Defense Logistics
Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies Will Sustain Equipment Availability While Meeting Ongoing Operational Requirements Gao ID: GAO-07-814 September 19, 2007Congress has appropriated billions of dollars for equipment repair, replacement, and recapitalization, collectively known as equipment reset. Because of the potential for equipment reset costs to affect the Department of Defense's (DOD) future budget requirements and related readiness concerns, GAO initiated this review under the Comptroller General's authority. GAO's objectives were to determine the extent to which the Army and Marine Corps (1) track and report equipment reset expenditures in a way that confirms that funds appropriated for reset are expended for that purpose and (2) can be assured that their reset strategies will sustain equipment availability while meeting ongoing operational requirements. GAO reviewed equipment reset policies and analyzed related budget data.
Although the Army and Marine Corps track and report equipment reset expenditures in the operation and maintenance accounts in detail, they do not report detailed equipment reset expenditures within the procurement accounts in a way that confirms that funds appropriated for reset are expended for that purpose because the DOD Financial Management Regulation does not require them to specifically report procurement expenditures for reset in detail. As directed by the Conference Report accompanying DOD's appropriations act for 2007, the Army and Marine Corps report detailed reset obligations and expenditures in their operation and maintenance accounts. While the Army and Marine Corps track reset expenditures and obligations in detail within the procurement accounts, they do not report those expenditures at the same level of detail as with the operation and maintenance accounts because they are not legally required do so. Neither the Army's nor the Marine Corps' monthly Supplemental and Cost of War Execution Reports identify the types of equipment at the subactivity group level, such as aircraft or vehicles. Until the Army and Marine Corps are required to report the obligation and expenditure of funds appropriated for reset in the procurement accounts at a more detailed level, Congress will not have the visibility it needs to exercise effective oversight and to determine if the amount of funding appropriated for equipment reset has been most appropriately used for the purposes intended. The Army and Marine Corps cannot be assured that their reset strategies will sustain equipment availability for deployed units as well as units preparing for deployment to Iraq and Afghanistan while meeting ongoing operational requirements because neither the Army's nor the Marine Corps' reset implementation strategies target shortages of equipment on hand and prioritize equipment needs of units preparing for deployment over longer-term modernization goals. While the Army's Force Generation implementation strategy and reset implementation guidance state that the goal of reset is to prepare units for deployment and to improve next-to-deploy units' equipment-on-hand levels, the Army's reset strategy is based on resetting equipment that it expects will be returning to the United States in a given fiscal year and not on targeting shortages of equipment for units preparing for deployment to Iraq and Afghanistan. Similarly, the Marine Corps' reset goal is to ensure that the Corps is equipped to perform both ongoing operations and future missions; however, over 80 percent of its reset budget is for procurement of equipment that will not be available for many months. Units can continue to report significant shortages during their training cycles that affect their ability to train. Thus, the services may be sacrificing short-term equipment needs for longer-term modernization goals. Until the services' reset strategies target shortages of equipment needed to equip units preparing for deployment and give priority to those units over longer-term needs, the Army and Marine Corps will be unable to minimize operational risk by ensuring the needs of deploying units can be met.
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-07-814, Defense Logistics: Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies Will Sustain Equipment Availability While Meeting Ongoing Operational Requirements
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2007:
Defense Logistics:
Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies
Will Sustain Equipment Availability While Meeting Ongoing Operational
Requirements:
Defense Logistics:
GAO-07-814:
GAO Highlights:
Highlights of GAO-07-814, a report to congressional committees.
Why GAO Did This Study:
Congress has appropriated billions of dollars for equipment repair,
replacement, and recapitalization, collectively known as equipment
reset. Because of the potential for equipment reset costs to affect the
Department of Defense‘s (DOD) future budget requirements and related
readiness concerns, GAO initiated this review under the Comptroller
General‘s authority. GAO‘s objectives were to determine the extent to
which the Army and Marine Corps (1) track and report equipment reset
expenditures in a way that confirms that funds appropriated for reset
are expended for that purpose and (2) can be assured that their reset
strategies will sustain equipment availability while meeting ongoing
operational requirements. GAO reviewed equipment reset policies and
analyzed related budget data.
What GAO Found:
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they
do not report detailed equipment reset expenditures within the
procurement accounts in a way that confirms that funds appropriated for
reset are expended for that purpose because the DOD Financial
Management Regulation does not require them to specifically report
procurement expenditures for reset in detail. As directed by the
Conference Report accompanying DOD‘s appropriations act for 2007, the
Army and Marine Corps report detailed reset obligations and
expenditures in their operation and maintenance accounts. While the
Army and Marine Corps track reset expenditures and obligations in
detail within the procurement accounts, they do not report those
expenditures at the same level of detail as with the operation and
maintenance accounts because they are not legally required do so.
Neither the Army‘s nor the Marine Corps‘ monthly Supplemental and Cost
of War Execution Reports identify the types of equipment at the
subactivity group level, such as aircraft or vehicles. Until the Army
and Marine Corps are required to report the obligation and expenditure
of funds appropriated for reset in the procurement accounts at a more
detailed level, Congress will not have the visibility it needs to
exercise effective oversight and to determine if the amount of funding
appropriated for equipment reset has been most appropriately used for
the purposes intended.
The Army and Marine Corps cannot be assured that their reset strategies
will sustain equipment availability for deployed units as well as units
preparing for deployment to Iraq and Afghanistan while meeting ongoing
operational requirements because neither the Army‘s nor the Marine
Corps‘ reset implementation strategies target shortages of equipment on
hand and prioritize equipment needs of units preparing for deployment
over longer-term modernization goals. While the Army‘s Force Generation
implementation strategy and reset implementation guidance state that
the goal of reset is to prepare units for deployment and to improve
next-to-deploy units‘ equipment-on-hand levels, the Army‘s reset
strategy is based on resetting equipment that it expects will be
returning to the United States in a given fiscal year and not on
targeting shortages of equipment for units preparing for deployment to
Iraq and Afghanistan. Similarly, the Marine Corps‘ reset goal is to
ensure that the Corps is equipped to perform both ongoing operations
and future missions; however, over 80 percent of its reset budget is
for procurement of equipment that will not be available for many
months. Units can continue to report significant shortages during their
training cycles that affect their ability to train. Thus, the services
may be sacrificing short-term equipment needs for longer-term
modernization goals. Until the services‘ reset strategies target
shortages of equipment needed to equip units preparing for deployment
and give priority to those units over longer-term needs, the Army and
Marine Corps will be unable to minimize operational risk by ensuring
the needs of deploying units can be met.
