet of storage space. 

   Figure 1.1:  Wholesale
   Ammunition Stockpile Sites

   (See figure in printed
   edition.)

The services own 80 percent\3 of the total tonnage of ammunition
stored by the single manager.  The Army owns the largest amount, 43
percent, followed by the Air Force with 17 percent, the Navy with 13
percent, and the Marine Corps with 7 percent. 

As the manager of the wholesale ammunition stockpile, the Army
undertakes all the management functions--distribution, storage,
inventorying, surveillance, maintenance, and disposal (see table
1.1).  The Army's effectiveness in performing these functions
determines the stockpile's readiness. 



                               Table 1.1
                
                     Stockpile Management Functions

Category                Description
----------------------  ----------------------------------------------
Distribution            Expeditious receipt and issue of items.

Storage                 Safe and secure storage of items; quick
                        response to customer requests; efficient use
                        of storage space.

Inventorying            Checking of stock location, quantity, and
                        condition against master records to provide
                        inventory accuracy and quick response.

Surveillance            Determination of the condition and
                        serviceability of stockpiled items through
                        inspections and testing.

Maintenance             Repair of defective stockpile items to restore
                        to usable state.

Disposal                Demilitarization and disposal of excess,
                        obsolete, and unsafe items from active
                        inventory through destruction or recovery of
                        resources for other uses.
----------------------------------------------------------------------

--------------------
\3 The remaining 20 percent of the wholesale stockpile is ammunition
designated for disposal (12 percent) and industrial and interservice
support agreement stocks (8 percent). 


   CHANGING WORLD CONDITIONS HAVE
   AFFECTED THE AMMUNITION
   STOCKPILE
---------------------------------------------------------- Chapter 1:3

During the 1980s, ammunition storage was generally stable.  In 1985,
with 55 to 60 percent of the storage space occupied, the stockpile
held about 2 million tons of ammunition.  Most of the stockpile
consisted of large lots, which optimized space and facilitated
economical surveillance and inventories.  However, in 1990 and 1991,
world politics changed significantly as the Soviet Union collapsed. 
As a result of this event and other worldwide changes, the United
States shifted from preparing for a global war to preparing for
regional conflicts and crises, and a general reshaping of military
resources and budgets began.  First, four major Army storage
installations were closed or realigned,\4 which reduced the
ammunition stockpile's storage capacity from 36 million to 30 million
square feet.  Second, because of overall reductions in the budget,
the single manager decided to significantly decrease its inventorying
of the wholesale stockpile.  Third, massive amounts of ammunition
were returned from overseas:  (1) prepositioned ammunition from
Europe, as U.S.  forces stationed there were withdrawn and (2) stock
from Operation Desert Storm, of which only 10 percent was used during
the war.  The continental U.S.  stockpile installations received
twice as much stock--1 million tons--as they had shipped out.  This
ammunition arrived in small, broken-up lots, which required more
storage space and inventory work. 

The stockpile has also been affected by (1) increases in retail stock
stored within its facilities, which increased the cost of storage
installation operations and reduced storage space and (2) lower usage
rates, as customer demand declined. 


--------------------
\4 The four major Army storage installations that were closed or
realigned were Fort Wingate Depot Activity, New Mexico; Navajo Depot
Activity, Arizona; Pueblo Depot Activity, Colorado; and Umatilla Army
Depot Activity, Oregon. 


   JOINT SERVICE-SPONSORED STUDY
   ADDRESSED STOCKPILE OPERATIONS
---------------------------------------------------------- Chapter 1:4

In 1993, the Joint Ordnance Commanders Group, concerned that the
wholesale conventional ammunition stockpile's readiness and quality
had been degraded, initiated a comprehensive study to assess the
wholesale ammunition stockpile.  The resulting report,\5 issued in
October 1993, identified several conditions adversely affecting the
readiness and reliability of the ammunition stored in the stockpile. 
The report identified problems in all the major functions that
related to stockpile operations and management.  Some degraded
functional areas, such as inventory and surveillance, directly affect
the readiness and reliability of the stockpile; others, such as
receipts, issues, and storage of ammunition, affect the efficiency
and effectiveness of operations.  The report predicted that
conditions would worsen over the next 4 years because of continued
funding problems and identified several initiatives to effect
improvements to the readiness and operations of the stockpile. 

The report's findings led to a charter for an ammunition functional
area analysis and the development of the Integrated Ammunition
Stockpile Management Plan to address funding and storage management
concerns. 


--------------------
\5 Wholesale Ammunition Stockpile Program (WASP) Review and
Assessment, October 1993. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:5

Concerned about the condition and readiness of the wholesale
ammunition stockpile, given changes in world and stockpile
conditions, the Chairmen, Subcommittee on Military Readiness and
Subcommittee on Military Procurement, House Committee on National
Security, asked us to determine (1) the availability of ammunition to
meet wartime and peacetime requirements and (2) what problems the
Army single manager has in managing the military services' wholesale
ammunition stockpile. 

To determine whether DOD has sufficient ammunition to meet demands
for training and war reserves, we compared serviceable ammunition,
from both wholesale and retail inventories, on hand for each service
as of September 30, 1994, with the amount needed to meet requirements
for wartime and peacetime operations.  In making this determination,
we used the automated data systems that each service maintains for
its ammunition items.  Specifically, the requirements were obtained
from the Army Worldwide Ammunition Reporting System (WARS),\6 Navy
Non-Nuclear Ordnance Requirements System, Air Force Theater
Allocation Buy/Budget System, and the Marine Corps Ammunition
Requirements Management System.  We did not independently verify the
military's method of determining ammunition requirements. 

To determine whether the services have excess amounts of ammunition,
we analyzed computerized files of the services' inventories as of
September 30, 1994 (the end of the fiscal year).  First, we compared
the total on-hand serviceable inventory, item by item, to that needed
to satisfy wartime requirements, testing and training requirements
for 7 years
(6 years of testing for the Army), and other requirements.  We used
testing and training requirements for 7 years (1) to be conservative
in calculating on-hand quantities exceeding requirements, (2) because
DOD's retention policy authorizes this level of supply to meet
Defense Planning Guidance, and (3) because 7 years coincides with the
future years' planning of the services.  As requested by the Army, we
used operational project, wholesale, and basic load requirements in
addition to 6 years of testing requirements and 7 years of training. 
Second, we determined the amount of unserviceable ammunition by type
of ammunition for which there was excess serviceable inventory. 
Third, we compared the single manager's inventory database showing
ammunition stored for the services with the services' databases that
we had used in our comparison.  We then determined the amount of
additional ammunition excess to requirements that was not on the
services' records.  Finally, we identified the amount of ammunition
DOD has designated for disposal.  To determine the services'
rationale for excesses, we selected and discussed with item managers
145 types of ammunition (126 randomly selected and 19 judgmentally
selected because they had large quantities of excess items) for which
on-hand quantities exceeded service-determined requirements. 

To determine whether the services have shortages of ammunition, we
compared the same universe to the amount needed to meet wartime
requirements plus that needed for 1 year of training and testing.  We
used only 1 year of training and testing requirements to be
conservative in calculating ammunition shortages.  To determine the
services' rationale for types of ammunition with shortages, we
selected and discussed with item managers 154 types of ammunition
(152 randomly selected and
2 judgmentally selected because they represented large dollar values)
for which on-hand quantities were less than service-determined
requirements.  Additionally, we selected and discussed with service
officials the
42 highest unit cost items (representing $32 billion of the $60
billion shortage) to determine the rationale for shortages. 

We used the Standard Depot System database for our analyses of the
wholesale stockpile.  This database includes information from 11 of
the
12 storage installations (Pine Bluff Arsenal is not included in the
system).  We used data as of March 1995 for old ammunition in the
wholesale stockpile, serviceability of ammunition in the stockpile as
classified by condition codes, and backlogs of periodic inspections
and data as of September 1995 on the net storage space of
installations.  We also used data from an Army disposal study dated
September 1995 on items designated for disposal and estimates of
disposals anticipated in the future. 

In relation to the management of the stockpile, we interviewed
ammunition management officials and reviewed policies, procedures,
and documents related to the management of conventional ammunition at
the following sites: 

  -- Headquarters locations

Departments of the Army, the Navy, and the Air Force, Washington,
D.C. 

  -- Technical commands

U.S.  Army Materiel Command, Alexandria, Virginia

U.S.  Industrial Operations Command, Rock Island, Illinois

U.S.  Army Defense Ammunition Center and School, Savanna, Illinois

  -- Inventory commands

Air Force Air Logistics Center, Ogden, Utah

Naval Ordnance Center, Indian Head, Maryland

Marine Corps Systems Command, Clarendon, Virginia

  -- Storage installations

Hawthorne Army Depot, Hawthorne, Nevada

Letterkenny Army Depot, Chambersburg, Pennsylvania

Red River Army Depot, Texarkana, Texas

Sierra Army Depot, Herlong, California

McAlester Army Ammunition Plant, McAlester, Oklahoma

Crane Army Ammunition Activity, Crane, Indiana

We did this review from April 1994 to April 1996 in accordance with
generally accepted government auditing standards. 


--------------------
\6 We based our analyses on ammunition requirements contained in the
WARS database.  Although Army representatives suggested in March 1996
that we use the Army's Research Development Acquisition Information
System Agency (RDAISA) database for greater accuracy, we determined
that this alternative database does not contain requirements for all
Army ammunition items but requirements for ammunition items for which
procurement actions are in process or planned.  We further determined
that the RDAISA database was not any more complete than the WARS
database.  For example, 46 percent of the types of ammunition for
which the WARS database showed a requirement did not have a
requirement in the RDAISA database.  Therefore, we did not
recalculate our detailed analysis of ammunition requirements and the
amount of ammunition excess to requirements based on the RDAISA
database. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 1:6

DOD expressed concern about the requirements database we used,
particularly for the Army.  We used the WARS database, which was the
most complete automated database we found for the Army.  At our exit
conference, Army officials suggested that we use the Army's RDAISA
database for greater accuracy.  However, we determined that this
database does not contain requirements for all Army ammunition items;
it only contains requirements for ammunition items for which
procurement actions are in process or planned.  We remain unconvinced
that the Army has a more complete automated database that we could
have used.  Also, DOD notes in its comments on this report that it
started using a capabilities-based munitions requirements process
beginning with the fiscal year 1996 budget.  Our requirements data
were the latest available as of September 1994, which was after the
beginning of the development of the fiscal year 1996 budget and
included capabilities-based principles. 


MUCH OF THE SERVICES' AMMUNITION
IS EXCESS TO REQUIREMENTS AND IS
AGING
============================================================ Chapter 2

The services have to do a better job of managing their ammunition
needs.  As of September 30, 1994, the total stockpile of usable and
unusable ammunition was worth about $80 billion.  We estimate that
about $31 billion of this total ammunition stockpile was excess.\1
This excess amount includes about $22 billion worth of ammunition
that was still usable. 

This situation has occurred primarily as a result of the collapse of
the Soviet Union in the early 1990s and the change in the primary
threat to the United States.  As a consequence, the services'
ammunition requirements were drastically reduced, and more of the
ammunition stockpile became excess.  The Army's war reserve
requirements, for example, were reduced by 74 percent. 

Of the various types of ammunition in the stockpile, we found that
almost half have amounts that exceed the services' needs in varying
quantities.  For some types of ammunition, the services have over 50
times their stated needs.  While there are shortages of some specific
ammunition types, overall, the services generally have enough
ammunition to meet their wartime and peacetime requirements. 

DOD management practices perpetuate the buildup of excess and aging
ammunition, even though the ammunition stockpile is supposed to
comprise only ammunition and explosives essential for peacetime and
wartime needs.  In many instances, the services keep it available
just in case they or other organizations, such as state agencies or
foreign allies, have a need for it.  However, DOD often does not
determine what would be a reasonable amount to keep to meet these
needs.  For all these reasons, storage facilities are reaching
capacity levels, and the excess ammunition is stressing the ability
of installation personnel to manage required ammunition since all
ammunition not identified for disposal, including the $31 billion
excess mentioned above and $2.9 billion in excess that appears on the
single manager's inventory records but not the services' inventory
records, receives the same amount of single manager attention (see
ch.  3 for a discussion of stockpile management).  Moreover, in
fiscal years 1993 and 1994, the services spent about $125 million for
ammunition that exceeded fiscal year 1995 stated requirements.  No
service purchased ammunition items in fiscal year 1995 for which it
had quantities on hand in excess of stated requirements at the end of
fiscal year 1994. 

