Defense Ammunition
DOD Meeting Small and Medium Caliber Ammunition Needs, but Additional Actions Are Necessary Gao ID: GAO-05-687 July 27, 2005Following the end of the Cold War, the Department of Defense (DOD) significantly reduced its purchases of small and medium caliber ammunition and reduced the number of government-owned plants that produce small and medium caliber ammunition. Since 2000, however, DOD's requirements for these types of ammunition have increased notably. Because the success of military operations depends in part on DOD having a sufficient national technology and industrial base to meet its ammunition needs, Congress asked GAO to review DOD's ability to assess if its supplier base can meet small and medium caliber ammunition needs. Specifically, we (1) identified changes over the past several years that have increased the requirement for small and medium caliber ammunition, (2) assessed the actions DOD has taken to address the increased requirement, and (3) determined how DOD plans to ensure that it can meet future small and medium caliber ammunition needs.
DOD's increased requirements for small and medium caliber ammunition over the past several years are largely the result of increased weapons training requirements needed to support the Army's transformation to a more self-sustaining and lethal force--an effort accelerated after the terrorist attacks of September 11, 2001--and the deployment of forces to conduct recent U.S. military actions in Afghanistan and Iraq. Between fiscal years 2000 and 2005, total requirements for small caliber ammunitions more than doubled, from about 730 million to nearly 1.8 billion rounds, while total requirements for medium caliber ammunitions increased from 11.7 million rounds to almost 22 million rounds. DOD has initiated several steps to meet the increased demand, including funding about $93.3 million for modernization improvements at the three government-owned ammunition plants producing small and medium caliber ammunition. DOD is currently able to meet its medium caliber requirement through modernization efforts at the government-owned ammunition plants and through contracts with commercial producers. The government-owned plant producing small caliber ammunition cannot meet the increased requirements, even with these modernization efforts. Also, commercial producers within the national technology and industrial base have not had the capacity to meet these requirements. As a result, DOD has had to rely at least in part on foreign commercial producers to meet its small caliber ammunition needs. DOD has taken steps to ensure that the national technology and industrial base can meet future small caliber ammunition needs by building flexibility into the acquisition system to address fluctuations. In addition, a planning process has been put in place to ensure that the base can respond to longer-term DOD ammunition needs, including small and medium caliber ammunition. While the process is ongoing, information to effectively implement the plan and timely performance measures to ensure accountability are lacking.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-687, Defense Ammunition: DOD Meeting Small and Medium Caliber Ammunition Needs, but Additional Actions Are Necessary
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Report to the Honorable David R.Obey, Ranking Minority Member,
Committee on Appropriations,:
House of Representatives:
United States Government Accountability Office:
GAO:
July 2005:
Defense Ammunition:
DOD Meeting Small and Medium Caliber Ammunition Needs, but Additional
Actions Are Necessary:
GAO-05-687:
GAO Highlights:
Highlights of GAO-05-687, a report to the Honorable David R. Obey,
Ranking Minority Member, Committee on Appropriations, House of
Representatives:
Why GAO Did This Study:
Following the end of the Cold War, the Department of Defense (DOD)
significantly reduced its purchases of small and medium caliber
ammunition and reduced the number of government-owned plants that
produce small and medium caliber ammunition. Since 2000, however, DOD‘s
requirements for these types of ammunition have increased notably.
Because the success of military operations depends in part on DOD
having a sufficient national technology and industrial base to meet its
ammunition needs, you asked GAO to review DOD‘s ability to assess if
its supplier base can meet small and medium caliber ammunition needs.
Specifically, we (1) identified changes over the past several years
that have increased the requirement for small and medium caliber
ammunition, (2) assessed the actions DOD has taken to address the
increased requirement, and (3) determined how DOD plans to ensure that
it can meet future small and medium caliber ammunition needs.
What GAO Found:
DOD‘s increased requirements for small and medium caliber ammunition
over the past several years are largely the result of increased weapons
training requirements needed to support the Army‘s transformation to a
more self-sustaining and lethal force”an effort accelerated after the
terrorist attacks of September 11, 2001”and the deployment of forces to
conduct recent U.S. military actions in Afghanistan and Iraq.
Between fiscal years 2000 and 2005, total requirements for small
caliber ammunitions more than doubled, from about 730 million to nearly
1.8 billion rounds, while total requirements for medium caliber
ammunitions increased from 11.7 million rounds to almost 22 million
rounds.
Total Small and Medium Caliber Requirements, Fiscal Years 2000 to 2005
(in millions of rounds):
[See PDF for image]
[End of figure]
DOD has initiated several steps to meet the increased demand, including
funding about $93.3 million for modernization improvements at the three
government-owned ammunition plants producing small and medium caliber
ammunition. DOD is currently able to meet its medium caliber
requirement through modernization efforts at the government-owned
ammunition plants and through contracts with commercial producers. The
government-owned plant producing small caliber ammunition cannot meet
the increased requirements, even with these modernization efforts.
Also, commercial producers within the national technology and
industrial base have not had the capacity to meet these requirements.
As a result, DOD has had to rely at least in part on foreign commercial
producers to meet its small caliber ammunition needs.
DOD has taken steps to ensure that the national technology and
industrial base can meet future small caliber ammunition needs by
building flexibility into the acquisition system to address
fluctuations. In addition, a planning process has been put in place to
ensure that the base can respond to longer-term DOD ammunition needs,
including small and medium caliber ammunition. While the process is
ongoing, information to effectively implement the plan and timely
performance measures to ensure accountability are lacking.
What GAO Recommends:
GAO is making recommendations aimed at strengthening DOD‘s ability to
implement its plan and ensure accountability.
In commenting on a draft of this report, DOD concurred with GAO‘s
recommendations and provided information on its planned steps to
implement them.
www.gao.gov/cgi-bin/getrpt?GAO-05-687.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Ann Calvaresi-Barr at
(202) 512-4281 or calvaresbarra@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOD'S Increased Requirements for Small and Medium Caliber Ammunition
Primarily Driven by Increased Proficiency Requirements:
PEO Is Meeting Increased Requirements through Modernization Efforts
Supplemented by Commercial Buys:
PEO Is Taking Steps to Meet Future Small and Medium Caliber Needs, but
Implementation Problems Exist:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Overview of Strategic Plan for Conventional Ammunition
Industrial Base, by Goal:
Appendix III: Comments from the Department of Defense:
Tables:
Table 1: Examples of Small and Medium Caliber Ammunition and Their
Uses:
Table 2: Small Caliber Requirements, Fiscal Years 2000 to 2005:
Table 3: Medium Caliber Requirements, Fiscal Years 2000 to 2005:
Table 4: Examples of Modifications at Lake City, Milan, and Radford
Plants:
Table 5: FY 2001-2005 Budget for Small Caliber Ammunition:
Table 6: FY 2001-2005 Budget for Medium Caliber Ammunition:
Figures:
Figure 1: Major Parts of a Fully Loaded Cartridge:
Figure 2: Total Small Caliber Requirements, Fiscal Years 2000 to 2005:
Figure 3: Total Medium Caliber Requirements, Fiscal Years 2000 to 2005:
Abbreviations:
DOD: Department of Defense PEOOffice of the Program Executive Officer:
United States Government Accountability Office:
Washington, DC 20548:
July 27, 2005:
The Honorable David R.Obey:
Ranking Minority Member:
Committee on Appropriations, House of Representatives:
Dear Congressman Obey:
Following the end of the Cold War, the Department of Defense (DOD)
significantly reduced its purchases of small and medium caliber
ammunition. Historically, DOD has procured small and medium caliber
ammunition from government-owned manufacturing plants. As a result of
the reduced ammunition needs, the number of these plants has been
reduced to less than half of what existed during the Cold War. DOD has
three remaining government-owned plants that produce small and medium
caliber ammunition. Since 2000, however, DOD's small and medium caliber
ammunition requirements have increased notably.