What GAO Recommends:
GAO recommends that the Secretary of Defense (1) improve DOD‘s
reporting of obligations and expenditures within the procurement
accounts and (2) assess the services‘ approaches to equipment reset to
ensure that their priorities address equipment shortages in the near
term to equip units that are preparing for deployment. DOD did not
agree with these recommendations. As a result, GAO is suggesting that
Congress direct DOD to revise its Financial Management regulation
pertaining to procurement funds.
To view the full product, including the scope and methodology, click on
GAO-07-814.
For more information, contact William M. Solis at (202) 512-8365 or
williams@gao.gov.
Contents:
Letter:
Results in Brief:
Background:
Army and Marine Corps Do Not Report Expenditures within Procurement
Accounts in a Way That Confirms That Funds Appropriated for Reset Are
Expended for That Purpose:
Army and Marine Corps Cannot Be Assured That Reset Implementation
Strategies Will Sustain Equipment Availability While Meeting Ongoing
Operational Requirements:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Marine Corps Reset Categories:
Appendix III: Army and Marine Corps Ground Equipment and Rotary
Aircraft Deployed and Total Equipment on Hand as of March 2007:
Appendix IV: Comments from the Department of Defense:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Breakdown of Army and Marine Corps Fiscal Year 2007 Reset
Execution Funding Plans:
Table 2: Comparison of Army and Marine Corps Sub-cost Categories within
the FMR for Operation and Maintenance and Procurement Accounts:
Table 3: Army Equipment Deployed to OIF/OEF and Total Equipment on Hand
as of March 2007:
Table 4: Marine Corps Equipment Deployed to OIF/OEF and Total Equipment
on Hand as of March 2007:
United States Government Accountability Office:
Washington, DC 20548:
September 19, 2007:
Congressional Committees:
Continuing military operations in Iraq and Afghanistan are taking a
toll on the condition and readiness of military equipment. Harsh combat
and environmental conditions in theater over sustained periods of time
exacerbate equipment repair, replacement, and recapitalization problems
that existed before the onset of combat operations in Iraq and
Afghanistan. Upon returning from operations, equipment is reset in
preparation for future operations. Although the Army and Marine Corps
continue to meet mission requirements and report high readiness rates
for deployed units, these services are operating with increasing risk
to overall readiness due to equipment shortages and equipment readiness
shortfalls. As a result, costs to repair, replace, and recapitalize
equipment, collectively known as reset, will increase significantly in
future Department of Defense (DOD) annual budgets.
In response to DOD's request for funds to meet its needs for equipment
reset, Congress has appropriated tens of billions of dollars. Congress
has provided the Army and Marine Corps with more than $49 billion in
supplemental[Footnote 1] appropriations since fiscal year 2002 for the
reset of equipment in addition to the billions of dollars provided to
DOD to sustain military equipment in its annual or baseline
budgets.[Footnote 2] In fiscal year 2007 alone, the Army received $17.1
billion for equipment reset, almost double the $8.6 billion in funding
the Army received for equipment reset programs in fiscal year 2006. Of
the $17.1 billion, the Army plans to fund reset with $8.6 billion from
operation and maintenance appropriations and $8.5 billion from
procurement appropriations. The Marine Corps received $5.8 billion in
fiscal year 2007, slightly more than the $5.1 billion it received in
fiscal year 2006. Of the $5.8 billion,[Footnote 3] the Marine Corps
plans to fund reset with $0.9 billion from operation and maintenance
appropriations and $4.9 billion from procurement
appropriations.[Footnote 4]
The Army Chief of Staff[Footnote 5] and Commandant of the Marine
Corps[Footnote 6] have testified about the extraordinary demands placed
on the services' equipment and concerns regarding their abilities to
support extensive reset efforts while also transforming to a more
flexible and more deployable force. According to the Army Chief of
Staff, only through a fully funded reset program can the Army extend
the life of its equipment and remain ready for future conflicts. The
Commandant of the Marine Corps also stated that timely delivery of
replacement equipment through reset funding is crucial to sustaining
high readiness rates in theater as well as improving readiness rates
for forces at home.
As we have testified before the House Committee on Armed
Services,[Footnote 7] 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, depot capacity issues, the potential transfer of U.S.
military equipment to Iraqi Security Forces, and the possibility of
continuing logistical support for Iraqi Security Forces. We also
observed that while the precise dollar estimate for the reset of Army
and Marine Corps equipment will not be known until operations in Iraq
and Afghanistan cease, it will likely cost billions of dollars to
repair and replace equipment. While the 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. We
concluded that until the services are able to firm up these
requirements and cost estimates, neither the Secretary of Defense nor
Congress will be in a sound position to weigh the trade-offs between
competing requirements and risks associated with degraded equipment
readiness.
Over the past several years, we also have reported on related equipment
issues, including the lack of equipment program strategies;[Footnote 8]
poor condition of pre-positioned equipment, which could lead to near-
term operational risks in the event of another large-scale
conflict;[Footnote 9] and challenges related to replacing Army National
Guard equipment left in the Operation Iraqi Freedom (OIF) theater to
support ongoing operations.[Footnote 10] Furthermore, we have reported
on the lack of transparency and inaccuracies in reported Global War on
Terrorism (GWOT) obligations,[Footnote 11] and that DOD was unable to
accurately track and report equipment reconstitution costs in its
supplemental budget requests because the services' accounting codes
were capturing GWOT and other obligations that were not incurred
exclusively for equipment reconstitution. In addition to these issues,
we have also reported on long-standing problems with DOD's accounting
systems[Footnote 12] and personnel issues.[Footnote 13] Moreover, the
John Warner National Defense Authorization Act for Fiscal Year 2007
directed the Secretary of the Army to submit a report to the
congressional defense committees in conjunction with the President's
annual budget submission, which includes information about reset
expenditures as well as future funding for reset requirements.[Footnote
14]
Because of the potential for reset costs to significantly affect DOD's
budget requirements in the coming years and related equipment readiness
issues, this report focuses on tracking and reporting reset costs and
the relationship between Army and Marine Corps equipment reset
implementation strategies and their ability to sustain equipment
availability. We performed our work under the authority of the
Comptroller General[Footnote 15] to conduct reviews on his own
initiative and are reporting the results to you because of your
oversight roles. Our objectives were to identify the extent to which
the Army and Marine Corps (1) track and report equipment reset
expenditures in a way that confirms that funds appropriated for reset
are expended for that purpose and (2) can be assured that their reset
implementation strategies will sustain equipment availability while
meeting ongoing operational requirements.
