Defense Logistics
Preliminary Observations on the Army's Implementation of Its Equipment Reset Strategies Gao ID: GAO-07-439T January 31, 2007Continuing military operations in Iraq and Afghanistan are taking a heavy toll on the condition and readiness of the Army's equipment. Harsh combat and environmental conditions in theater over sustain periods exacerbates the wear and tear on equipment. Since fiscal year 2002, Congress has appropriated about $38 billion to the Army for the reset (repair, replacement, and modernization) of equipment that has been damaged or lost as a result of combat operations. As operations continue in Iraq and Afghanistan and the Army's equipment reset requirements increase, the potential for reset costs to significantly increase in future Department of Defense annual budgets also increases. For example, the Army estimates that it will need about $12 billion to $13 billion per year for equipment reset until operations cease, and up to two years thereafter. Today's testimony addresses (1) the extent to which the Army can track and report equipment reset expenditures in a way that confirms that funds appropriated for reset are expended for that purpose, and (2) whether the Army can be assured that its equipment reset strategies will sustain future equipment readiness for deployed as well as non-deployed units while meeting ongoing requirements. GAO's preliminary observations are based on audit work performed from November 2005 through December 2006.
The Army cannot track or report equipment reset expenditures in a way that confirms that funds appropriated for reset are expended for that purpose. In order to provide effective oversight of the Army's implementation of its equipment reset strategies and to plan for future reset initiatives, the Congress needs to be assured that the funds appropriated for reset are used as intended. The Army, however, is unable to confirm that the $38 billion that Congress has appropriated to the Army since fiscal year 2002 for equipment reset has been obligated and expended for reset. Because equipment reset had not been identified as a separate program within the budget, it was grouped together with other equipment-related line items in the O&M and Procurement appropriations. With the enactment of the Fiscal Year 2007 Appropriations Act, Congress directed DOD to provide a detailed accounting of obligations and expenditures by program and subactivity group. The Army has established a subactivity group for reset, and, according to Army officials, beginning in fiscal year 2007, the Army has begun to track reset obligations and expenditures by subactivity group. However, based on our analysis, the Army's reset tracking system does not provide sufficient detail to provide Congress with the visibility it needs to provide effective oversight. The Army cannot be assured its reset strategies will sustain equipment availability for deployed as well as non-deployed units while meeting ongoing operational requirements. The Army's primary objective for equipment reset is to equip units preparing for deployment. However, the Army's reset strategy does not specifically target low levels of equipment on hand among units preparing for deployment. Although deployed Army units generally report high readiness rates, the Army continues to be faced with increasing levels of operational risk due to low levels of equipment on hand among units preparing for deployment. According to the Army's fiscal year 2007 framework for reset and the Army's Force Generation model implementation strategy, the goal of reset is to prepare units for deployment and to improve next-to-deploy unit's equipment on hand levels. However, since the Army's current reset planning process is based on resetting equipment that it expects will be returning to the United States in a given fiscal year, and not based on an aggregate equipment requirement to improve the equipment on hand levels of deploying units, the Army cannot be assured that its reset programs will provide sufficient equipment to train and equip deploying units for ongoing and future requirements for the Global War on Terrorism. The Army has recently begun to track the equipment readiness of returning units and units approaching deployment in an effort to assess the effectiveness of their reset efforts. However, these readiness indicators are of limited value in assessing the effectiveness of reset because they do not measure the equipment on hand levels against the equipment that the units actually require to accomplish their directed missions in Iraq and Afghanistan.
GAO-07-439T, Defense Logistics: Preliminary Observations on the Army's Implementation of Its Equipment Reset Strategies
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Testimony:
Before the Subcommittees on Readiness and Air and Land Forces,
Committee on Armed Services, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Wednesday, January 31, 2007:
Defense Logistics:
Preliminary Observations on the Army's Implementation of Its Equipment
Reset Strategies:
Statement of William M. Solis Director, Defense Capabilities and
Management:
GAO-07-439T:
GAO Highlights:
Highlights of GAO-07-439T, testimony before the Subcommittee on
Readiness and the Subcommittee on Air and Land Forces, Committee on
Armed Services, House of Representatives
Why GAO Did This Study:
Continuing military operations in Iraq and Afghanistan are taking a
heavy toll on the condition and readiness of the Army‘s equipment.
