Defense Logistics
Improved Oversight and Increased Coordination Needed to Ensure Viability of the Army's Prepositioning Strategy Gao ID: GAO-07-144 February 15, 2007Prepositioned military equipment and supplies on ships and overseas on land have become an integral part of the U.S. defense strategy. However, the Army's program has faced long-standing management challenges, including equipment excesses and shortfalls, invalid or poorly defined requirements, and maintenance problems. In Public Law 109-163, Congress required the Army to conduct an assessment of its prepositioning programs and required GAO to assess (1) whether the Army's report addressed the areas required by Congress, and (2) the major challenges the Army continues to face in its prepositioning program. GAO analyzed the Army's report and other information it obtained from the Joint Staff, the Army, and its subordinate commands to identify the issues affecting the Army's prepositioning program. GAO also visited prepositioned equipment sites in South Carolina, Europe, South Korea, and Kuwait.
The Army's April 2006 report on the status of its prepositioning program addressed the areas required by Congress; for example, it included descriptions of operational capabilities, as well as inventory shortfalls expressed in terms of procurement costs. However, the Army significantly shifted its prepositioning strategy in the latter part of 2006, since that report was issued. According to the Army, this shift was based on insights gained from the 2006 Quadrennial Defense Review, but Army officials told us that budget reprogramming decisions and worsening Army-wide equipment shortfalls also influenced the expedited strategy revision. The Army's revised strategy proposes less reliance on heavy combat equipment afloat and the expansion of heavy equipment in Kuwait and Italy. As a result, the Army's April 2006 report to Congress is outdated, and neither Congress nor DOD should base funding decisions on it. The Army faces several major strategic and management challenges as it revises and implements its prepositioning program. From a strategic perspective, the Army cannot gauge how well its emerging strategy will align with DOD plans currently under development. The Army plans to begin implementing its revised strategy by the end of 2006. DOD has a departmentwide prepositioning study underway intended to set strategy and joint doctrine, but this will not be completed for several months and it anticipates that the Army will have to modify its prepositioning strategy when the DOD-wide strategy is issued. As a result, the Army is at risk of resourcing requirements that may be superseded by the DOD strategy. Moreover, because prepositioning is linked to airlift, sealift, and basing, the Army's decisions will have an as-yet undetermined effect on these areas. In addition to these strategic concerns, the Army faces three key management challenges. First, the Army has yet to determine sound secondary item and operational project stock requirements, and to systematically measure and report readiness. While the Army has been taking steps to address long-standing requirements-determination problems in certain parts of its program, the effort was not finished when GAO completed its work. Without accurate requirements and systematic readiness reporting, Army managers are not able to determine the extent to which the existing inventory reflects what the Army needs. Second, the Army lacks a comprehensive plan for maintenance and storage facilities for prepositioned stocks, resulting in uncertain future facility requirements. In the interim, prepositioned stocks are being stored outside, resulting in higher maintenance costs. Finally, inadequate maintenance oversight of the Army's prepositioning program has raised concerns about the true condition of the equipment at some locations. Until these strategic and management challenges are addressed, the Army will face uncertain risks should new conflicts occur.
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-07-144, Defense Logistics: Improved Oversight and Increased Coordination Needed to Ensure Viability of the Army's Prepositioning Strategy
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
February 2007:
Defense Logistics:
Improved Oversight and Increased Coordination Needed to Ensure
Viability of the Army's Prepositioning Strategy:
GAO-07-144:
GAO Highlights:
Highlights of GAO-07-144, a report to congressional committees
Why GAO Did This Study:
Prepositioned military equipment and supplies on ships and overseas on
land have become an integral part of the U.S. defense strategy.
However, the Army‘s program has faced long-standing management
challenges, including equipment excesses and shortfalls, invalid or
poorly defined requirements, and maintenance problems. In Public Law
109-163, Congress required the Army to conduct an assessment of its
prepositioning programs and required GAO to assess (1) whether the
Army‘s report addressed the areas required by Congress, and
(2) the major challenges the Army continues to face in its
prepositioning program. GAO analyzed the Army‘s report and other
information it obtained from the Joint Staff, the Army, and its
subordinate commands to identify the issues affecting the Army‘s
prepositioning program. GAO also visited prepositioned equipment sites
in South Carolina, Europe, South Korea, and Kuwait.
What GAO Found:
The Army‘s April 2006 report on the status of its prepositioning
program addressed the areas required by Congress; for example, it
included descriptions of operational capabilities, as well as inventory
shortfalls expressed in terms of procurement costs. However, the Army
significantly shifted its prepositioning strategy in the latter part of
2006, since that report was issued. According to the Army, this shift
was based on insights gained from the 2006 Quadrennial Defense Review,
but Army officials told us that budget reprogramming decisions and
worsening Army-wide equipment shortfalls also influenced the expedited
strategy revision. The Army‘s revised strategy proposes less reliance
on heavy combat equipment afloat and the expansion of heavy equipment
in Kuwait and Italy. As a result, the Army‘s April 2006 report to
Congress is outdated, and neither Congress nor DOD should base funding
decisions on it.
The Army faces several major strategic and management challenges as it
revises and implements its prepositioning program. From a strategic
perspective, the Army cannot gauge how well its emerging strategy will
align with DOD plans currently under development. The Army plans to
begin implementing its revised strategy by the end of 2006. DOD has a
departmentwide prepositioning study underway intended to set strategy
and joint doctrine, but this will not be completed for several months
and it anticipates that the Army will have to modify its prepositioning
strategy when the DOD-wide strategy is issued. As a result, the Army is
at risk of resourcing requirements that may be superseded by the DOD
strategy. Moreover, because prepositioning is linked to airlift,
sealift, and basing, the Army‘s decisions will have an as-yet
undetermined effect on these areas. In addition to these strategic
concerns, the Army faces three key management challenges. First, the
Army has yet to determine sound secondary item and operational project
stock requirements, and to systematically measure and report readiness.
While the Army has been taking steps to address long-standing
requirements-determination problems in certain parts of its program,
the effort was not finished when GAO completed its work. Without
accurate requirements and systematic readiness reporting, Army managers
are not able to determine the extent to which the existing inventory
reflects what the Army needs. Second, the Army lacks a comprehensive
plan for maintenance and storage facilities for prepositioned stocks,
resulting in uncertain future facility requirements. In the interim,
prepositioned stocks are being stored outside, resulting in higher
maintenance costs. Finally, inadequate maintenance oversight of the
Army‘s prepositioning program has raised concerns about the true
condition of the equipment at some locations. Until these strategic and
management challenges are addressed, the Army will face uncertain risks
should new conflicts occur.
What GAO Recommends:
GAO is making recommendations to synchronize the Army‘s prepositioning
strategy with overall department efforts and address issues including
requirements determination, readiness reporting, need for a
comprehensive facilities plan, and maintenance oversight. The
Department of Defense ( [DOD) generally concurred with our
recommendations but felt that further actions are unneeded. GAO
disagrees and continues to believe that its recommended actions are
warranted.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-144].
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]
Contents:
Letter:
Results in Brief:
Background:
The Army's April 2006 Report to Congress Addressed the Areas Required,
but the Army's Strategy Is Evolving:
The Army Faces Major Strategic and Management Challenges As It Revises
and Implements Its Prepositioning Program:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Past Products Identifying Challenges Facing the Army and
DOD Regarding Prepositioning Programs:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Status of Facilities at Selected Army Prepositioned Stock
Locations:
Table 2: GAO Products:
Table 3: Other Products:
Figures:
Figure 1: Existing Outdoor Storage in Kuwait:
Figure 2: Overview of Military Construction Project at Camp Livorno,
Italy:
United States Government Accountability Office:
Washington, DC 20548:
February 15, 2007:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
With fewer troops permanently stationed overseas, the prepositioning of
stocks of equipment and supplies has become integral to the ability of
the Department of Defense (DOD) to project forces into conflict areas
faster. DOD has acknowledged the need to reorient its capabilities to
respond to a wider range of challenges. In the 2005 National Defense
Strategy, the department indicated that prepositioning will continue to
be an important aspect of DOD's force posture in the future.[Footnote
1] Additionally, a DOD analysis undertaken to support the achievement
of operational timelines during major combat operations reaffirmed the
relevance of prepositioned stocks.[Footnote 2] As a result of this
mobility analysis as well as recommendations arising from a September
2005 GAO report on prepositioning, DOD determined that it would
reassess its existing prepositioning program to identify the optimal
mix of capabilities needed to support the defense strategy in the
future.[Footnote 3]
The Army, the Marine Corps, and the Air Force have drawn heavily from
their prepositioned stocks to support Operations Iraqi Freedom and
Enduring Freedom. As we testified in March 2006, these sustained
military operations are taking a toll on the condition and readiness of
military equipment, and the Army and Marine Corps face a number of
ongoing and long-term challenges that will affect the timing and cost
of equipment repair and replacement.[Footnote 4] A number of reports in
recent years by GAO and other audit agencies (see app. II) have
highlighted numerous long-standing problems facing DOD's prepositioning
programs, including a lack of centralized operational direction;
unreliable reporting of the readiness of prepositioned equipment sets;
inaccurate reporting of the maintenance condition of equipment;
equipment excesses at some prepositioned locations; systemic problems
with the requirements determination and inventory management; and some
Army prepositioned stocks having a maintenance condition that was
considerably below the goal of 90 percent mission capability. In our
September 2005 report, we recommended that DOD develop a DOD-wide
strategy and that the Army repair equipment in poor maintenance
condition.[Footnote 5]
The National Defense Authorization Act for Fiscal Year 2006 directed
the Army to conduct an assessment of its prepositioning programs, and
the Army did so. The Army's report, submitted in April 2006, focused on
specific items required by the law including how such programs were
configured to support the evolving goals of the Army, including key
operational capabilities; whether there were any shortfalls, and if so,
how the Army planned to mitigate them; the maintenance condition of
prepositioned equipment and supplies, including the procedures used to
ensure that maintenance was performed; the adequacy of storage and
maintenance facilities; and the adequacy of oversight mechanisms and
internal management reports. The Army's report was based on the Army
Prepositioned Stocks Strategy 2012, the Army's underlying strategy at
that time, which laid out a strategic roadmap for the Army's
prepositioning program through 2012. Strategy 2012 called for the
prepositioning of five heavy brigade combat team sets, multiple support
units, and associated sustainment stocks to provide the strategic
responsiveness required to attain the DOD joint swiftness objectives.
These stocks are prepositioned around the world, primarily at land
sites in Europe, Northeast Asia, and Southwest Asia, and aboard
prepositioning ships afloat near Guam and Diego Garcia. During the
course of our review and subsequent to the Army's issuance of its April
2006 report to Congress, however, the Army began revising its
prepositioning program and drafting a revised strategy, the Army
Prepositioned Stocks Strategy 2013. These changes were still under way
as we completed our work.
The 2006 Authorization Act also required GAO to assess the Army's
report and identify any issues facing the program for the
future.[Footnote 6] We provided a briefing to your staff on our
preliminary assessment of the Army's report and issues facing the
program. The present report expands and updates that information by
assessing (1) whether the Army's report addressed the areas required by
Congress, and (2) major challenges the Army continues to face in its
prepositioning program.
Our work is based on our analysis of the Army's report and other key
documents identifying equipment shortfalls and maintenance condition,
facility shortfalls, and contractor oversight; discussions with senior
Army officials and commanders; and site visits to Army prepositioning
sites in Charleston, South Carolina; Europe; South Korea; and Kuwait.
We determined that the data we used were sufficiently reliable for the
purpose of this report. We performed our work from February 2006
through October 2006 in accordance with generally accepted government
auditing standards. A more detailed discussion of our scope and
methodology is contained in appendix I.