To address our first objective, we reviewed the monthly Supplemental
and Cost of War Execution Reports, analyzed equipment reset funding
requests, and discussed equipment reset tracking and reporting systems
with Army and Marine Corps officials to determine the extent to which
their financial management systems confirmed that funds appropriated
for reset are expended for that purpose. We reviewed reported
obligations and expenditures and budget estimates for Army and Marine
Corps equipment reset funding and determined that the reliability of
these data was sufficient for our purposes. To address our second
objective, we examined service policies and processes for developing
reset plans and discussed with Army and Marine Corps officials the
services' equipment reset implementation strategies and how they plan
to sustain equipment availability while meeting ongoing operational
requirements. We did not review the services' overall equipping
strategies. We also selected five pieces of high-demand equipment for
review and compared the services' planned reset activities to equipment
requirements.[Footnote 16] These equipment items were identified by
service officials as well as previous GAO reports as items critical to
ongoing operations, and large numbers of these equipment items have
gone through multiple rotations or have been in constant use in the OIF
theater. Our review included only major end items, primarily ground
equipment and rotary aircraft. We reviewed inventory numbers, location
of equipment (e.g., items deployed or nondeployed), and acquisition
plans for future procurement of new equipment. For work under both
objectives, we held discussions at service headquarters responsible for
developing and executing equipment reset implementation strategies, met
with officials from commands responsible for executing reset programs,
met with an Army Division preparing to deploy to Iraq in 2007, and met
with officials in the Office of the Secretary of Defense (OSD) to
discuss overall reset policies and programs. We reviewed reported
obligations and expenditures and budget estimates for Army and Marine
Corps equipment reset funding and determined that the reliability of
these data was sufficient for our purposes. We performed our work from
October 2005 through April 2007 in accordance with generally accepted
government auditing standards. Appendix I contains more detailed
information about our scope and methodology.
Results in Brief:
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they
do not report detailed equipment reset expenditures within the
procurement accounts in a way that confirms that funds appropriated for
reset are expended for that purpose because there is no requirement to
report procurement expenditures beyond what is required by the DOD
Financial Management Regulation (FMR).[Footnote 17] While the
Conference Report accompanying the DOD appropriations act for 2007
directed the Secretary of Defense to periodically provide a detailed
accounting of obligations and expenditures of funds provided in Title
IX of the act, which includes funds provided for reset, by program and
subactivity group and to provide a listing of equipment procured using
funds appropriated under Title IX of this act,[Footnote 18] the Army
and Marine Corps are not legally required to provide this detailed
accounting. The Army and Marine Corps currently provide detailed
reports of obligations and expenditures within the operation and
maintenance accounts, but have chosen not to provide the same detailed
accounting of obligations and expenditures within the procurement
accounts. Consequently, neither DOD nor Congress can be assured that
procurement funds appropriated for equipment reset are being obligated
and expended for equipment reset for deploying units and units
preparing to deploy to Iraq and Afghanistan instead of other, more long-
term equipment needs. As we recently testified,[Footnote 19] as of
fiscal year 2007, the Army has begun to track and report reset
obligations and expenditures in its operation and maintenance account.
According to Army officials, the Army segregates the cost of reset from
other costs and tracks expenditures to ensure that funds appropriated
for this purpose are expended for this purpose. Unlike the Army, the
Marine Corps began tracking and reporting reset execution in its
operation and maintenance account when it began receiving reset funding
in fiscal year 2006. The Marine Corps established a special
identification code within its financial management systems to identify
obligations and expenditures related to equipment reset. With regard to
the procurement accounts, however, the Army's and the Marine Corps'
monthly Supplemental and Cost of War Execution Reports[Footnote 20]
identify the costs of equipment reset as just one line, instead of
reporting these costs at lower sub-cost categories,[Footnote 21] such
as vehicle procurement. The Army provides additional monthly reports to
Congress detailing the status of procurement reset obligations in total
dollars as well as a summary of the number of equipment items replaced
or recapitalized; however, it does not provide a breakdown of the
dollars associated with those quantities. The Marine Corps does not
provide these additional reports because it was not required or
requested to provide such reports but could provide reports at the
budget line item level if requested. Until the Army and Marine Corps
are required to report the obligation and expenditure of funds
appropriated for reset in the procurement accounts at lower sub-cost
category levels, similar to the level of detail they report for
obligations and expenditures in the operation and maintenance accounts,
Congress will not have the visibility it needs to exercise effective
oversight and to determine if the amount of funding appropriated for
equipment reset has been most appropriately used for the purposes
intended, such as addressing the short-term needs of deploying units
and units preparing to deploy to Iraq and Afghanistan. Furthermore,
because the Army was not required to track the execution of its reset
appropriations from the onset of operations, it does not have
historical execution data upon which to base future cost
estimates.[Footnote 22] As we have reported, historical execution data
would provide a basis for estimating future funding needs.[Footnote 23]
The Army and Marine Corps cannot be assured that their reset
implementation strategies will sustain equipment availability for
deployed units as well as units preparing for deployment to Iraq and
Afghanistan while meeting ongoing operational requirements because
neither the Army's nor the Marine Corps' reset implementation
strategies target shortages of available equipment and prioritize
equipment needs of units preparing for deployment over longer-term
modernization goals. According to the Army's Army Force Generation
Model (ARFORGEN) implementation strategy and reset implementation
guidance,[Footnote 24] the primary goal of reset is to prepare units
for deployment and to improve next-to-deploy units' equipment-on-hand
levels. However, the Army's reset implementation strategy is based on
resetting equipment that it expects will be returning to the United
States in a given fiscal year and not on targeting shortages of
equipment for units preparing for deployment to Iraq and Afghanistan.
Similarly, the Marine Corps' reset goal is to ensure that the Corps is
equipped to perform both ongoing operations and future missions.