Harsh combat and environmental conditions in theater over sustain
periods exacerbates the wear and tear on equipment. Since fiscal year
2002, Congress has appropriated about $38 billion to the Army for the
reset (repair, replacement, and modernization) of equipment that has
been damaged or lost as a result of combat operations. As operations
continue in Iraq and Afghanistan and the Army‘s equipment reset
requirements increase, the potential for reset costs to significantly
increase in future Department of Defense annual budgets also increases.
For example, the Army estimates that it will need about $12 billion to
$13 billion per year for equipment reset until operations cease, and up
to two years thereafter.
Today‘s testimony addresses
(1) the extent to which the Army can track and report equipment reset
expenditures in a way that confirms that funds appropriated for reset
are expended for that purpose, and (2) whether the Army can be assured
that its equipment reset strategies will sustain future equipment
readiness for deployed as well as non-deployed units while meeting
ongoing requirements.
GAO‘s preliminary observations are based on audit work performed from
November 2005 through December 2006.
What GAO Found:
The Army cannot track or report equipment reset expenditures in a way
that confirms that funds appropriated for reset are expended for that
purpose. In order to provide effective oversight of the Army‘s
implementation of its equipment reset strategies and to plan for future
reset initiatives, the Congress needs to be assured that the funds
appropriated for reset are used as intended. The Army, however, is
unable to confirm that the $38 billion that Congress has appropriated
to the Army since fiscal year 2002 for equipment reset has been
obligated and expended for reset. Because equipment reset had not been
identified as a separate program within the budget, it was grouped
together with other equipment-related line items in the O&M and
Procurement appropriations. With the enactment of the Fiscal Year 2007
Appropriations Act, Congress directed DOD to provide a detailed
accounting of obligations and expenditures by program and subactivity
group. The Army has established a subactivity group for reset, and,
according to Army officials, beginning in fiscal year 2007, the Army
has begun to track reset obligations and expenditures by subactivity
group. However, based on our analysis, the Army‘s reset tracking system
does not provide sufficient detail to provide Congress with the
visibility it needs to provide effective oversight.
The Army cannot be assured its reset strategies will sustain equipment
availability for deployed as well as non-deployed units while meeting
ongoing operational requirements. The Army‘s primary objective for
equipment reset is to equip units preparing for deployment. However,
the Army‘s reset strategy does not specifically target low levels of
equipment on hand among units preparing for deployment. Although
deployed Army units generally report high readiness rates, the Army
continues to be faced with increasing levels of operational risk due to
low levels of equipment on hand among units preparing for deployment.
According to the Army‘s fiscal year 2007 framework for reset and the
Army‘s Force Generation model implementation strategy, the goal of
reset is to prepare units for deployment and to improve next-to-deploy
unit‘s equipment on hand levels. However, since the Army‘s current
reset planning process is based on resetting equipment that it expects
will be returning to the United States in a given fiscal year, and not
based on an aggregate equipment requirement to improve the equipment on
hand levels of deploying units, the Army cannot be assured that its
reset programs will provide sufficient equipment to train and equip
deploying units for ongoing and future requirements for the Global War
on Terrorism. The Army has recently begun to track the equipment
readiness of returning units and units approaching deployment in an
effort to assess the effectiveness of their reset efforts. However,
these readiness indicators are of limited value in assessing the
effectiveness of reset because they do not measure the equipment on
hand levels against the equipment that the units actually require to
accomplish their directed missions in Iraq and Afghanistan.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-439T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact William M. Solis at (202)
512-8365 or solisw@gao.gov.
[End of Section]
Mr. Chairmen and Members of the Subcommittees:
Thank you for the opportunity to appear before you today to discuss the
Army's equipment planning strategies for the repair, replacement, and
modernization of equipment, collectively known as equipment reset. Our
service members are working with great courage and diligence to perform
the roles the President has asked of them. Notwithstanding their noble
efforts, equipment shortages and equipment readiness shortfalls among
U.S. Army units are of increasing concern. As operations continue in
Iraq and Afghanistan and the Army's equipment reset requirements grow,
the potential for reset costs to significantly increase in future
Department of Defense (DOD) annual budgets also grows. In addition to
the billions of dollars provided to DOD for military equipment in its
yearly baseline budgets, Congress has provided the Army with more than
$38 billion in supplemental appropriations since fiscal year 2002 for
the repair, replacement, and modernization of equipment. In fiscal year
2007 alone, the Army has received $17.1 billion for equipment reset,
almost double the $8.6 billion in equipment reset funding the Army
received in fiscal year 2006. In addition, DOD is expected to request
an additional $26 billion for reset in a subsequent fiscal year 2007
supplemental appropriation. Army officials estimate the Army will need
about $12 billion to $13 billion per year for reset until operations
cease in Iraq and Afghanistan and up to two years thereafter.