The Army is the single manager for conventional ammunition acquisition,
including small and medium caliber ammunition, for all U.S.
forces.[Footnote 1] In September 1999, we reported on the need to
consolidate the management of the Army's conventional ammunition
programs.[Footnote 2] In early 2002, the Army established the Office of
the Program Executive Officer (PEO) for Ammunition as part of a larger
effort to establish greater accountability and responsibility in the
life-cycle management of DOD's ammunition programs. A year later, the
Army designated this office as the executor for the single manager for
conventional ammunition mission and delegated to that office limited
authority to make determinations on restricting procurements of
conventional ammunition as directed by section 806 of the Strom
Thurmond National Defense Authorization Act for Fiscal Year 1999
(Public Law 105-261).[Footnote 3] In addition, the PEO for Ammunition
was given responsibility for procuring conventional ammunition to meet
current military requirements.
Because the success of military operations depends in part on DOD
having a sufficient national technology and industrial base[Footnote 4]
to meet its ammunition needs, you asked us to review DOD's ability to
assess if its supplier base can meet small and medium caliber
ammunition needs. Specifically, we (1) identified changes over the past
several years that have increased the requirements for small and medium
caliber ammunition, (2) assessed the actions DOD has taken to address
the increased requirement, and (3) determined how DOD plans to ensure
that it can meet future small and medium caliber ammunition needs.
In conducting our work, we spoke with officials from appropriate DOD
and Army offices. We also reviewed DOD and Army ammunition acquisition
policies, planning documents, and ammunition budget and requirements
data. For the purposes of this review, we collected data on 5.56mm,
7.62mm, 9mm, and .50-caliber small caliber ammunition, and 20mm, 25mm,
30mm, and 40mm medium caliber ammunition. We conducted our review from
September 2004 to May 2005 in accordance with generally accepted
government auditing standards. For more information on our scope and
methodology, see appendix I.
Results in Brief:
DOD's increased requirements for small and medium caliber ammunition
over the past several years are largely the result of increased weapons
training requirements needed to support the Army's transformation to a
more self-sustaining and lethal force--an effort accelerated after the
terrorist attacks of September 11, 2001--and the deployment of forces
to conduct recent U.S. military actions in Afghanistan and Iraq.
Between fiscal years 2001 and 2005, total requirements for small
caliber ammunitions more than doubled, from about 730 million to nearly
1.8 billion rounds, while total requirements for medium caliber
ammunitions increased from 11.7 million rounds to almost 22 million
rounds. Because a significant portion of this increased requirement is
a result of the need to increase training to ensure weapons proficiency
in support of transformation, it will continue into the foreseeable
future.
The PEO took several steps to meet the increased need for small and
medium caliber ammunition. The PEO began modernizing the three
ammunition plants that produce DOD's small and medium caliber
ammunition, which were built in the World War II era. Between fiscal
years 2000 and 2005, DOD funded about $93.3 million to replace or
refurbish outdated manufacturing equipment and make other facility
improvements. These modernization efforts are planned to continue
through fiscal year 2011. DOD is currently able to meet its medium
caliber requirement through modernization efforts at these ammunition
plants and through contracts with commercial producers within the
national technology industrial base. However, the modernization efforts
at the plant that produces small caliber ammunition will only allow the
contractor to increase the facility's production capacity to 1.5
billion rounds by early 2006--falling short of DOD's current small
caliber ammunition requirements. To make up for these shortfalls, DOD
has had to rely on additional buys of small caliber ammunition in the
commercial market, both domestic and foreign, and from another nation's
war reserve stock. In fiscal year 2004, DOD made additional buys
totaling about 313 million rounds of small caliber ammunition from both
domestic and foreign sources.
The PEO is attempting to build flexibility into the acquisition system
to address fluctuations in near-term needs for small caliber
ammunition. For example, the PEO plans to select a commercial producer
in 2005 that will serve as a second source for producing small caliber
ammunition. This second source producer will begin providing an
additional 300 million rounds per year of small caliber ammunition in
early 2007. In addition, the PEO has initiated a planning process to
ensure that the conventional ammunition industrial base's capacity
could effectively and efficiently respond to future DOD ammunition
needs, including small and medium caliber ammunition. While the process
is ongoing, we identified two weaknesses that may limit its
effectiveness, the lack of (1) information to effectively implement
certain planning initiatives and (2) performance metrics to annually
measure progress and ensure accountability. For example, the PEO has
articulated the need to conduct a business case analysis to determine
the future size and scope of the government-owned conventional
ammunition base; however, implementing that business case analysis will
require actions outside the PEO's scope of responsibility. In addition,
while the PEO has encouraged ammunition program managers to submit
acquisition plans so that it can determine which items should be
procured from the national technology and industrial base, as called
for by section 806, Public Law 105-261, other services' ammunition
program managers have not always been forthcoming with the plans.
Further, while certain performance measures are in place, they are not
sufficient to monitor progress and ensure accountability. For example,
the PEO's plan does not include key results-oriented principles, such
as identifying key resources needed to meet the plan's goals and
objectives, including costs, schedules, and responsible DOD components
for individual initiatives. In addition, the plan does not include an
annual review process to compare the actions taken to the desired
performance--principles that agencies have been encouraged to include
in their planning.
We are making recommendations aimed at strengthening DOD's ability to
ensure that a sufficient national technology and industrial base exists
for cost effectively procuring conventional ammunition. In commenting
on a draft of this report, DOD concurred with GAO's recommendations and
provided information on its planned steps to implement them.
Background:
A DOD directive assigns the Secretary of the Army the mission of the
single manager for conventional ammunition within DOD. The Under
Secretary of Defense for Acquisition, Technology, and Logistics is
responsible for providing policy and guidance for the single manager
for conventional ammunition's mission, and ensuring compliance with the
single manager's responsibilities. Section 806 of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-
261) vests the single manager with the authority to restrict the
procurement of conventional ammunition to sources within the national
technology and industrial base. The Secretary of the Army was
authorized to delegate, within the Army, this authority. A January 28,
2003, memorandum from the Secretary of the Army delegated authority to
make section 806 determinations to the Assistant Secretary of the Army
for Acquisition, Logistics, and Technology. In an April 16, 2003,
memorandum that office re-delegated limited section 806 authority to
the Program Executive Officer for Ammunition in his capacity as the
single manager's executor.