However, neither the Army nor the Marine Corps can ensure that their
reset implementation strategies can achieve these goals because neither
service's reset implementation strategies target shortages of available
equipment needed to equip deploying units and units preparing for other
missions and contingencies in order to minimize operational risk. For
example, as part of their fiscal year 2007 reset strategy, the Army
plans to recapitalize more than 7,500 High Mobility, Multi-Purpose
Wheeled Vehicles (HMMWV) at a cost of $455 million; however, these
recapitalized HMMWVs will not be available to train or equip units
deploying for OIF missions due to inadequate force protection and will
have limited training value to deploying units primarily because the
unarmored HMMWVs have different handling characteristics and
configurations than the armored HMMWVs used in Iraq. In addition, the
Army's fiscal year 2007 reset strategy includes plans to modernize
Abrams Tanks and Bradley Fighting Vehicles (Bradley) to accelerate
achieving long-term strategic goals under the Army's modularity
initiative. While deploying Army units have not experienced shortages
of these items, accelerating modernization programs in general to
achieve a modular force structure may be sacrificing other short-term
needs for longer-term goals. According to Army officials, reset
prepares units for the next mission, which can be either current (e.g.,
OIF/Operation Enduring Freedom (OEF)) or future (e.g., full-spectrum
contingency operations) missions; thus, accelerating modernization of
the Abrams Tanks and Bradleys would prepare units for future
missions.[Footnote 25] Although deployed Army and Marine Corps units
and units about to deploy generally report high readiness rates, the
services have reported a decrease in nondeployed units' reported
readiness rates,[Footnote 26] in part due to equipment shortages. The
Army Chief of Staff has testified that the Army has had to take
equipment from nondeployed units in order to provide it to deployed
units, which increases risk to next-to-deploy units and limits the
Army's ability to respond to emerging contingencies. In contrast, the
Marine Corps reset planning process emphasizes replacing equipment;
however, actions required to support this strategy have adversely
affected readiness of nondeployed Marine Corps units. For example, as
the Commandant of the Marine Corps has testified,[Footnote 27] the
Marine Corps has had to choose between providing equipment to units
preparing to deploy to Iraq and Afghanistan and unit training for other
contingencies while also deploying troops to support other operations,
such as humanitarian and disaster relief efforts in Pakistan and the
Philippines, Theater Security Cooperation events in Central America and
parts of Africa, and protecting our embassies. Until the services'
reset implementation strategies target shortages of equipment needed to
equip units preparing for deployment and ensure that those units are
given priority over longer-term equipment needs, the Army and Marine
Corps will be unable to minimize operational risk by ensuring that the
needs of deploying units can be met.
We are recommending that the Secretary of Defense direct the Under
Secretary of Defense, Comptroller to amend the FMR to require a more
detailed accounting of obligations and expenditures within the
procurement accounts for equipment reset, similar to the services'
reporting of reset obligations and expenditures within the operation
and maintenance accounts.[Footnote 28] We are also recommending that
the Secretary of Defense direct the Secretary of the Army and
Commandant of the Marine Corps to assess their approaches to equipment
reset to ensure that their priorities address equipment shortages in
the near term to minimize operational risk and meet the needs of
deploying units.
In commenting on a draft of this report, the department did not agree
with either of our two recommendations. DOD stated that formalizing
procedures by amending the FMR would be unwieldy and cost prohibitive
and that creating additional line items for each procurement program
would add complexity and duplication to existing reports. The intent of
our recommendation is not that the department create a complex
accounting system within each procurement account. Rather, we are
recommending that the department report reset obligations and
expenditures at the sub-cost category level, similar to the operation
and maintenance accounts to provide Congress with the visibility it
needs to identify the types of equipment that are being procured with
the reset funds it appropriates, such as aircraft, vehicles, or
communication and electronic equipment. We have modified our
recommendation to be clearer as to the level of detail we are
recommending for the reporting of obligations and expenditures in the
procurement accounts and added a matter for congressional consideration
suggesting that Congress should consider directing the Secretary of
Defense to direct the Under Secretary of Defense, Comptroller, to amend
the FMR. Regarding our second recommendation, DOD stated that there is
no need to direct the services to assess their approaches to reset
because the services already continually assess their approaches to
reset. We continue to believe that the Army's and Marine Corps'
equipment reset implementation strategies should target short-term
equipment shortages for deploying units and units preparing for
deployment rather than long-term modernization goals, which would be
more consistent with both the Army's and Marine Corps' definitions and
goals for their reset programs. DOD also provided a number of technical
comments, which we considered and incorporated as appropriate. DOD's
comments and our evaluations are discussed in detail in a later section
of this report. DOD's written comments are reprinted in appendix IV.
Background:
As a result of operations related to OIF, the Army and Marine Corps
continue to face an enormous challenge to reset their equipment due to
the increased usage of equipment, pace of operations, and amount of
equipment to be reset. At the onset of operations in 2003, the Army and
Marine Corps deployed with equipment that in some cases was already
more than 20 years old. As of January 2007, about 25 percent of the
Army's total on-hand wheeled and tracked vehicles and about 19 percent
of the Army's rotary wing aircraft were deployed to OIF/ OEF. In
addition, in March 2007 the Commandant of the Marine Corps testified
that approximately 30 percent of all Marine Corps ground equipment and
nearly 25 percent of Marine Corps active duty aviation squadrons are
engaged overseas.[Footnote 29] Most of the Marine Corps equipment is
not rotating out of theater at the conclusion of each force rotation
due to low equipment density. Appendix III provides a comparison of
Army and Marine Corps ground equipment and rotary aircraft deployed to
OIF/OEF to total equipment on hand.
As we stated in our January 2007 testimony,[Footnote 30] the services
are operating this equipment at a pace well in excess of peacetime
operations. The harsh operating environments in Iraq and environmental
factors such as heat, sand, and dust have taken a toll on sensitive
components. Troop levels and the duration of operations are also
factors that affect funding requirements. Army officials have recently
testified that the Army's truck fleet is experiencing an operational
tempo that is five to six times the peacetime rate, causing excessive
wear that is further exacerbated by the addition of heavy armor kits
required to enhance force protection.[Footnote 31] Marine Corps
officials also testified that ground equipment and rotary wing aircraft
are experiencing operational tempos from two to five times the
peacetime rate, thus increasing equipment maintenance and replacement
costs.[Footnote 32]
The Army generally defines equipment reset as the repair,[Footnote 33]
recapitalization, or replacement of equipment in accordance with the
standardized definition OSD and the services began using in
2006.[Footnote 34] Repairs can be made at the field level or
sustainment (depot) level. Army field level maintenance is intended to
bring equipment back to the 10/20 series Technical Manual standard, and
is usually performed at installations where the equipment is
stationed.[Footnote 35] Sustainment-level maintenance is work performed
on equipment that exceeds field-level reset capabilities. Sustainment-
level maintenance may be done at Army depots by contractors, by
installation maintenance activities, or a combination of the three, and
is coordinated by the Army Materiel Command. Army officials testified
in January 2007 that from the beginning of combat operations through
the end of fiscal year 2006, the Army has reset more than 200,000
pieces of equipment and plans to reset about 117,000 major items of
equipment in fiscal year 2007.