Results in Brief:
While the Army's April 2006 report to Congress on the status of its
prepositioned program addressed the areas required by Congress, the
report is now outdated because the Army has shifted its prepositioning
strategy. As required by the National Defense Authorization Act for
Fiscal Year 2006, the April 2006 report included descriptions of
operational capabilities as outlined in the Army Prepositioned Stocks
Strategy 2012, as well as inventory shortfalls expressed in terms of
procurement costs. The report estimated that the Army would need well
over $4 billion to procure new equipment and replenish spare parts and
other items, as well as provide new facilities in Kuwait, South Korea,
and Charleston, South Carolina. The report also addressed the
maintenance condition of prepositioned equipment, which had been a
concern based on GAO's past work. The Army reported that stocks in
South Korea had been repaired since GAO's previous review was
performed. The Army's report also noted recent efforts to improve
management and maintenance oversight of the program, including forming
an independent team to inspect equipment and maintenance operations.
However, since the report was submitted to Congress, the Army has been
reexamining its overall prepositioning strategy. Based on recent
reprogramming decisions as part of a DOD program review, its
identification of servicewide equipment shortfalls, and insights gained
from the 2006 Quadrennial Defense Review, the Army concluded in the
summer of 2006 that its Prepositioned Stocks Strategy 2012 was no
longer viable. It began work on a revised strategy in late August
2006.[Footnote 7] According to Army officials, the proposed strategy
includes significant changes to the program, including less reliance on
heavy combat equipment afloat, and the expansion of heavy combat
equipment in Kuwait and Italy, along with continued reliance on stocks
in South Korea. The Army is seeking to have an implementation plan for
its new strategy in place by the end of 2006.
The Army faces major strategic and management challenges as it revises
and implements its prepositioning program, including:
* Inability to gauge its alignment with DOD-wide prepositioning
strategy: The Army's plan to implement its prepositioning strategy by
the end of 2006 could result in investments for the prepositioning
program that do not align with the anticipated DOD-wide prepositioning
strategy because it will be several months ahead of overarching DOD-
wide efforts. Strategy should be shaped from the top down. One of the
key recommendations from our September 2005 report was that the
department needed joint doctrine and an overarching strategy to lay a
foundation for the programs of the services to ensure jointness and
avoid duplication across the services. Consistent with our
recommendation, DOD began a study with a broad charter in mid-2006 to
evaluate a range of future prepositioning options, but that study was
still underway when we completed our work. The John Warner National
Defense Authorization Act for fiscal year 2007 required DOD to
establish the strategic policy on the programs of DOD for the
prepositioning of materiel and equipment mid-April 2007.[Footnote 8] At
the time we finished our work the Army was planning to implement its
strategy by the end of 2006--months ahead of the DOD-wide effort. The
most significant problem resulting from this timing is that the Army
cannot be assured that its efforts will be aligned with DOD-wide
efforts still ongoing. Even though DOD and Army officials told us they
have coordinated their prepositioning plans, the timing of the two
strategies is not synchronized. As a result, DOD could be restricted in
developing an optimal DOD-wide strategy because the Army strategy
already exists or the Army could be at risk of filling requirements
that will be superseded when the DOD-wide strategy is issued. Moreover,
prepositioning is interconnected with airlift, sealift, and basing, so
the Army's decisions will have an as-yet undetermined effect on lift
requirements and basing. Such potential problems are avoidable if the
strategies are synchronized.
* Need to determine sound secondary item and operational project stock
requirements and systematically measure and report readiness: Despite
recent efforts to improve requirement setting, the Army has not yet
determined reliable secondary item and operational project stock
requirements. In its efforts to reassess secondary item requirements,
the Army ran its requirements-determination model, called the Army War
Reserve Automated Process, in 2005. It had not previously run the model
since 1999, even though Army guidance at that time called for
requirements to be updated every 2 years. Further, operational project
stock requirements must be revalidated every 5 years, but the most
recent revalidation for many of the projects was last conducted in
1998. However, in response to our recommendation in 2005 that this long-
standing problem be addressed, the Army initiated a revalidation of its
Operational Project Stocks in April 2006. The revalidation was still
ongoing when we completed our work in October 2006. Also, while the
Army measures readiness of prepositioned equipment programs by
assessing inventory levels against requirements and the maintenance
condition of on-hand equipment, the Army does not systematically
measure or report readiness for the secondary item and operational
project programs. This situation is largely unchanged since 1998, when
we recommended that the Army develop readiness-reporting mechanisms for
these programs.[Footnote 9] Without sound requirements or reporting
mechanisms, the Army cannot reliably assess the impact of any
shortfalls, the readiness of its programs, or make informed investment
decisions about them.
* Need to identify maintenance and storage facility requirements: The
Army currently lacks a comprehensive prepositioning storage and
maintenance facilities plan. The maintenance and storage facility
shortages it reported to Congress were based on the now obsolete Army
Prepositioning Strategy 2012. Army policy calls for the long-term
storage of prepositioned equipment in controlled-humidity facilities,
because outdoor storage results in substantially increased maintenance
costs.[Footnote 10] Yet currently in Kuwait, storage facilities are
being used to house command staff personnel while equipment is being
stored outside, in harsh environmental conditions. The Army estimates
that maintenance costs an extra $24 million per year for the heavy
brigade set in Kuwait because equipment is stored outside. In South
Korea, despite an intensive effort to repair prepositioned assets and
correct long-standing problems, almost one-third of the equipment
continues to be stored outside, resulting in increased maintenance and
costly corrosion. In contrast, part of the Army's new strategy includes
a plan to store heavy equipment at a newly constructed site in Italy,
to make use of a facility that had previously been left without a
mission. Before these existing facilities problems can be addressed,
however, the Army must determine how prepositioned equipment will be
utilized and where it needs to be located. Army officials are
considering using prepositioned equipment in Kuwait, South Korea, and
Italy to support a rotational presence and training in these regions
even as they continue to develop a prepositioning implementation plan
based on existing space and storage. According to Army officials,
utilizing prepositioned equipment to support a rotational presence or
for training increases the maintenance requirement and, therefore, the
maintenance facilities needed. Depending on how the rotation is
scheduled, however, it may concurrently reduce the requirement for
humidity-controlled storage space. Furthermore, since an alternate
South Korean prepositioning site is being considered, the Army may be
constructing facilities at its existing prepositioning site at Camp
Carroll that it does not need. Without a comprehensive facilities plan,
the Army will not know the types and quantities of facilities it will
need to store and maintain equipment at each location.
* Lack of maintenance oversight: The Army reported to Congress that
oversight of the program is provided by the Army Materiel Command and
external agencies tasked with evaluating the program, and that
readiness is accurately reported. In our 2005 report, we found that a
lack of oversight in South Korea resulted in a deterioration of the
maintenance condition of prepositioned equipment. In response to our
report, the Army established oversight of the maintenance process in
South Korea and repaired the equipment. However, in Kuwait, our review
of recent inspections by Army inspectors of contractor-maintained
equipment raised significant concerns about its true maintenance
condition. These concerns are the result of inadequate management of
contractor performance. Specifically, over one-quarter of the
prepositioned equipment presented by the contractor failed the
government quality assurance inspection between June 2005 and June
2006.
We are recommending that the Army take steps to synchronize its
prepositioning strategy with the DOD-wide strategy in order to ensure
that future investments made for the Army's prepositioning program
align with the DOD prepositioning strategy. Once the Army's strategic
direction is aligned, we are recommending that the Army develop an
implementation plan that maintains ongoing reevaluation of the
secondary item and operational project stock requirements; establishes
systematic readiness measurement and reporting of these requirements;
identifies the optimal mix of storage and maintenance facilities at
each location; and prescribes oversight requirements for the
maintenance of prepositioned equipment.
In written comments on a draft of this report, DOD generally concurred
with our recommendations but stated that it had already taken steps to
address the recommendations and that further actions are not needed. We
acknowledge that the Army and the department have taken some initial
steps; however, we continue to believe that our recommendations have
merit and that additional actions and sustained management attention
will be needed to ensure the viability of the Army's prepositioning
program as part of the overall departmentwide effort to meet mobility
needs.
Background:
Prepositioning is an important part of DOD's overall strategic mobility
framework. It allows DOD to field combat-ready forces in days rather
than the weeks it would take if the forces and all necessary equipment
and supplies had to be brought from the United States to the location
of the conflict. The U.S. military can deliver equipment and supplies
in three ways: by air, by sea, or by prepositioning. While airlift is
fast, it is expensive to use and impractical for moving all of the
material needed for a large-scale deployment. Although ships can carry
large loads, they are slower than airlift. Prepositioning lessens the
strain of using expensive airlift and reduces the reliance on slower
sealift deliveries. The value of prepositioned stocks was demonstrated
during operations in Iraq. The military used equipment and supplies
stored at land sites in the region and offloaded much of the stocks
from its prepositioning ships. Having the equipment prepositioned
allowed troops to fly in, deploy rapidly, and train with prepositioned
equipment before beginning combat operations in Iraq. As the ongoing
war has depleted those items, the Army is in the process of
reconstituting its prepositioned equipment and supplies.
The Department of the Army provides strategic-level guidance for the
Army's prepositioned stock program and allocates funding for
prepositioned stock requirements. The Army Materiel Command provides
the overall management of the Army's prepositioned stocks program.
Within Army Materiel Command, the Army Sustainment Command manages the
operations and maintenance of the program, and issues the stocks in
theater in support of contingency operations or exercises. At each
prepositioned stock location, the Army Sustainment Command also
provides an Army Field Support brigade and battalion for day-to-day
maintenance and operational management of the program.
The Army's prepositioning program involves three primary categories of
stocks stored at land sites and aboard prepositioning ships: combat
brigade sets, war reserve sustainment stocks, and operational projects
as described below.
* Army Combat brigade sets:
- Are designed to support 3,000 to 5,000 soldiers.
- Include heavy weaponry such as tanks and Bradley fighting vehicles.
- Include support equipment such as trucks and High Mobility Multi-
purpose Wheeled Vehicles.
- Include spare parts and other sustainment stocks to support the early
stages of a conflict.
* War reserve sustainment stocks include:
- Items to sustain the battle unit until resupply can be ramped up to
wartime levels and arrive in theater.
- War Reserve Secondary Items include rations, clothing and textiles,
construction and barrier materiel, medical supplies, repair parts, and
major assemblies (reparables and consumables).
* Operational project stocks include:
- Authorized material above unit authorizations designed to support
Army operations or contingencies.
- Equipment and supplies for special operations forces, bare base sets,
petroleum and water distribution, mortuary operations, and prisoner-of-
war operations, among others.
The Army's April 2006 Report to Congress Addressed the Areas Required,
But the Army's Strategy is Evolving:
The Army's April 2006 report to Congress on the status of its
prepositioned program addressed the areas required by Congress, but the
Army has significantly shifted its prepositioning strategy since then.
The Army's report included descriptions of operational capabilities as
outlined in the Army Prepositioned Stocks Strategy 2012; addressed the
maintenance condition of prepositioned equipment; and noted recent
efforts to improve management and maintenance oversight of the program,
including forming an independent inspection team. However, since the
report's publication, the Army has begun a reexamination of its overall
prepositioning strategy. According to the Army, this shift was based on
insights gained from the 2006 Quadrennial Defense Review, but Army
officials told us that recent budget reprogramming decisions and
worsening Army-wide equipment shortfalls also influenced the
reexamination. The Army concluded that its Prepositioned Stocks
Strategy 2012 was no longer viable and began work on a revised strategy
that was approved by Army leaders in late August 2006 and is expected
to be completed by the end of 2006.
Army Report Addresses Areas Required by Congress:
The Army's report to Congress addressed the required areas included in
the National Defense Authorization Act for Fiscal Year 2006. The Army
determined that over $4 billion would be needed to fill equipment,
secondary item, and facility shortfalls. The Army reported that
additional covered storage and maintenance space was needed at
prepositioning sites in Southeast and Northeast Asia as well as at the
Charleston, South Carolina, facilities used to maintain afloat stocks
envisioned under the 2012 strategy. Further, it indicated that the
facilities in Europe would be sufficient to meet the prepositioned
requirements once the construction project in Italy was completed. The
equipment sets at each location were at a high percentage of mission
capability, it reported, with the exception of Kuwait. The equipment
sets in Kuwait had been issued in support of Operation Iraqi Freedom
and Operation Enduring Freedom, and by 2006 had a low mission-
capability rate. It did stipulate, however, that the equipment set was
undergoing repair, recapitalization, and replacement.