High-level planning guidance establishes general guidelines for the
services to determine how much ammunition is needed to conduct military
operations. As the single manager for conventional ammunition, the Army
is responsible for coordinating with all the military services to meet
conventional ammunition requirements. Through the PEO for Ammunition,
the Army manages small and medium caliber ammunition, including small
arms, mortar, automatic cannon, and ship gun ammunition (see table
1).[Footnote 5]
Table 1: Examples of Small and Medium Caliber Ammunition and Their
Uses:
Weapon: Small caliber: Machine gun;
Use: Small caliber: Mounted on the Army's Bradley Fighting Vehicle;
Ammunition: Small caliber: 7.62mm.
Weapon: Small caliber: M2 machine gun;
Use: Small caliber: Ground or mounted vehicles;
Ammunition: Small caliber: .50-caliber.
Weapon: Small caliber: M16 rifle;
Use: Small caliber: Ground;
Ammunition: Small caliber: 5.56mm.
Weapon: Small caliber: M9 pistol;
Use: Small caliber: Ground;
Ammunition: Small caliber: 9mm.
Weapon: Medium caliber: Cannon;
Use: Small caliber: Mounted on the Air Force's F-15 Eagle;
Ammunition: Small caliber: 20mm.
Weapon: Medium caliber: Bushmaster cannon;
Use: Small caliber: Mounted on the Army's Bradley Fighting Vehicle, the
Marine Corps' Light Armored Vehicle, the Air Force's AC-130U special
operations aircraft, and numerous other Navy and Coast Guard surface
ships;
Ammunition: Small caliber: 25mm.
Weapon: Medium caliber: Cannons;
Use: Small caliber: Mounted on the Air Force's A-10 close support
aircraft;
Ammunition: Small caliber: 30mm.
Weapon: Medium caliber: M203 grenade launcher;
Use: Small caliber: Infantrymen;
Ammunition: Small caliber: 40mm.
Source: DOD data, GAO analysis.
[End of table]
All ammunition cartridges are composed of several components that must
be assembled at different stages of production. See figure 1 for an
example of a 5.56mm cartridge. It takes, on average, 23-months from the
time a production order is placed until final delivery.
Figure 1: Major Parts of a Fully Loaded Cartridge:
[See PDF for image]
[End of figure]
Since World War II, DOD has relied primarily on a government-owned base
to meet its conventional ammunition needs. During the Cold War, there
were as many as 34 government-owned plants producing conventional
ammunition. The end of the Cold War and subsequent changes to defense
missions resulted in declining requirements. At its peak in 1985,
funding for conventional ammunition was $4.3 billion; by 1999, funding
had dropped by more than half to about $2 billion. Currently, there are
14 government-owned ammunition plants, 11 of which are contractor-
operated. Three of these 11 facilities--Lake City (Missouri), Milan
(Tennessee), and Radford (Virginia)--are the government-owned,
contractor-operated producers of DOD's small and medium caliber
ammunition.
Lake City is the primary producer of small caliber ammunition. Lake
City is operated by a commercial ammunition producer under a contract
that runs from fiscal year 1999 through fiscal year 2008. The contract
initially called for a minimum production capacity amount of 350
million rounds and a maximum of 800 million rounds of 5.56mm, 7.62mm,
and .50-caliber ammunition. The PEO increased the upper capacity
requirement to 1.5 billion rounds per year to be accomplished by early
2006 through modifications made to the original contract.
The PEO relies on annual contracts with three commercial producers
within the national technology and industrial base for most of DOD's
supply of 20mm, 25mm, and 30mm medium caliber ammunition. Currently,
one of these producers is manufacturing medium caliber ammunition at
Radford which specializes in the production of propellants and
explosives; the other two commercial producers manufacture medium
caliber ammunition at their own facilities. Radford's current contract
was awarded in fiscal year 2003 and has been renewed on an annual basis
through fiscal year 2005. Milan is the government's primary producer of
40mm ammunition. The contract with the commercial operator at Milan
runs from fiscal year 1998 through fiscal year 2006.
DOD'S Increased Requirements for Small and Medium Caliber Ammunition
Primarily Driven by Increased Proficiency Requirements:
DOD's increased requirements for small and medium caliber ammunitions
have largely been driven by increased weapons training requirements,
dictated by the Army's transformation to a more self-sustaining and
lethal force--which was accelerated after the attacks of September 11,
2001--and by the deployment of forces to conduct recent U.S. military
actions in Afghanistan and Iraq. Since 2000, requirements for small
caliber ammunition have more than doubled, and requirements for medium
caliber ammunition have almost doubled.
Over the last decade, the Army began transforming its warfighting
capabilities to respond more effectively to the growing number of
peacekeeping operations, small-scale contingencies, and nontraditional
threats, such as terrorism. According to Army officials, the
transformation is the most comprehensive change in the Army in over a
century and will affect all aspects of its organizations, training,
doctrine, leadership, and strategic plans as well as its acquisitions.
As part of its transformation, the Army is planning for its forces to
be self-sustaining and capable of generating combat power and
contributing decisively to combat operations. Following the September
11, 2001, attacks, the Army accelerated its force transformation to
mobilize and deploy soldiers in support of various missions, most
notably war-fighting operations in Afghanistan and Iraq.
To meet its force transformation objectives, the Army began requiring
all soldiers to gain additional weapons qualifications training after
they complete initial basic training. The Army also began requiring
that personnel in all deployed elements, including combat support and
combat service support units, achieve and maintain greater proficiency
in the use of specified weapons. For example, beginning in late 2001,
the Army established a policy requiring each soldier to qualify twice a
year on small caliber firearms instead of once a year as previously
required. According to Army officials, in addition to the increased
annual training requirements, small caliber ammunition needs have
increased by an additional 66 percent due to a combination of the
mobilization of units and contingency training, for example, training
to react to defend against attacks on truck convoys; and, to a lesser
extent, due to operations in Iraq and Afghanistan. The increased
requirements are likely to continue to a significant extent beyond
current operational deployments due to the increased training
requirements.
Between fiscal years 2000 and 2005, total requirements for small
caliber ammunition increased from about 730 million to nearly 1.8
billion rounds (see figure 2).
Figure 2: Total Small Caliber Requirements, Fiscal Years 2000 to 2005:
[See PDF for image]
Note: In millions of rounds.
[End of figure]
The 5.56mm rounds--used in the M16 rifle, the standard weapon used by
soldiers--accounted for much of the small caliber increase (see table
2).
Table 2: Small Caliber Requirements, Fiscal Years 2000 to 2005:
In millions of rounds.
Type: 5.56mm;
FY 2000: 626.2;
FY 2001: 575.6;
FY 2002: 689;
FY 2003: 929;
FY 2004: 1,181;
FY 2005: 1,353.