The Marine Corps initially defined equipment reset as restoring/
enhancing combat capability to its pre-OIF/OEF condition and included
recapitalization, reconstitution, and modernization of
equipment.[Footnote 36] The Commandant of the Marine Corps recently
testified that the Marine Corps moved depot maintenance and attrition
losses from cost of war[Footnote 37] to reset, which increased its
fiscal year 2007 reset estimate, following the adoption of the
standardized definition of reset costs across the services during the
summer of 2006.[Footnote 38] Reset estimates are in addition to cost of
war estimates. Equipment returning from combat theaters is evaluated
and transported to either a maintenance depot or to a Marine Corps
unit's home station for repair. Equipment is repaired to a "Code A"
condition, which means that the unit restores a majority of the usable
life remaining on all major components or to like-new condition but is
not considered to be in a zero-miles/zero-hours condition.
Recapitalization includes rebuilding or repairing equipment to a level
that improves the performance capabilities of the equipment or returns
the equipment to a zero-miles/zero-hours level. The objectives of the
Army's recapitalization process include extending equipment service
life; reducing operating and support costs; enhancing capability; and
improving system reliability, maintainability, safety, and efficiency.
The Army recapitalizes equipment either at depots/arsenals with Army
Materiel Command, the original equipment manufacturer, or a partnership
of the two overseeing operations. The Marine Corps has established a
principle end item rotation plan, which essentially rebuilds equipment
and extends its service life. This maintenance is done at the depot
level.
Replacement is the procurement of new equipment to replace battle
losses, washouts, and critical equipment deployed and left in theater
but needed for homeland defense and homeland security and other
critical missions. Army officials recently testified that the Army is
replacing and upgrading more than 50,000 pieces of equipment in fiscal
year 2007. The types of equipment the Army plans to replace range from
Apache, Black Hawk, and Chinook helicopters; ground combat vehicles
such as Abrams Tanks and Bradleys; and wheeled vehicles such as
Strykers and HMMWVs. The Army's fiscal year 2007 requirement for
procurement or investment of major items of equipment is $8.5 billion,
which includes $2.5 billion to replace reserve component equipment left
in theater as theater-provided equipment.[Footnote 39] Marine Corps
officials testified[Footnote 40] that a significant portion of their
reset requirement is for the replacement of equipment. For example, of
the total $10.2 billion requirement, the Marine Corps has received $8.8
billion from fiscal year 2006 through fiscal year 2007 for procurement
of new equipment.
Army and Marine Corps reset funding generally includes ground and
aviation equipment, combat losses, and pre-positioned equipment. The
services fund field-level and some depot-level maintenance from the
operation and maintenance appropriations, while procurement
appropriations fund most recapitalization and all procurement of new
equipment as part of reset. The Army's fiscal year 2007 reset execution
plan includes about 46 percent operation and maintenance funding and 54
percent procurement funding, while the Marine Corps plan includes about
16 percent operation and maintenance funding and 84 percent procurement
funding. Table 1 provides a breakdown of Army and Marine Corps reset
execution funding plans for fiscal year 2007.
Table 1: Breakdown of Army and Marine Corps Fiscal Year 2007 Reset
Execution Funding Plans:
Reset category: Repair (operation and maintenance);
Army: Dollars in billions: $7.8;
Army: Percentage of total: 46;
Marine Corps: Dollars in billions[A]: $0.9;
Marine Corps: Percentage of total: 16.
Reset category: Field-level maintenance;
Army: Dollars in billions: 3.7;
Army: Percentage of total: [Empty];
Marine Corps: Dollars in billions[A]: [Empty];
Marine Corps: Percentage of total: [Empty].
Reset category: Sustainment-level maintenance;
Army: Dollars in billions: 4.1;
Army: Percentage of total: [Empty];
Marine Corps: Dollars in billions[A]: [Empty];
Marine Corps: Percentage of total: [Empty].
Reset category: Recapitalization;
Army: Dollars in billions: 4.3;
Army: Percentage of total: 25;
Marine Corps: Dollars in billions[A]: [Empty];
Marine Corps: Percentage of total: [Empty].
Reset category: Rebuild (operation and maintenance);
Army: Dollars in billions: 0.7;
Army: Percentage of total: [Empty];
Marine Corps: Dollars in billions[A]: [Empty];
Marine Corps: Percentage of total: [Empty].
Reset category: Upgrade (procurement);
Army: Dollars in billions: 3.6;
Army: Percentage of total: [Empty];
Marine Corps: Dollars in billions[A]: [Empty];
Marine Corps: Percentage of total: [Empty].
Reset category: Replacement procurement);
Army: Dollars in billions: 5.0;
Army: Percentage of total: 29;
Marine Corps: Dollars in billions[A]: 4.9;
Marine Corps: Percentage of total: 84.
Reset category: Total FY 07 funding[B];
Army: Dollars in billions: $17.1;
Army: Percentage of total: 100;
Marine Corps: Dollars in billions[A]: $5.8;
Marine Corps: Percentage of total: 100.
Sources: Army G-8 and Marine Corps' Programs and Resources Contingency
Cell.
[A] Total $5.8 billion reset funding includes $0.7 billion initially
appropriated for procurement of Mine Resistant Ambush Protected
vehicles (MRAP) that was later reclassified as a cost of war, not
reset.
[B] Army and Marine Corps reset funding includes funding for ground and
aviation equipment, combat losses, and pre-positioned equipment. In
addition to operation and maintenance and procurement appropriations,
the Marine Corps also receive funds from Operation and Maintenance
Navy, Navy Aircraft Procurement, Navy Weapons Procurement, and Navy
Other Procurement appropriation accounts. The Marine Corps reset
funding also includes about $8 million from the Research and
Development appropriation account.
[End of table]
The services' fiscal year 2007 reset execution plans reflect
assumptions made about the condition of equipment at the end of
operations and each service's equipping philosophy. For example, prior
to OIF/OEF, Army units traditionally deployed and redeployed with their
own equipment sets and rotated equipment back to the United States when
equipment required repairs that exceeded field-level maintenance
capabilities. After operations began, the Army developed and
implemented initiatives to keep large amounts of equipment in theater
(known as theater-provided equipment) in order to maintain high
equipment readiness rates for combat units and improve availability of
equipment in theater. The Army calculates reset funding requirements
each year based on the projected amount of equipment returning during
the following fiscal year that can be repaired in that fiscal year and
on the documented losses that have occurred. Army officials estimate
that about 15 percent of equipment will be recapitalized or replaced
and about 85 percent will be repaired after operations cease. In
contrast, the Marine Corps, as an expeditionary service, traditionally
leaves equipment in theater for subsequent rotating forces. Equipment
remains in use on a near-continuous basis at an operating tempo that
far exceeds normal peacetime usage. Rotation of equipment was not
possible after operations began because spare equipment was not
available for use while equipment was in depot maintenance. Marine
Corps officials recently testified that they have developed a principal
end item rotation plan that allows equipment to be sent back to the
United States for depot-level maintenance cycles. This rotation plan
extends the service life and applies the latest technology available to
ensure that the best possible equipment is returned to theater. Marine
Corps officials estimate that more than 80 percent of equipment will be
replaced and about 20 percent will be repaired after operations cease.