Regarding the program's management and maintenance oversight, the
report acknowledged that weaknesses in the quality control program had
been revealed by both internal and external audits, including GAO's
September 2005 report. The Army Sustainment Command created the
Logistics Support and Evaluation Team to address identified quality
control problems. According to the Army report, the team provides an
additional layer of review to ensure that the Army Prepositioned Stock
readiness levels reported are accurate and that sufficient quality
assurance measures are in place.
Army Prepositioning Stocks Strategy 2012 Is No Longer Viable:
Since the release of its report to Congress in April 2006, several
decisions led the Army to conclude that its existing strategy was no
longer viable. In particular, an internal DOD reprogramming action
required the Army to offload a Heavy Brigade Combat Team equipment set
stored on a prepositioned ship and redistribute it to meet existing
equipment shortfalls and reduce costs. The Army had two equipment sets
already aboard prepositioned ships and planned to upload a third set in
2013. The reprogramming action directed the Army to offload the third
equipment set. However, because the third equipment set had not yet
been created, the Army decided to offload one of the existing equipment
sets instead to meet the reprogramming guidance. This decision
effectively reduced the Army's program in the near term from two to one
heavy brigade combat team afloat, with implications for the operational
plans of the regional combatant commanders.
Several factors combined to create a ripple effect that impacted the
viability of the Army Prepositioned Stocks 2012 Strategy. First, the
department told us the Army changed its strategy based on insights
gained from the 2006 Quadrennial Defense Review. Also, Army officials
told us that equipment shortfalls made it difficult for the Army to
meet the requirements in the strategy at least partly because Army
prepositioned stock equipment was continuing to be drawn to support
ongoing operations. Also, the Army transformation to modularity
exacerbated shortfalls in certain types of equipment and created
excesses in others. In addition, the Army eliminated most of the
remaining facilities and prepositioned stocks from Western Europe but
was completing a new maintenance and storage facility in Italy which
needed a mission. As a result, the Army's 2006 report was outdated soon
after its publication and should not be used by Congress or DOD for
funding decisions.
The Army Faces Major Strategic and Management Challenges As It Revises
and Implements Its Prepositioning Program:
The future success of the Army's prepositioning program depends not
only on how well the Army aligns its efforts with those of the
department as a whole, but also on how well long-standing management
issues are addressed as the new strategic plan is implemented. The Army
expects to finalize its implementation plan for the revised
Prepositioned Stocks Strategy 2013 by December 31, 2006, but DOD will
not complete its departmentwide strategy before mid-April 2007.
Further, problems persist with the Army's management of its secondary
item and operational project stocks programs, including lingering
questions about the overall requirements and the lack of reliable
readiness measures for these programs. In addition, the lack of a
comprehensive prepositioning storage and maintenance facilities plan
contributes to increased maintenance costs and uncertain future
facility requirements. Finally, the Army has not demonstrated adequate
oversight to ensure the proper maintenance condition of prepositioned
stocks.
Alignment between Army's Prepositioning Strategy and Anticipated DOD
Strategy Remains Uncertain:
The Army is developing a new prepositioning strategy to address recent
decisions that have affected the viability of its existing plan.
According to Army officials, the new strategy is intended to promote
greater flexibility in the use of prepositioned stocks while
concurrently increasing the Army's access to unstable areas. While
continuing to rely on stocks in South Korea, the proposed strategy
includes significant changes to the program--among them, less reliance
on heavy combat equipment afloat and expanded reliance on heavy
equipment in Kuwait, Qatar, and Italy. The Army's draft revisions to
its prepositioning strategy were approved by the Army Vice-Chief of
Staff in late August 2006. The Army established an Integrated Process
Team to develop a comprehensive implementation plan for the new
strategy and to provide direction to working groups that would assess
the areas of strategy, capabilities, equipping, facilities, and
funding. The Army plans to have this task completed by late December
2006. However, since the Army's Integrated Process Teams were still
performing their work, we could not evaluate progress at the time we
completed our review.
DOD has efforts underway that will address gaps identified in GAO's
September 2005 report but have implications for the Army's efforts.
First, to address gaps in departmentwide oversight, DOD convened a
working group that includes representatives from the Office of the
Secretary of Defense, Joint Staff, Defense Logistics Agency, the Army,
Joint Forces Command, and the other services to develop joint doctrine
for the prepositioning programs. This group was also working to update
the departmental-level directive that describes responsibilities and
provides broad guidance to the services during our review. While the
efforts begun by this group represent progress, DOD had not yet
developed joint doctrine for the program at the time we completed our
work. Second, DOD also initiated a study in the spring of 2006 to
address the need for a departmentwide prepositioning strategy to guide
the department's future prepositioning efforts. This study was a follow-
on to the 2005 Mobility Capabilities Study that, while identifying the
importance of prepositioning in meeting mobility objectives, along with
interrelated airlift, sealift, and basing decisions, recognized the
need for further analysis of prepositioning. Thus, the DOD-wide
prepositioning study will determine how and what prepositioned
equipment should be used and whether the prepositioned assets are in
the best locations to support the department's priorities and posture
plans. According to DOD officials, this DOD-wide prepositioning study
was not scheduled to be finished until the spring of 2007 at the
earliest. However, on October 17, 2006, Public Law 109- 369 was enacted
directing the Secretary of Defense to complete its DOD- wide
prepositioning strategy by mid-April 2007.
DOD and Army officials told us during the course of our review that
they discuss such strategy issues during their joint working group
meetings and felt that they have coordinated their prepositioning
plans. However, if the two strategies are not synchronized, DOD could
be limited in developing an optimal DOD-wide strategy because the Army
strategy already exists. Alternatively, the Army could be at risk of
filling requirements that will be superseded when the DOD-wide strategy
is ultimately issued. In fact, DOD anticipates that when the DOD-wide
strategy is issued the Army will have to modify its service-specific
prepositioning strategy to align with the new requirements. Finally,
since prepositioning is interconnected with airlift, sealift, and
overseas basing, the Army's decisions will have an as-yet undetermined
effect on lift requirements and basing.
Despite Recent Efforts to Improve Requirements Setting for Secondary
Item and Operational Project Programs, the Army Does Not Have Reliable
Requirements or Readiness Information:
Despite recent efforts to improve requirements setting, the Army has
not yet determined reliable secondary item and operational project
requirements. In its efforts to reassess secondary item requirements,
the Army ran its requirements-determination model, called the Army War
Reserve Automated Process, in 2005. It had not previously run the model
since 1999, even though Army guidance at that time called for
requirements to be updated every 2 years. Because the model yielded
questionable outputs, Army officials told us they were conducting a
management review to scrub the requirements and help to determine
investment priorities. Army officials said they expect requirements to
be significantly adjusted as a result of their reviews. For example,
the Army has already lowered the U.S. Army Europe meals-ready-to-eat
stockage levels to match the smaller force structure there. This action
resulted in over 1 million meals being made available to fill other
high-priority requirements. In addition, the Army War Reserve Automated
Process that is used for computing secondary item requirements will now
be updated annually instead of biennially.
Addressing these problems is critical for ensuring Army readiness in
future conflicts. Experiences in Iraq showed that prepositioned
secondary item stocks did not adequately support the troops in combat
operations. Secondary items encompass a wide range of inventory,
including critical readiness-enabling spare parts. In 2005, we reported
that inaccurate requirements and insufficient funding led to shortages
in critical items during Operation Iraqi Freedom.[Footnote 11] For
example, demand for nonrechargeable lithium batteries and track shoes
for armored vehicles were more than three times greater than the stated
requirements for those items. We concluded that these shortfalls were
directly traceable to problems in requirements computation.
In addition to critical shortfalls, lessons learned also show
considerable mismatches between what was available in prepositioned
stocks and what units actually needed. In retrospect, the Army did a
poor job in forecasting what it would need. As a result, it had to use
scarce and expensive airlift to get needed stocks to the troops in the
field, essentially defeating the purpose of prepositioning such items
in the first place. Subsequent analyses have detailed the extent of the
mismatches between stock levels, requirements, and actual usage. For
example, most of the 16,000 different spare parts that were actually
positioned in Kuwait were ultimately shipped back from the theater
because they were not needed by the forces there, according to a RAND
study commissioned by the Army.[Footnote 12] Most spare parts had to be
airlifted to the theater, according to RAND. In addition, RAND compared
the Army's requirements for prepositioned spare parts to the actual
demands during 2003 in Kuwait and found considerable mismatches. Only
about half of the spare parts the Army thought would be required for
prepositioned stocks were actually demanded in theater by Army units
during 2003.
According to Army officials, secondary items have historically not been
fully funded at least partially because of concerns over the accuracy
of the requirements. As shown in Operation Iraqi Freedom, inaccurate
requirements resulted in limited demand for some items and excessive
demand for others, greatly surpassing the on-hand inventory. The Army
had to employ high-cost air transportation to bring needed items to the
warfighter.
As with secondary item requirements, long-standing issues exist within
the operational project program--which includes important items like
chemical defense equipment, pipeline systems, mortuary units, and bare
base sets for housing soldiers in austere environments, among other
items not typically part of unit equipment. These sets are typically
kept to meet the specific needs of regional combatant commanders, and
Army regulations require that they be revalidated every 5 years to
ensure that the sets are still needed for an operational plan. Despite
this requirement, the most recent revalidation for many of the projects
was conducted in 1998. However, in response to our recommendation in
2005 that this long-standing problem be addressed, the Army initiated a
revalidation of its Operational Project Stocks in April 2006.
By October 2006, when we completed our work, the Army had queried Army
commands worldwide to revalidate the needs for the various sets and had
obtained validations for most of the sets. However, Army officials told
us that they have already taken actions to eliminate projects that are
no longer needed and are planning to conduct a management review of
this program to further refine the requirements. To date, the Army has
consolidated some projects and has cancelled other projects that were
no longer needed. For example, three projects to support aerial
delivery operations were cancelled because they were no longer required
to support current operational plans. In addition, United States Army,
Europe has cancelled two projects for bridging and aircraft matting
because they no longer meet current operational requirements.
One of the most significant consequences of having questionable
requirements underpinning the programs is that it makes it difficult to
assess their overall readiness, and the risk associated with
shortfalls. Typically, the Army measures readiness of prepositioned
equipment programs by assessing the inventory levels against
requirements as well as the maintenance condition of on-hand equipment.
However, the Army does not routinely measure or report readiness for
the secondary item and operational project programs. According to Army
and DOD officials, shortfalls in secondary items and some operational
projects are identified in combatant command priority lists and through
joint quarterly readiness reports to the Joint Staff, but not as part
of the Army's readiness reporting system. This situation is largely
unchanged since 1998, when we recommended that the Army fix
requirements problems and develop readiness-reporting mechanisms for
these programs.[Footnote 13]
Despite their lower priority relative to combat equipment programs,
secondary item and operational project programs can be critical during
a war. They contain items such as spare parts that are essential to
keep the combat equipment operational, as well as chemical defense
equipment and other items likely to be needed during the early stages
of a conflict. The budgetary stakes are high: according to the April
2006 report to Congress, the Army estimated that it had a shortfall of
about $1.7 billion in secondary items alone. Without sound
requirements, the Army cannot reliably assess the readiness of its
programs. Once sound requirements are set, the Army will need reporting
mechanisms to assess their readiness and the impact of any shortfalls.
In the absence of such mechanisms, the Army cannot make sound risk-
based decisions about what investments it should make in the programs
in the future.
Army Lacks a Comprehensive Prepositioning Storage and Maintenance
Facilities Plan:
Although the Army reported maintenance and storage facility shortages
to Congress, it lacks a comprehensive plan for maintenance and storage
facilities for prepositioned stocks. According to Army officials,
facility shortfalls are a concern in Kuwait and Korea, while facility
excesses were an issue in Italy. Army policy recommends storing
prepositioned equipment in controlled-humidity storage facilities,
since outdoor storage results in increased maintenance costs. However,
requirements for these facilities are currently uncertain. Until the
Army develops a comprehensive plan that identifies how prepositioned
equipment will be utilized and where it will be located for the long
term, the existing facilities problems can not be addressed.