In addition to its ammunition in excess of stated requirements, DOD
has shortages of some types of ammunition.  However, the services
generally believe that these shortages are manageable because they
have substitute items and planned procurements to make up for
shortages. 

We believe that the shortages of some items could be satisfied by
better sharing of amounts in excess of stated requirements among the
services.  While the Army has shared some excess ammunition among the
other services, the single manager is unaware of all ammunition in
excess of stated requirements because the services have not
identified which of their ammunition is required and which is not
required.  Without this information, the single manager cannot
adequately identify and coordinate redistribution of excess
ammunition.  During our review, we identified $1.2 billion of items
in excess of stated requirements that could be shared to meet service
shortages of required ammunition, reduce potential future
procurements, and avoid maintenance. 


--------------------
\1 We define excess as ammunition quantities above the military
services' stated war reserve and peacetime requirements.  DOD's
definition of excess ammunition differs from our definition.  DOD
does not define ammunition as excess until the quantity of an item
exceeds all authorized retention levels (such as economic and
contingency retention levels) and the item is processed for
reutilization or disposal. 


   WAR RESERVE REQUIREMENTS HAVE
   BEEN SIGNIFICANTLY REDUCED
---------------------------------------------------------- Chapter 2:1

Because the threat the United States faces has changed from a global
war to a much smaller one involving two major regional conflicts, all
the services' war requirements have been reduced.  Army war reserve
requirements in total tonnage declined 74 percent--from 2.5 million
tons in fiscal year 1992 to 650,000 tons in fiscal year 1994 (see
fig.  2.1).  For example, the requirement for multiple launch rocket
system pods decreased by 82 percent.  Likewise, the requirement for
the 155-millimeter dual purpose improved conventional munitions
decreased by 61 percent.  The reduced threat has led to reduced
requirements, and reduced requirements have contributed significantly
to large quantities of various ammunition types becoming excess to
the services' stated needs. 

   Figure 2.1:  Reduction in Army
   War Reserve Requirement
   (tonnage in millions)

   (See figure in printed
   edition.)

Source:  Conventional Ammunition Functional Area Analysis. 


   ALMOST 50 PERCENT OF THE TYPES
   OF AMMUNITION HAVE QUANTITIES
   EXCEEDING REQUIREMENTS
---------------------------------------------------------- Chapter 2:2

All the services have serviceable ammunition in the stockpile that
exceeds their needs as defined in the Defense Planning Guidance; that
is, to support U.S.  forces during two nearly simultaneous major
regional conflicts, for training and testing during peacetime, and
for other needs.  In total, about 50 percent of the ammunition types
in the services' inventories include quantities exceeding
requirements.  The 50 percent includes ammunition types in their
inventories for which the services have no stated requirements. 

Although ammunition managers agreed that some items were excess, they
believed that ammunition should be kept for other uses, such as
training and foreign military sales.  However, they have set no
limits on how much should be kept for other purposes.  The retention
of excess ammunition adds unnecessarily to workload and costs and
requires the use of increasingly valuable storage space. 


      EXCESS SERVICEABLE
      AMMUNITION
-------------------------------------------------------- Chapter 2:2.1

The services own and store in the wholesale and retail stockpiles
excess ammunition valued at about $22 billion, or 40 percent of the
value of the total serviceable stockpile (see table 2.1).  To
determine the adequacy of the stockpile, we compared the amount of
serviceable ammunition on hand in both wholesale and retail level
storage facilities as of September 30, 1994, to the services' stated
requirements.  At that time, the services owned and stored 2,781
different types of serviceable conventional ammunition worth $58
billion.  Before considering stocks excess, we accounted for the
quantity of ammunition needed for two major regional conflicts and
for 7 years of training and testing (6 years of testing for the
Army).  For all services, we allowed 1-1/2 times the stated
requirements before determining excess quantities. 



                         Table 2.1
          
           Excess Serviceable Ammunition Owned by
                        the Services

                   (Dollars in billions)

                                                 Excess as
                                  Value of      percentage
                    Value of        excess        of total
                 serviceable   serviceable     serviceable
Service           ammunition    ammunition      ammunition
--------------  ------------  ------------  --------------
Army                   $26.4         $15.0              57
Navy\a                  14.9           3.8              26
Marine Corps             5.4           2.1              39
Air Force                7.0            .7              10
==========================================================
Subtotal               $53.7         $21.6              40
Excluded Navy            4.5
 items\a
==========================================================
Total                  $58.2
----------------------------------------------------------
\a We excluded items valued at $4.5 billion with a requirement of
zero because the Navy could not identify components versus end items
for several types of ammunition. 

Of the excess ammunition owned by the services, 30 percent exceeded
requirements by 1-1/2 to more than 30 times.  For another 18 percent,
the services did not identify a requirement.  The total value of
these items is $21.6 billion.  (See table 2.2.)



                               Table 2.2
                
                  Serviceable Ammunition That Exceeds
                Requirements Multiple Times (as of Sept.
                               30, 1994)

                         (Dollars in billions)

                                                    Percentage   Value
Number of times type of                 Number of     of total      of
ammunition exceeds                     ammunition   ammunition  excess
requirement\a                               types        types   items
------------------------------------  -----------  -----------  ------
More than 30                                  121          4.3    $3.7
15.01 to 30.0                                  83          3.0     0.3
1.51 to 15.0                                  637         22.9    14.6
======================================================================
Subtotal                                      841         30.2    18.6
No requirement                                500         18.0     3.0
======================================================================
Total                                       1,341         48.2   $21.6
----------------------------------------------------------------------
\a Amounts exceeding 1 indicate that more than enough ammunition is
on hand to meet the wartime and peacetime requirements through fiscal
year 2001. 

One example of excess ammunition types is the .30-caliber carbine
ball cartridge.  The Air Force has enough of this type of ammunition
to meet its stated requirement 58 times, and the Army has 517 times
the amount needed.  Similarly, the Navy has 276 times the amount of
the .50-caliber ball cartridges needed, and the Marine Corps has 92
times the number of offensive hand grenades needed to meet its
requirements. 

Also, as table 2.2 shows, 500 types of ammunition worth $3 billion
have no stated requirements.  For example, the Air Force has no
requirement in its database for its 4.8 million of 20-millimeter
cartridges worth over $21 million.  According to Air Force officials,
this ammunition is needed for the M39 gun and the F-5 aircraft and
can be used in the M61 gun, when separated.  In addition, the Marine
Corps does not show a requirement in its database for its 4,307
105-millimeter cartridges valued at over $2.5 million and 2.9 million
.50-caliber cartridges valued at about $2.7 million.  Marine Corps
officials stated that they do not need these types of ammunition. 
The other services similarly have ammunition on hand for which there
is no stated requirement.  Although Air Force officials said that
they have specific uses for the ammunition, they nevertheless do not
show that they need it by including it in their requirements
database. 


      ADDITIONAL EXCESS INVENTORY
-------------------------------------------------------- Chapter 2:2.2

We calculated the total amount of excess ammunition--serviceable and
unserviceable--at about $31 billion.  In addition to the $22 billion
of serviceable ammunition in excess of stated needs, we calculated
that as of September 30, 1994, DOD had about $9.4 billion in
unserviceable assets that exceeded stated needs (see table 2.3), for
a total excess of $31 billion, or about 39 percent of the $80 billion
ammunition stockpile.  In addition, there was over $2.9 billion of
excess assets on the single manager's inventory records that did not
appear on the services' inventory records, and over $2 billion of
ammunition that was identified for disposal.\2



                               Table 2.3
                
                Excess Unserviceable Ammunition Owned by
                              the Services

                         (Dollars in billions)

                                                             Excess as
                                                            percentage
                                                 Value of           of
                                                   excess        total
                                    Value of  unserviceab  unserviceab
                                unserviceabl           le           le
                                           e  ammunition\  ammunition\
Service                           ammunition            a            a
------------------------------  ------------  -----------  -----------
Army                                    $8.6         $5.5           64
Navy\b                                   6.7          3.4           51
Marine Corps                             1.5           .4           27
Air Force                                 .9           .1           11
======================================================================
Subtotal                               $17.7        $ 9.4           53
Excluded Navy items\b                    3.8
======================================================================
Total                                  $21.5
----------------------------------------------------------------------
\a This represents only unserviceable ammunition by type of
ammunition for which there was excess serviceable inventory. 

\b We excluded items valued at over $3.8 billion with a requirement
equal to zero because the Navy cannot identify components versus end
items for several types of ammunition. 

Without some identification of ammunition not needed to meet wartime
and peacetime requirements or some other prioritization, all
ammunition other than that identified for disposal receives the same
level of attention by the single manager.  As discussed in chapter 3,
the large amount of ammunition being stored by the single manager is
stressing the ability of installation personnel to manage required
ammunition. 


--------------------
\2 We were only able to determine a dollar value for 43 percent of
the ammunition identified for disposal as of September 30, 1994, and
this amounted to $2.1 billion. 


      ITEM MANAGERS' VIEWS ON
      EXCESS AMMUNITION
-------------------------------------------------------- Chapter 2:2.3

We queried ammunition item managers about the reasons that DOD had
excess ammunition for 145 selected (126 randomly and 19 judgmentally)
types of ammunition.  These managers agreed that they had excess
items for 59 (41 percent) of the 145 types we selected.  They
disagreed that the rest were excess for varying reasons.  All cited
training as a reason for keeping excess ammunition.  However, we had
already computed training and testing needs in our analysis, and the
ammunition they cited as needed for training was excess to stated
requirements.  Other reasons cited for keeping the ammunition were
for foreign military sales, research and development, trade purposes,
military competitions, and ceremonies, such as military funerals. 
However, the services had not determined what would be a reasonable
amount to meet these needs; rather, they seemed to keep all of any
item they thought might be needed. 


   SERVICE INVENTORIES CONTAIN
   MANY OLD AND AGING AMMUNITION
   ITEMS
---------------------------------------------------------- Chapter 2:3

Historically, the age of ammunition in the stockpile has been a
concern and the object of study since before fiscal year 1979.  In
fiscal year 1979, the single manager initiated a purification program
to eliminate old, obsolete, or otherwise unneeded ammunition items. 
This particular effort built on the results of past studies.  In
September 1985, the single manager issued an ammunition stockpile
rotation study that assessed the effectiveness of stockpile rotation
policies and regulations.  This study analyzed ammunition stocks in
the United States and Europe and found that 30 percent of the Army's
stocks in the United States and 26 percent of the overseas stocks
were 20 years old or older. 

Little change, if any, has occurred since 1985.  Despite an awareness
of age and the need to rotate ammunition stocks, we found that as of
March 1995, a considerable portion of the wholesale ammunition
stockpile was over
25 years old.  The age of over 56 percent of the lots in the
wholesale ammunition stockpile is unknown because the date of
manufacture is either not recorded in the database or recorded
incorrectly.  Of the remaining 44 percent, 14 percent was over 30
years old, 34 percent was over 20 years old, and more than 55 percent
was over 10 years old. 
Table 2.4 shows the ages of the ammunition lots\3 in the wholesale
stockpile. 



                               Table 2.4
                
                   Age of Ammunition in the Wholesale
                      Stockpile (as of Mar. 1995)

                                                   Number
                                                       of   Percentage
Age in years                                         lots   of total\a
-------------------------------------------------  ------  -----------
0 to 5                                             40,688           26
5.01 -10                                           30,150           19
10.01 -15                                          18,474           12
15.01 -20                                          14,986            9
20.01 -25                                          15,130           10
25.01 -30                                          16,587           10
30+                                                22,453           14
======================================================================
Total                                              158,46          100
                                                        8
----------------------------------------------------------------------
\a Does not include 202,691 lots for which the age was unknown or
incorrectly entered into the database. 

We observed ammunition dating to the 1940s (see fig.  2.2).  Service
officials generally said that unless ammunition has a shelf life, its
age does not alter its serviceability.  They noted that if ammunition
is stored properly, it is as good as the day it was manufactured. 

   Figure 2.2:  Ammunition Dating
   From the 1940s

   (See figure in printed
   edition.)