Type: 7.62mm;
FY 2000: 47.2;
FY 2001: 50.7;
FY 2002: 92.2;
FY 2003: 136.3;
FY 2004: 313;
FY 2005: 282.
Type: .50-caliber;
FY 2000: 20.4;
FY 2001: 15.7;
FY 2002: 22.6;
FY 2003: 41.8;
FY 2004: 67;
FY 2005: 74.
Type: 9mm;
FY 2000: 39.6;
FY 2001: 133.7;
FY 2002: 104.2;
FY 2003: 146.4;
FY 2004: 75;
FY 2005: 81.
Total;
FY 2000: 733.4;
FY 2001: 775.7;
FY 2002: 908;
FY 2003: 1,253.5;
FY 2004: 1,636;
FY 2005: 1,790.
Source: PEO for Ammunition data, GAO analysis.
[End of table]
Medium caliber requirements have also increased over the past few
years. Between fiscal years 2000 and 2005, medium caliber requirements
almost doubled, from 11.7 million rounds to almost 22 million rounds
(see figure 3).
Figure 3: Total Medium Caliber Requirements, Fiscal Years 2000 to 2005:
[See PDF for image]
Note: In millions of rounds.
[End of figure]
The 40mm rounds represent the bulk of the increases between fiscal
years 2000 and 2005 (see table 3).
Table 3: Medium Caliber Requirements, Fiscal Years 2000 to 2005:
In millions of rounds.
Type: 20mm;
FY 2000: 2.4;
FY 2001: 4.1;
FY 2002: 4.4;
FY 2003: 6.3;
FY 2004: 4;
FY 2005: 4.
Type: 25mm;
FY 2000: 2.6;
FY 2001: 2.6;
FY 2002: 3;
FY 2003: 4.4;
FY 2004: 0.8;
FY 2005: 1.
Type: 30mm;
FY 2000: 2.5;
FY 2001: 5.1;
FY 2002: 3.9;
FY 2003: 4.1;
FY 2004: 5.4;
FY 2005: 5.5.
Type: 40mm;
FY 2000: 4.2;
FY 2001: 4.8;
FY 2002: 4.6;
FY 2003: 11.1;
FY 2004: 11;
FY 2005: 11.
Total;
FY 2000: 11.7;
FY 2001: 16.6;
FY 2002: 15.9;
FY 2003: 25.9;
FY 2004: 21.2;
FY 2005: 21.5.
Source: PEO for Ammunition data, GAO analysis.
[End of table]
PEO Is Meeting Increased Requirements through Modernization Efforts
Supplemented by Commercial Buys:
In an effort to help meet the increased need for small and medium
caliber ammunition in the near term, the PEO upgraded the equipment at
the Lake City, Milan, and Radford Army Ammunition plants. While these
upgrades enabled Milan and Radford--the government-owned, contractor-
operated producers of medium caliber ammunition--to meet DOD's
requirements, Lake City--the small caliber ammunition producer--was
unable to meet DOD's fiscal year 2004 requirement of about 1.6 billion
rounds of ammunition. As a result, the PEO made additional procurements
from the commercial market to make up for fiscal year 2004 shortfalls.
The three government-owned, contractor-operated plants that produce
small and medium caliber ammunition were built in 1941. Between fiscal
years 2001 and 2005, DOD funded a total of about $93.3 million to
upgrade these facilities. This included replacement or refurbishment of
ammunition cartridge production equipment and other facility
improvements. According to a PEO official, ongoing modernization is
needed for the Army ammunition plants to continue to operate into the
future, and in the case of the Lake City Army Ammunition Plant,
additional equipment and facility upgrades will be needed to increase
capacity to address future needs. According to a PEO official, the Army
plans to replace and refurbish ammunition production equipment through
fiscal year 2011. See table 4 for examples of funded modifications.
Table 4: Examples of Modifications at Lake City, Milan, and Radford
Plants:
Army Ammunition Plant: Lake City;
Modifications:
* Small caliber line upgrades;
* Replacement of die sets for manufacturing ammunition components.
Army Ammunition Plant: Milan;
Modifications:
* Modernization of temperature humidity control used for producing
mortars;
* Production support and equipment replacement.
Army Ammunition Plant: Radford;
Modifications:
* Upgrading the acid production facilities for propellant production.
Source: Army data, GAO analysis.
[End of table]
According to PEO officials, the national technology and industrial base
has been able to meet the increased requirements for medium caliber
ammunition. In an effort to meet DOD's small ammunition requirements,
the PEO initiated additional modernization efforts at Lake City to
increase production from a maximum capacity of 800 million rounds in
fiscal year 2001 to approximately 1.2 billion rounds per year in July
2004.[Footnote 6] Despite this increased production capacity, Lake City
was unable to meet fiscal year 2004 requirements for small caliber
ammunition.
Consequently, the PEO was forced to rely on other ammunition sources.
While many commercial ammunition producers responded to the PEO's
sources sought announcements,[Footnote 7] few were able to satisfy
DOD's ammunition specifications. For example, seven of nine commercial
producers responding to the PEO's announcement for a specific type of
5.56mm ammunition were unable to meet the specifications, such as
producing metal cartridge cases. For an announcement for different
types of .50-caliber ammunition, none of the 10 respondents were able
to meet all of the specifications. Several respondents were foreign
ammunition producers. According to officials from U.S. commercial
ammunition producers, the recent surge in DOD's small caliber
ammunition requirements could only be met by accessing available
worldwide capacity.
The PEO was eventually able to find commercial producers qualified to
fill DOD's small caliber ammunition shortfall in fiscal year 2004.
These included Israel Military Industries and Olin-Winchester--a U.S.
ammunition producer. According to data provided by the PEO, almost 313
million rounds of 5.56mm, 7.62mm, and .50-caliber ammunition were
purchased from commercial ammunition producers in fiscal year
2004.[Footnote 8] According to a PEO official, DOD paid about $10
million more than a similar amount of small caliber ammunition would
cost from Lake City. However, Lake City could not meet the 2004
requirement. Although DOD paid a premium as a result of the need to
procure ammunition outside the government-owned base, we did not
analyze whether maintaining a more robust base would have been cost-
effective.
According to DOD officials, the increased buys for small caliber
ammunition are being funded through supplemental appropriations. Tables
5 and 6 illustrate how much funding for small and medium caliber
ammunition acquisitions has been proposed by the President's Budget,
and the final funding including supplemental funds for fiscal years
2001 to 2005.
Table 5: FY 2001-2005 Budget for Small Caliber Ammunition:
Dollars in thousands.
Fiscal year: 2001;
Proposed President's budget: $123,205;
Final funding including supplemental funds: $255,956.
Fiscal year: 2002;
Proposed President's budget: $117,728;
Final funding including supplemental funds: $140,930.
Fiscal year: 2003;
Proposed President's budget: $169,928;
Final funding including supplemental funds: $364,910.
Fiscal year: 2004;
Proposed President's budget: $315,186;
Final funding including supplemental funds: $298,671.
Fiscal year: 2005;
Proposed President's budget: $283,500;
Final funding including supplemental funds: $282,405.