Continuing military operations in Iraq and Afghanistan are taking a
toll on the condition and readiness of military equipment. Harsh combat
and environmental conditions in theater over sustained periods of time
exacerbates equipment repair, replacement, and modernization problems
that existed before the onset of combat operations in Iraq and
Afghanistan. Upon returning from operations, equipment is reset in
preparation for future operations. Although the Army continues to meet
mission requirements and reports high readiness rates for deployed
units, the lack of equipment availability for units preparing for
deployment and other non-deployed units increases the risk to future
overall readiness.
As we testified in March 2006 before the Subcommittees on Readiness and
Tactical Air and Land Forces of the House Committee on Armed
Services,[Footnote 1] the Army will face a number of ongoing and long-
term challenges that will affect the timing and cost of equipment
reset, such as Army modularity initiatives, equipment requirements for
prepositioned equipment sets; future equipment replacement needs for
active, guard, and reserve forces; depot capacity issues, the potential
transfer of U.S. military equipment to the Iraqi Security Forces, and
the possibility of continuing logistical support for Iraqi Security
Forces. We also observed that while the precise dollar estimate for the
reset of Army equipment will not be known until operations in Iraq and
Afghanistan cease, it will likely cost billions of dollars to repair
and replace equipment. While the Army is working to refine overall
requirements, the total requirements and costs are unclear and raise a
number of questions as to how the Army will afford them. We concluded
that until the Army is able to firm up these requirements and cost
estimates, neither the Secretary of Defense nor the Congress will be in
a sound position to weigh the trade offs between competing requirements
and risks associated with degraded equipment readiness.
My statement today reflects our preliminary observations drawn from our
ongoing work on equipment reset issues, which we are performing under
the Comptroller General's authority to conduct evaluations on his own
initiative. As requested, my testimony today will focus on the Army's
equipment reset strategies for ground equipment and rotary aircraft in
both the active and reserve components. Specifically, it addresses (1)
the extent to which the Army can track and report equipment reset
expenditures in a way that confirms that funds appropriated for reset
are expended for that purpose, and (2) whether the Army can be assured
that its equipment reset strategies will sustain future equipment
readiness for deployed as well as non-deployed units while meeting
ongoing requirements.
The preliminary observations we will discuss today regarding Army
equipment reset strategies are based on audit work performed from
November 2005 through December 2006. We conducted our work in
accordance with generally accepted government auditing standards.
Summary:
The Army cannot track or report equipment reset expenditures in a way
that confirms that funds appropriated for reset are expended for that
purpose. In order to provide effective oversight of the Army's
implementation of its equipment reset strategies and to plan for future
reset initiatives, the Congress needs to be assured that the funds
appropriated for reset are used as intended. The Army, however, is
unable to confirm that the $38 billion that Congress has appropriated
to the Army since fiscal year 2002 for equipment reset has been
obligated and expended for reset. Because equipment reset was not
identified as a separate program within the budget, it was grouped
together with other equipment-related line items in the O&M and
Procurement accounts. The Conference Report accompanying the Department
of Defense Appropriations Act for 2007[Footnote 2] directed the
Secretary of Defense to provide periodic reports to congressional
defense committees which include a detailed accounting of obligations
and expenditures of appropriations provided in Title IX of the act by
program and subactivity group. According to the Conference Report, the
conferees have provided $17.1 billion in additional reset funding for
the Army in Title IX. The Army has established a subactivity group for
reset, and, according to Army officials, beginning in fiscal year 2007,
the Army has begun to track reset obligations and expenditures by
subactivity group. However, based on our analysis, the Army's reset
tracking system does not provide sufficient detail to provide Congress
with the visibility it needs to provide effective oversight. In
addition, because the Army has not historically tracked the execution
of its reset appropriations, it does not have historical execution
data. As we have previously reported, historical execution data would
provide a basis for estimating future funding needs.[Footnote 3] The
Congressional Budget Office has also recently testified that better
estimates of future reset costs could be provided to Congress if more
information was available on expenditures incurred to date.[Footnote 4]
Without historical execution data, the Army must rely on assumptions
and models based on its own interpretations of the definition of reset,
and may be unable to submit accurate budget requests to obtain future
reset funding.
The Army cannot be assured its reset strategies will sustain equipment
availability for deployed as well as non-deployed units while meeting
ongoing operational requirements. The Army's primary objective for
equipment reset is to equip units preparing for deployment. However,
the Army's reset strategy does not specifically target low levels of
equipment on hand among unit's preparing for deployment. Although
deployed Army units generally report high readiness rates, the Army
continues to be faced with increasing levels of operational risk due to
low levels of equipment on hand among units preparing for deployment.