While old ammunition may still be serviceable, it is less likely to
be used if a new item is available.  The 1985 rotation study noted
that soldiers in the field demanded the newest and best lots of
ammunition available, thus older lots remained in storage.  More
recently, during Operation Desert Storm, battlefield commanders opted
to use newer, more modern items.  Ammunition that was shipped to
Southwest Asia for Operation Desert Storm, partly from Europe, but
was not used now occupies over 2 million square feet of space in the
U.S.  depot system, awaiting potential use and continuing to age. 
Also, according to single manager officials, commanders insist on
training the way they are expected to fight a war.  Consequently,
they also do not want to train with the "old stuff." Rather, they
want to use the more modern and the most current ammunition, if
available. 


--------------------
\3 Ammunition is manufactured and controlled by lots.  An ammunition
lot identifies specific characteristics associated with a certain
quantity of ammunition (e.g., complete rounds, components,
propellants) that is manufactured or assembled by one producer under
uniform conditions and is expected to function in a uniform manner. 
Beginning around the mid-1970s, the month and year of manufacture
were incorporated among the characteristics of each ammunition lot
number. 


   MANAGEMENT PRACTICES PERPETUATE
   THE BUILDUP OF EXCESS AND AGING
   AMMUNITION
---------------------------------------------------------- Chapter 2:4

The Joint Ordnance Commanders Group's 1993 study and resulting report
on the wholesale stockpile found that the excess ammunition in the
stockpile contributes to the stockpile's annual operational costs. 
The report suggested that the services reduce the amount of excess
ammunition stored.  The report also suggested that training, foreign
military sales, grant aid programs, and destruction are among the
ways of eliminating excess.  However, the services have made little
progress in eliminating excess and aging ammunition because they are
reluctant to classify ammunition as excess; have no incentive to
declare ammunition excess, since the Army pays for its storage; are
storing ammunition for weapon systems no longer in their inventories;
and have purchased ammunition that, according to their records, was
not needed to meet required levels.  In addition, the services keep
ammunition over and above requirements, or in "long supply," to meet
various retention needs.  Moreover, single manager personnel do not
always issue the older stock, leaving it to continue to age. 


      SERVICES ARE RELUCTANT TO
      CLASSIFY AMMUNITION AS
      EXCESS
-------------------------------------------------------- Chapter 2:4.1

According to the 1993 report on the wholesale stockpile, the services
have known for some time that they have excess quantities of
ammunition items.  We were told that the services do not like to
declare ammunition excess because they then lose ownership of stocks. 
Also, if items in long supply are transferred to another service, the
transferring service is reimbursed for the items.  However, if an
item is identified as excess and then given to another service, the
issuing service is not paid for the item.  Also, theater commanders
may exercise their judgment to retain ammunition items even if
requirements no longer exist.  Air Force inventory control point
officials agreed in October 1994 that they could no longer provide
effective and efficient management of vast quantities of older,
obsolete weapon systems.  They listed 138 potential items for
disposal because they had no operational requirement, were no longer
reliable, were environmentally unacceptable, or their shelf life had
expired.  Although headquarters officials approved some of these
items for disposal, they directed that others be retained until
suitable substitutes became available or more data were provided
about the items. 


      SERVICES HAVE NO INCENTIVES
      TO REDUCE EXCESS AMMUNITION
-------------------------------------------------------- Chapter 2:4.2

Currently, the services have no incentive to reduce excess ammunition
in the wholesale stockpile because the single manager is responsible
for its care; that is, storage, inventories, surveillance, and
disposal of the ammunition.  The 1993 report on the wholesale
stockpile notes that an incentive for inducing the services to reduce
excess ammunition would be to charge a storage fee or charge each
service for the cost to maintain its stock in the wholesale system. 
However, single manager officials we talked to did not support
charging the services a storage fee.  In their opinion, the real
issue is the need for the services to identify nonrequired items and
turn them over to the single manager for disposal or identify them
for possible redistribution where they exceed stated requirements. 
However, the services have only partially provided this information. 


      SERVICES STORE AMMUNITION
      FOR WEAPON SYSTEMS NO LONGER
      IN THEIR INVENTORIES
-------------------------------------------------------- Chapter 2:4.3

Ammunition is being stored and managed for weapon systems that either
have been purged or are no longer in the active inventory.  Although
we did not determine the total amount of ammunition stored for weapon
systems no longer in the inventory, we found specific examples of
such ammunition. 

The M60A2 tank and the M42 self-propelled gun are obsolete weapon
systems to the Army.  However, the Army continues to store 147,300
152-millimeter cartridges valued at $43.6 million for the M60A2 tank
and 269,000 40-millimeter cartridges valued at $2.5 million for the
M42 self-propelled gun.  Although Army officials acknowledged that
the 152-millimeter cartridges were at one time used for the M60A2
tank, in commenting on this report, DOD said the Army is maintaining
these 152-millimeter cartridges for the M551 Sheridan tank.  However,
DOD noted that there will be a reevaluation of the need to retain
these cartridges.  Also, the Army is storing 97 million rounds of
various small arms ammunition valued at $146 million for weapons no
longer in the Army's inventory.  According to Army officials, this
ammunition cannot be used for other weapons currently in the
inventory. 

The Air Force continues to store motors for the Nike Hercules rocket. 
According to the Air Force's database, there is no requirement for
these rocket motors, and the Air Force owns only 39 of them. 
However, the Standard Depot System database, which accounts for
wholesale ammunition assets, shows that the Air Force owns 469 of the
Nike rocket motors--430 more than the Air Force's system shows.  The
Navy continues to store in the wholesale inventory about 4,000
16-inch projectiles for its battleships, which are no longer in the
active fleet.  These projectiles are in the single manager's
wholesale inventory database as belonging to the Navy.  However, they
are not in the inventory database used by the Navy.  Also, the Navy
stores 3-inch, .50-caliber ammunition and MK25 mines in the wholesale
system.  At one depot we visited, we were told it had little or no
issues of the 3-inch, .50-caliber ammunition in 15 years, and
according to an official at another installation, there had been no
activity at all for the MK25 mines in over 10 years.  Like the
16-inch projectiles, over 5,000 MK25 mines in the single manager's
wholesale inventory listed as belonging to the Navy are not in the
Navy's inventory database. 

The Marine Corps continues to store about 3 million .50-caliber
cartridges for the M85 machine gun, even though the Marine Corps has
removed the M85 gun from its inventory and no other weapon system
uses this type of .50-caliber ammunition.  Likewise, the Marine Corps
continues to store over 4,000 105-millimeter projectiles that were
used for the M60A1 tank.  The M60A1 tank, however, is also no longer
in the Marine Corps' inventory.  In commenting on this report, DOD
noted phasing out of the M60A1 tanks from the Marine Corps' inventory
began in 1991 and was completed in 1994.  DOD stated that the purging
of ammunition for the M85 and M68 weapons began in October 1991 and
is scheduled for completion in fiscal year 1997. 


      SERVICES HAVE BOUGHT
      AMMUNITION WHEN EXISTING
      INVENTORY WAS SUFFICIENT
-------------------------------------------------------- Chapter 2:4.4

We compared the services' ammunition purchases during fiscal years
1993 through 1995 to ammunition items in excess quantities as of
September 30, 1994.  For fiscal years 1993 and 1994, we found that
the Army and the Navy bought 17 types of ammunition at a cost of
about $124.4 million and $0.3 million, respectively, that according
to their records they did not need to meet stated requirements.  We
did not find that similar purchases were made for fiscal year 1995. 

As can be seen in table 2.5, in fiscal year 1993, the Army purchased
six types of ammunition at a cost of over $114 million.  According to
Army records, all of these items were excess to their fiscal year
1995 stated requirements, and after deducting the quantities
purchased in fiscal years 1993 and 1994, inventory quantities
remaining still exceeded service-defined requirements.  For example,
the Army bought 118,893 155-mm projectiles (D864) at a cost of $78.9
million.  After deducting this quantity from the excess quantity as
of September 30, 1994, 86,307 of these projectiles remained in
inventory. 



                                    Table 2.5
                     
                     Army Items Purchased That Were Excess to
                                   Requirements


                                                                          Excess
                                                                        quantity
                                                            Excess     remaining
                    1993                1994              quantity         after
          Descri  quanti              quanti              on 9/30/     deducting
Item      ption       ty   1993 cost      ty  1994 cost         94   purchases\a
--------  ------  ------  ----------  ------  ---------  ---------  ------------
D513      155-                        40,903  $9,999,96    119,200        78,297
           mm                                         5
           proje
           ctile
D532      155-    49,104  $27,508,06                       616,500       567,396
           mm                      1
           prope
           lling
           charg
           e
D864      155-    118,89  78,946,141                       205,200        86,307
           mm          3
           proje
           ctile
M995      Demoli   1,751      96,393     580     24,865      2,362            31
           tion
           charg
           e
M997      Demoli     341       9,265     487     10,319        940           112
           tion
           charg
           e
ML05      High     4,380     888,658                        10,580         6,200
           explo
           sive
           cutte
           r
ML10      Demoli                       4,578     79,978      6,083         1,505
           tion
           charg
           e
ML11      Demoli                       3,893     68,984      7,494         3,601
           tion
           charg
           e
ML18      Demoli                         439     11,976      6,136         5,697
           tion
           charg
           e
ML19      Demoli                       4,968    139,005      6,874         1,906
           tion
           charg
           e
N523      Percus  1,714,   6,651,966                     2,780,000     1,065,568
           sion      432
           prime
           r
================================================================================
          Total           $114,100,4          $10,335,0
           cost                   84                 92
--------------------------------------------------------------------------------
\a This is the excess quantity remaining after subtracting the 1993
and 1994 purchases from the excess on hand on September 30, 1994. 

An Army official told us that these purchases may have been made
because (1) the Congress directed the purchase, (2) it was more
economical to purchase a large quantity rather than a small quantity
to meet the requirement, or (3) the requirements decreased after the
item was placed in the budget request cycle.  Another Army official
commented that the purchases could have been made before the
requirements changed.\4

Smaller, but similar purchases were made by the Navy (see table 2.6). 
In fiscal years 1993 and 1994, the Navy bought six types of
ammunition at a cost of $320,000.  According to Navy records, all of
these items were excess to their fiscal year 1995 stated requirements
and after deducting the quantities purchased in fiscal years 1993 and
1994, inventory quantities remaining still exceeded service-defined
requirements. 



                                    Table 2.6
                     
                     Navy Items Purchased That Were Excess to
                                   Requirements


                                                                          Excess
                                                                        quantity
                                                            Excess     remaining
                           1993            1994           quantity         after
                         quanti    1993  quanti    1994   on 9/30/     deducting
Item      Description        ty    cost      ty    cost         94   purchases\a
--------  -------------  ------  ------  ------  ------  ---------  ------------
A064      5.56-mm         6,400  $2,816  179,20  $62,72  1,588,906     1,403,306
           cartridge                          0       0
A071      5.56-mm        30,240   7,862  13,440   2,957  32,198,09    32,154,412
           cartridge                                             2
B634      60-mm           2,724  203,86                     10,854         8,130
           cartridge                  4
G811      Practice hand                   4,950  24,849     11,394         6,444
           grenade
G878      Hand grenade    2,520   4,284   3,240   4,504    265,038       259,278
           fuze
M458      Detonating     152,00   6,080                    164,700        12,700
           cord               0
================================================================================
          Total cost             $224,9          $95,03
                                     06               0
--------------------------------------------------------------------------------
\a This is the excess quantity remaining after subtracting the 1993
and 1994 purchases from the excess on hand on September 30, 1994. 

Assuming ammunition requirements are accurate and in accordance with
Defense Planning Guidance, we believe the readiness posture of the
Army and the Navy could have been enhanced if fiscal year 1993 and
1994 procurements had been focused on items with shortages rather
than on items that either met and/or exceeded requirements. 


--------------------
\4 In commenting on this report, DOD expressed concern with the data
in table 2.4.  However, we could not address its concerns because the
data provided by DOD was not compatible. 


      PRACTICES FOR ROTATING STOCK
      LEAD TO AGING AND
      OBSOLESCENCE OF AMMUNITION
-------------------------------------------------------- Chapter 2:4.5

It is the single manager's policy for installations to first issue
ammunition from small lots and use older stocks for training. 
However, this policy is not always followed.  All the installations
we visited noted that, as a practical matter, this policy is often
too difficult to follow.  Not all items in a storage facility are
easily accessible, and if the facility is at or near capacity, single
manager personnel have little choice but to issue the more accessible
stock to maximize efficiency and to ensure that the customer's
required delivery date is met. 