Source: Army data, GAO analysis.
[End of table]
Table 6: FY 2001-2005 Budget for Medium Caliber Ammunition:
Dollars in thousands.
Fiscal year: 2001;
Proposed President's budget: $130,089;
Final funding including supplemental funds: $140,589.
Fiscal year: 2002;
Proposed President's budget: $105,522;
Final funding including supplemental funds: $101,119.
Fiscal year: 2003;
Proposed President's budget: $114,585;
Final funding including supplemental funds: $263,782.
Fiscal year: 2004;
Proposed President's budget: $148,747;
Final funding including supplemental funds: $163,062.
Fiscal year: 2005;
Proposed President's budget: $150,984;
Final funding including supplemental funds: $150,401.
Source: Army data, GAO analysis.
[End of table]
PEO Is Taking Steps to Meet Future Small and Medium Caliber Needs, but
Implementation Problems Exist:
The PEO has taken certain steps to ensure that the national technology
and industrial base can meet future small and medium caliber ammunition
needs. As part of these efforts, the PEO is attempting to build
flexibility into its acquisition system to address near-term
fluctuations in the requirement for small caliber ammunition. In
addition, the PEO has initiated a longer-term planning process to
better manage the national technology and industrial base for
conventional ammunition. However, the PEO lacks access to some
information needed to effectively implement certain planning
initiatives, and other initiatives require actions that are beyond the
purview of the PEO. Furthermore, the PEO has not established sufficient
performance metrics necessary to ensure accountability.
PEO Is Attempting to Build Flexibility into Procurement Process for
Small Caliber Ammunition:
The PEO is taking several steps to increase flexibility in the small
caliber ammunition procurement process. First, the PEO plans to
increase Lake City's production capacity to 1.5 billion rounds per year
by March 2006 through additional modernization. Moreover, the PEO is in
the process of selecting a commercial contractor that will provide an
additional 300 million small caliber ammunition rounds per year. This
commercial producer will serve as a second source in addition to Lake
City, to meet small caliber ammunition needs. The contract is to be
awarded in mid 2005, with initial deliveries to start in January 2007.
Also, the PEO is requiring that this commercial source be able to
supply an additional 200 million rounds of small caliber ammunition, if
requirements continue to increase.[Footnote 9]
In the event that future small caliber ammunition requirements were to
decrease, which would likely happen if war fighting operations were
scaled back, the PEO plans to reduce the amount of ammunition produced
at Lake City, while maintaining the 300 million rounds of ammunition
production provided by the commercial producer. According to a PEO
official, the reduction at Lake City will be accomplished by reducing
the number of work shifts rather than by storing or mothballing
equipment. Therefore, a future need for increased production could be
met by adding shifts. By building this flexibility into the production
at Lake City, whose production the PEO can expand or contract under a
new contract starting in fiscal year 2008, the PEO hopes to avoid the
need for future additional buys, while retaining the capacity to expand
production at Lake City.
A Planning Process for Ammunition Has Been Initiated, but Information
Needed for Effective Implementation and Measuring Performance Is
Lacking:
The PEO has initiated a planning process to ensure that the national
technology and industrial base for conventional ammunition's capacity
can effectively and efficiently respond to future DOD ammunition needs,
including small and medium caliber ammunition requirements.[Footnote
10] While the process is ongoing, information needed to effectively
implement all aspects of the process and performance metrics needed to
annually measure progress and ensure accountability are lacking.
In November 2003, the PEO issued a plan[Footnote 11] with the following
five goals: (1) balance industrial base and acquisition management
risk; (2) transform to meet current and future requirements; (3)
incentivize industry to reinvest in capital equipment and processes;
(4) modernize required manufacturing and logistics capacity; and (5)
operate effectively and efficiently. In addition to these five goals,
the plan establishes 30 initiatives that are intended to help meet the
goals. (See appendix II for a list of the 30 initiatives by goal.)
The PEO has begun taking actions to implement several of the 30
initiatives to achieve the plan's goals. For example, the PEO has begun
implementing initiatives that address determining whether procurements
of conventional ammunition should be restricted to sources within the
national technology and industrial base, as provided by section 806 of
Public Law 105-261. The PEO, the Joint Munitions Command, and the
Defense Contract Management Agency have worked together to begin the
development of a risk assessment tool that will include industrial base
data such as requirements, suppliers, capacities, deficiencies,
production schedules, and inventories. The tool also will be capable of
developing reports with "what-if" scenarios to anticipate production
problems. To date, the Joint Munitions Command and the Defense Contract
Management Agency have identified hundreds of conventional ammunitions
items that could not be produced if only one supplier of the necessary
components needed to build the item would suddenly become unavailable.
As part of its efforts to implement its section 806 responsibilities,
the PEO is encouraging all ammunition program managers to provide
acquisition plans for their conventional ammunition needs, as required
by regulation.[Footnote 12] This process is intended to help the PEO
ensure that other Army and DOD components are developing procurement
strategies that adhere to section 806.
Despite these actions, the implementation of the planning process has
two major weaknesses. First, the PEO lacks the information needed to
effectively implement several initiatives. For example, conducting a
business case analysis to determine the future size and scope of the
government-owned base to preserve critical capabilities and reduce
costs is key to meeting the PEO goals. However, implementing the
business case analysis is outside the PEO's scope of responsibility.
Further, who will need to take action and what needs to be done to
develop the business case have not yet been specified. Further, in the
case of the acquisition plans, the PEO has encouraged ammunition
program managers to submit acquisition plans so that determinations can
be made as to what should be procured within the national technology
and industrial base, as called for in section 806. Some services
program managers (other than Army) have not been forthcoming with all
the information needed to make these determinations. The authority to
require program managers to submit these plans rests with the Under
Secretary of Defense for Acquisition, Technology and Logistics.
Second, the performance measures in place are not sufficient to monitor
progress made in meeting the plan's goals and objectives and ensure
accountability. The Government Performance and Results Act of 1993
(Public Law 103-62) provides guiding principles that agencies should
use to gauge progress towards long-term goals. These principles include
identifying required resources such as staff, schedules, and costs.
Additionally, the act requires agencies to report actual performance
against performance goals, the reasons certain goals were not met, and
future planned actions to meet stated goals. The 30 initiatives
included in the PEO's plan establish some accountability for
implementation because they identify the objectives for each goal and
general performance measures. Further, the PEO is developing plans for
each of the 30 initiatives--14 of which have been developed. These
plans contain information on major activities or actions that must be
taken to complete an initiative and identify the PEO staff responsible
for managing each initiative. However, the PEO has not yet completed
the development of implementation plans. Furthermore, the initiatives
in the strategic plan do not include key results-oriented principles
such as identifying key resources needed to meet the plan's goals and
objectives including costs, schedules, and responsible DOD components
for individual initiatives. In addition the plan does not include an
annual review process to compare the actions taken to the desired
performance. Such evaluations could be useful in achieving the plan's
goals.