Over the past several years, we have reported on equipment reset
concerns, including the lack of equipment program strategies, poor
condition of pre-positioned equipment, and challenges related to
replacing Army National Guard equipment left in the OIF theater to
support ongoing operations. For example, for certain equipment items,
the Army and Marine Corps have not developed complete sustainment,
modernization, and replacement strategies or identified funding needs
for all priority equipment such as the Army's Bradley and Marine Corps'
CH-46E Sea Knight helicopter.[Footnote 41] Also, because DOD has drawn
heavily on pre-positioned stocks to support ongoing operations in Iraq,
it faces some near-term operational risks should another large-scale
conflict emerge.[Footnote 42] Moreover, Army National Guard inventories
have been depleted by strategies requiring large amounts of equipment
to be left in theater to equip other units, and the Guard will likely
face growing shortages and challenges in regaining readiness for future
missions until plans to replace this equipment are implemented and
completed.[Footnote 43] In our report on reliability of contingency
operations obligations data, we found that while DOD had taken steps to
improve its cost-reporting procedures, lack of transparency and
inaccuracies in reported contingency operations obligations continue to
exist.[Footnote 44] Similarly, we have reported that DOD was unable to
accurately track and report equipment reconstitution[Footnote 45] costs
in its supplemental budget requests because the services' accounting
codes were capturing contingency operations and other obligations that
were not incurred exclusively for equipment reconstitution. We
recommended that the Secretary of Defense direct the services to
develop comprehensive and consistent methods for tracking and reporting
equipment reconstitution obligations, which include equipment repair,
replacement, and recapitalization, collectively known as reset. In
response to our recommendation, DOD has revised its FMR to improve
reporting of equipment reconstitution by providing a more detailed
breakdown of the equipment reconstitution category within the operation
and maintenance account for the monthly Supplemental and Cost of War
Execution Reports but did not address the procurement accounts. DOD now
reports operation and maintenance equipment reconstitution costs by
organizational-level maintenance, intermediate-level maintenance, depot-
level maintenance, and contractor logistics support. However, until
additional actions are taken, such as improving the services' financial
systems' ability to track obligations, we stated that our
recommendation will not be fully implemented. In addition to these
concerns, we also have reported on long-standing concerns about DOD's
accounting systems[Footnote 46] and personnel issues,[Footnote 47]
which could also have an impact on equipment reset. Moreover, Congress
has required the Secretary of Defense to submit detailed information on
reset expenditures for each of the services with their annual budget
requests as part of the Fiscal Year 2007 National Defense Authorization
Act.[Footnote 48]
Army and Marine Corps Do Not Report Expenditures within Procurement
Accounts in a Way That Confirms That Funds Appropriated for Reset Are
Expended for That Purpose:
Although the Army and Marine Corps track and report equipment reset
expenditures in the operation and maintenance accounts in detail, they
do not report detailed equipment reset expenditures within the
procurement accounts in a way that confirms that funds appropriated for
reset are expended for that purpose because there is no requirement to
report procurement expenditures beyond what is required by the DOD FMR.
While the Conference Report accompanying the DOD appropriations act for
2007 directed the Secretary of Defense to periodically provide a
detailed accounting of obligations and expenditures of funds provided
in Title IX of the act, which includes funds provided for reset, by
program and subactivity group[Footnote 49] and to provide a listing of
equipment procured using funds appropriated under Title IX of this
act,[Footnote 50] the Army and Marine Corps are not legally required to
provide this more detailed level of accounting. The Army and Marine
Corps currently track and report obligations and expenditures at
detailed levels within the operation and maintenance accounts,
consistent with this guidance. However, despite the fact that they
track reset obligations and expenditures in detail within the
procurement accounts, they do not report those expenditures at the same
level of detail. Between fiscal years 2003 through 2007 the Army
received more than $14 billion in reset funding for procurement of new
equipment. The Marine Corps received about $8 billion from fiscal year
2006 through fiscal year 2007 for procurement of new equipment as well.
Army and Marine Corps officials stated that they could provide an
historical accounting of those reset obligations and expenditures if
required to do so. As we recently testified, as of fiscal year 2007,
the Army has begun to track and report obligations and expenditures in
its operation and maintenance account, as directed by the Conference
Report. According to Army officials, the Army segregates the cost of
reset from other costs and tracks expenditures to ensure funds
appropriated for this purpose are expended for this purpose. The Army
has also designated separate codes to capture cost data within the
financial accounting system within the operation and maintenance
accounts broken down by Army pre-positioned stocks, depot maintenance,
recapitalization, aviation special technical inspection and repair, and
field maintenance. Each of the Army's commands uses these codes to
record the execution of operation and maintenance reset funds. The
Defense Finance and Accounting Service collects these reset cost data
and provides them to the Army for various reports on the status of
reset obligations and expenditures. Unlike the Army, the Marine Corps
began tracking reset execution in its operation and maintenance account
when it began receiving reset funding in fiscal year 2006. The Marine
Corps established a special interest code within its financial
management systems to identify operation and maintenance obligations
and expenditures related to equipment reset.
Neither the Army's nor the Marine Corps' monthly Supplemental and Cost
of War Execution Reports further breaks down the procurement accounts
similar to the way the services break down the operation and
maintenance accounts at the sub-cost category level. Currently, the DOD
FMR does not require accounting for reset obligations and expenditures
at detailed sub-cost category levels within the procurement
accounts.[Footnote 51] The monthly reports reflect one line item for
reset within the procurement accounts. The FMR reset sub-cost category
includes the funding for major repairs/overhauls and recapitalization
of equipment[Footnote 52] within the procurement and research,
development, test, and evaluation accounts. Table 2 compares sub-cost
categories for the operation and maintenance and procurement accounts
for the monthly Supplemental and Cost of War Execution Reports as
prescribed by the Financial Management Regulation.
Table 2: Comparison of Army and Marine Corps Sub-cost Categories within
the FMR for Operation and Maintenance and Procurement Accounts:
Operation and maintenance sub-cost categories: Reset organizational-
level maintenance;
Procurement sub-cost categories: Reset.