We agree that additional work would be required to consistently issue
first-in stock and that this could increase labor costs and delay
deliveries.  We recognize, however, that the longer first-in stock
remains in storage facilities, the older it becomes and the more
likely it is to become obsolete and destined for destruction.  As we
noted previously, over 55 percent of ammunition in the wholesale
system for which the age of the ammunition is recorded is over 10
years old. 


   DESPITE SOME SHORTAGES OF
   AMMUNITION, SERVICES' MANAGERS
   GENERALLY BELIEVE THEY CAN MEET
   REQUIREMENTS
---------------------------------------------------------- Chapter 2:5

As of September 30, 1994, the services had shortages of items in 752
ammunition types valued at about $60 billion.  According to the
Deputy Chief of Staff for Ammunition, U.S.  Army Materiel Command,
however, "sufficient munitions are currently in the stockpile to
support any projected military operation." Inventory control point
officials from all the services agree that they have no major
problems with shortages because they consider inventory quantities
sufficient, they have substitutable items, and/or they have plans to
purchase the items.  During our review, Marine Corps officials stated
that the Marine Corps did not have enough ammunition to support
requirements.  However, in commenting on this report, DOD said a
Marine Corps ammunition study conducted after our review was
completed validated a lower level of war reserve requirements than
was previously identified.  Therefore, DOD commented that all the
services have sufficient ammunition to support their requirements,
although the mix of ammunition is not optimum. 


      SHORTAGES
-------------------------------------------------------- Chapter 2:5.1

Thirty percent of the items with shortages were on hand in quantities
ranging from over 50 percent of the requirement to almost the entire
requirement; 41 percent were on hand in quantities ranging from 1
percent to 50 percent of the requirement; and 29 percent had none on
hand to meet the requirement.  Some of the items are expensive, which
accounts for the large amount of money ($60 billion) needed to
eliminate these shortages.  Also, we used service-defined
requirements in our analysis, and these requirements did not always
take into account the availability of substitute items and the
planned phaseout of ammunition.  In six classified DOD/Inspector
General (IG) reports issued from June 1994 through June 1995 on
quantitative requirements for antiarmor munitions, DOD/IG concluded
that the services had overstated requirements by $15.5 billion. 

Forty-two of the items identified as in a shortage condition in our
analysis accounted for over 50 percent ($32 billion) of the total
dollar value of the shortages.  Fifteen items have a unit cost that
exceeds $1 million, which accounts for over $18 billion in shortages. 
Stated requirements for many of these items may not reflect the true
need for the item.  For example, according to the Navy's database,
the Navy has a shortage of
1,587 AIM-54C Phoenix missiles, but the Navy does not consider the
missile to be in a shortage status.  In fact, after considering
several other substitute items, the Navy's inventory has about 191
percent of the requirement for the Phoenix.  The replacement cost of
each missile would be over $2 million; the shortage amount accounts
for over $3.2 billion of the total shortage. 

Similarly, the Air Force is short about 18,000 AGM-88B High-Speed
Anti-Radiation Missiles (HARM), which account for over $6 billion of
the shortage amount.  However, according to Air Force officials,
HARMs are no longer being procured and their database only shows a
lesser shortage amount.  Likewise, the Army is short 616 Army
Tactical Missile System (ATACMS), which accounts for over $390
million, but according to Army officials, the ATACMS is not
recognized as being in a shortage position. 

Various versions of the Patriot missile are also shown in the
database as being in short supply.  The value of these missiles is
about $760 million.  According to an Army official, no procurements
had been requested since about 1993, and there had been no
procurements since about 1993 or 1994.  A more sophisticated version
of the Patriot missile will be the next missile purchased for the
inventory.  The official commented that the requirement in the
database may be the number that was needed at an earlier date. 

Service officials generally disagreed with the service-defined
requirements, which when compared to ammunition on hand indicated
that 42 high dollar value items were actually in a shortage position. 
To the contrary, we were told that inventories are generally
sufficient to meet requirements, particularly when quantities of
substitute items are considered.  With budget constraints, the
services do not have the money to purchase some items in a shortage
position.  And with the exception of the Marine Corps, service
officials generally believed that they had sufficient quantities of
substitute ammunition and that future procurements would be adequate
to meet wartime and peacetime requirements under the Defense Planning
Guidance.  Army officials noted, however, that in the future they
anticipate problems in filling training requirements. 

We randomly selected 152 ammunition items showing shortages. 
Managers said that 67 of the items had shortages, and they planned
future purchases for some of these items.  However, despite the
records, which showed that these items lacked sufficient quantities
to meet established requirements, the item managers contended that
most of the items (85) were not considered to have shortages because
of available substitutes and planned buys.  Our sample showed a
serious shortage of top-priority items for the Marine Corps but no
major problem for the other services. 

The Marine Corps asserted that it had an insufficient amount of some
ammunition to support two nearly simultaneous major regional
conflicts.  According to the Marine Corps' program manager for
ammunition, the Marine Corps "is prepared and capable of executing
one MRC [major regional conflict] and doing significantly more than
that .  .  .  [but] does not have the ammunition to support [two
MRCs]." The program manager noted that the Marine Corps is short of
ammunition valued at about
$1.5 billion, including $500 million in ammunition for current
training needs.  We were told that shortages are mainly long-range
artillery and war reserve items such as .50-caliber SLAP 4 and
1-linked cartridges, 9-millimeter ball cartridges, and
7.62-millimeter ball linked cartridges.  DOD's comments on this
report noted that a Marine Corps ammunition study conducted after
this review was completed has validated a lower level of war reserve
requirements than was previously identified.  Therefore, DOD said all
services, including the Marine Corps, have sufficient ammunition to
support their requirements. 


      MORE CROSS-SHARING OF EXCESS
      AMMUNITION CAN BE DONE
-------------------------------------------------------- Chapter 2:5.2

Although the Army has shared some excess ammunition across the
services, we found that (1) purchases of about $185 million in fiscal
years 1993 and 1995 could have been avoided if ammunition in excess
of stated requirements had been shared among the services, (2) $1.2
billion in ammunition in excess of stated requirements could be
shared to alleviate shortages, and (3) $19 million in costs could be
avoided by providing ammunition in excess of stated requirements in
good condition to services that planned maintenance for the same
ammunition.  The Senate Committee on Appropriations has also
recognized the need for the services to be more aggressive in sharing
excess ammunition.  For fiscal year 1995, on the basis of our
identification of potential ammunition budget reductions,\5 it
directed the Army to transfer at least 17,000 excess M203A1
155-millimeter red bag charges, at no cost, to the Marine Corps and
denied the Marine Corps $12 million for new charges. 

Ammunition officials stated that one reason that more ammunition in
excess of stated requirements has not been shared is that the single
manager does not know the other services' requirements or the total
holdings of ammunition.  Even if the single manager did have this
knowledge, it is not authorized to redistribute ammunition.  It,
therefore, cannot initiate the distribution of ammunition in excess
of stated requirements and purge the wholesale system of unnecessary
items for which there is no reason to retain. 


--------------------
\5 1995 Defense Budget:  Potential Reductions and Rescissions in
RDT&E and Procurement Programs (GAO/NSIAD-94-255BR, Sept.  8, 1994),
p.  91. 


         CROSS-SHARING TO AVOID
         UNNECESSARY PURCHASES
------------------------------------------------------ Chapter 2:5.2.1

Cross-sharing of existing ammunition that exceeds one or more
service's stated requirements can preclude unnecessary purchases and
redirect resources to fill or partially fill shortages.  During
fiscal years 1993 through 1995, the military services purchased
$184.5 million of ammunition items that were not needed to meet
stated requirements (see table 2.7).  The ammunition purchased,
according to service-defined requirements and inventory records, was
already available or partially available in DOD inventories in
quantities that exceeded fiscal year 1995 service requirements.  For
example, in fiscal year 1995, the most current year after the
September 30, 1994, excess analysis, the military services bought
18 types of ammunition at a total cost of $102.2 million.  However,
enough of the same types of ammunition were already in the inventory
system to completely satisfy or partially satisfy 58 percent, or
$59.4 million, of the total fiscal year 1995 purchase quantity. 
Similar conditions existed in fiscal years 1993 and 1994. 



                                    Table 2.7
                     
                     DOD Ammunition Purchases That Could Have
                       Been Filled With Existing Inventory
                              (fiscal years 1993-95)


Ammunition cost and
avoidance                            1993         1994         1995        Total
----------------------------  -----------  -----------  -----------  -----------
Purchase cost                 $131,039,72  $48,529,950  $102,200,70  $281,770,37
                                        2                         2            4
Purchase cost totally         100,306,079   17,520,692   38,634,122  156,460,893
 avoided
Purchase cost partially         2,191,111    5,108,352   20,757,027   28,056,490
 avoided
================================================================================
Total cost avoided            $102,497,19  $22,629,044  $59,391,149  $184,517,38
                                        0                                      3
Percent of purchase cost             78.2         46.6         58.1         65.5
 avoided for these specific
 item types
--------------------------------------------------------------------------------
Examples of excess ammunition that could have filled services'
shortages include the Marine Corps' 22 million 5.56-millimeter tracer
rounds.  As of September 30, 1994, the Marine Corps had a quantity of
this ammunition sufficient to meet the quantities bought by the Air
Force, the Army, and the Navy and still had about 12 million rounds
more than needed.  Redistribution of the Marine Corps' assets in
these instances could have saved and/or redistributed over $5 million
spent by the other services for the same ammunition.  In another
example, the Army had over 1.9 million 25-millimeter APDS-T
cartridges, which exceeded its stated requirements.  The Navy bought
this same item in fiscal years 1993 and 1995 at a cost of over $5
million, and the Marine Corps bought the item in fiscal years 1994
and 1995 at a cost of over $6 million.  Redistribution of these
assets could have saved or redirected over $11 million for ammunition
with shortages or for other purposes, and the Army would still have
had 1.4 million rounds more than its stated requirement.  We believe
that centralized oversight and management of DOD ammunition
requirements and assets would enable better use of ammunition through
redistribution and free up funds to purchase items determined to have
shortages. 


         CROSS-SHARING TO REDUCE
         SHORTAGES
------------------------------------------------------ Chapter 2:5.2.2

We identified $1.2 billion of ammunition in excess of stated
requirements that could be shared among the services to meet service
shortages.  Some cross-sharing of ammunition has been done.  For
example, in fiscal year 1993, the Army transferred over 1.8 million
excess .50-caliber blank linked cartridges and 61,500 60-millimeter
cartridges to the Navy and the Marine Corps, respectively.  And in
fiscal year 1994, the Army again transferred additional excess
ammunition--about 3,800 .45-caliber blank cartridges and about 68,000
.50-caliber blank cartridges to the Navy, about 484,000
5.56-millimeter dummy cartridges and about 118,000 7.62-millimeter
dummy cartridges to the Marine Corps, and 347,000 5.56-millimeter
dummy cartridges and 16.5 million 5.56-millimeter cartridges to the
Air Force.  While this is a step in the right direction, the services
must make a concerted effort to identify ammunition in excess of
requirements that can be shared to reduce shortages. 

DOD directives currently require each service to report to the single
manager its total assets against requirements to help identify
excesses and corresponding needs among the services.  However, the
single manager has not regularly received this data from all the
services.  Despite the Army's transfers of excess ammunition, our
analysis of ammunition requirements and assets showed 139 instances
where excess on-hand quantities of $1.2 billion could be shared among
the services to meet shortages.  For example, 30 ammunition items
with shortages in the Navy could be partially or totally filled by
excess quantities in the Army, the Air Force, and the Marine Corps;
shortfalls of 8 items in the Army could be relieved by excess items
from the Marine Corps; and 15 Air Force items with shortages could be
partially or wholly filled by excess items from the Army.  As shown
in table 2.8, for some ammunition types, two of the four services
have excess quantities that could be shared to fill a deficit in
another service, and even when shortages are relieved by excess
ammunition, excess quantities still remain. 