Conclusions:
Ensuring the industrial base can meet DOD's fluctuating small and
medium caliber requirements is a significant challenge. Unforeseen
events, such as the terrorist attacks of September 11, 2001, and
subsequent military deployments, make predicting future requirements
difficult. However, it is imperative that the warfighter be provided
with sufficient ammunition to carry out missions to counter ongoing and
emerging threats without amassing wasteful unused stockpiles. While DOD
has been able to meet its near-term ammunition requirements, it has had
to rely on foreign suppliers to make up for some shortfalls.
Implementing a strategy for DOD's long-term ammunition needs should
include steps to ensure that future ammunition acquisitions are both
cost-effective and timely. The likelihood that the current strategy
will achieve its goals and objectives could be enhanced by (1) ensuring
that the information needed to effectively implement initiatives is
provided to those responsible for implementation, and by (2) ensuring
that the plan identifies key resources needed to achieve the plan's
goals and objectives, and developing an annual review process to
compare the actions taken to the desired performance.
Recommendations for Executive Action:
To improve DOD's ability to manage the national technology and
industrial base for small and medium caliber ammunition and to address
risks to that base, we recommend that the Secretary of Defense direct
the:
Under Secretary of Defense for Acquisition, Technology, and Logistics
to ensure that needed information on planned ammunition procurements is
provided to the Program Executive Officer for Ammunition; and:
Assistant Secretary of the Army for Acquisition, Logistics, and
Technology to ensure that the Program Executive Officer for Ammunition
identifies and provides key resources and develops metrics for
measuring annual progress in meeting planned goals and objectives.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, DOD concurred with both
recommendations. In response to our recommendation that DOD ensure that
needed information on planned ammunition procurements be provided to
the Program Executive Officer for Ammunition, the Under Secretary of
Defense for Acquisition, Technology, and Logistics plans to issue
direction to the services emphasizing the need to submit small and
medium caliber ammunition plans to the Single Manager for Conventional
Ammunition. In response to our recommendation that the Program
Executive Officer for Ammunition identify and provide key resources and
develop metrics for measuring annual progress in meeting planned goals
and objectives, the Under Secretary of Defense for Acquisition,
Technology, and Logistics plans to provide direction to the Assistant
Secretary of the Army for Acquisition, Logistics, and Technology and
the Program Executive Officer for Ammunition to identify and provide
key resources and develop/refine metrics for measuring annual progress
in meeting planned goals and objectives. (See appendix III for agency
comments.) In addition, DOD provided technical comments that we have
incorporated as appropriate.
Copies of this report will be sent to interested congressional
committees and the Secretary of Defense. We will also make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-4841 if you have any questions regarding
this report. Contact points for our Offices of Congressional Relations
and Public Affairs may be found on the last page of this report. Major
contributors to this report were Thomas Denomme, Marie Ahearn, Tony
Beckham, Michael Gorin, Arturo Holguín, and Karen Sloan.
Sincerely yours,
Signed by:
Ann Calvaresi-Barr:
Director, Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
To identify changes over the past several years that have increased the
requirement for small and medium caliber ammunition and assess the
actions DOD has taken to address the increased requirement, we reviewed
documentation and data, and interviewed DOD officials from the Office
of the Under Secretary of Defense for Acquisition, Technology and
Logistics; the Office of the Assistant Secretary of the Army for
Acquisition, Logistics and Technology; the Office of the Army Deputy
Chief of Staff for Operations and Plans; the Office of the PEO for
Ammunition; and the Training and Doctrine Command. Specifically, we
reviewed policy documents governing (1) DOD's Transformational Planning
Guidance, (2) Army training requirements, (3) small and medium caliber
ammunition production requirements, and (4) other major operational
requirements related to small and medium caliber ammunition needs. We
also interviewed DOD and Army officials and obtained inventory data to
determine small and medium caliber ammunition trends and to understand
how selected policies have impacted the industrial base for ammunition.
For the purposes of this review, we collected data on 5.56mm, 7.62mm,
9mm, and .50-caliber small caliber ammunition; as well as 20mm, 25mm,
30mm, and 40mm medium caliber ammunition. We also spoke to two
commercial ammunition producers to obtain a better understanding of the
supplier base. Finally, we examined budget data provided by officials
from the Office of the Assistant Secretary of the Army for Financial
Management and Comptroller to determine the funding for small and
medium caliber ammunition between fiscal years 2001 to 2005.
To determine how DOD plans to ensure that it can meet future small and
medium caliber ammunition needs, we interviewed officials from
previously mentioned DOD offices, including the Office of the PEO for
Ammunition, to determine the status of their planning efforts.
[End of section]
Appendix II: Overview of Strategic Plan for Conventional Ammunition
Industrial Base, by Goal:
Strategic Goal 1: Balance industrial base & acquisition management
risk:
Ranking: 4;
Strategic initiatives: Synchronize ammunition procurements to maintain
the required manufacturing capabilities and capacities. Define
structured decision process to facilitate synchronizing. (Keep lines
warm.)
Ranking: 12;
Strategic initiatives: Effectively implement section 806 of Public Law
105-261 (Strom Thurmond National Defense Authorization Act for Fiscal
Year 1999).
Ranking: 13;
Strategic initiatives: Use science base production and prototyping as
principal means for attaining surge capabilities and emergency
requirements.
Ranking: 15;
Strategic initiatives: Partner with industry and academia to assist in
advancing the state of manufacturing readiness.
Ranking: 20;
Strategic initiatives: Define and require an industrial base readiness
assessment into all acquisition plans and strategies.
Ranking: 23;
Strategic initiatives: Pursue feasibility and overall business case for
government-owned, contractor-operated Army ammunition plants for sell,
long-term lease, and/or consolidation options focusing on preserving
critical capabilities and reducing costs. (Pending fiscal year 2005
Base Realignment and Closure Process outcome and Army industrial base
transformation guidance.)
Objectives:
* Ensure critical core competencies and capabilities are available to
meet requirements.
* Balance cost, schedule, and performance with the need to have
capability.
* Establish right-sized ammunition industrial base.
Performance measures:
1. Munitions Readiness Ratings.
2. Utilized capacity and footprint.
3. Government-owned, contractor-operated/ government-owned, government-
operated operating costs.
4. Strategic outload capabilities (facilitization, staffing, and
skills).
Strategic Goal 2: Transform to meet current and future requirements:
Ranking: 3;
Strategic initiatives: Develop a replenishment definition to increase
planning and industrial base sizing consistencies.
Objective:
* Determine effective replenishment requirements definition and
strategy.
Ranking: 17;
Strategic initiatives: Establish an integrated data environment process
and centralized industrial base assessment tool. Assessment tool will
include requirements, suppliers, capacities, deficiencies, production
schedules, stockpile, metrics, and ’what-if“ report generation.
Objective:
* Optimize acquisition planning and industrial base preparedness.
Increase manufacturing capability and readiness.
Performance measures:
1. Existence and clarity of replenishment definition.
2. Percentage of acquisition strategies/plans utilizing industrial base
assessment tool for planning.