Operation and maintenance sub-cost categories: Reset intermediate-
level maintenance;
Procurement sub-cost categories: [Empty].
Operation and maintenance sub-cost categories: Reset depot-level
maintenance;
Procurement sub-cost categories: [Empty].
Operation and maintenance sub-cost categories: Reset contractor
logistic support;
Procurement sub-cost categories: [Empty].
Sources: DOD Supplemental and Cost of War Execution Reports.
[End of table]
As shown in table 2, the Army and Marine Corps report reset costs at a
more detailed level within the operation and maintenance accounts than
the procurement accounts. Operation and maintenance reset
organizational-level and intermediate-level maintenance includes
equipment repairs/overhauls, and reset depot-level maintenance includes
equipment rebuilding that would improve performance capabilities or
extend the service life of the equipment. Procurement reset funds the
replacement or upgrade of equipment.
The Army provides additional monthly reports to Congress detailing the
status of procurement reset obligations in total dollars as well as a
summary of the number of equipment items replaced or recapitalized;
however, it does not provide a breakdown of the dollars associated with
those quantities. The Marine Corps does not provide these additional
reports because it was not required or requested to provide such
reports but could provide reports at the budget line item detail level
if requested. The process for tracking the execution of reset funding
within the Army's procurement account involves communications with the
individual program executive offices and managers for the purchase of
equipment included under reset. Funds that come from reset
appropriations are designated as such in funding authorization
documents that are sent to the program executive offices and managers.
Once the program managers receive these funds, they execute the funding
according to the specifications outlined in the funding authorization
documents. The program managers update and report back to Army
headquarters on a monthly basis on the numbers of equipment procured as
well as the dollar amounts associated for reset. The Army tracks
procurement obligations and expenditures manually outside the financial
accounting system. As it has done with the operation and maintenance
account, the Marine Corps established a special interest code within
its financial management system beginning in fiscal year 2006 to
identify obligations and expenditures related to equipment reset within
the procurement account.
Until the Army and Marine Corps are required to report the obligation
and expenditure of funds appropriated for reset in the procurement
accounts at a more detailed level, similar to reporting of obligations
and expenditures in the operation and maintenance accounts, they will
be unable to ensure that these funds are being obligated and expended
for equipment reset for deploying units and units deploying to Iraq and
Afghanistan instead of other, more long-term equipment needs.
Furthermore, Congress will not have the visibility it needs to exercise
effective oversight and to determine if the amount of funding
appropriated for equipment reset has been most appropriately used for
the purposes intended. In addition, because the Army was not required
to track the execution of its reset appropriations from the onset of
operations, it initially did not have historical execution
data[Footnote 53] upon which to base future cost estimates. As we have
reported, historical execution data would provide a basis for
estimating future funding needs.[Footnote 54] The Congressional Budget
Office has also testified that better estimates of future reset costs
could be provided to Congress if more information was available on
expenditures incurred to date.[Footnote 55] Without historical
execution data, the Army must rely on assumptions and models based on
its own interpretations of the definition of reset, and may be unable
to submit accurate budget requests to obtain future reset funding.
Army and Marine Corps Cannot Be Assured That Reset Implementation
Strategies Will Sustain Equipment Availability While Meeting Ongoing
Operational Requirements:
The Army and Marine Corps cannot be assured that their reset
implementation strategies will sustain equipment availability for
deployed units as well as units preparing for deployment to Iraq and
Afghanistan because neither the Army's nor the Marine Corps' reset
implementation strategies target shortages of equipment on hand and
prioritize needs of units preparing for deployment over longer-term
modernization goals.[Footnote 56] According to the Army's ARFORGEN
implementation strategy and reset implementation guidance,[Footnote 57]
the primary goal of reset is to prepare units for deployment and to
improve next-to-deploy units' equipment-on-hand levels. However, the
Army's reset implementation strategy is not based on aggregate
equipment requirements to improve the equipment-on-hand levels of units
preparing for deployment to Iraq and Afghanistan. Instead, the Army's
reset implementation strategy is based on resetting equipment that it
expects will be returning to the United States in a given fiscal year.
Similarly, the Marine Corps' reset goal is to ensure that the Corps is
equipped to perform both ongoing operations and other future missions;
however, more than 80 percent of the Marine Corps' fiscal year 2006 and
fiscal year 2007 reset budget requests are for procurement of new
equipment that will not be available for many months. Although deployed
Army and Marine Corps units and units about to deploy generally report
high reported readiness rates, the services have reported a decrease in
nondeployed units' reported readiness rates. Furthermore, the Army's
and Marine Corps' reset implementation strategies do not ensure that
reset of equipment needed to support units that are preparing for
deployment are given priority over other longer-term equipment needs,
such as equipment modernization in support of the Army's modularity
initiative, because reset implementation strategies are not linked to
meeting deploying unit equipment needs.
Reset Implementation Strategies Do Not Target Shortages of Equipment on
Hand to Mitigate Operational Risk:
The Army and Marine Corps reset implementation strategies do not
specifically target shortages of equipment on hand among units
preparing for deployment to Iraq and Afghanistan in order to mitigate
operational risk.[Footnote 58] Although deployed Army and Marine Corps
units and units about to deploy generally report high reported
readiness rates, the services have reported a decrease in nondeployed
units' reported readiness rates, in part due to equipment shortages.