                                    Table 2.8
                     
                        Selected Ammunition Shortages and
                      Offsetting Excess Ammunition Among the
                                     Services

                                                                        Quantity
                                                                       remaining
                                                            Marine  after cross-
Item      Description        Army  Air Force       Navy      Corps       sharing
--------  ------------  ---------  ---------  ---------  ---------  ------------
B506      Cartridge,      745,200    (9,387)   (32,780)     21,079       724,112
           40-mm, red
           smoke
G900      Hand           (17,300)          0     43,232     19,992        45,924
           grenade,
           incendiary
G937      Hand/rifle            0      (124)     22,138     91,067       113,081
           grenade
A130      Cartridge,    12,427,90          0  (3,273,17  7,990,929    17,145,650
           7.62-mm              0                    9)
           ball
B508      Cartridge,      766,700          0    (5,977)     73,764       834,487
           40-mm,
           green smoke
L323      Signal           13,300          0    (4,684)     74,496        83,112
           smoke, red,
           hand held
L324      Signal            5,900          0    (9,904)     44,630        40,626
           smoke,
           green, hand
           held
M028      Demolition       10,100          0      (942)     19,369        28,527
           kit,
           Bangalore
           torpedo
N464      Fuze,         2,149,500   (33,043)          0    556,131     2,672,588
           proximity
ML14      Demolition        6,919      9,833    (9,091)          0         7,661
           charge,
           linear
           shaped
--------------------------------------------------------------------------------
Note:  Figures in parentheses indicate shortages. 


         CROSS-SHARING TO AVOID
         MAINTENANCE
------------------------------------------------------ Chapter 2:5.2.3

In addition to filling some of the services' shortages, the
cross-sharing of excess ammunition during fiscal years 1996 through
2000 could result in the avoidance of more than $19 million in
planned maintenance costs (see table 2.9).  For example, about $11.5
million in planned maintenance could be avoided by sharing a portion
of the 839,694 excess 155-millimeter projectiles with services that
plan maintenance on 370,000 projectiles.  In addition, the $3.4
million cost to repair 40-millimeter cartridges could be avoided
because, in this case, the Air Force has more than 1 million excess
cartridges that could partially fill the Army's requirement to repair
1.7 million rounds of this item. 



                               Table 2.9
                
                Costs of Planned Ammunition Maintenance
                 That Could Be Avoided by Using Excess
                  Ammunition (fiscal years 1996-2000)

                                    Ammunition
                                     requiring      Excess  Maintenanc
                                    maintenanc    quantity      e cost
Item      Description                        e     on hand     avoided
--------  ------------------------  ----------  ----------  ----------
A063      5.56-mm cartridge            288,096  22,301,824     $86,429
A071      5.56-mm cartridge          1,505,991  32,198,092     240,959
B542      40-mm cartridge              252,638     727,687     568,435
B546      40-mm cartridge            2,129,544   1,048,969   3,352,085
D502      155-mm projectile              9,000      23,078   1,305,000
D563      155-mm projectile            370,000     839,694  11,484,000
N285      Fuze                         245,010   3,773,600   2,290,844
======================================================================
Total                                                       $19,327,75
                                                                     2
----------------------------------------------------------------------

         SINGLE MANAGER DOES NOT
         HAVE INFORMATION OR
         AUTHORITY TO DIRECT
         CROSS-SHARING
------------------------------------------------------ Chapter 2:5.2.4

In 1979,\6 we recommended that the Secretary of Defense assign
responsibility to the single manager for operating a single national
inventory control point to provide DOD-wide integrated inventory
management, designate the single manager as owner of the ammunition
in the wholesale inventory, and require the single manager to apply
the principles of vertical stock management for inventory.  DOD
disagreed with these recommendations, stating that the single manager
organization's objective would be to permit the cross-sharing of
stocks between services and to avoid procurements by one service for
needs that could be satisfied with another service's excess
ammunition.  DOD stated that the single manager would be provided
information on location and condition of retail stocks and service
stratification of stocks.  This information would allow the single
manager to perform, with service approval, cross-sharing to gain
efficiencies in procurement, inventory, and transportation
management.  However, we found that the single manager does not have
information on location and condition of retail stocks or information
on service stratification of stocks. 

Concerning our 1979 recommendation that the single manager be the
owner of the ammunition in the wholesale inventory, DOD disagreed. 
DOD said the services have an obligation to control the assets they
acquire through congressional appropriations and the custodial
responsibility of the single manager does not conflict with
cross-sharing economies of common items or inhibit effective
depot-level management. 

In our 1979 report, we noted that several problems with the existing
organization of the single manager preclude achieving further
centralized ammunition management.  The single manager organization
lacks visibility over the services' retail stocks, has limited
communication channels, and must compete for resources with other
Army programs.  It is principally staffed by Army personnel and is
viewed by the other services as parochial.  In addition, the single
manager is unable to fully implement the concept within the single
manager's own service--the Army. 

As we noted in our 1979 report, the services are reluctant to give
the single manager the degree of control the manager needs to provide
efficient and economic inventory management in peacetime and the
intensive inventory management needed during war. 

Ammunition at U.S.  storage and production facilities is designated
wholesale and the remainder retail.  The services retain total
responsibility for the retail inventory.  In our 1979 report, we
noted that single manager officials claim they could achieve more
savings if they had retail asset visibility for all services through
transportation savings and matching long supply and excess ammunition
items against projected procurements.  The wholesale and retail
designations, coupled with the services' responsibilities, preclude
the single manager from managing a substantial segment of the
inventory. 


--------------------
\6 Centralized Ammunition Management--A Goal Not Yet Achieved
(LCD-80-01, Nov.  26, 1979). 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 2:6

DOD partially concurred with our findings.  DOD agreed that there
were excesses, but took exception to the criteria that we used in
determining excess inventory.  It said we inferred that stocks above
established requirements were excess and should therefore be disposed
of.  Our report states that DOD has about $22 billion of serviceable
ammunition that exceeds established needs and about $31 billion in
excess serviceable and unserviceable ammunition. 

We agree that not all the ammunition in excess of stated requirements
should be disposed of and do not state that it should be.  However,
we believe that the assets in excess of stated requirements should be
made available for cross-sharing to avoid one service purchasing
assets that another service has in excess of its wartime and
peacetime requirements.  In addition, we believe there are many items
being stored that will never be used and should be identified for
disposal.  Furthermore, items in excess of stated needs that should
be retained should be identified as not required, but to be retained
for potential future use.  This could greatly help the single manager
to better apply limited resources to storing and maintaining
ammunition. 

DOD agreed that cross-sharing of ammunition at the wholesale level
would allow for better use of ammunition through redistribution.  DOD
stated the planned Joint Defense Total Asset Visibility Program will
provide all the services the capability to review all assets and will
further expand cross-sharing of assets at the wholesale level.  DOD
did not agree with our analysis of ammunition requirements and assets
that showed excess on-hand quantities of $1.2 billion that could be
shared among the services to meet shortages.  DOD provided
information for the Army that showed stockage retention levels rather
than excesses for most of these items.  DOD makes available for
cross-sharing ammunition it considers excess; however, it does not
consider stocks in its retention categories as available for
cross-sharing.  We believe all assets in excess of requirements,
including retention stocks (such as economic retention levels) should
be considered for cross-sharing, which may avoid a future
procurement. 

Army data from its September 30, 1994, asset stratification of
conventional ammunition, which excludes missiles, shows total assets
of $18.7 billion and an authorized acquisition objective of $13.3
billion.  It shows various retention levels totaling $4.4 billion, or
23.7 percent, and a potential excess of about $1 billion, or 5
percent.  Using the stratification data for cross-sharing would only
make the $1 billion of potential excess available while the $4.4
billion in various retention levels would not be identified for
cross-sharing.  We believe the economic retention amounts of over $1
billion should be made available for cross-sharing to avoid purchases
by another service and other retention stocks should be considered
for cross-sharing. 


PROBLEMS WITH AMMUNITION STOCKPILE
MANAGEMENT THREATEN READINESS, AND
THE SINGLE MANAGER'S PLAN FOR
IMPROVEMENT HAS BEEN DELAYED
============================================================ Chapter 3

Increases in the wholesale ammunition stockpile due to returns of
massive amounts of munitions from Europe and Operation Desert Storm,
combined with a decrease in the wholesale stockpile's workforce, have
created a situation that could, if allowed to continue, degrade the
forces' readiness to meet wartime and peacetime needs.  Because the
Army has placed a lower priority on funding ammunition functions,
management of the stockpile has become a difficult task, and managers
have had to concentrate on the receipt and delivery of ammunition to
the detriment of their inspections, tests, maintenance, storage, and
disposal.  During the summer of 1993, the Joint Ordnance Commanders
Group's study team assessed the management of the stockpile and found
major deficiencies in stockpile management.  The team predicted that
unless something was done about the deficiencies, conditions would
worsen.  Our review confirmed that the stockpile's condition and
readiness have indeed been degraded.  We found that

  -- ammunition was reported as serviceable when it might not be
     because the single manager's method of recording the condition
     of stock was misleading;

  -- the condition of ammunition was often unknown because required
     inspections and testing had not been done;

  -- top-priority ammunition was not serviceable because repairs had
     not been done;

  -- ammunition was inefficiently stored, taxing facilities where
     space is at a premium; and

  -- the ammunition designated for disposal is accumulating faster
     than it can be eliminated. 

In 1994, the single manager developed the Integrated Ammunition
Stockpile Management Plan to improve the poor condition of the
wholesale ammunition stockpile.  However, the single manager has made
little progress toward improving the stockpile's operations and
readiness.  Two factors beyond the single manager's control hinder
the success of implementing the plan:  (1) the services' lack of
incentives to identify required and nonrequired items in the
stockpile and (2) the uncertainty of sustained funding for the care,
maintenance, and disposal of ammunition.  None of the services,
including the Army, have provided a list of required and nonrequired
ammunition, and although funding increased in fiscal years 1995 and
1996, the sustainment of increases to carry out the plan to
completion is not ensured. 


   CONDITION OF THE STOCKPILE IS
   SIGNIFICANTLY IMPAIRED
---------------------------------------------------------- Chapter 3:1

Because of the vast influx of ammunition from overseas in recent
years and decreases in storage space, funding, and staff, the ability
of the single manager to manage the stockpile has been taxed.  As
discussed in
chapter 2, much of this ammunition is excess, old, and deteriorating
but has not been removed from the inventory and is taking up valuable
space.  The single manager has concentrated on receiving and issuing
ammunition and because of resource constraints has neglected the
surveillance, maintenance, and disposal of ammunition.  As a result,
the condition of the stockpile is unknown.  This situation degrades
the overall readiness of the ammunition stockpile and could, if
allowed to continue, degrade the forces' readiness. 


      ARMY'S METHOD OF CLASSIFYING
      AMMUNITION AS SERVICEABLE
      LEADS TO UNCERTAINTY
-------------------------------------------------------- Chapter 3:1.1

As of March 1995, 59 percent of the ammunition tonnage and 223,293 of
the services' ammunition lots were classified as serviceable; the
remaining 41 percent of the tonnage was unavailable for issue because
it was unserviceable, suspended, or designated for disposal.  Because
of the lack of identification of required and nonrequired items, we
could not determine serviceability statistics for required stocks. 
Of the services' top-priority items (which make up 25 percent of the
stockpile's tonnage), about 71 percent were classified as
serviceable, but 29 percent were termed unusable because they needed
repair, could not be fixed, needed inspection, or were suspended from
issue (see fig.  3.1).  For example, motors for the MK66 2.75-inch
rocket could not be issued as of March 1995 because 100 percent of
them needed inspection. 

   Figure 3.1:  Condition of Items
   in the Wholesale Ammunition
   Stockpile

   (See figure in printed
   edition.)

Source:  GAO analysis of the wholesale ammunition stockpile Standard
Depot System database as of March 1995. 

The condition of ammunition lots is identified by codes signifying
that the ammunition is serviceable, unserviceable, or suspended. 
Lots in all conditions may also have defect codes indicating, for
example, rust, paint needed, replacement of unserviceable components
required, or nonhazardous/unserviceable/nonreparable.  Of the lots
classified as serviceable, 24 percent had at least one defect, and
1,752 lots (about 1 percent) were identified as
nonhazardous/unserviceable/nonreparable.  Of the services'
top-priority serviceable items, 19 percent had at least one defect. 
When the lots with defect codes are deducted from the serviceable
tonnage, the portion of the stockpile classified as serviceable
without defect is about 46 percent, and the portion of top-priority
items classified as serviceable is about 58 percent. 

One defect code indicates that an ammunition lot is overdue for
periodic inspection by at least 6 months.  Before 1990, overdue
inspections were clearly indicated by changing the lot's condition
code, but the other services objected to this procedure, and the Army
dropped it.  Now, the condition code remains unchanged, and the
defect code is added.  According to one official, under this system,
the lot's condition does not look as bad as it really is, since the
condition code is not changed. 