3. Munitions readiness ratings.
4. Trend of single point failure condition.
5. Logistics Modernization Program deployment schedule.
6. Meet combatant command operations planning requirements.
7. Correct positioning of ammunition stocks to meet peacetime and
wartime requirements.
8. Government-owned, contractor- operated/government-owned, government-
operated operating costs.
9. Utilized capacity and footprint.
10. Unit cost trends for critical ammunition end items.
11. Army manufacturing modernization investments.
12. Munitions readiness ratings.
13. Logistics critical skills and capability sustainment assessments.
14. Strategic outload capabilities (facilitization, staffing, and
skills).
Ranking: 23;
Strategic initiatives: Pursue feasibility and overall business case for
government-owned, contractor-operated Army ammunition plants for sell,
long-term lease, and/or consolidation options focusing on preserving
critical capabilities and reducing costs. (Pending fiscal year 2005
Base Realignment and Closure Process outcome and Army industrial base
transformation guidance.)
Ranking: 30;
Strategic initiatives: Sell non-value added, unutilized production
equipment and utilize revenue for advancing manufacturing technology
capability, environmental remediation, and reducing Army ammunition
plant operating costs.
Objective:
* Reduce government-owned, contractor-operated Army ammunition plant
operating costs/footprint and dispose of excess Army ammunition plant
capacity.
Ranking: 18;
Strategic initiatives: Utilize science-based production methodologies
and knowledge transfer/access to Industry for ramp-up capability and/or
capacity. Alternative strategy to laying away facilities/equipment.
Ranking: 6;
Strategic initiatives: Establish robust manufacturing modernization
funding lines.
Objective:
* Develop and ensure manufacturing/logistics capability and readiness.
Strategic Goal 3: Incentivize industry to reinvest in capital equipment
and processes
Ranking: 1;
Strategic initiatives: Establish multi-year contracting strategies by
ammo family (14 categories).
Ranking: 19;
Strategic initiatives: Selectively promote initiatives from the
Armament Retooling and Manufacturing Support Act of 1992 authorizing
the Army to permit commercial firms to use facilities located at
government-owned, contractor-operated ammunition plants for commercial
purposes, and identify projects for production modernization and
transformation.
Objectives:
* Maintain a financially viable industrial base.
Performance measures:
1. Number of suppliers in high-risk financial condition.
2. Financial viability of suppliers of critical core capabilities.
3. Industry investment applied to modernizing manufacturing processes,
equipment, and facilities.
Ranking: 28;
Strategic initiatives: Explore and implement indemnification on a
selected basis.
Ranking: 5;
Strategic initiatives: Promote long-term relationships/partnerships
with Industry.
Ranking: 27;
Strategic initiatives: Offer government-owned equipment and personnel
for supplier use.
Ranking: 7;
Strategic initiatives: Initiate a manufacturing modernization loan
program to provide low-interest rates to the ammo supply chain.
Ranking: 18;
Strategic initiatives: Facilitate use of science based production
modeling and process controls.
Ranking: 14;
Strategic initiatives: Award incentive production contracts that match
government funds for contractor investment in capital equipment and
processes.
Objective:
* Increase industry investment in equipment and facilities.
Strategic Goal 4: Modernize required manufacturing and logistics
capacity:
Ranking: 6;
Strategic initiatives: Establish robust manufacturing modernization
funding lines.
Ranking: 9;
Strategic initiatives: Identify, consolidate, and prioritize production
deficiencies in the organic and commercial sector, aligning priorities
with the program managers‘ needs.
Ranking: 14;
Strategic initiatives: Integrate into ammunition contracts a percentage
required for capital improvement initiatives with contractor matching.
Ranking: 24;
Strategic initiatives: Establish science-based production methodologies
at critical single point failure locations and transfer prototyping
knowledge/capabilities to Industry.
Ranking: 25;
Strategic initiatives: Leverage and coordinate Mantech and research,
development, technology, and engineering from all services.
Objective:
* Increase manufacturing and logistics readiness to meet current and
future requirements.
Performance measures:
1. Munitions readiness ratings.
2. Manufacturing readiness levels for future munitions.
3. Army and industry‘s manufacturing modernization investments.
4. Number of single point failures adopting science based production
methodologies.
Strategic Goal 5: Operate effectively and efficiently:
Ranking: 2;
Strategic initiatives: Ensure that military services and industry
participate in strategic planning activities.
Ranking: 10;
Strategic initiatives: Actively participate in industry organizations
and events; e.g., National Defense Industrial Association, Munitions
Industrial Base Task Force, etc.
Objective:
* Maintain open communications with all services and industry.
Performance measures:
1. Number of annual meetings with industry and services.
2. Customer satisfaction survey.
3. Percentage of identified inefficiencies that have been corrected.
4. Utilized capacity and footprint.
5. Customer satisfaction survey ratings.
6. Munitions readiness ratings.
7. Number of self-help projects implemented by ammunition suppliers and
associated value-engineering savings.
8. Meet combatant command operations planning requirements.
9. Correct positioning of ammunition stocks to meet peacetime and
wartime requirements.
10. Percentage of production base plan converted to integrated data
environment.
11. Establishment and completion of a logistics industrial base plan.
12. Percentage of baseline metrics collected.
13. Munitions readiness ratings.
14. Strategic outload capabilities (facilitization, staffing, and
skills).
Ranking: 8;
Strategic initiatives: Level and consolidate procurement buys to the
maximum extent practicable.
Ranking: 11;
Strategic initiatives: Identify operating inefficiencies and formulate
corrective actions. (This initiative was deleted in the November 2004
update of the plan.)
Ranking: 21;
Strategic initiatives: Incentivize the implementation of best business
practices in single manager for conventional ammunition processes and
at key government and commercial suppliers.
Ranking: 23;
Strategic initiatives: Pursue feasibility and overall business case for
government-owned, contractor-operated Army ammunition plants for sale,
long- term lease, and/or consolidation options focusing on preserving
critical capabilities and reducing costs. (Pending fiscal year 2005
Base Realignment and Closure Process outcome and Army industrial base
transformation guidance.)
Ranking: 29;
Strategic initiatives: Promote/incentivize contractors to pursue state-
based, self-help programs among ammo suppliers.
Ranking: 16;
Strategic initiatives: Promote commonality of components across/within
ammo families.
Obejctives:
* Reduce ammunition life-cycle costs.
* Maximize customer satisfaction.
* Reduce response time in providing ammunition to the joint warfighter.
Ranking: 17;
Strategic initiatives: Develop and implement an industrial base
integrated data environment using a web-based assessment tool and
report generating system that captures production data, stockpile
condition, requirements and specific industrial base metrics.
Objective:
* Automate industrial base planning and processes.
Ranking: 22;
Strategic initiatives: Identify and benchmark best practices in
production and facility management.
Ranking: 26;
Strategic initiatives: Baseline, characterize, and monitor the state of
the industrial base supply chain. Utilize Joint Munitions Command
production base readiness measurement scheme to characterize risk of
industrial base to meet requirements.
Objective:
* Understand condition and posture of the ammunition and logistics
base.