Outdoor Storage of Equipment Results in Millions of Dollars of
Increased Maintenance Costs:
The Army's lack of adequate storage facilities for prepositioned
equipment has led to equipment being stored outdoors, leaving it
relatively unprotected from moisture, sand, and other elements and thus
contributing to a number of maintenance problems, including
corrosion.[Footnote 14] Army Regulation 740-1 stipulates that
prepositioned equipment should be stored in controlled-humidity storage
facilities. If controlled-humidity storage is not available, then
covered storage space is preferred. More frequent inspections are
required for equipment stored outside.
Inadequate storage facilities in both South Korea and Kuwait have
resulted in outdoor storage of prepositioned equipment. Figure 1 shows
the storage situation in Kuwait, with prepositioned equipment stored at
outside locations.
Figure 1: Existing Outdoor Storage in Kuwait:
[See PDF for image]
Source: U.S. Army.
[End of figure]
Outdoor storage accelerates equipment deterioration and increases costs
due to additional maintenance requirements. For example, if tanks are
stored outside, preventive maintenance inspections must be performed
every 30 days. If they are stored in controlled-humidity warehouses,
inspections are only performed every 6 months. According to Army
officials, maintenance inspections and repairs for equipment stored
outdoors cost about four times that of equipment being stored in
controlled-humidity warehouses. Army officials estimate that it costs
an additional $24 million per year per heavy brigade combat team to
maintain the equipment in outdoor storage.
Future Facility Requirements for the Army Prepositioning Program Remain
Uncertain:
Facility requirements for the Army's prepositioning program depend on
equipment requirements, and as was discussed above, these have not yet
been established. Consequently, facility requirements are uncertain.
Prepositioned equipment can be used as rotational--that is, equipment
provided to units arriving in theater for deployment; training--that
is, equipment provided to units for training exercises but then
returned to the storage location; or simply as stored prepositioned--
equipment that is stored for undetermined future use. According to Army
officials, there will be increased maintenance and maintenance
facilities requirements if prepositioned equipment is to be used for
training or to support a rotational presence in the region.
Concurrently, there may be a decreased requirement for humidity-
controlled storage space, depending on how the rotation is scheduled.
Rotational unit equipment will have more repair requirements than
stored units, due to damage and wear. If the prepositioned equipment is
maintained solely for future use, more storage facilities and less
maintenance capability will be needed. In Kuwait, the Army has not
determined whether the prepositioned equipment will be used for units
rotating in and out of theater, used as a combat brigade team training
set, or stored.
Storage facilities in Kuwait will likely be needed, but until Army
officials decide how the equipment in Kuwait will be used, they will
not be able to determine the type and amount of facilities needed.
Storage facilities intended for prepositioned equipment at Camp Arifjan
are currently being used as headquarters buildings for Army Central
Command, and it is not clear when these buildings will revert to their
storage function. While the Army is exploring numerous options for
providing covered storage of the equipment in Kuwait, ranging in cost
from $20 million to $37 million, none are currently funded.
Additional maintenance and storage facilities are needed in South Korea
to support the prepositioned equipment at Camp Carroll. The Army has
already broken ground on a new maintenance facility that is expected to
be operational in November 2007. The Army has plans to build an
additional 200,000 square feet of storage space at a cost of $18.6
million. This project is currently unfunded, yet it has a target
completion date of 2012. However, while the Army is addressing the
prepositioning facility shortfalls at Camp Carroll, it is considering
relocation of the set to another site near a port further south. Army
officials believe it would provide for more flexible use of the
prepositioned assets. If the Army decides to move the equipment set,
the additional covered storage at Camp Carroll may be unnecessary.
The Army's new strategy also includes a plan to store heavy equipment
at a newly constructed Italian site, to make use of a facility that
previously had no mission. When initially approved, the construction
project was intended to support the storage of a prepositioned combat
brigade team equipment set, but this plan was eliminated in the 2012
strategy. However, since the contract for this project had already been
awarded and construction was underway, the Army decided to complete the
construction. Army officials stated that it would be more costly to
cancel the project than to finish it. The cost for the initial phases
of the construction project is approximately $48 million. A $5 million
ammunition maintenance and storage facility is also planned as part of
this construction project.
Figure 2 shows the new facility, including seven controlled-humidity
warehouses, a maintenance facility, an administration building, and a
brake test facility and wash rack.
Figure 2: Overview of Military Construction Project at Camp Livorno,
Italy:
[See PDF for image]
Source: U.S. Army.
[End of figure]
The new Army strategy includes a prepositioned combat brigade team
equipment set at Livorno with the intention of using the port to upload
the prepositioned equipment onto ships as needed. The Army has also
been discussing using the equipment in Livorno for rotational training
exercises in Eastern Europe in locations like Bulgaria and Romania.
However, specific plans for this had not been developed.
Afloat stocks are reduced in the Army's new 2013 prepositioning
strategy, but the Army plans to continue to utilize the Charleston,
South Carolina, prepositioning facility to unload, repair, and reload
prepositioned equipment from afloat prepositioning ships. The facility
was originally used to maintain Polaris missiles and was converted by
the Army to provide maintenance support of the prepositioned afloat
fleet. According to Army officials, upgraded maintenance and storage
facilities will be required to support the facility's prepositioning
mission but the implications of the new strategy on facilities have not
yet been determined.
Table 1 shows the current status of maintenance and storage facilities
at selected Army prepositioning locations.
Table 1: Status of Facilities at Selected Army Prepositioned Stock
Locations:
Location: Europe;
Status:
* Military closed three prepositioned sites in Europe at Bettemborg,
Luxembourg; Eygelshoven, Netherlands; and Hythe, United Kingdom.
* First two phases of a three-phase maintenance and storage facility
project are nearing completion in Livorno, Italy at a cost of $48
million.
Location: Charleston, S.C;
Status:
* The Army is proposing several projects for additional storage and
improved maintenance capability for the facility.
Location: South Korea;
Status:
* Construction of a new maintenance facility is currently underway at
Camp Carroll with completion due in November 2007.
* Planning for additional 200,000 sq. ft. storage capability.
* Exploring potential relocation of set to Kwang Yang.
Location: Kuwait;
Status:
* Existing storage facility is currently being used to house Army
Central Command administrative offices, which leaves prepositioned
assets stored outside.
* Army Materiel Command is considering permanent and temporary
maintenance and storage capability alternatives to protect
prepositioned equipment from the harsh desert climate.
Location: Qatar;
Status:
* Seventeen of 26 existing storage facilities have been diverted to
Army priority missions; some diverted warehouses may be returned to
Army Prepositioning Stocks use at some future date.
Source: GAO analysis, developed from Army data.
[End of table]
Maintenance Oversight of Prepositioned Stocks Has Improved in South
Korea, but Needs Improvement in Kuwait:
Management oversight of the maintenance of equipment in Korea has
improved since we published our report in 2005. Previously, significant
issues and problems were found with the mission capability of stocks in
South Korea. We stated that despite reports of high mission capability,
the majority of the stocks in South Korea were not mission capable.
During our May 2006 visit to South Korea, we observed that the Army had
hired additional personnel to bring the equipment up to full mission
capability and ensure that the equipment was properly maintained. A new
organizational structure was established that created clear lines of
responsibility and standard operational procedures for each aspect of
the cyclic maintenance program. A training program for production
control was established for both U.S. and South Korean employees, and
there was a continued emphasis on the need for oversight.
While the problems we identified in 2005 in South Korea have been
corrected, recent inspections of contractor-maintained equipment in
Kuwait revealed a high percentage of equipment failure, indicating that
maintenance oversight is a continuing problem. Analyzing data available
at the site, we found that 28 percent of the prepositioned equipment in
Kuwait submitted for government acceptance had failed quality assurance
testing between June 2005 and June 2006. However, the maintenance
battalion had not routinely tracked this information or monitored this
important performance measure.
Additionally, much of the equipment recently certified by the
contractor during preventative maintenance inspections failed random
governmental checks. Beginning in May 2006, the quality
assurance[Footnote 15] team began performing random preventative
maintenance checks on equipment items inspected and certified by the
contractor within the previous 10 to 14 days. Nearly half of the 49
pieces of equipment sampled during May and June 2006 by the quality
assurance inspectors had nonmission-capable faults needing repair. We
accompanied inspectors on three random inspections. The nonmission-
capable faults we observed included inoperable lights, fluid leaks,
lack of battery power, and an inoperable rear door on a Bradley
Fighting Vehicle. Army officials told us this failure rate was not
acceptable and that they had informed the contractor it needed to
improve performance. Yet Army officials recently reported successful
issuance in August 2006 of some of the prepositioned equipment for
units heading to Iraq. This inspection failure rate raises questions
about the true mission capability of the prepositioned equipment, and
it demonstrates the need for rigorous management oversight of the
maintenance contractor in Kuwait. Without improved oversight of
maintenance, prepositioned equipment and supplies could be less than
mission capable when needed.
Conclusions:
While prepositioning is considered critical to DOD's ability to meet
its mobility needs, the department does not yet have a clear strategy
laid out that identifies the role that prepositioning will play in the
21st century. The Army took steps to revise its prepositioning strategy
in the latter part of 2006; however, its efforts are not fully
synchronized with the evolving DOD-wide strategy. The Army's decisions
today have profound future implications for the entire department and
potentially affect our ability to respond to conflict. The primary risk
of having the Army develop its strategy in advance of a DOD-wide
strategy is that the Army could develop plans without an understanding
of how the Army and other services' programs will fit together or,
alternatively, limit the options of the department because it must
incorporate the Army's plans into the overall strategy. The importance
that prepositioned stocks are envisioned to have in the future
underscores the need for DOD-wide consensus on the direction and
priority for the programs, and the necessity of strong leadership and
direction from the top levels of DOD. The choices may well be
difficult. Unlike the period following the end of the Cold War, the
Army no longer has an excess of relatively modern combat and support
equipment. Depending on the strategy that is eventually chosen,
billions of investment dollars could be required to recapitalize
prepositioning programs and build an infrastructure to support them.
Alternatively, should the Army and DOD decide to focus less on
prepositioned stocks, this decision will likely have a ripple effect on
airlift and sealift needs. A DOD-wide strategy would become the
foundation for an investment plan that balances costs and risks and
would guide the department as it chooses where it will invest in an
environment that is increasingly becoming resource constrained.
Setting and aligning broad strategies, however, will not be enough to
ensure success in the Army's program over the longer term. Once the DOD-
wide strategy is set and the Army's efforts are aligned with it, the
Army must turn its attention to the fundamentals of program management.
Dozens of reports from GAO and other organizations point to pervasive
management problems in determining requirements and ensuring program
readiness, as well as in providing adequate storage and maintenance for
prepositioned equipment. To its credit, the Army recognizes this and
has taken critical first steps toward redefining its prepositioning
program and building a plan for its implementation. However, focused
and sustained attention will be required to overcome these long-
standing issues.
Recommendations for Executive Action:
We recommend that the Secretary of Defense direct the Secretary of the
Army to take steps to synchronize the Army's prepositioning strategy
with the DOD-wide strategy to ensure that future investments made for
the Army's prepositioning program align with the anticipated DOD-wide
prepositioning strategy.
Once the strategic direction is aligned with the DOD strategy, we
recommend that the Secretary of the Army develop an implementation plan
that:
* completes ongoing reevaluation of the secondary item and operational
project stock requirements as well as establishes systematic readiness
measurement and reporting of secondary items and operational project
stock programs,
* identifies the optimal mix of storage and maintenance facilities at
each location to support the emerging strategy, and:
* prescribes oversight requirements for the maintenance of
prepositioned equipment to ensure that equipment is ready for combat.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD generally concurred
with our recommendations but stated that it had already taken steps to
address the recommendations and that further actions are not needed. We
acknowledge that the Army and the department have taken some initial
steps; however, we continue to believe that our recommendations have
merit and that additional actions and sustained management attention
will be needed to ensure the viability of the Army's prepositioning
program as part of the overall departmentwide effort to meet mobility
needs. DOD also commented that our report contained misleading
information and provided technical comments to improve the accuracy and
clarity of the report. We disagree that the facts in our report are
misleading and have addressed each of the department's technical
comments in appendix III.