Even though the defect code is indicated on ammunition lots,
inventory records that item managers routinely use do not include
defect codes.  Item managers must look up the lot number in an
ammunition lot report to determine whether it has a defect.  Because
of personnel shortages, only a small percentage of overdue inspection
codes is entered into the inventory database.  Although stockpile
officials' statistics show that about 68,000 lots were past due for
periodic inspections as of June 30, 1995, our analysis of stockpile
data shows that only 6,609 lots had been coded as past due. 
Therefore, lots that appear to item managers as available for issue
may, in fact, not be available.  This situation creates a false
impression of readiness, and issuance of ammunition could be delayed
as a result. 


      CONDITION OF AMMUNITION IS
      SUSPECT BECAUSE OF DELAYS IN
      INSPECTIONS AND TESTS
-------------------------------------------------------- Chapter 3:1.2

To ensure that requisitions can be speedily filled with usable
ammunition, especially in wartime, the single manager must
continually check the condition of ammunition items to ensure that
they are ready for use and safely stored.  Each stockpile
installation is supposed to inspect ammunition periodically to ensure
that items are serviceable, properly classified as to condition, and
safe.  Based on the expected rate of deterioration, ammunition is to
be inspected every 2 to 10 years.  For example, Army guidelines
specify that blasting caps should be inspected every 2 years and
small arms ammunition every 5 years.  In addition, regular tests are
to be done to ammunition, not only to ensure that all items are safe
and reliable but also to identify those of marginal reliability or
capacity and those for maintenance or disposal.  However, inspections
and ammunition tests have fallen so far behind in recent years due to
personnel and funding cuts that the condition of many items,
including the services' top-priority items, is no longer known, with
the result that stockpile readiness may be impaired. 


         INSPECTION BACKLOGS ARE
         GROWING
------------------------------------------------------ Chapter 3:1.2.1

According to stockpile officials, a backlog of inspections has
existed since the 1980s, when the lack of personnel precluded
periodic inspections of unserviceable ammunition.  However, the
backlog has more than doubled since fiscal year 1989 (see fig.  3.2),
largely because of the influx of material from Europe and Operation
Desert Storm and the loss of inspection personnel.  In fiscal year
1994, stockpile managers suspended periodic inspections for all but
fast-moving items, and in fiscal year 1995, they concentrated instead
on reducing the backlog of lots that were in an unknown condition. 
By fiscal year 2001, periodic inspections of more than 139,000 lots
could be backlogged. 

   Figure 3.2:  Increase in
   Periodic Inspection Backlog

   (See figure in printed
   edition.)

Source:  U.  S.  Army Industrial Operations Command. 

Our analysis shows that the services' priority items had not been
treated any differently from lesser priority items when periodic
inspections were done.  As of March 1995, the periodic inspections of
15 percent (4,444) of the services' top-priority lots were past due,
meaning the serviceability, condition, and safety of these priority
items were questionable.  This number is likely to be larger because
the date for the next inspection for 22 percent (8,396) of these lots
was not in the inspection database.  Periodic inspections of
top-priority items are important because these are the items the
services need to be available (without defect) and ready for war. 


         TEST PROGRAM IS BEHIND
         SCHEDULE
------------------------------------------------------ Chapter 3:1.2.2

Because inspections cannot detect all deterioration of ammunition,
lot samples are regularly taken for test-firing or examination at
test facilities or laboratories.  This effort includes several
testing programs, including programs for small-caliber and
large-caliber ammunition.\1 According to stockpile officials, of all
the testing programs, only the large-caliber program is backlogged. 
Stockpile management has concentrated its limited testing funds on
such programs as small arms at the expense of the large-caliber
program, which is a much more costly effort.  The large-caliber
program covers 129 items having a 5-year test cycle, 85 of which are
war reserve stock; the remaining 44 are classed as substitutes and do
not have a war requirement.  As of September 1995, testing for 25
percent of the war reserve items and 59 percent of the substitutes
was overdue.  Officials predicted that, by fiscal year 1998, these
backlogs could increase to 55 percent for war reserve items and to 84
percent for the substitutes.  (See fig.  3.3.)

   Figure 3.3:  Current and
   Projected Backlogs of Tests for
   Large-Caliber War Reserve
   Ammunition in the Wholesale
   Stockpile

   (See figure in printed
   edition.)

Source:  U.S.  Army Industrial Operations Command. 


--------------------
\1 For testing purposes, large-caliber items comprise all ammunition
in sizes ranging from 40 millimeters to 8 inches. 


      UNCERTAINTY OF EXTENT OF
      UNSERVICEABLE CRITICAL ITEMS
      THREATENS READINESS
-------------------------------------------------------- Chapter 3:1.3

In the 1993 report on the wholesale stockpile, the single manager
stated that 27 percent of the services' critical items for war,
including the M830 120-millimeter cartridge and the M864
155-millimeter projectile, were unserviceable; that is, the items
needed maintenance before they could be used, were missing
components, or were earmarked for reclamation.  As of March 1995, 18
percent of the services' top-priority ammunition for war and training
needed repair, and 2 percent was beyond repair.  Because of the
backlog in inspections and tests of ammunition, however, the full
extent of unserviceable items in the stockpile today is uncertain. 
As long as managers lack accurate information on the condition of
stored items, effective planning and performance of maintenance are
problematic.  More important, the failure to maintain ammunition in
good condition could affect the services' ability to meet wartime
requirements. 

Repairs and maintenance of ammunition in storage are important not
only to sustain readiness but also to save funds, since an
unserviceable item can be repaired, on average, for 10 to 12 percent
of the cost of a new item.  The single manager estimates that the
average cost to repair a ton of ammunition is $800.  Using that
estimate, about $99 million would be needed to repair the 18 percent
of top-priority ammunition currently known to need repair.  The
estimated cost to purchase new items could be as much as $826
million. 


      INEFFICIENT USE OF STORAGE
      SPACE IMPEDES EFFICIENCY OF
      STOCKPILE OPERATIONS
-------------------------------------------------------- Chapter 3:1.4

Several factors contribute to the inefficient use of storage space. 
These factors include the loss of storage space due to downsizing,
the addition of ammunition from Europe and Operation Desert Storm,
the retention of ammunition that is unusable or awaiting disposal,
and the proliferation of fragmented (broken up) lots of ammunition. 
As a result of these factors, some usable ammunition is stored
outside when it should be stored inside. 

Since 1988, the storage space for ammunition has been drastically
reduced.  Storage space was reduced by 6 million gross square feet
when four installations were closed based on the recommendations of
the 1988 Base Realignment and Closure Commission.  As of September
1995, over
80 percent of the stockpile installations' net storage space\2

of 26.1 million square feet\3

was full, and that space will be reduced by about 16 percent when the
Sierra, Seneca, and Savanna storage areas are closed, as recommended
by the 1995 Base Realignment and Closure Commission. 

In addition to dealing with less space, storage facilities had to
accommodate a vast amount of ammunition returned from abroad after
Operation Desert Storm and from bases closing in Europe.  Ammunition
storage space will soon become even more cramped as ammunition use
declines through force reductions and the stockpile receives another
113,000 tons of ammunition from Europe in fiscal year 1996. 

Due to the inefficient storage of ammunition, some serviceable items
that should be stored inside were stored outside, while material with
less demanding storage requirements occupied high-explosive storage
areas.  For example, serviceable high-explosive items were stored
outside, while inert material was stored in about 600,000 square feet
of structures designed to house high-explosive and small arms items. 
Also, serviceable Maverick, Patriot, and Hawk missiles, which should
be stored inside, were stored outside at one depot.  (Fig.  3.4 shows
Maverick missiles stored outside.)

   Figure 3.4:  Maverick Missiles
   Stored Outside

   (See figure in printed
   edition.)

Among the serviceable ammunition stored at installations were items
that were beyond repair and designated for disposal and occupying
considerable space.  As of September 1995, 12 percent, or 3.2 million
square feet, of the stockpile's storage capacity was occupied by
stocks designated as beyond repair or for disposal.  For example,
about 300,000 tons of items designated for disposal were stored
inside at an annual cost of about $8 million and occupied nearly 2.8
million square feet.  Aggregated, these stocks would fill at least
two storage installations that could be used to store serviceable
stocks.  We found the following examples of individual types of
ammunition with questionable needs. 

In one case, 251,000 propelling charges (for 155-millimeter guns)
that had been condemned but not designated for disposal were taking
up 36,031 square feet (see fig.  3.5). 

   Figure 3.5:  Old Propelling
   Charge for 155-millimeter Gun

   (See figure in printed
   edition.)

   Note:  Propelling charge should
   be all white.

   (See figure in printed
   edition.)

In another case, 715 unserviceable Nike Hercules rocket motors with
no requirements occupied 31,212 square feet.  One depot was storing
458 of these items, some of which were manufactured in 1959. 
According to an official there, these rocket motors occupied 16 to 20
storage sites at that depot (see fig.  3.6). 

   Figure 3.6:  Nike Hercules
   Rocket Motors With No
   Requirement

   (See figure in printed
   edition.)

Two types of 3-inch, 50-caliber gun ammunition occupied about 15,000
square feet, even though the Navy no longer has any weapon in active
inventory that uses this ammunition.  According to an official at one
installation, this ammunition has had few or no issues in 15 years. 

In yet another case, 5,382 Navy MK25 mines that appeared in the
Army's wholesale inventory database as belonging to the Navy did not
appear in the Navy's inventory database, and was occupying 49,552
square feet.  About 2,200 (40 percent) of these mines had been
suspended because their condition was unknown.  We noted that some of
these mines at one installation were manufactured in 1954, and at
another installation, none of these mines had moved in over 10 years
(see fig.  3.7). 

   Figure 3.7:  Navy MK25 Mines
   Manufactured in 1954

   (See figure in printed
   edition.)

The proliferation of small, fragmented lots of ammunition also
impedes the efficient management and use of ammunition storage space. 
According to the 1993 report on the wholesale stockpile, about 32,000
fragmented lots were stored largely because of base closures and the
return of ammunition from Europe and Operation Desert Storm. 
Installations were forced to store the returned ammunition without
knowing whether additional quantities of the same lots would be
received.  These lots were often stored in more than one location. 
To optimize storage space and reduce inventories and surveillance,
ammunition from the same lot in the same condition should be located
in one storage structure when possible.  If personnel have to fill
requisitions from several locations, response time is delayed and
issue costs increase. 

Our analysis shows that since October 1993, the number of fragmented
lots in the stockpile has increased 14 percent.  These lots--some of
which were stored in more than three structures--occupy 24 percent
(5.9 million square feet) of the total storage space (see fig.  3.8). 
Fragmented lots can be reduced by selecting them first when filling
requisitions, either by using an automated lot selection process or a
manual selection process. 

   Figure 3.8:  Example of Wasted
   Space With Fragmented Lot

   (See figure in printed
   edition.)


--------------------
\2 To determine an installation's net storage space, the single
manager reduces its total storage space by the amount of unusable
space and aisle space it contains, and then subtracts 10 percent from
that difference to account for losses due to multiple lots and other
abnormalities. 

\3 Our analysis did not include Pine Bluff Arsenal because it is not
included in the Standard Depot System database. 


      ITEMS MARKED FOR DISPOSAL
      ACCUMULATE FASTER THAN THEY
      CAN BE ELIMINATED
-------------------------------------------------------- Chapter 3:1.5

As storage space has been significantly reduced and ammunition has
been added, the disposal of excess, obsolete, and unusable ammunition
has become crucial.  (See fig.  3.9 for ammunition disposal
operations.)

   Figure 3.9:  Ammunition
   Disposal Operations

   (See figure in printed
   edition.)

   Truck carrying Ammunition (Navy
   bombs) to Disposal Site

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

   Blast on Destruction of Navy
   Bombs

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

   Air Force Bombs Awaiting
   Destruction

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

   Blast on Destruction of Air
   Force Bombs

   (See figure in printed
   edition.)

As of September 1995, nearly 375,000 tons of ammunition items
designated for disposal remained stored in the stockpile.  According
to single manager officials, the ammunition designated for disposal
has increased and is likely to increase further.  Also, in recent
years, the identification of ammunition for disposal has greatly
exceeded the amount disposed of.  Ammunition designated for disposal
from fiscal years 1986 through 1995 amounted to 681,000 tons, while
the amount eliminated was 390,000 tons (see fig.  3.10). 

   Figure 3.10:  Increase in
   Ammunition Disposal Backlog

   (See figure in printed
   edition.)