According to the Army's fiscal year 2007 framework for reset and the
Army's Force Generation (ARFORGEN) implementation strategy, the goal of
reset is to prepare units for deployment and to improve next-to-deploy
unit's equipment on hand levels. However, since the Army's current
reset planning process is based on resetting equipment that it expects
will be returning to the United States in a given fiscal year, and not
based on an aggregate equipment requirement to improve the equipment on
hand levels of deploying units, the Army cannot be assured that its
reset programs will provide sufficient equipment to train and equip
deploying units for ongoing and future GWOT requirements. According to
November 2006 Army readiness reports, deployed units and units
preparing for deployment reported low levels of equipment on hand, as
well as specific equipment item shortfalls that affect their abilities
to carry out their missions. As of fiscal year 2007, Army officials
stated they have begun to track the equipment readiness of returning
units and units approaching deployment in an effort to assess the
effectiveness of their reset efforts. To do this, Army leaders plan to
examine the equipment serviceability of units that recently returned
from deployment that are resetting and the equipment on hand for units
preparing to deploy[Footnote 5]. However, these readiness indicators
such as equipment on hand and equipment serviceability are of limited
value in assessing the effectiveness of reset. Specifically, equipment
on hand measures required levels of equipment against the primary
mission for which the unit was designed, which may be much different
than the unit's directed GWOT mission, and equipment serviceability
ratings may be high, even if equipment on hand levels are very low. For
example, the Army plans to recapitalize more than 7,500 High Mobility,
Multi-Purpose Wheeled Vehicles (HMMWV) in fiscal year 2007 at a cost of
$455 million. While the Army's HMMWV recapitalization activities may
raise overall HMMWV equipment on hand levels of non-deployed units in
the United States, Army officials have stated that this
recapitalization program will not directly provide HMMWVs to train or
equip units deploying for OIF missions. Specifically, the unarmored
HMMWVs produced by the recapitalization program are not being deployed
to the OIF theater due to inadequate force protection and have limited
training value to deploying units primarily because the unarmored
HMMWVs have different handling characteristics and configurations than
the armored HMMWVs used in Iraq. Furthermore, the Army's reset
strategies do not ensure that the repairing, replacing, and modernizing
of equipment needed to support units that are preparing for deployment
are being given priority over other longer-term equipment needs, such
as equipment modernization in support of the Army's modularity
initiative. For example, the Army's FY 2007 reset strategy includes
plans to accelerate modernization of Abrams Tanks and Bradley Fighting
Vehicles to accelerate achieving long-term strategic goals under the
Army's modularity initiative.
Background:
As a result of operations related to OIF, the Army continues to face an
enormous challenge to reset its equipment. This is due to the increased
usage of equipment, pace of operations, and the amount of equipment to
be reset. At the onset of operations in March 2003, the Army deployed
with equipment that in some cases was already more than 20 years old.
As of January 2007, the Army has about 25 percent of total on-hand
wheeled and tracked vehicles and about 19 percent of rotary wing
aircraft deployed to the OIF/Operation Enduring Freedom (OEF) theater
as shown in table 1.
Table 1: Comparison of Army Ground Equipment and Rotary Aircraft
Deployed to OIF/OEF Theater and the Total Equipment On Hand as of
January 2007:
Wheeled Vehicles.
HEMTT;
Total In OIF/OEF Theater: 3282;
Total On Hand: 12836;
Percent Equipment Deployed: 26.
HET;
Total In OIF/OEF Theater: 912;
Total On Hand: 2394;
Percent Equipment Deployed: 38.
HMMWV;
Total In OIF/OEF Theater: 23818;
Total On Hand: 95970;
Percent Equipment Deployed: 24.
Tracked Vehicles.
Bradley;
Total In OIF/OEF Theater: 679;
Total On Hand: 3021;
Percent Equipment Deployed: 22.
Abram;
Total In OIF/OEF Theater: 366;
Total On Hand: 3406;
Percent Equipment Deployed: 11.
M88;
Total In OIF/OEF Theater: 192;
Total On Hand: 1832;
Percent Equipment Deployed: 10.
Total Wheeled & Tracked Vehicles;
Total In OIF/OEF Theater: 29249;
Total On Hand: 119459;
Percent Equipment Deployed: 24.
Rotary Wing A/C.