DOD partially concurred with our first recommendation that the
Secretary of Defense take steps to synchronize the Army's
prepositioning strategy with the emerging DOD-wide strategy, and stated
that the Army had developed a service-specific strategy that is being
incorporated into ongoing mobility studies and the emerging DOD-wide
effort. The department stated that, since the Army is participating in
ongoing studies, further direction is not required. Some of the
technical comments DOD provided also addressed the strategy-setting
issue, but seemed to contradict the overall response. For example, DOD
stated that the timing of the two strategies could cause "disconnects"
and that the Army will have to modify its strategy when the DOD-wide
strategy is issued. Since DOD's comments lack internal consistency, it
is not clear to us what the department intends to do to address the
recommendation. As our report points out, successful management
practices dictate that strategy setting should begin at the top, and
that strong leadership will be needed from the department to ensure
that the programs of the Army--as well as other military services--are
aligned with the overall departmentwide strategy, not the reverse.
Moreover, taking a service-centric approach to prepositioning may
preclude opportunities for innovation, or lead to duplication across
the department. Prepositioning should be viewed in a joint context, as
part of broader mobility objectives. The ultimate departmentwide
strategy should not just cobble together the plans of the individual
services into a departmentwide strategy. In our view, as it develops
the DOD-wide strategy, the department should take advantage of the
opportunity to reexamine its approach to prepositioning as part of
broader mobility considerations including its interrelationship with
airlift and sealift.
In the technical comments, the department also stated that the Army
should not be criticized for its timing and lack of synchronization
with a DOD strategy that had not yet been issued. The Army did expedite
its strategy revision during the course of our review, completing it
from start to finish in the latter half of 2006. The Army completed
this revision while a broader strategy effort--specifically, a follow-
on to the Mobility Capabilities Study focused on the future of
prepositioning--was ongoing but had an unclear completion date. In a
September 2005 report, we recommended that DOD develop a departmentwide
strategy to set direction for and underpin the prepositioning programs
of the services but this has still not been completed. Underscoring its
interest in prepositioning--and consistent with our previous
recommendation--the John Warner National Defense Authorization Act for
Fiscal Year 2007 required the department to finalize a departmentwide
prepositioning strategy by April 2007. Had the department implemented
our recommendation in a more timely fashion, this synchronization
concern would be moot and DOD may not have been called upon to
establish a strategy for the department's prepositioning programs.
The department concurred with our second recommendation that, once the
Army's strategy is aligned with the DOD-wide strategy, the Secretary of
the Army should develop an implementation plan to address the
requirements, readiness reporting, facilities, and maintenance
oversight issues that we identified in our report. The department
stated that the Army had included an implementation plan in its revised
prepositioning strategy that addressed these issues and that the
implementation plan had been aligned with a joint staff instruction
published in November 2006 that provides logistics planning guidance
for prepositioning and a department directive dated December 2003 that
provides war reserve materiel policy. As a result, the department
stated that no additional direction is required. We disagree. The
Army's implementation plan was to have been completed in December 2006,
but was still unavailable as of the end of January 2007. As a result,
GAO could not determine whether the elements of our recommendation have
been addressed. However, we reviewed the recent logistics planning
guidance and while the instruction provides general logistics planning
guidance for prepositioned stocks, there are few specifics about
requirements setting and readiness reporting for secondary items and
operational project stocks, facilities, or maintenance oversight. We
also reviewed the identified department guidance. While it does require
the determination of war reserve materiel requirements, and annual
reports of the existing levels of these items, we do not believe this
is a systematic reporting of readiness. In fact, our 2005 report found
that the department was not enforcing the readiness-reporting
provision, and planned to rescind it. Neither Instruction addresses the
optimum mix of storage and maintenance facilities or prescribes
oversight requirements for the maintenance of prepositioned equipment
to ensure that it is combat ready. Moreover, since these issues have
been long-standing, recognized both in prior GAO reports and
assessments made by the Army's own audit organizations, we continue to
believe that additional direction is needed.
We will send copies of this report to the Secretary of Defense and the
Secretary of the Army. We will also make copies available to others
upon request. In addition, this report will be available at no charge
on the GAO Web site at [Hyperlink,http://www.gao.gov]. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report.
If you or your staff has any questions, please contact me at (202) 512-
8365. Key contributors to this report are listed in appendix IV.
Signed by:
William M. Solis, Director:
Defense Capabilities and Management:
[End of section]
Appendix I: Scope and Methodology:
To assess whether the Army's report comprehensively addressed the
required reporting areas in Public Law 109-163, we reviewed the Army's
prepositioned stocks program. We obtained the Army's report and
reviewed and compared it to the legislative mandate as well as other
documents including Department of Defense (DOD) regulations, Army
regulations that govern storage and maintenance of prepositioned
stocks, and the Army Prepositioned Stocks Strategy 2012. We also
reviewed Inspector General and Army Audit Agency reports on
prepositioning issues as well as any relevant GAO reports. We
interviewed officials in the Department of Defense Joint Staff,
Department of the Army, Army Materiel Command, and the Army Sustainment
Command and its subordinate units at each prepositioning location. We
also collected and analyzed internal Army reports on inventory and
readiness to verify the reported inventory levels and readiness rates
of prepositioned stocks.
To assess the major challenges facing the Army as it revises and
implements its prepositioning program, we reviewed the Army
Prepositioned Stocks Strategy 2012 and DOD regulations and documents
pertaining to a joint prepositioning strategy, along with relevant past
GAO, Inspector General, and Army Audit Agency reports. We interviewed
officials from the Department of the Army, the Office of the Secretary
of Defense for Policy, the Department of Defense Joint Staff, the Army
Materiel Command, and the Army Sustainment Command and its subordinate
units at prepositioning locations in Europe, South Korea, South
Carolina, and Kuwait. We conducted site visits to Army prepositioned
stock facilities at each location to observe firsthand the current
status of their storage and maintenance facilities and also reviewed
existing maintenance and storage procedures and oversight processes. We
also examined the Army's planned revisions to its existing Army
Prepositioned Stocks Strategy 2012 and the efforts on behalf of DOD to
develop an overarching prepositioning strategy. We examined the level
of coordination between the Army and DOD with regard to the new
prepositioning strategies currently under development. We could not
fully assess these strategies, as they are still in the process of
being developed. We also documented current inventory levels, funding
for the program, and equipment readiness rates by collecting and
analyzing internal Army reports on inventory, funding, and readiness.
We reviewed past reports prepared by GAO, the Army Audit Agency, the
Army Materiel Command Inspector General, and the Army Logistics Support
and Evaluation Team that identified problems with the prepositioning
program.
We conducted our review from February 2006 through October 2006 in
accordance with generally accepted government auditing standards. We
reviewed available data for inconsistencies and also verified with the
Army information technology contractor in Kuwait that they review and
validate the input data we used in the report. We determined that the
data we used were sufficiently reliable for the purpose of this report.
We interviewed officials, and obtained documentation when applicable,
at the following locations:
* U.S. Army Headquarters, Washington, D.C.
* U.S. Army Material Command, Ft. Belvoir, Virginia.
* U.S. Army Forces Command, Ft. McPherson, Georgia.
* U.S. Army Central Command, Ft. McPherson, Georgia.
* U.S. Army Sustainment Command, Rock Island, Illinois.
* U.S. Army Europe, Campbell Barracks, Germany.
* 8th U.S. Army, Yongsan Garrison, South Korea.
* U.S. Army Field Support Brigade, Seckenheim, Germany.
* Material Support Center - Korea, Camp Carroll, South Korea.
* U.S. Army Field Support Battalion - Livorno, Camp Livorno, Italy.
* U.S. Army Field Support Battalion - Northeast Asia, Camp Carroll,
Korea.
* U.S. Army Field Support Battalion - Southwest Asia, Camp Arifjan,
Kuwait.
* U.S. Army Field Support Battalion-Afloat - Charleston, South
Carolina.
Unified Commands:
* U.S. Forces Europe, Patch Barracks, Germany.
* U.S. Forces Korea, Yongsan Garrison, South Korea.
* Joint Chiefs of Staff, J-4, Washington, D.C.
[End of section]
Appendix II: Past Products Identifying Challenges Facing the Army and
DOD Regarding Prepositioning Programs:
The Army's prepositioning program has faced a number of long-standing
challenges including inadequate oversight and management; equipment and
facility excesses and shortfalls; and invalid, inaccurate, poorly
defined, and otherwise questionable requirements. In addition to
problems with the prepositioning program, the Army has also had
difficulty associated with the successful implementation of strategic
plans and programs. GAO, the Army Audit Agency, Army's and the
Department of Defense's (DOD) Inspector Generals along with others have
called attention to these problems in products issued over the years.
Table 2 provides summaries of the challenges to the Army and DOD's
prepositioning programs along with program implementation concerns
identified in past GAO reports and testimonies issued between January
1996 and September 2006. Table 3 provides summaries of similar issues
identified in select products released by other organizations during
the same time period.
Table 2: GAO Products:
Title: Force Structure: Army Needs to Provide DOD and Congress More
Visibility Regarding Modular Force Capabilities and Implementation
Plans, GAO-06-745 (September 2006);
Key challenges identified: In September 2006, we reported that the Army
had not completed key details of the equipping strategy for its modular
force and, as a result, it is unclear what level of equipment units
will have, how this strategy may affect the Army's equipment funding
plans, and how well units with low priority for equipment will be able
to respond to unforeseen crises. We also reported that the Army lacks a
comprehensive and transparent approach to measure progress against its
modularity objectives, assess the need for further changes to modular
designs, and monitor implementation plans. We noted that without
performance metrics and a comprehensive testing plan, decision makers
will not have full visibility into how the modular force is currently
organized, staffed, and equipped and, as a result, will not have
sufficient information to assess the capabilities, cost, and risks of
the Army's modular force implementation plans.
Title: DOD's High-Risk Areas: Challenges Remain to Achieving and
Demonstrating Progress in Supply Chain Management, GAO-06-983T (July
2006);
Key challenges identified: In July 2006, we testified that DOD has
continued to make progress implementing the 10 initiatives in its
supply chain management improvement plan, but it will take several
years to fully implement these initiatives. We noted that although DOD
has incorporated several broad performance measures in its supply chain
management improvement plan, it continues to lack outcome-focused
performance measures for many of the initiatives, making it difficult
to track and demonstrate progress toward improving the three focus
areas of requirements forecasting, asset visibility, and materiel
distribution. We additionally reported that although DOD's plan
includes four high-level performance measures that are being tracked
across the department, these measures do not necessarily reflect the
performance of the initiatives and do not relate explicitly to the
three focus areas. Further, DOD's plan does not include cost metrics
that might show efficiencies gained through supply chain improvement
efforts.
Title: Force Structure: Capabilities and Cost of Army Modular Force
Remain Uncertain, GAO-06-548T (April 2006);
Key challenges identified: In April 2006, we testified that although
the Army is making progress creating modular units, it faces
significant challenges in managing costs and meeting equipment and
personnel requirements associated with modular restructuring in the
active component and National Guard. We noted that the Army does not
have a comprehensive and transparent approach to measure progress
against stated modularity objectives and assess the need for further
changes to modular designs. We additionally testified that the Army has
not established outcome-related metrics linked to many of its
modularity objectives and although it is analyzing lessons learned from
Iraq and training events, the Army does not have a long-term,
comprehensive plan for further analysis and testing of the designs and
fielded capabilities. Finally, we testified that without performance
metrics and a comprehensive testing plan, neither the Secretary of
Defense nor congressional leaders will have full visibility into the
capabilities of the modular force as it is currently organized,
staffed, and equipped.
Title: Defense Logistics: Preliminary Observations on Equipment Reset
Challenges and Issues for the Army and Marine Corps, GAO-06-604T (March
2006);
Key challenges identified: In March 2006, we testified that both the
Army and Marine Corps will face a number of ongoing and long-term
challenges that will affect the timing and cost of equipment reset,
such as Army and Marine Corps transformation initiatives, reset of
prepositioned equipment, efforts to replace equipment left overseas
from the active, National Guard, and Reserve units, as well as the
potential transfer of U.S. military equipment and the potential for
continuing logistical support to Iraqi Security Forces. We also
testified that the Marine Corps and Army will have to better align
their funding requests with the related program strategies to sustain,
modernize, or replace existing legacy equipment systems. We testified
that both services will have to make difficult choices and trade-offs
when it comes to their many competing equipment programs. Finally, we
noted that while the services are working to refine overall
requirements, the total requirements and costs are unclear and raise a
number of questions as to how the services will afford them.