Source:  U.S.  Army Industrial Operations Command. 

Storage installations and contractors execute the ammunition disposal
program.  Before an item is earmarked for disposal, other
options--sales, transfers, and reuse--are explored.  According to
single manager officials, foreign military sales have not proved a
successful means of disposing of excess ammunition because foreign
countries buy new, rather than obsolete, items if they have the means
to do so.  Currently, the primary means of disposing of ammunition is
by open burning or detonation.  Greater emphasis, however, is being
placed on the resource recovery and recycling method of ammunition
disposal, even though this will increase costs. 


   DESPITE 1994 PLAN FOR
   IMPROVEMENTS, LITTLE PROGRESS
   HAS BEEN MADE
---------------------------------------------------------- Chapter 3:2

In 1994, the single manager developed the Integrated Ammunition
Stockpile Management Plan to improve the poor conditions found in the
wholesale ammunition stockpile.  The plan proposes specific actions
to achieve, by 2001,\4 a smaller, safer ammunition stockpile by
changing operations and optimizing space with fewer installations and
staff.  However, except in its inventorying of ammunition, the single
manager has not substantially improved the operations and readiness
of the wholesale ammunition stockpile.  The single manager cannot
ensure success in implementing the plan and managing the stockpile
until the Army and other services identify their ammunition as
required and nonrequired, but the services have no incentives to do
so.  Successful implementation of the plan also is dependent on
sufficient funding being provided for the care, maintenance, and
disposal of stockpile items.  The Congress established a minimum
funding level in fiscal year 1995, and the conferees on the DOD
appropriations act established a funding minimum for fiscal year 1996
for the care and maintenance of ammunition.  Also, the House
Committee on Appropriations, in its report on DOD's fiscal year 1995
appropriations, said it expects DOD to fund disposal activities at a
level that will decrease the disposal backlog to a sustainable level
of about 100,000 tons early in the next century. 


--------------------
\4 Although fiscal year 2001 is the goal for implementing the plan,
the single manager also set a goal of reducing the disposal stockpile
to 100,000 tons by fiscal year 2004. 


      THE SINGLE MANAGER HAS BEGUN
      TO IMPLEMENT PARTS OF THE
      STOCKPILE PLAN
-------------------------------------------------------- Chapter 3:2.1

The single manager has greatly improved its inventory records, a
critical function previously identified as seriously degraded.  In
1995, the single manager inventoried the entire wholesale stockpile
at a cost of $14 million.  This inventory restored the stock records'
accuracy of item locations and quantities.  It also introduced major
changes in the inventory process to focus on the accuracy of
quantities within storage sites.  It did not, however, assess
condition.  Once a site is physically inventoried, it is sealed and
no longer subject to a yearly inventory unless activity affects its
stock balance.  To ensure that stock balances are correct, 10 percent
of all sealed locations will be sampled annually.  This new process
is intended to reduce the inventory workload, freeing staff for other
duties. 

The single manager has also taken steps to improve the stockpile's
operations, as planned.  For example, it has consolidated some small,
fragmented lots of material and redistributed them within warehouses
and has removed some items from inappropriate storage.  Storage
installations in fiscal years 1994 and 1995 freed about 800,000
square feet of space.  In addition, the single manager has adopted a
priority system to ensure that required war reserve and training
items receive maintenance first.  Quarterly reviews will focus on the
most urgent maintenance needs. 


      THE SERVICES HAVE NOT YET
      IDENTIFIED REQUIRED AND
      NONREQUIRED AMMUNITION
-------------------------------------------------------- Chapter 3:2.2

At all six storage installations we visited, officials either were
unaware of any progress made or had not detected any change in
operations resulting from the single manager's "tiering" concept,
which relies on each service's categorization of its ammunition as
required and nonrequired.  The problem is that neither the Army nor
the other services have identified stock in those categories.  The
single manager's three-tier concept is designed to ensure that the
more critical ammunition is stored in depots capable of providing the
quickest response to mobilization.  Four tier I depots would contain
mostly required items needed in the first 30 days of mobilization,
items needed for training, and items needed beyond 30 days to augment
tier II and III depots' war reserve stocks.  Tier I depots would
receive all support necessary for storage, surveillance, inventories,
maintenance, and disposal.  Tier II depots would normally store war
reserves needed more than 30 days after mobilization, production
offset items, and some nonrequired stocks awaiting disposal.  Tier
III depots would be caretakers for items awaiting disposal or
relocation. 

The single manager has not aggressively pursued the services' efforts
to identify stock as required and nonrequired, and the single manager
does not know the priority the services place on each type of
ammunition.  As a result, surveillance,\5 maintenance, storage, and
inventories may not be focused on priority stock to ensure it is
ready for shipment when needed, and scarce resources may be spent on
items with low or no priority.  During our review, we found that the
Army had not fully complied with the single manager's plan to
identify ammunition, and the other services may not fully understand
the stockpile's definition of required and nonrequired ammunition. 
Some attempts were made to generate the necessary data, but the
services did not provide sufficient detail. 

  -- In 1993, the Air Force classified serviceable high-priority
     items as tier I, unserviceable items as tier III, and all others
     as tier II, but it did not know whether the items in tiers I and
     II were required and the items in tier III were nonrequired. 
     Officials said that the single manager did not ask for the
     information by required and nonrequired categories. 

  -- In 1994, the Navy provided tonnage data to the single manager by
     types of ammunition, which in a general sense categorizes items
     into tiers.  Navy officials could not recall being requested to
     categorize ammunition as required or nonrequired, and they noted
     that the wholesale stockpile manages only 13 percent of the
     Navy's ammunition inventory.  Most of the Navy assets are stored
     aboard ships and at naval weapon stations, which they consider
     to be tier I and II locations. 

  -- Marine Corps officials said they had not been required by the
     single manager to categorize items as required or nonrequired. 

During our review, we found that for inspection purposes, the Army
had assigned a priority to each type of ammunition that can be used
to identify required and nonrequired ammunition.  The priorities
range from ammunition needed for training and war reserve to
ammunition for which there is no formal requirement.  The single
manager requested that the other services concur with these priority
definitions.  The Marine Corps responded; however, the Navy and the
Air Force have not responded to this request, and the single manager
cannot require the services to provide this information. 


--------------------
\5 The serviceability of ammunition is determined through
surveillance inspections and tests by sampling ammunition lots. 


      THE SINGLE MANAGER MAY NOT
      HAVE SUFFICIENT FUNDS TO
      CARRY OUT THE PLAN
-------------------------------------------------------- Chapter 3:2.3

The single manager is concerned that it will not consistently have
sufficient funds through 2001 to implement its $2.7 billion plan to
restore the stockpile to a usable condition and dispose of unneeded
ammunition.  The single manager uses operation and maintenance (O&M)
funds for receipts and issuance, inventories, and surveillance of
ammunition and procurement appropriations for disposal of excess,
obsolete, and unsafe ammunition.\6

The O&M funding allocated by the Army for inventories, storage, and
surveillance has historically been less than needed by the single
manager and has not yet been provided to implement the single
manager's plan.  Therefore, the single manager has made little
progress in correcting stockpile problems.  Moreover, the progress
made in correcting inventory records in 1995 may be jeopardized
because funding allocated by the Army is insufficient to maintain the
accuracy of the records. 

According to the single manager, to successfully carry out its plan
and restore stockpile readiness, it must have consistent full funding
over several years for stockpile activities.  The plan was based on
near-term funding levels, beginning in fiscal year 1996, and it
projected full implementation by fiscal year 2001.  However, actual
funding for fiscal years 1996 and 1997 was less than required, which,
according to the single manager, postponed implementation of the plan
by 2 years--from 2001 to 2003.  Moreover, because of limited staff at
stockpile installations, large funding levels in any given year will
not enable the single manager to catch up--a lost year will add an
additional year to fully implement the plan. 

For fiscal year 1995, the Congress statutorily required that a
minimum of $388.6 million of the Army's 1995 O&M account be spent
specifically for the safety and security, receipt and issue,
efficient storage and inventory, surveillance, and other activities
associated with conventional ammunition.\7 For fiscal year 1996, the
conferees on the DOD appropriations act directed that a minimum of
$300.9 million be spent for the same purpose.  According to single
manager officials, setting a minimum is a good approach because
funding levels are consistent and better planning and management
decisions can be made.  The House Committee on Appropriations report
on the 1995 DOD appropriations stated that it expects the Army to
fully fund ammunition activities in future budget submissions.  It
also commended DOD for increasing its budget for disposal activities
to $95 million for fiscal year 1995, and it recommended funding of
$110 million and stated the expectation that DOD would continue this
level of funding in future budgets. 

In its 1994 plan to improve stockpile management, the single manager
set a goal to reduce the 423,000 tons of ammunition awaiting disposal
to 100,000 by fiscal year 2004.  The three interrelated factors to
accomplish this goal are anticipated disposal quantities between
fiscal years 1996 and 2004, the actual disposal funding, and the
average cost to destroy a ton of ammunition.  In March 1996, the Army
estimated that 685,900 tons--more than triple the 1994 single
manager's estimate of 225,000 tons--will be generated between fiscal
years 1996 and 2004.  This estimate does not include 98,834 tons
(85,733 tons of industrial stocks and 13,101 tons of tactical missile
and large rocket motor assets) that will be generated which have
other sources of disposal funding.  If the single manager receives
$100 million a year through fiscal year 2004 for disposal, and the
disposal cost per ton is no more than $909 a ton, the single manager
will meet its goal of eliminating the 100,000-ton backlog.  The
single manager recognizes that it will be difficult to meet this goal
because it relies on a significant level of funding and the cost to
dispose of ammunition may increase.  Therefore, the goal will not be
met if the single manager does not receive $100 million a year or if
the disposal cost per ton increases.  For example, if the average
cost per ton is $1,100, the disposal backlog will be over 239,000
tons at the end of fiscal year 2004.  Likewise, if the cost is $1,300
a ton, the backlog will be over 365,000 tons.  The disposal stockpile
most likely will grow even more as ammunition quantities excess to
service requirements are identified (see ch.  2). 

Moreover, the single manager is concerned that the disposal program
will suffer from funding cuts, personnel shortages, and low priority. 
If the past is any indication, the single manager may be correct. 
During fiscal years 1986-94, funding for disposal totaled $266
million, considerably less than the $695 million the single manager
estimated was needed to operate at maximum capacity. 

The disposal of obsolete and deteriorated ammunition is a
time-consuming and expensive process.  At the installation with the
largest disposal capacity, 1,300 tons of ammunition were destroyed at
a cost of about $1 million during 1 week we visited.  Additionally,
the lack of Army funding has affected the single manager's ability to
operate disposal facilities at full capacity.  Although the estimated
disposal capacity is over 100,000 tons of ammunition per year, the
single manager has not been able to fully fund this function.  Prior
to 1995, the greatest amount disposed of was 61,500 tons in 1992;
only 11,700 tons were disposed of in 1990.  For example, one
installation that can process 27,800 tons of ammunition annually had
been allocated only 19,200 tons for disposal in fiscal year 1995. 
Another installation with a capacity to dispose of about 35,900 tons
had been allocated only about 3,800 tons in fiscal year 1994. 

The single manager plans to gradually decrease its reliance on open
burning/detonation of ammunition because environmental regulations
have made these methods difficult and undesirable.  Currently,
however, open burning/detonation is the only cost-effective method of
disposal for some items, such as cluster bombs and large rocket
motors.  Nonetheless, the single manager plans to increase disposal
through resource recovery and recycling methods.  These methods are
more costly--over $2,000 per ton or over twice as much as for open
burning/open detonation.  Should the cost per ton to dispose of
ammunition approach this higher level, the backlog would increase
significantly. 


--------------------
\6 The services provide funds for maintenance and repairs on items
they own. 