AH-64A/D;
Total In OIF/OEF Theater: 120;
Total On Hand: 689;
Percent Equipment Deployed: 17.
CH-47D;
Total In OIF/OEF Theater: 63;
Total On Hand: 392;
Percent Equipment Deployed: 16.
OH-58D;
Total In OIF/OEF Theater: 60;
Total On Hand: 354;
Percent Equipment Deployed: 17.
UH-60A/L;
Total In OIF/OEF Theater: 293;
Total On Hand: 1362;
Percent Equipment Deployed: 21.
Total Rotary Wing Aircraft;
Total In OIF/OEF Theater: 536;
Total On Hand: 2797;
Percent Equipment Deployed: 19.
Source: Army G-8:
[End of table]
As we stated in our March 2006 testimony, the Army is operating this
equipment at a pace well in excess of peacetime operations. The harsh
operating environments in Iraq and environmental factors such as heat,
sand, and dust have taken a toll on sensitive components. Troop levels
and the duration of operations are also factors that affect equipment
reset requirements.
The Army defines reset as the repair, recapitalization, and replacement
of equipment. Repairs can be made at the field level or national
(depot) level. Army field level maintenance is intended to bring
equipment back to the 10/20 series Technical Manual standard, is done
by soldiers augmented by contractors, as required, and is usually
performed at installations where the equipment is stationed.[Footnote
6] National level maintenance is work performed on equipment that
exceeds field level reset capabilities. National Level maintenance may
be done at Army depots, by contractors, by installation maintenance
activities, or a combination of the three, and is coordinated by the
Army Material Command. The Army Chief of Staff testified in June 2006
that, as of that point in time, the Army had reset over 1,920 aircraft,
14,160 tracked vehicles, and 110,800 wheeled vehicles, as well as
thousands of other items. He further stated that the Army expected to
have placed about 290,000 major items in reset by the end of fiscal
year 2006.[Footnote 7]
Recapitalization includes rebuilding of equipment which could include:
extending service life, reducing operating and support costs, enhancing
capability, and improving system reliability. The Army recapitalizes
equipment either at Army Materiel Command depots or arsenals, the
original equipment manufacturer, or a partnership of the two.
Replacement includes buying new equipment to replace confirmed battle
losses, washouts, obsolete equipment, and critical equipment deployed
and left in theater but needed by reserve components for homeland
defense/homeland security missions.
Army reset funding includes ground and aviation equipment, combat
losses, and prepositioned equipment. The Army funds field level and
some depot level maintenance from the operation & maintenance (O&M)
appropriations, while procurement appropriations fund most
recapitalization and all procurement of new equipment as part of reset.
The Army's fiscal year 2007 reset execution plan includes about 46
percent O&M funding and 54 percent procurement funding. Table 2
provides a breakdown of Army equipment reset execution plans for fiscal
year 2007.
Table 2: Army Fiscal Year 2007 Reset Execution Plans:
Reset Category: Repair (O&M);
Army: Amount of reset funding (dollars in billions): $7.8;
Army: Percent of total: 46.
Reset Category: Field level Maintenance;
Army: Amount of reset funding (dollars in billions): 3.7;
Army: Percent of total: [Empty].
Reset Category: Depot level Maintenance;
Army: Amount of reset funding (dollars in billions): 4.1;
Army: Percent of total: [Empty].
Reset Category: Recapitalization;
Army: Amount of reset funding (dollars in billions): 4.3;
Army: Percent of total: 25.
Reset Category: Replacement (Procurement);
Army: Amount of reset funding (dollars in billions): 5.0;
Army: Percent of total: 29.
Reset Category: Total fiscal year 2007 funding[1];
Army: Amount of reset funding (dollars in billions): $17.1;
Army: Percent of total: 100.
Source: Army G-8:
[End of table]
Under the Army's framework for training and equipping units for
deployments, known as the Army Force Generation Model (ARFORGEN), reset
begins when units return from their deployments and concludes prior to
a unit's being made available for subsequent missions. Reset is
intended to be a demand-based process, focused on operational
requirements of the combatant commander, to rapidly return Army
materiel to units preparing for subsequent operations in order to meet
current and future combatant commander demands. Next-to-deploy units
are identified and intended to receive first priority for distribution
of equipment emerging from reset programs per the Army's Resource
Priority List[Footnote 8]. The Army's fiscal year 2007 reset policy
states that the primary driver in equipment reset operations is the
rapid return of Army materiel to units preparing for subsequent
operations as specified by the Army Resource Priority List (ARPL), a
process that should lead to improved equipment readiness over time.