Title: DOD's High-Risk Areas: High-Level Commitment and Oversight
Needed for DOD Supply Chain Plan to Succeed, GAO-06-113T (October
2005);
Key challenges identified: In October 2005, we testified that DOD's
plan to improve supply chain management provides a good start and
framework for addressing long-term systemic weaknesses and in focusing
the multiyear effort to improve supply support to the warfighter. We
noted that successful resolution of DOD's supply chain management
problems will require continued efforts to complete and successfully
implement the plan. Based on GAO's criteria for removing programs from
the high-risk designation, we reported that it is important for DOD to
sustain top leadership commitment and long-term institutional support
for the plan; obtain necessary resource commitments from the military
services, the Defense Logistics Agency, and other organizations;
implement proposed improvement initiatives across the department to
address root causes; identify performance metrics and valid data to use
in monitoring the initiatives; and demonstrate progress toward meeting
performance targets.
Title: Defense Logistics: Better Management and Oversight of
Prepositioning Programs Needed to Reduce Risk and Improve Future
Programs, GAO-05-427 (September 2005);
Key challenges identified: In September 2005, we reported that DOD
faced near-term operational risks should another large-scale conflict
emerge because existing prepositioned stocks had been heavily drawn to
support operations in Iraq. We noted that some residual capability
exists but many of the programs face significant inventory shortfalls
and, in some cases, maintenance problems. We additionally reported that
the department and the military services have provided insufficient
oversight over DOD prepositioning programs resulting in long-standing
problems with requirements determination and inventory management.
Title: Defense Inventory: Actions Needed to Improve the Availability of
Critical Items during Future Military Operations, GAO-05-275 (March
2005);
Key challenges identified: In March 2005, we reported on DOD's supply-
chain management during Operation Iraqi Freedom. We developed detailed
case studies of nine supply items that were reported to be in short
supply and could have had operational impacts, and found that U.S.
troops experienced shortages of seven of the nine items that led, in
some cases, to a decline in the operational capability of equipment and
increased risk to troops. We identified five systemic deficiencies that
contributed to shortages of the selected items, including (1)
inaccurate and inadequately funded Army war reserve requirements, (2)
inaccurate supply forecasts, (3) insufficient and delayed funding, (4)
delayed acquisition, and (5) ineffective distribution.
Title: High-Risk Series: An Update, GAO-05-207 (January 2005);
Key challenges identified: In January 2005, we reported that DOD's
supply- chain management had experienced significant weaknesses in its
ability to provide efficient and effective supply support to war
fighters. While DOD reports showed the department owning about $67
billion of inventory, shortages of certain critical spare parts were
adversely affecting equipment readiness and contributing to maintenance
delays. DOD also lacked visibility and control over the supplies and
spare parts it owned and did not have the ability to provide timely or
accurate information on the location, movement, status, or identity of
its supplies.
Title: Military Prepositioning: Observations on Army and Marine Corps
Programs During Iraqi Freedom and Beyond, GAO-04-562T (March 2004);
Key challenges identified: In March 2004, we testified that during
Operation Iraqi Freedom, the Army's prepositioning program had some
equipment that was outdated or did not match unit needs. The program
also faced shortfalls, such as trucks, spare parts, and other items. We
noted that shortages in Army prepositioned and war reserve spare parts
had been a long-standing systemic problem. We likewise reported that
the theater supply-and-distribution system became overwhelmed and was
worsened by the inability to track assets available in theater, which
meant that warfighters did not know what was available.
Title: Defense Logistics: Preliminary Observations on the Effectiveness
of Logistics Activities During Operation Iraqi Freedom, GAO-04-305R
(December 2003);
Key challenges identified: In December 2003, we reported that during
Operation Iraqi Freedom poor asset visibility and insufficient and
ineffective theater distribution capabilities contributed to
substantial logistics support problems. DOD and military service
officials raised a number of issues that may have contributed to the
logistics problems, including (1) shortages of some spares or repair
parts needed by deployed forces, (2) a reported mismatch between Army
prepositioned equipment and unit needs, (3) DOD contractors used for
logistics support during Operation Iraqi Freedom were not always
effective, and (4) physical security at ports and other distribution
points in the theater was not always adequate to protect assets.
Title: Military Readiness: New Reporting System Is Intended to Address
Long-Standing Problems, but Better Planning Is Needed, GAO-03-456
(March 2003);
Key challenges identified: In March 2003, we reported that DOD used
readiness measures that varied 10 percentage points or more to
determine readiness ratings and often did not report the precise
measurements outside DOD. We additionally reported that DOD had
complied with most, but not all, of the legislative readiness-reporting
requirements and, as a result, Congress was not receiving all the
information mandated by law. DOD issued a directive in June 2002 to
establish a new comprehensive readiness-reporting system. However, as
of January 2003, DOD had not developed an implementation plan
containing measurable performance goals, identification of resources,
performance indicators, and an evaluation plan to assess progress in
developing the new reporting system.
Title: Major Management Challenges and Program Risks: Department of
Defense, GAO-03-98 (January 2003);
Key challenges identified: In January 2003, we reported that
inefficient inventory management practices represented one of the most
serious weaknesses in DOD's logistics operations. While DOD's inventory
value had been declining for the previous 10 years, GAO's past and
current work in the area indicated that DOD (1) continued to store
unnecessarily large amounts of material, with about half of its
secondary inventory exceeding then- war reserve or current operating
requirements; (2) purchased material for which there was no valid
requirement; (3) experienced equipment readiness problems because of a
lack of key spare parts; and (4) maintained inadequate visibility over
material being shipped to and from military activities.
Title: Defense Inventory: Improved Industrial Base Assessments for Army
War Reserve Spares Could Save Money, GAO-02-650 (July 2002);
Key challenges identified: In July 2002, we reported that the Army's
approach to industrial-base capability assessments lacked key
attributes that included the collection of current industry data, the
analysis of that data, and the creation of management strategies for
improving wartime spare parts availability. We noted that out-of-date
data could result in reduced readiness and inflated or understated war
reserve spare parts funding requests within budget submissions to
Congress, and the Army's ability to identify long lead times and create
management strategies to reduce lead times and thus the amount of
inventory needed.
Title: Defense Inventory: Army War Reserve Spare Parts Requirements Are
Uncertain, GAO-01-425 (May 2001);
Key challenges identified: In May 2001, we reported that
notwithstanding the apparent shortfall in funding for war reserve spare
parts, our review showed uncertainties about the accuracy of the Army's
requirements and funding needs in that area. Specifically, we found
that (1) the best available data regarding the rate at which spare
parts would be consumed during wartime had generally not been used in
determining war reserve requirements for spare parts, (2) a potential
mismatch existed between the Army's methodology for determining spare
parts requirements and the Army's planned battlefield maintenance
practices, (3) the capacity of the industrial base to support the parts
requirements of the two major theaters of war scenario was not well
defined or based on industry data, and (4) emerging issues, such as
force restructuring actions, could significantly affect future war
reserve requirements.
Title: Military Prepositioning: Army and Air Force Programs Need To Be
Reassessed, GAO/NSIAD-99-6 (November 1998);
Key challenges identified: In November 1998, we reported that the Army
and Air Force had poorly defined, outdated, or otherwise questionable
requirements in the major programs that GAO reviewed. The Army and the
Air Force had reported significant shortages and poor maintenance
conditions in their prepositioning programs. In some cases, however,
reliable data to assess inventory fill and maintenance condition were
unavailable. Thus, the precise readiness of the prepositioned stocks--
and the impact of any shortfalls--was difficult to determine because of
the questionable requirements that underpinned the programs and the
poor information that the services used to manage the programs.
Title: Afloat Prepositioning: Not All Equipment Meets the Army's
Readiness Goal, GAO/NSIAD-97-169 (July 1997);
Key challenges identified: In July 1997, we reported that of the Army's
unit sets considered when reporting the readiness of the brigade set of
war reserve equipment; about 25 percent did not meet the Army's
readiness goal for full-mission capability. According to Army
maintenance records, some equipment aboard prepositioning ships had
been reported as nonmission capable since September 1995. These records
also erroneously identified some nonmission-capable equipment as
repairable aboard ship, although Army officials said that many repairs
could not be made until the equipment was downloaded. One factor that
contributed to lower readiness rates was that some equipment was not
fully mission capable when it was originally loaded on prepositioning
ships. Other factors include the deterioration of the equipment while
in storage aboard ships and the limited ability to conduct maintenance
on the equipment while in storage.
Title: Army War Reserves: DOD Could Save Millions by Aligning Resources
With the Reduced European Mission, GAO/NSIAD-97-158 (July 1997);
Key challenges identified: In July 1997, we reported that DOD could
have saved about $54 million per year in personnel costs once the Army
removed unneeded war reserve equipment from central Europe and aligned
its resources with the reduced mission. Army data showed that of
128,000 items in central Europe identified as available for
redistribution outside of Europe, the Army had firm plans for about
54,000 items, had proposed--but had not funded or implemented--the
plans for about 27,000 items, and had no plans for about 46,000 items
because it found no known requirement for them in the war reserve
program.
Title: Defense Inventory Management: Problems, Progress, and Additional
Actions Needed, GAO/T-NSIAD-97-109 (March 1997);
Key challenges identified: In March 1997, we testified that inventory
management problems had plagued DOD for decades. We had recently
reported that about half of DOD's secondary inventory was not needed to
support war reserve or current operating requirements. Most of the
problems that contributed to the accumulation of this unneeded
inventory still existed, such as outdated and inefficient inventory
management practices that frequently did not meet customer demands,
inadequate inventory oversight, weak financial accountability, and
overstated requirements. We noted that while we continued to see
pockets of improvement, DOD had made little overall progress in
correcting systemic problems that had traditionally resulted in large
unneeded inventories.
Source: GAO.
[End of table]
Table 3: Other Products:
Title: Management of Army Prepositioned Stocks. Headquarters,
Department of the Army, U.S. Army Audit Agency, A2006-0200-ALL (August
2006);
Key challenges identified: In August 2006, the Army Audit Agency
reported that U.S. Army Material Command management practices for
overseeing the Army prepositioned stocks program and ensuring it
remained responsive to warfighters needs appeared to be on automatic
pilot with little management intervention. They reported that this
inattention has resulted in supply problems including problems
associated with requirements determination and inventory management.
Title: Army Prepositioned Stocks in Europe. Headquarters, Department of
the Army, U.S. Army Audit Agency, A2006-0197-ALE (August 2006);
Key challenges identified: In August 2006, the Army Audit Agency
reported that the requirements identified in the Army's APS Strategy
2012 would not effectively support responsibilities in the European
theater or Army transformation goals. The Army Audit Agency indicated
that while the APS strategy included requirements for six operational
projects, only two were valid - special operations forces and aerial
delivery. According to the Army Audit Agency, the remaining operational
projects were either invalid or questionable for the U.S. European
Command Area of Responsibility and proponents of these projects did not
do required reviews and revalidations of the requirements.
Title: Military Construction Projects Supporting Army Prepositioned
Stocks in Europe. Headquarters, Department of the Army, U.S. Army Audit
Agency, A2006-0149-ALE (June 2006);
Key challenges identified: In June 2006, the Army Audit Agency reported
that the Army was continuing with its construction projects at Livorno,
Italy, despite elimination of the original requirements for the
projects and uncertainty about the facility's future mission. They
additionally reported that the continuation of construction without a
permanent requirement did not justify expenditure of Military
Construction, Army funds appropriated for the project and violated the
spirit in which Congress appropriated funds for the project.