\7 The Chemical and Biological Defense Command split from the U.S. 
Army Armament, Munitions, and Chemical Command/Industrial Operations
Command in fiscal year 1995, taking $59.8 million of this amount,
leaving $328.8 million for the stockpile.  In total, $396.95 million
was obligated for this activity in fiscal year 1995. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 3:3

DOD concurred that problems with the ammunition stockpile management
threaten readiness.  DOD noted that funding levels in fiscal years
1993 and 1994 were so low as to force concentration on shipments and
receipts at depots.  DOD said that during this period surveillance,
stockpile reliability testing, and priority maintenance projects were
severely limited.  DOD agreed that defect codes had not been entered
for all items with overdue inspections but said inspections are
performed prior to issuance of any item.  DOD also said that during
the first quarter of fiscal year 1996, significant progress was made
toward prioritizing ammunition items and identifying those that
satisfy power projection and training requirements.  Based on the new
priorities, periodic inspection backlogs were adjusted and reduced
from approximately 60,000 lots to approximately 30,000 lots with the
identification of the required part of the stockpile.  We strongly
support identifying what is needed for power projection and training
and concentrating limited resources on these ammunition items.  We
believe that DOD's observation that periodic inspection needs were
reduced from 60,000 to 30,000 lots and is indicative of potential
reductions that can be made in the care and maintenance functions of
the single manager. 

DOD partially concurred that the single manager's plan for
improvement has been delayed.  DOD said that while funding has been
problematic, DOD does not believe that the implementation of the
improvements in ammunition management will be delayed.  DOD said the
overall goal of the Integrated Ammunition Stockpile Management Plan
is to accomplish (1) depot tiering by 2001 and (2) the other changes
in stockpile management as soon as possible.  With the closure of
three depots, DOD expects to accomplish the tiering goal on schedule. 
DOD notes that the two major requirements to implement the management
plan are adequate funding and segregation of the stockpile.  We agree
that these are important.  We are particularly concerned that the
identification of required ammunition, such as for power projection
and training, be done as quickly as possible so that the single
manager can better use limited resources.  We are also particularly
concerned that unless funding levels and ammunition disposal are
closely monitored, the single managers will not meet its 2004
disposal goal. 


CONCLUSIONS AND RECOMMENDATION
============================================================ Chapter 4

Unquestionably, the single manager faces difficulties in resolving
problems that developed with the wholesale stockpile as the Cold War
ended.  These difficulties stem from DOD's downsizing of its force
and facilities in response to the much reduced threat.  Reductions in
ammunition storage space and the workforce, coupled with the return
of massive amounts of ammunition from closed bases in Europe and from
Operation Desert Storm, have degraded the single manager's ability to
manage the stockpile.  In addition, this ammunition was returned in
small, broken lots that were stored haphazardly as they came from
overseas. 

Partly as a result of this situation, half of the ammunition types in
the stockpile contain items in excess of stated requirements, which
we estimated to be valued at about $31 billion.  This $31 billion of
usable and unusable ammunition, as well as $2.9 billion of excess
ammunition that was on the single manager's inventory records but not
the services' inventory records, was being treated by the single
manager as necessary to meet requirements.  Because the single
manager has concentrated on responding to requests for usable
ammunition, inspections and tests of ammunition have been delayed. 
The single manager does not know how much ammunition in excess of
stated requirements is in the stockpile and is therefore unaware of
what ammunition could be shared among the services to alleviate
shortages and what unusable ammunition does not need attention beyond
that for safety reasons.  In addition, there are tremendous backlogs
of ammunition to dispose of.  For the foreseeable future, this
disposable ammunition will increase and take up limited storage
space. 

These problems are not insurmountable, but they will take time to
overcome.  The Integrated Ammunition Stockpile Management Plan is a
step in the right direction.  In addition, the minimum levels set for
the care and maintenance of ammunition established by the Congress
for fiscal year 1995 and the House Committee on Appropriations for
fiscal year 1996 have helped the single manager in meeting its
responsibilities. 

The single manager's success in implementing the management plan is
limited by the services' lack of incentives to identify excess
ammunition.  The services are not inclined to determine which of
their ammunition is required and declare the remainder excess because
once ammunition is declared excess, a service is not reimbursed for
its cost if another service wants it.  Also, the services have no
incentive to mark ammunition for disposal because they do not have to
pay the single manager to store it.  As the Joint Commanders Ordnance
Group's 1993 report points out, the single manager could charge the
services a storage fee as an incentive for the services to relinquish
ownership of excess, old, and obsolete ammunition.  The report also
suggested that additional storage space could be made available if
excess ammunition was used in training, included in foreign military
sales or grant aid programs, or destroyed.  In addition, as we
recommended in 1979, the single manager could own, manage, and
control the entire ammunition stockpile.  If this was the case, the
manager would have visibility over ammunition in excess of
established requirements and could distribute it to other services
that need it or, if unneeded, dispose of it when there was no longer
a reason to retain it. 

Another troublesome problem is the disposal of excess ammunition,
which is a time-consuming, expensive process.  For example, at the
installation with the largest disposal capacity, 1,300 tons of
ammunition were destroyed at a cost of about $1 million during 1 week
we visited.  With over 375,000 tons of ammunition awaiting disposal
at the end of fiscal year 1995 and additional ammunition identified
for disposal each year, it will take years to dispose of the
ammunition.  And because of the expense associated with disposing of
this much ammunition, finding the funds to facilitate disposal is
difficult.  One option would be to require the services to include
the cost to dispose of ammunition being replaced in budgets for new
ammunition.  While this option would not eliminate the significant
quantities of ammunition already awaiting disposal, it would focus
earlier attention on the ammunition disposal problem, provide
additional funds for disposal, and over time significantly reduce the
quantities for disposal. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 4:1

To impress upon the services the need to address the problem of
excess ammunition, the Congress may wish to consider requiring the
Secretary of Defense to report annually the amount of ammunition on
hand and the amount that exceeds established requirements.  This
report could also cite progress made in addressing specific
ammunition stockpile management problems, including identifying
ammunition in excess of established requirements, cross-sharing of
ammunition in excess of established requirements among services that
have shortages, inspecting and testing ammunition, and disposing of
excess ammunition when it no longer makes sense to retain it.  With
this information, the Congress could make more informed annual budget
decisions related to the ammunition stockpile. 


   RECOMMENDATION
---------------------------------------------------------- Chapter 4:2

To facilitate implementation of the single manager's plan for
storing, maintaining, and disposing of ammunition, we recommend that
the Secretary of Defense develop incentives to encourage the military
services to categorize their ammunition as required or as excess to
stated requirements, to update this information annually, and to
relinquish control of their excess ammunition to the Army single
manager for distribution to other services that have shortages of
ammunition or for disposal when it no longer makes sense to retain
it.  Possible changes in ammunition management, include requiring the
services to pay the single manager a fee for storing their
ammunition; using excess ammunition in training; authorizing the
single manager to own, manage, and control the wholesale stockpile
and/or have visibility of the services' retail stocks and total
requirements so the manager can identify ammunition excess to stated
requirements and coordinate redistribution of it to services that
need the ammunition or dispose of it; and requiring the services to
include the cost to dispose of excess ammunition in their budgets for
new ammunition. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 4:3

DOD partially concurred with the matter for congressional
consideration.  DOD said it already provides the Congress with
ammunition inventory data in the Supply System Inventory Report and
demilitarization information in the procurement budget
justifications.  We are aware of this report and the information
contained in it.  However, as currently prepared, the inventory
report does not provide any information on the amount of ammunition
that exceeds established requirements.  Also, information on
stockpile management problems and progress in solving these problems
is not provided. 

DOD disagreed with the recommendation and options given for potential
changes in ammunition management.  DOD stated that it considers the
present arrangement for managing much of the services' stockpile to
be satisfactory.  DOD stated it believes stockpile stratification and
cross-sharing could be enhanced but does not consider incentives to
be necessary to encourage compliance by the military services. 
Problems with cross-sharing among the services noted in our 1979
report continue.  In addition, due to large quantities of ammunition
in storage and a reduced work force to manage this ammunition,
problems with ammunition management threaten readiness.  Therefore,
we do not believe that existing DOD practices will solve the serious
problems.  The Integrated Stockpile Management Plan is a step in the
right direction, yet all the services still have not identified
required and nonrequired ammunition as called for in the 1994 plan. 
This is a very important part of this plan's implementation.  DOD
disagreed with the options to require a storage charge or increase
the single manager's responsibilities.  We agree other options are
possible; those in our report are some potential options.  However,
we do not agree the present arrangement for managing the stockpile is
working well and believe that existing DOD practices will not solve
the problems.  We are not advocating erosion of the centralized
management of ammunition but are providing options to further
strengthen ammunition management and provide incentives to the
services to help the single manager operate more effectively.  We
continue to believe our recommendation is valid. 




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COMMENTS FROM THE DEPARTMENT OF
DEFENSE
============================================================ Chapter 4



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   GAO COMMENTS
---------------------------------------------------------- Chapter 4:4

1.  The draft report we sent to the agency for comments concentrated
on the $22 billion in serviceable ammunition that was excess to
stated requirements.  However, when DOD responded to this report and
dealt with excess ammunition, it addressed the total ammunition
stockpile--serviceable and unserviceable ammunition.  Since the
single manager treats both serviceable and unserviceable ammunition
the same if it has not been declared excess by the services, we
expanded our discussion of excesses to cover the entire ammunition
stockpile.  This increased the amount in excess of stated
requirements to about $31 billion for usable and unusable ammunition. 
In addition, $2.9 billion in excess ammunition is on the single
manager's inventory records but not the services' records.  Also,
over $2 billion of items are awaiting disposal. 

2.  The Department of Defense (DOD) stated that it had trouble
identifying the sources of data we used.  Our sources were discussed
with DOD, and they are identified in our scope and methodology
section in chapter 1.  The computerized database we used to compare
assets on hand to requirements was created using DOD-supplied data,
and our sources have been provided to DOD.  Other sources of data,
such as DOD's report on the Wholesale Ammunition Stockpile Program,
are identified throughout our report. 

3.  DOD discussed the need to retain three types of
munitions--16-inch gun ammunition; 3-inch, .50-caliber gun
ammunition; and the MK25 mines.  DOD stated that two of these items
have been retained for "mothballed" ships that have been kept as
mobilization assets.  DOD agreed that the MK25 mines are excess.  We
believe that ammunition retained for mothballed ships needs to be
identified as such to the single manager so that it can best use its
scarce resources.  As discussed in responding to agency comments in
chapter 2 of this report, we do not advocate disposing of excess
ammunition for which there is a potential future need. 

4.  DOD stated that 40-millimeter ammunition for the M42
self-propelled gun has been declared excess for several years, with a
quantity of 17,000 remaining to be supplied to Turkey.  Although
declaring ammunition as potentially excess initiates an inventory
reduction of unneeded ammunition, a declaration "for several years"
does not rid it from the inventory system.  As of September 30, 1994,
the Army's inventory records showed that it still owned 269,000
40-millimeter cartridges.  These cartridges at that time had not been
transferred to the disposal account. 

5.  DOD stated that the services have active annual processes for
identifying excess, screening excess with other services' and foreign
military customers, and for transferring any remaining excess to the
resource recovery disposal account.  We agree that DOD has a process
for identifying and sharing excess with others.  However, we believe
this DOD process needs to be improved.  For example, the
identification of an excess asset for cross-sharing among the
services is not done until a service removes all retention category
holds on the asset.  Therefore, for example, if one service has more
of an asset than its wartime and peacetime requirements and decides
that it might sometime in the future buy this asset, the service
places the excess in an economic retention category.  This asset then
does not appear as excess, and another service could buy the item. 
DOD has over $1 billion in assets in this economic retention
category, which we believe should be made available to other services
for potential cross-sharing to prevent another service from buying
these same items. 

6.  DOD stated that the age of an ammunition item is not necessarily
related to its combat usefulness.  DOD also stated that depots
normally ship the older lots first.  However, in our visits to
ammunition depots, we were told that the older lots are not shipped
first unless it is cost-effective to do so.  Furthermore, we noted
many ammunition items dating from the 1940s to the 1960s.  Also, as
found by the single manager's stock rotation study in 1985, soldiers
in the field demanded the newest and best lots of ammunition
available.  We agree that just because ammunition is old does not
mean it is unusable.  However, we question whether much of the
ammunition dating from the 1940s, for example, will ever be used. 

7.  We annotated our report to note that the Marine Corps' hand
grenades referred to as being in excess are offensive hand grenades. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II


   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

Sharon A.  Cekala
Joan B.  Hawkins
Nancy L.  Ragsdale


   NORFOLK FIELD OFFICE
-------------------------------------------------------- Appendix II:2

Dudley C.  Roache, Jr.
Bradley D.  Simpson
Sandra D.  Epps
Linda H.  Koetter
Jeffrey C.  McDowell
Patricia W.  Lentini


   DALLAS FIELD OFFICE
-------------------------------------------------------- Appendix II:3

Calvin E.  Phillips
Donald R.  McCuistion


*** End of document. ***