To develop its fiscal year 2007 reset execution plan, the Army examined
the types and quantities of equipment held by deployed units overseas
and estimated what equipment they expected to return from overseas
theaters to unit home stations or Army depots for reset. Depending on
the required work, and whether upgrades and modernizations are planned,
item-by-item determinations were made on what level of maintenance the
equipment would receive as part of its reset. Due to the complexity and
quantity of the maintenance required, some equipment items are
automatically sent to one of the Army's depots. For example, returning
Abrams tanks and Bradley Fighting vehicles are automatically inducted
into depot level reset programs due to the quantity and complexity of
their reset maintenance. For each equipment item expected to return
from overseas theaters for reset in a given fiscal year, the Army
estimates a per unit cost of the planned reset activity, and multiplies
that cost by the number of items expected to returned and be available
for reset. The total Army reset funding requirement for a given fiscal
year is determined by aggregating all of these costs to include all
equipment expected to return from overseas theaters.
Army Reset Tracking System Cannot Confirm Funds Appropriated for Reset
are Expended for that Purpose:
The Army cannot track or report equipment reset expenditures in a way
that confirms that funds appropriated for reset are expended for that
purpose. In order to provide effective oversight of the Army's
implementation of its equipment reset strategies and to plan for future
reset initiatives, the Congress needs to be assured that the funds
appropriated for reset are used as intended. The Army, however, is
unable to confirm that the $38 billion that Congress has appropriated
to the Army since fiscal year 2002 for equipment reset has been
obligated and expended for reset. Because equipment reset was not a
separate program within the budget, it was grouped together with other
equipment-related line items in the O&M and Procurement accounts. The
Conference Report accompanying the Department of Defense Appropriations
Act for 2007[Footnote 9] directed the Secretary of Defense to provide
periodic reports to congressional defense committees which include a
detailed accounting of obligations and expenditures of appropriations
provided in Title IX of the act by program and subactivity group.
According to the Conference Report, the conferees have provided $17.1
billion in additional reset funding for the Army in Title IX. The Army
has established a subactivity group for reset, and, according to Army
officials, beginning in fiscal year 2007, the Army has begun to track
reset obligations and expenditures by subactivity group. However, based
on our analysis, the Army's reset tracking system does not provide
sufficient detail to provide Congress with the visibility it needs to
provide effective oversight. For example, the Army's tracking system
compares what they have executed by month to their obligation plan at a
macro level. Unlike the annual baseline budget requests which include
details within each subactivity group, the Army's O&M monthly reset
report does not provide details of the types of equipment repaired.
Likewise, the Procurement report does not itemize the types of
equipment replaced or recapitalized. As a result, the Army is not in a
position to tell Congress how they have expended the funds they have
received to repair, replace, and recapitalize substantial amounts of
damaged equipment. Because funds for reset are generally recorded in
the same appropriation accounts as other funds that are included in the
baseline budget, it is difficult to determine what is spent on reset
and what is spent on routine equipment maintenance. In addition,
because the Army has not historically tracked the execution of its
reset appropriations, it does not have historical execution data. As we
have previously reported, historical execution data would provide a
basis for estimating future funding needs.[Footnote 10] The
Congressional Budget Office has also recently testified that better
estimates of future reset costs could be provided to Congress if more
information was available on expenditures incurred to date.[Footnote
11] Without historical execution data, the Army must rely on
assumptions and models based on its own interpretations of the
definition of reset, and may be unable to submit accurate budget
requests to obtain reset funding in the future.
Army Cannot Be Assured Its Reset Strategies Will Sustain Equipment
Availability While Meeting Ongoing Operational Requirements:
The Army cannot be assured its reset strategies will sustain equipment
availability for deployed as well as non-deployed units while meeting
ongoing operational requirements. The Army's primary objective for
equipment reset is to equip its deployed forces and units preparing for
deployment. However, the Army's reset strategy does not specifically
target low levels of equipment on hand among units preparing for
deployment. Furthermore, the Army's reset strategies do not ensure that
the repairing, replacing, and modernizing of equipment needed to
support units that are preparing for deployment are giving priority
over other longer-term equipment needs, such as equipment modernization
in support of the Army's modularity initiative.