Title: Operation Iraqi Freedom (OIF) Maritime Prepositioning Force
(MPF) Reconstitution, Regeneration, and Reembarkation (R3)Operations:
Summary Findings, Center for Naval Analyses, CAB D0009974.A2/Final
(June 2004);
Key challenges identified: In June 2004, the Center for Naval Analyses
reported that although Marine Corps Maritime Prepositioning Force
operations in Iraq could be characterized as a success, the execution
of reconstitution, regeneration, and reembarkation was neither simple
nor easy. Challenges and issues included (1) a lack of detailed
published policies and guidance, and servicewide knowledge and
experience, in planning and executing operations; (2) simultaneous
conduct of combat and operations; and (3) a lack of effective systems,
organizations, and procedures for tracking and accounting for
prepositioned equipment after it was downloaded.
Title: Operational Project Stocks - Phase II, Headquarters, Department
of the Army, U. S. Army Audit Agency, A-2004-0108-AML (February 2004);
Key challenges identified: In February 2004, the Army Audit Agency
reported that some operational projects--one of four categories of Army
prepositioned stocks--had (1) invalid intended purposes; (2)
inaccurate, overstated, outdated, or questionable requirements; (3)
insufficient quantities of equipment on hand; or (4) a lack of
requirements for essential equipment. Consequently, about $472 million
of the roughly $1.5 billion in requirements reviewed were invalid and
$280 million were questionable.
Title: U.S. Army Matériel Command (USAMC) Operation Iraqi Freedom (OIF)
Lessons Learned Conference, 10-11 September 2003, Redstone Arsenal,
Alabama;
Key challenges identified: In September 2003, the U.S. Army Matériel
Command sponsored an Operation Iraqi Freedom lessons learned conference
during which 27 major issues were identified in such areas as
personnel, supply, maintenance, and distribution. For example (1)
supply-related lessons learned included the need to relook at
requirements determinations, asset management and visibility,
prepositioned stocks, and ammunition warfighter support; (2)
maintenance-related lessons learned included the need to improve
prepositioning maintenance, readiness and other reporting,
accountability, and forward repair activity; and (3) distribution-
related lessons learned included the need to modify force structure and
doctrine to support the distribution system, appoint a single DOD
distribution manager, and develop and implement a business system.
Title: Systematic Inspection of the Material Condition of Army War
Reserve Stocks, U.S. Army Matériel Command Inspector General (August
2001);
Key challenges identified: In August 2001, the Army Matériel Command
Inspector General reported the following problems with Army war reserve
sustainment stocks related to the Army Prepositioned Stock program: (1)
a lack of centralized strategic operational direction; (2) insufficient
funding for program requirements; (3) a lack of data integrity in
automated systems; (4) adverse mission impact caused by readiness
reporting procedures and overall operational practices; (5) mismatches
between recorded condition codes of matériel and true conditions; (6)
no established procedures for test, measurement, and diagnostic
equipment support; (7) an inability of the command to effectively
support the Army's wartime mortuary affairs mission; (8) matériel
excess to requirements stored at prepositioned sites; (9) ineffective
government oversight of a contractor allowing decreased readiness and
increased costs; and (10) bulk fuel, potable water, and other assets to
support forces during deployment were not part of the package.
Title: Army Prepositioned Stock Program, Combat Equipment Group -
Europe, U.S. Army Audit Agency, AA 98-138 (March 1998);
Key challenges identified: In March 1998, the Army Audit Agency
reported that while the Army Combat Equipment Group properly accounted
for its war reserve stocks stored in Europe, improved accounting
procedures were needed for its war reserve stocks loaned in support of
Operation Joint Endeavor in Bosnia. The audit agency additionally
reported that repair parts had been identified during the audit that
were not needed to support the deployable unit sets authorized for the
war reserve program. Moreover, while war reserve equipment was
generally maintained and stored properly, some of the combat equipment
companies retained too many line items, maintained excess stockage
levels, and didn't establish an effective method to monitor maintenance
operations.
Title: Sustainment Requirements for the Army Prepositioned Stock
Program, U.S. Army Audit Agency, AA 98-99 (February 1998);
Key challenges identified: In February 1998, the Army Audit Agency
reported that a substantial number of undesignated war reserve assets
were stored in Europe that could have been used to satisfy new
sustainment stock requirements.
Title: Total Asset Visibility-Operational Projects, U.S. Army Audit
Agency, AA 98-31 (November 1997);
Key challenges identified: In November 1997, the Army Audit Agency
reported problems in the Total Asset Visibility capability for Army
operational projects, including (1) incomplete or unreliable on-hand
asset balances, (2) a lack of visibility over loaned assets, (3)
inadequate identification of key management controls in Army policy
regulations, (4) weaknesses in data integrity, and (5) failure of Army
managers at both the wholesale and retail levels to redistribute assets
to improve readiness and reduce requirements.
Title: Equipment Pre-positioned Afloat, Department of Defense Inspector
General, 97-054 (December 1996);
Key challenges identified: In December 1996, the DOD Inspector General
reported that the Army had rapidly expanded its afloat prepositioning
program without first publishing criteria, policy, plans, and doctrine
resulting in a possible inability to ensure effective equipment
management in support of the combatant commanders.
Source: GAO.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Deputy Under Secretary Of Defense For Logistics And Materiel Readiness:
3500 Defense Pentagon:
Washington, DC 20301-3500:
January 17, 2007:
Mr. William M. Solis:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense (DoD) response to the GAO draft
report, GAO-07-144, "Defense Logistics: Army Needs to Take Steps to
Address Prepositioning Strategy, Requirements, Facilities and
Maintenance Oversight Issues," dated December 14, 2006 (GAO Code
350921).
The Department partially concurs with each recommendation. An
explanation of the DoD position is enclosed. Additionally, since
portions of the draft report supporting the recommendations could be
misleading, technical comments are provided to improve the accuracy and
clarity of the draft report. The Department appreciates the opportunity
to comment on the draft report.
Sincerely,
Signed by:
Jack Bell:
Enclosures:
As stated:
GAO Draft Report - Dated December 14, 2006 GAO Code 350921/GAO-07-144:
"Defense Logistics: Army Needs to Take Steps to Address Prepositioning
Strategy, Requirements, Facilities and Maintenance Oversight Issues"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommended that the Secretary of Defense
direct the Secretary of the Army to take steps to synchronize the
Army's prepositioning strategy with the DoD-wide strategy to ensure
that future investments made for the Army's prepositioning program
align with the anticipated DoD-wide prepositioning strategy.
DoD Response: Partially Concur. The DoD agrees with the need to
synchronize Service prepositioning strategies with the DoD strategic
positioning policy. The fiscal year 2007 National Defense Authorization
Act directs that, "Not later than six months after the date of
enactment of this Act, the Secretary of Defense shall establish the
strategic policy on the programs of the DoD for the prepositioning of
materiel and equipment." In order to support the development of this
mandated policy and ultimately publish a comprehensive strategy for the
composition, location, maintenance, employment and reconstitution of
stocks, the Army is participating fully in the ongoing Mobility
Capability Study 2006 on pre-positioning. Under the auspices of that
study and the Global Defense Posture Review, the Army's strategy is
being incorporated into these studies as DoD continues its efforts
toward the development of a DoD-wide Prepositioning (PREPO) strategy.
In anticipation of this study, the Army developed its own Service
strategy that supports the anticipated DoD-wide strategic "policy" in
order to ensure that future investments made for the Army's
prepositioning program are aligned. Additional direction regarding the
synchronization of strategies/policy is not required.
Recommendation 2: The GAO recommended that once the strategic direction
is aligned with the DoD strategy, the Secretary of the Army develop an
implementation plan that:
* maintains ongoing reevaluation of the secondary item and operational
project stock requirements as well as establishes systematic readiness
measurement and reporting of secondary items and operational project
stock programs;
* identifies the optimal mix of storage and maintenance facilities at
each location to support the emerging strategy; and:
* prescribes oversight requirements for the maintenance of
prepositioned equipment to ensure that equipment is ready for combat.
DoD Response: Concur. This guidance already exists in the recently
revised Chairman, Joint Chiefs of Staff Instruction 4310.01 B
(Logistics Planning Guidance for Global Pre-Positioning Materiel
Capabilities) dated November 1, 2006 and DoD Directive 3110.6 (War
Reserve Materiel Policy). The Army's implementation plan, included in
the Army Prepositioned Stocks Strategy 2013, is already aligned with
this guidance as a result of their participation in the Joint Working
Group, where the items in the GAO recommendation are specifically
monitored by OSD and the Joint Staff. Additional direction is not
required.
Technical Comments:
GAO Draft Report - Dated December 14, 2006 GAO Code 350921/GAO-07-144:
"Defense Logistics: Army Needs to Take Steps to Address Prepositioning
Strategy, Requirements, Facilities and Maintenance Oversight Issues"
Highlights Page, Para 1: What GAO Found:
"The Army's April 2006 report on the status of its prepositioning
program addressed the areas required by Congress; for example, it
included descriptions of operational capabilities, as well as inventory
shortfalls plus strategic capabilities assessments required in future
operating environments shaped by insights gained through QDR 06
(change: expressed in terms of procurement costs. However, the Army has
significantly shifted its prepositioning strategy since that report was
issued. Based primarily on budget reprogramming decisions but
influenced as well by worsening Army wide equipment shortfalls.) The
Army concluded in summer 2006 that its prepositioning strategy was no
longer viable and began work on a revised strategy. The Army's revised
strategy proposes significant changes to the program by 2013, including
less reliance on heavy combat equipment afloat and the expansion of
heavy equipment in the European theater (remove: in Kuwait and Italy)
As a result, the Army's April 2006 report to Congress is outdated, and
neither Congress nor the Department of Defense (DoD) should base
funding decisions on it,"
Comment: Change for clarity / accuracy. The Army APS 2012 strategy was
changed due to insights gained during QDR 06 and other strategic
initiatives, not due to budget reprogramming decisions.
Highlights Page, Paragraph 2: What GAO Found:
"The Army faces several strategic and management challenges as it
revises and implements its prepositioning program. From a strategic
perspective, the Army will align its strategy with the forthcoming DoD
strategic "policy "(underdevelopment) which will provide guidance for
prepositioning capabilities, training, readiness and land base
requirements. The DoD policy will result in the Army creating/modifying
its strategy in accordance with the guidance provided in the DoD
policy. (change: gauge how well it is emerging strategy will align with
DOD plans currently under development. The Army plans to begin
implementing its revised strategy by the end of 2006. However, DOD has
a department wide prepositioning study underway intended to set
strategy and joint doctrine to guide the departments prepositioning
programs, but this will not be completed for several months. As a
result, the Army will implement its strategy before the DoD study is
completed and is at risk of resourcing requirements that may be
superseded by the DoD strategy. Moreover, because prepositioning is
interconnected with airlift, sealift, and basing, the Army's decisions
will have an as yet undetermined effect on these areas.)
Comment: Change for clarity/accuracy:
Page 4, para 2, line 3:
* "Inability to gauge its alignment with DoD-wide prepositioning policy
strategy (change: strategy).
Comment: Change for clarity/accuracy:
Page 5, para l, line 7:
* "The fiscal year 2007 National Defense Authorization Act required DoD
to complete a DoD-wide strategic policy by April 2007 In the interim
the Army, at the time we finished our work, was planning to implement
their internal strategy in accordance with their required missions and
capabilities. Even though DoD and Army officials told us they have
coordinated prepositioning plans, the timing of the two strategies
could cause disconnects between the strategies that will need to be
addressed after the Army's strategy is implemented. (change: The fiscal
2007 defense authorization act required DoD to complete a DoD wide
strategy by mid April 2007. At the time we finished our work, the Army
was planning to implement their strategy by the end of 2006- months
ahead of the DoD wide effort. The most significant problem resulting
from the timing, is that the Army cannot be assured that its efforts
will be aligned with DoD wide efforts still ongoing. Even though DOD
and Army officials told us the have coordinated prepositioning plans,
the timing of the two strategies is not synchronized. As a result, DoD
could not be restricted in developing an optimal DoD wide strategy
because the Army strategy already exists or the Army could be at risk
of filling requirements that will be superseded when the DoD wide
strategy is issued. Moreover, prepositioning is interconnected with
airlift, sealift, and basing so the Army's decisions will have an as
yet undetermined effect on lift requirements and basing. Such potential
problems are avoidable if the strategies are synchronized.)