Source: PEO for Ammunition data.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
OFFICE OF THE UNDER SECRETARY OF DEFENSE:
ACQUISITION, TECHNOLOGY AND LOGISTICS:
3000 DEFENSE PENTAGON:
WASHINGTON, DC 20301-3000:
Ms. Ann Calvaresi-Barr:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
JUL 15 2005:
Dear Ms. Calvaresi-Barr:
This is the Department of Defense (DoD) response to the GAO draft
report, "DEFENSE AMMUNITION: DOD Meeting Small and Medium Caliber
Ammunition Needs, but Additional Actions Are Necessary," dated June 20,
2005 (GAO Code 120373/GAO-05-687).
The report recommends that the Under Secretary of Defense (Acquisition,
Technology, and Logistics) ensure that needed information on planned
ammunition procurement is provided to the Program Executive Officer for
Ammunition, and that the Assistant Secretary of the Army for
Acquisition, Logistics, and Technology ensure that the Program
Executive Officer for Ammunition identifies key resources and develops
metrics for measuring annual progress in meeting planned goals and
objectives.
The Department concurs with both recommendations. The Department
mandated that the Services provide their small and medium caliber
ammunition acquisition plans be submitted to the Single Manager for
Conventional Ammunition in an Under Secretary of Defense memorandum,
dated April 5, 2002, subject: Section 806 of the Strom Thurmond
National Defense Authorization Act of Fiscal Year 1999. The Department
is considering the reissue of this memorandum to emphasize the need and
importance of adhering to this direction. The Assistant Secretary of
the Army for Acquisition, Logistics, and Technology and the PEO for
Ammunition are continuing to identify and provide key resources and
developing/refining metrics for measuring annual progress in meeting
planned goals and objectives. Detailed comments on the report are
enclosed.
My point of contact for this matter is Mr. Robert Read at (703) 602-
4287.
Signed by:
Gary A. Powell:
Acting, Deputy Under Secretary of Defense (Industrial Policy):
Enclosure: As stated:
GAO DRAFT REPORT - DATED JUNE 20, 2005 GAO CODE 120373/GAO-05-687:
"DEFENSE AMMUNITION: DOD MEETING SMALL AND MEDIUM CALIBER AMMUNITION
NEEDS, BUT ADDITIONAL ACTIONS ARE NECESSARY":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense (Acquisition, Technology and
Logistics) to ensure that needed information on planned ammunition
procurements is provided to the Program Executive Officer for
Ammunition. (p. 17/GAO Draft Report):
DOD RESPONSE: Concur. The Department mandated that the Services provide
their small and medium caliber ammunition acquisition plans be
submitted to the Single Manager for Conventional Ammunition in an Under
Secretary of Defense memorandum, dated April 5, 2002, subject: Section
806 of the Strom Thurmond National Defense Authorization Act of Fiscal
Year 1999. The Under Secretary of Defense for Acquisition, Technology &
Logistics (USD(AT&L)) will issue reinforcing direction to the Services
emphasizing the need and importance of adhering to the prior direction.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
direct:
the Assistant Secretary of the Army for Acquisition, Logistics, and
Technology to ensure that the Program Executive Officer for Ammunition
identifies key resources and develops metrics for measuring annual
progress in meeting planned goals and objectives. (p. 17 & 18/GAO Draft
Report):
DOD RESPONSE: Concur. The USD(AT&L) will provide direction to the
Assistant Secretary of the Army for Acquisition, Logistics, and
Technology and the Program Executive Officer for Ammunition to continue
to identify and provide key resources and develop/refine metrics for
measuring annual progress in meeting the planned goals and objectives
identified in the Single Manager for Conventional Ammunition (SMCA)
Industrial Base Strategic Plan: 2015. The strategic plan identifies
five goals: (1) balance industrial base and acquisition management
risk; (2) transform to meet current and future requirements; (3)
incentivize industry to reinvest in capital equipment and processes;
(4) modernize required manufacturing and logistics capacity; and (5)
operate effectively and efficiently. The strategic plan also
establishes 30 initiatives to help meet the goals. The Program
Executive Officer for Ammunition is supporting the strategic plan and
the implementing the initiative by identifying the necessary key
resources and metrics and by measuring annual progress.
[End of section]
FOOTNOTES
[1] DOD Directive 5160.65, updated April 14, 2004, designates the
Secretary of the Army as DOD's single manager for conventional
ammunition under the authority of the Secretary of Defense. By
memorandum dated January 28, 2003, the Secretary of the Army delegated
single manager for conventional ammunition authority to the Assistant
Secretary of the Army for Acquisition, Logistics, and Technology.
[2] See GAO, Defense Management: Army Could Achieve Efficiencies by
Consolidating Ammunition Management, GAO/NSIAD-99-230 (Washington,
D.C.: Sept. 30, 1999).
[3] Section 806 of the Strom Thurmond National Defense Authorization
Act for Fiscal Year 1999 (Public Law 105-261, October 1998) authorizes
DOD to restrict its procurement of conventional ammunition to sources
within the national technology and industrial base if it determined
that such action would be needed to preserve the base's capability to
meet DOD's conventional ammunition requirements in cases of national
emergency or to achieve industrial mobilization.
[4] Defined by 10 U.S. Code section 2500(1) as the persons and
organizations that are engaged in research, development, production, or
maintenance activities conducted within the United States and Canada.
[5] Other categories of conventional ammunition managed by the PEO for
Ammunition include: (1) bombs (including cluster, fuel air explosive,
general purpose, and incendiary); (2) unguided rockets, projectiles,
and submunitions; (3) chemical ammunition with various fillers; (4)
land mines; (5) demolition materiel; (6) grenades; (7) flares and
pyrotechnics; and (8) other items used in the previously mentioned
categories including explosives, propellants, chemical agents,
cartridges, propelling charges, projectiles, warheads, fuzes, boosters,
and safe arm devices in bulk, combination, or separately packaged items
of issue for complete round assembly.
[6] The PEO purchased approximately 120 million rounds of war reserve
stocks from the United Kingdom in fiscal year 2004.
[7] A sources sought announcement is a type of market survey to
identify companies that can fill the quantities and types of ammunition
being sought.
[8] The PEO purchased almost 2.7 million rounds of armor-piercing
5.56mm and 7.62mm ammunition from a commercial producer in Sweden in
fiscal year 2004.
[9] In 2005 the PEO issued a request for proposals for a commercial
producer to produce 300 million rounds per year. The request calls for
300 million rounds for the first year, plus four additional 1-year
options for 300 million rounds per year. In addition the request
requires that the commercial producer have the capability of increasing
production by an additional 200 million rounds within 12 months of an
award, if needed.
[10] The PEO was tasked with developing a conventional ammunition
industrial base strategic plan to ensure that the ammunition industrial
base could effectively and efficiently respond to current and future
conventional ammunition requirements.
[11] Single Manager for Conventional Ammunition (SMCA) Industrial Base
Strategic Plan: 2015.
[12] See section 207.103 of the Defense Federal Acquisition Regulation
Supplement.
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