Army Reset Strategies Do Not Target Low Levels Of Equipment On Hand To
Mitigate Operational Risk:
The Army's reset strategies do not specifically target low levels of
equipment on hand among units preparing for deployment in order to
mitigate operational risk. The Army continues to be faced with
increasing levels of operational risk due to low levels of equipment on
hand among units preparing for deployment. According to the Army's
fiscal year 2007 framework for reset and the Army's ARFORGEN
implementation strategy, the primary goal of reset is to prepare units
for deployment and to improve next-to-deploy units' equipment on hand
levels. Units preparing for deployment are intended to attain a
prescribed level of equipment on hand within forty-five days prior to
their mission readiness exercise, which is intended to validate the
unit's preparedness for its next deployment. However, since the Army's
reset planning process is based on resetting the equipment that will be
returning to the United States in a given fiscal year, and not based on
an aggregate equipment requirement to improve the equipment on hand
levels of deploying units, the Army cannot be assured that its reset
programs will provide sufficient equipment to train and equip deploying
units for ongoing and future GWOT requirements, which may lead to
increasing levels of operational risk.
Army Has Begun To Track Equipment Readiness But Readiness Indicators
Are of Limited Value:
As of fiscal year 2007, Army officials stated they have begun to track
the equipment readiness of returning units and units approaching
deployment dates in an effort to assess the effectiveness of their
reset efforts. To do this, Army leaders plan to examine the equipment
serviceability of units that recently returned from deployed that are
resetting and the equipment on hand for units preparing to deploy.
However, these readiness indicators such as equipment on hand and
equipment serviceability are of limited value in assessing the
effectiveness of reset. For example, equipment on hand measures
required levels of equipment against the unit's primary mission which
may be much different than the unit's directed GWOT mission. In
addition, a unit's equipment serviceability ratings may be reported as
acceptable, even if equipment on hand levels are very low[Footnote 12].
For example, the Army plans to induct 7,500 High Mobility, Multi-
Purpose Wheeled Vehicles (HMMWV) into depot level recapitalization
programs in 2007 at a cost of $455 million. The Army intends to use
these HMMWVs to fill gaps in the Army's force structure to allow units
to train and perform homeland security missions. However, according to
Army officials, the HMMWVs that emerge from this recapitalization
program will not be suitable for use in the OIF theater because they
will not be armored and, thus, will not provide protection from sniper
fire and mine blasts. The unarmored M1097R1 HMMWVs will not offer the
same level of force protection as the M1114 Uparmored HMMWV, and do not
have the M1114's rooftop weapons station. According to Army officials,
only fully armored HMMWVs are being deployed to the OIF theater. While
the Army's HMMWV recapitalization activities may raise overall HMMWV
equipment on hand levels of non-deployed units in the United States,
they will not directly provide HMMWVs to equip units deploying for OIF
missions, or allow them to train on vehicles similar to those they
would use while deployed. According to November 2006 Army readiness
data, deployed units, and units preparing for deployment report low
levels of equipment on hand, as well as specific equipment item
shortfalls that affect their ability to carry out their missions. Army
unit commanders preparing for deployments may subjectively upgrade
their unit's overall readiness levels[Footnote 13], which may result in
masking the magnitude of equipment shortfalls. Since 2003, deploying
units have continued to subjectively upgrade their overall readiness as
they approach their deployment dates, despite decreasing overall
readiness levels among those same units. This trend is one indicator of
the increasing need for Army leaders to carefully balance short-term
investments as part of reset to ensure overall readiness levels remain
acceptable to sustain current global requirements. Until this is done,
the Army cannot be assured that their plans will achieve the stated
purpose of their reset strategy for 2007, or in future years, to
restore the capability of the Army to meet current and future
operational demands.
Army Reset Strategies Do Not Give Priority To Unit Equipment Needs Over
Longer-Term Equipment Needs:
The Army's reset strategies do not ensure that the repairing,
replacing, and modernizing of equipment needed to support units that
are preparing for deployment are given priority over other longer-term
equipment needs, such as equipment modernization in support of the
Army's modularity initiative. Army reset strategies are primarily
intended to be based on plans for repairing, recapitalizing, or
replacing equipment returning from overseas theaters in a given fiscal
year. However, in addition to meeting these short term requirements,
the Army's reset strategy has included funding requests for certain
items to accelerate achieving longer-term strategic goals under the
Army's modularity initiative. For example, in addition to the planned
fiscal year 2007 national level reset of almost 500 tanks and more than
300 Bradleys expected to return from the OIF theater, the Army also
intends to spend approximately $2.4 billion in fiscal year 2007 reset
funds to take more than 400 Abrams tanks and more than 500 Bradley
Fighting Vehicles from long-term storage or from units that have
already received modernized Bradleys for depot level upgrades. These
recapitalizations will allow the Army to accelerate their progress in
achieving a modular force structure[Footnote 14] by providing
modernized Abrams and Bradley vehicles to several major combat units 1
or 2 years ahead of schedule. The Army believes achieving these
modularity milestones for Abrams tanks and Bradley Fighting Vehicles
will achieve greater commonality in platforms that will enable force
generation efforts and reduce overall logistical and financial
requirements by reducing the number of variants that must be supported.