Comment: Recommend the paragraph be modified The Army should not be
criticized for timing and lack of synchronization with an updated DoD
strategic policy that has not been yet issued. The Services create
individual prepositioning strategies in accordance with the required
missions and capabilities.
Page 6, para 1, line 2:
"...be revalidated every S years, we recommended in September 2005 that
the Army address this long - standing problem. In response the Army
conducted a revalidation of their Operational Project Stocks in April
06. As of the date of this report, 98% of all the Stocks had completed
that validation. (change: but the most revalidation for many of the
projects was last conducted in 1998. We recommended in September 2005
that the Army address this longstanding problem. In response, the Army
has taken several steps to address it, but reviews of the secondary
item and operational projects requirements were still ongoing when we
completed our work in October 2006. Also, while the Army measures
readiness of prepositioned equipment programs by assessing inventory
levels against requirements and the maintenance condition of on hand
equipment, the Army does not systematically measure or report readiness
for the secondary item and operational project programs. Without sound
requirements or reporting mechanisms, The Army cannot reliably assess
the impact of any shortfalls, the readiness of its programs, or make
informed investment decisions about them.)
Comment: Change for accuracy. The Department of the Army started
tracking War Reserve Secondary Items using the Strategic Management
System in June 2006. The Strategic Management System is a monthly
requirement that provides visibility to the Army Senior Leadership of
the equipment on-hand-and equipment readiness of the Army Prepositioned
Stocks at the various worldwide locations i.e. Continental United
States, Europe, Afloat, Northeast Asia and Southwest Asia. It provides
the Current Year (2007), the Budget Year (2008), the Program Objective
Memorandum and Fiscal Year-07 Supplemental funding status for War
Reserve Secondary Items. Included in this report are the Authorized
Stockage List, Prescribed Load List, Unit Basic Load, Operational
Project Stocks and Sustainment Stocks funding information for each of
the locations. The Strategic Management System process is a key
component to enhancing the Army's ability to support future contingency
and wartime operational requirements. Additionally, in October 2006 the
Army began a test of a new process to identify War Reserve Secondary
Items requirements based on using real world demand data gathered from
Operations Iraqi Freedom and Enduring Freedom.
Page 9, para 4:
* "War reserve sustainment stocks include:
- Items to sustain the battle until CONUS resupply can be ramped up to
war time levels and arrive in theater.
- War Reserve Secondary Items include rations, clothing and textiles,
construction and barrier materiel, medical supplies and repair parts
and major assemblies (reparables and consumables)."
(Change:
- Replacement equipment for losses in early stages of operations or
until unit resupply is established.
- Major end items such as aircraft engines and tracked vehicles.
- Secondary items such as meals, clothing, petroleum supplies,
construction materials, ammunition, medical materials, and repair
parts.)
Comment: Change for clarity/accuracy. The GAO report incorrectly
defines what compromises War Reserve Sustainment Stocks.
Page 10, para 3:
"The Army's April 2006 Report To Congress Addressed The Areas
Required(change: But The Army Strategy Is Evolving)
Comment: Change for clarity/accuracy.
Page 10, para 4, line 8:
"The Army's April 2006 report to congress on the status of its
prepositioned program addressed the areas required by Congress, but the
Army has significantly shifted its prepositioning strategy since then.
The Army's report included descriptions of operational capabilities as
outlined in the Army Prepositioned Stocks Strategy 2012, addressed the
maintenance condition of prepositioned equipment; and noted recent
efforts to improve management and maintenance oversight of the program,
including forming an independent inspection team. (change: However,
since the report's publication, the Army has begun a reexamination of
its overall prepositioning strategy. Based primarily on recent budget
cuts to the program as part of the DoD program review as well as
equipment shortfalls throughout the service the Army concluded that its
Prepositioned Stocks Strategy 2012 was no longer viable and began
working on a revised strategy that was approved by Army leaders in late
August 2006 and is expected to be completed by the end of 2006.
Comment Change for clarity/accuracy:
Page 11, para 1, last sentence:
"It did stipulate, however, that the equipment set was undergoing reset
repair, replacement and recap."
Comment: Change for accuracy.
Page 11, para 3, line 2:
"In particular, an internal DoD reprogramming action required the Army
to offload a Heavy Brigade Combat Team equipment set stored on a
prepositioned ship and redistribute it to meet existing equipment
shortfalls and reduce costs.
Comment: Change for accuracy.
Page 12, para 1, line 7:
"This decision effectively reduced the Army's program in the near term
from two to one Heavy Brigade Combat Team afloat, with implications for
the (change: Army's) Combatant Commands' operational plans in both the
near and longer term."
Comment: Change for accuracy.
Page 12, para 2, line 1:
"The Army's examination of the global strategic context in 2013 and
beyond and future operating environments shaped by insights gained
through QDR 06 led to the development of a new strategy. Several
factors combined to create a ripple effect that impacted the viability
of the Army Prepositioned Stocks 2012 Strategy. Equipment shortfalls
made it difficult for the Army to meet the requirements in the strategy
at least partly because Army prepositioned stock equipment was
continuing to be drawn to support ongoing operations. Also, the Army
transformation to modularity exacerbated shortfalls in certain types of
equipment and created excesses in others. In addition, the Army
eliminated most of the remaining facilities and prepositioned stocks
from Western Europe. (change: but was completing new maintenance and
storage facilities in Italy which needed a mission). As a result, the
Army's 2006 report was outdated soon after its publication and should
not be used by Congress or DoD for funding decisions."
Comment: Change for accuracy.
Page 13, para 3, line 1:
"DoD has efforts underway that will address gaps identified in GAO's
September 2005 report, but have implications for the Army's efforts.
First, to address Army Prepositioned Stocks in department-wide
oversight, DoD convened a working group that includes representatives
from the Office of the Secretary of Defense, Joint Staff, Defense
Logistics Agency, the Army, Joint Forces Command and the other Services
to develop joint doctrine for the prepositioning programs.
Comment: Change for accuracy:
Page 23, Table 1: Status of Facilities at Army Prepositioned Stock
Locations:
Insert: "Qatar Camp As Sayliyah, Qatar. The Qatar facilities, which
were completed in 1997, included 26 warehouses of about 60KSQFT each
and two large maintenance shops, all dedicated to the ARMY
PREPOSITIONED STOCKS-5 mission. During the recent Iraq war, 17
warehouses were diverted from ARMY PREPOSITIONED STOCKS storage to DA
priority missions. Some diverted warehouses may be returned to ARMY
PREPOSITIONED STOCKS use at some future date. 12 soft-skinned warehouse
extensions were installed in 2005 to provide additional interim ARMY
PREPOSITIONED STOCKS storage space of about 110KSQFT. Numerous minor
construction projects (O&MA funded) to meet current needs are proposed
or in progress.
Falcon 78, Qatar: Ammo Storage and Maintenance: 20 earth-covered
storage igloos, 9 bermed upload sunshades (double stall); dunnage
sunshade, hardened processing/storage building. No facility investment
required. "
Comment: Change for accuracy.
GAO's Responses to DOD's Technical Comments:
1. DOD comments indicate that the reason the Army shifted its
prepositioning strategy in 2006 was not due to budget reprogramming
decisions; instead it was due to the 2006 Quadrennial Defense Review.
We interviewed Army officials during the summer of 2006 who told us
that the budget reprogramming decision and equipment shortfalls
throughout the Army were the main impetus of the strategy review. We
have added the Army's assertion that the quadrennial review influenced
the decision to the text.
2. DOD indicates that the DOD policy under development "will result in
the Army creating/modifying its strategy in accordance with the
guidance in the DOD policy" when issued. We have added the department's
assertion to the text. We agree that having an Army implementation plan
in place before the DOD policy is issued will result in the need to
modify the Army's strategy. However this is an apparent inconsistency
with the main text of the department's comments stipulating that the
Army's completed strategy will be incorporated into the DOD-wide
strategy. As a result, we continue to believe that additional
department-level direction is needed to ensure that future investments
made by the Army are aligned with DOD policy.
3. We believe that strategy is a better description as it provides
linkage to the recommendation in our 2005 report calling for a DOD-wide
prepositioning strategy.
4. The department stated that the Army should not be criticized for
creating an implementation strategy before the DOD policy is issued.
Our intent was not to criticize but to demonstrate the potential risks
associated with individual service strategies being implemented before
the department's strategy is issued. In a September 2005 report GAO
recommended that DOD develop a departmentwide strategy to set direction
for and underpin the prepositioning programs of the services but this
has still not been completed. The Army can ill afford to invest scarce
resources to meet requirements that will not be aligned with the DOD
policy when issued.
5. The department disagreed with several aspects of our description of
the operational project and secondary item programs. We have included
additional information to the report that, in response to a past GAO
recommendation, the Army has conducted revalidations of most
operational project stocks. Further, the Army asserted that it tracks
the funding of the prepositioned secondary items and operational
project stocks as part of the Army's Strategic Management System and
that this constitutes readiness reporting. We disagree. The
requirements underpinning these programs are questionable, and funding
information is inadequate for determining readiness.
6. We have changed the text to reflect the department's definition of
war reserve sustainment stocks.
7. Since the Army strategy evolved during our review, we continue to
believe our caption better reflects the substance.
8. See comment 1.
9. We have changed the text to delete "reset".
10. We have changed the text to insert "DOD".
11. We have made changes to the text to reflect the role of Combatant
Commanders in operational planning.
12. The department's suggested language indicated that the shift in
strategy was the result of the 2006 Quadrennial Review. We have
reflected this throughout the report. The department also suggested
deleting language in the draft report concerning the lack of mission in
Italy in the previous Army strategy but offered no reason why this
information should be deleted. When initially approved, the $55 million
construction project in Italy was intended to support the storage of a
prepositioned combat brigade team equipment set there, but this
requirement had been eliminated in the 2012 strategy leaving the
facility with no mission. The Army decided to complete the construction
as it was more costly to cancel than complete, and the Army's 2013
strategy indicates placing a combat brigade team equipment set at that
location even though existing operational and contingency plans for the
area do not require this type of equipment. We have retained this
information in the report because we believe this information
illustrates the need for better facilities planning by the Army.
13. We have made changes to the text to include the Joint Forces
Command in DOD's working group.
14. We added information to reflect the facilities in Qatar.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
William M. Solis, (202) 512-8365:
Acknowledgments:
In addition to the contact named above, John Pendleton, Assistant
Director, Jeff Kans, Travis Thomson, Jennifer Jebo, Erika Prochaska,
and Cheryl Weissman also made key contributions to this report.
FOOTNOTES
[1] DOD, The National Defense Strategy of the United States of America
(March 2005).
[2] This analysis was performed in the Mobility Capabilities Study,
released in December 2005.
[3] GAO, Defense Logistics: Better Management and Oversight of
Prepositioning Programs Needed to Reduce Risk and Improve Future
Programs, GAO-05-427 (Washington, D.C.: Sept. 6, 2005).
[4] 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).
[5] GAO-05-427.
[6] The Act (Pub.L. No. 109-163, § 351 (2006)) specifically required
the Comptroller General to (1) determine whether the Army's report
comprehensively addressed the required reporting items, and (2)
determine the extent to which any shortfall or other issues reported by
the Secretary of the Army or identified by the Comptroller General had
been addressed including an assessment of any related plans to address
shortfalls in the future.
[7] The new strategy will be the Army Prepositioned Stock Strategy
2013.
[8] Pub. L. No. 109-364, § 351 (2006).
[9] GAO, Military Prepositioning: Army and Air Force Programs Need To
Be Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998).
[10] Army Regulation 740-1, Storage and Supply Activity Operations
(Sept. 9, 2002).
[11] GAO-05-275.
[12] The RAND Corporation, Sustainment of Army Forces in Operation
Iraqi Freedom: Major Findings and Recommendations (Santa Monica,
Calif.: 2005).
[13] GAO, Military Prepositioning: Army and Air Force Programs Need To
Be Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov.16, 1998).
[14] Corrosion is defined under 10 U.S.C. § 2228 as the deterioration
of a material or its properties caused by a reaction of that material
with its chemical environment.
[15] Quality assurance inspectors perform a variety of tasks, including
initial acceptance of repaired equipment from the maintenance
contractor and monitoring of contractor-performed preventative
maintenance checks.
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