Concluding Observations:
Since fiscal year 2002, Congress has appropriated approximately $38
billion for Army equipment reset. In addition, the Army estimates that
future funding requirements for equipment reset will be about $12 to
$13 billion per year for the foreseeable future. To ensure that these
funds are appropriately used for the purposes intended and to provide
the Congress with the necessary information it needs to provide
effective oversight, the Army will need to be able to track and report
the obligation and expenditure of these funds at a more detailed level
than they have in the past. We do not believe that the reporting format
the Army developed for tracking and reporting this data for fiscal year
2007 is sufficiently detailed to provide Congress with the visibility
it needs to provide effective oversight.
Also, the Army's reset strategies need to ensure that priority is given
to repairing, replacing, and modernizing the equipment that is needed
to equip units preparing for deployment. The current low levels of
equipment on hand for units that are preparing for deployment could
potentially decrease overall force readiness if equipment availability
shortages are not filled prior to these units' deployments.
Lastly, as the Army moves forward with equipment reset, it will need to
establish more transparent linkages among the objectives of its reset
strategies, the funds requested for reset, the obligation and
expenditure of appropriated reset funds, and equipment requirements and
related reset priorities.
Mr. Chairmen, this concludes my statement. I would be happy to answer
any questions.
FOOTNOTES
[1] GAO, Defense Logistics: Preliminary Observations on Equipment Reset
Challenges and Issues for the Army and Marine Corps, GAO-06-604T
(Washington, D.C.: Mar. 30, 2006).
[2] H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
[3] GAO, Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are
Within Funding Levels and Significant Multiyear Procurement Funds Will
Likely Remain Available for Use in Fiscal Year 2007, GAO-07-76
(Washington, D.C.: Nov. 13, 2006); and GAO, Defense Management:
Processes to Estimate and Track Equipment Reconstitution Costs Can Be
Improved, GAO-05-293 (Washington, D.C.: May 5, 2005).
[4] Congressional Budget Office, Issues in Budgeting for Operations in
Iraq and the War on Terrorism (Washington, D.C.: Jan. 18, 2007).
[5] Equipment on hand is a readiness measurement based on the quantity
and type of required equipment that is available to a unit for the
execution of the unit's primary mission. Equipment serviceability is
based on the condition of equipment the unit has on hand.
[6] Army reset does not include contractor logistics support for
equipment readiness, field level maintenance required to keep equipment
operational, or the replacement of ammunition.
[7] Gen. Peter J. Schoomaker, Chief of Staff of the Army, Army's Reset
Strategy and Plan for Funding Reset Requirements, Statement before
Committee on Armed Services, U.S. House of Representatives (June 27,
2006).
[8] The Army Resource Priority List specifies the order in which Army
units have precedence for distribution of resource. Generally, units
closer to deployment dates have the highest priority.
[9] H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
[10] GAO-07-76; GAO-05-293.
[11] Congressional Budget Office, Issues in Budgeting for Operations in
Iraq and the War on Terrorism (Washington, D.C.: Jan. 18, 2007).
[12] Units report their readiness using overall C-level ratings, which
are based on assessments of their equipment on hand, equipment
serviceability, training, and personnel levels. These assessments are
made against the unit's Table of Organization and Equipment, which
prescribes the wartime mission, capabilities, organizational structure,
and equipment requirements for which the unit was designed, which may
be different than its directed mission supporting operations in Iraq or
Afghanistan.
[13] Army units assigned directed missions can subjectively report
their readiness for upcoming deployment using "percent effective"
ratings. These reflect the unit commander's subjective assessment of
the unit's ability to perform its mission.
[14] The Army Modular Heavy Brigade Combat Team (HBCT) force structure
calls for 31 HBCTs equipped with combinations to two different types of
Abrams Tanks and Bradley Fighting Vehicles. Seventeen HBCTs would be
equipped with the digitized Abrams M1A2 System Enhancement Program
(SEP) tanks and digitized M2A3 Bradley Fighting Vehicles. The remaining
fourteen HBCTs would be equipped with the Abrams M1A1 Abrams Integrated
Management (AIM) and Bradley Operation Desert Storm (ODS) upgraded
vehicles.
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