According to the Army's ARFORGEN implementation strategy and reset
implementation guidance,[Footnote 59] the primary goal of reset is to
prepare units for deployment and to improve next-to-deploy units'
equipment-on-hand levels. Army officials stated that reset prepares
next-to-deploy units for missions that could include either current
(e.g., OIF/OEF) or future (e.g., full-spectrum contingency operations)
missions. However, as we have testified,[Footnote 60] some units
preparing for deployment have reported shortages of equipment on hand,
as well as specific equipment item shortfalls that affect their ability
to carry out their missions. For example, according to an Army unit
preparing to deploy, the model HMMWVs the unit was given to train with
were limited in number and were significantly different from the
armored HMMWVs it was expecting to use while in theater. While the
Army's plan to recapitalize more than 7,500 (HMMWV) in fiscal year 2007
at a cost of $455 million may raise overall HMMWV equipment-on-hand
levels of nondeployed units in the United States, Army officials have
stated that this recapitalization program will not directly provide
HMMWVs to train or equip units deploying for OIF missions. This is
because the HMMWVs produced by the recapitalization program are
unarmored and do not offer adequate force protection, and thus are not
being deployed to the OIF theater. Moreover, these HMMWVs have limited
training value for deploying units primarily because the unarmored
HMMWVs have different handling characteristics and configurations than
the armored HMMWVs used in Iraq. In addition, Army[Footnote 61] and
Marine Corps[Footnote 62] unit commanders preparing for deployments may
subjectively upgrade their units' overall readiness levels, which may
mask the magnitude of equipment shortfalls. For example, some deploying
units may report high readiness rates even though unit commanders have
noted equipment shortages in the readiness reports' remarks sections
with plans to fall in on theater-provided equipment.[Footnote 63] As we
have testified,[Footnote 64] since 2003, deploying units have continued
to subjectively upgrade their overall readiness as they approach their
deployment dates, despite decreasing overall readiness levels among
those same units. Units can continue to report shortages throughout
their training cycles that affect their ability to train. Army leaders
have testified to Congress that timely reset of equipment is
fundamental to enabling them to sustain their current global
commitments as well as prepare for emerging threats. However, since the
Army's current reset planning process is based on resetting equipment
that it expects will be returning to the United States in a given
fiscal year, and is not based on aggregate equipment requirements to
improve the equipment-on-hand levels of deploying units, the Army
cannot be assured that its reset programs will provide sufficient
equipment to train and equip deploying units for ongoing and future
requirements.
While the Marine Corps' reset implementation strategy is focused on
ensuring that the Marine Corps is equipped to perform both ongoing
operations and future missions, their priority for equipment reset is
to support deployed forces. This strategy reflects Marine Corps
leaders' expectations that short-term deployed unit requirements can be
met by using equipment currently deployed to the OIF theater, and that
in the long term, much of that deployed equipment will ultimately need
to be replaced, based on the expectation that many items will be
damaged or degraded beyond economical repair. In order to maintain high
mission capable rates for deployed forces and ensure that units
preparing to deploy have sufficient equipment to conduct predeployment
training programs, the Marine Corps has supplemented the equipment
deployed to the OIF theater by drawing additional equipment from its
maritime pre-positioning ships and pre-positioned stocks in Norway. In
addition, it continues to cross-level and redistribute equipment across
the Corps. Actions required to support this strategy have adversely
affected readiness of nondeployed units with a decrease in nondeployed
Marine Corps unit readiness. As a result, the Marine Corps has had to
make trade-offs between unit training for other types of contingencies
and units preparing to deploy to OIF. Marine Corps leaders have
testified on the critical role that reset plays in ensuring that
deployed and nondeployed reported equipment readiness rates remain
acceptable. While the reported readiness rates of Marine Corps units
deployed to the OIF theater remain high, Marine Corps officials have
recognized the need to continue to invest in the readiness of deployed
equipment--both through the purchase of replacement equipment and
through increased rotation of major deployed equipment items in
maintenance facilities in the OIF theater and the United States. The
Marine Corps' goal for its reset funding requests for fiscal year 2006
and fiscal year 2007 was to address the aggregate set of equipment
shortfalls created by the impact of OIF and OEF on its equipment
inventories. Beginning in fiscal year 2005, the Marine Corps conducted
a detailed appraisal of the impact of OIF and OEF on its equipment
based on a set of business rules and assumptions on what types of
shortfalls could be included in its reset estimate, and like the Army,
made item-by-item decisions on whether to repair, recapitalize, or
replace each item. Its final reset requirement addressed three major
categories of equipment needs: requirements to replace equipment
committed to OIF operations in Iraq, Afghanistan, and the Horn of
Africa as well as related shortfalls in the United States;
reconstitution of pre-positioned equipment and other strategic
reserves; and modernization requirements to provide equipment needed to
support OIF-related force structure needs, such as special units
created to train Iraqi forces and other foreign military forces.
Reflecting the emphasis on replacing equipment, more than 80 percent of
the Marine Corps' reset funding for fiscal years 2006 and 2007 is for
procurement.[Footnote 65]
Until the services' reset implementation strategies target shortages of
equipment needed to equip units preparing for deployment, the Army and
Marine Corps will be unable to minimize operational risk by ensuring
that the needs of deploying units can be met.
Reset Implementation Strategies Do Not Give Priority to Deploying Unit
Equipment Needs over Longer-Term Equipment Needs:
The Army's and Marine Corps' reset implementation strategies do not
ensure that the repairing, replacing, and recapitalization of equipment
needed to support units that are preparing for deployment are being
given priority over other longer-term equipment needs because reset
implementation strategies are not linked to meeting deploying unit
equipment needs. Although Army reset implementation strategies are
primarily based on plans for repairing, recapitalizing, or replacing
equipment returning from overseas theaters in a given fiscal year, the
Army's reset strategy also has included funding requests for certain
items to accelerate achieving longer-term strategic goals under the
Army's modularity initiative. For example, in addition to the planned
fiscal year 2007 sustainment-level reset of almost 500 tanks and more
than 300 Bradleys expected to return from the OIF theater, the Army
also intends to spend approximately $2.4 billion in fiscal year 2007
reset funds to take more than 400 Abrams Tanks and more than 500
Bradleys from long-term storage or from units that have already
received modernized Bradleys for depot-level upgrades. These
recapitalizations will allow the Army to accelerate its progress in
achieving a modular force structure[Footnote 66] by providing
modernized Abrams Tanks and Bradleys to several major combat units 1 or
2 years ahead of schedule. Army officials believe achieving these
modularity milestones for Abrams Tanks and Bradleys will achieve
greater commonality in platforms and reduce overall logistical and
financial requirements by reducing the number of variants that must be
supported. However, accelerating modernization programs to achieve a
modular force structure may be sacrificing short-term needs for longer-
term goals.
The Marine Corps' reset planning process does not include an evaluation
of trade-offs between the shorter-term need to improve the degraded
readiness of Marine Corps units in the United States against longer-
term requirements for procurement to replace deployed items that may
not affect readiness for some time.[Footnote 67] For example, the
Marine Corps has requested supplemental appropriations to procure 3,700
MRAPs to replace HMMWVs, while also planning to procure additional
HMMWVs as part of reset to replace older variants and deployed A2
HMMWVs severely degraded due to OIF missions.[Footnote 68] However,
many of these HMMWVs will not be fielded for more than 2 years. In the
short term, the Marine Corps needs the MRAPs for increased force
protection while the requirement for HMMWV replacements will continue
beyond OIF/OEF. Until reset implementation strategies are linked to
equipment needs of deploying units, the Army and Marine Corps will be
unable to prioritize their reset plans and funding to ensure that the
short-term needs of deploying units can be met.
Conclusions:
Since fiscal year 2002, Congress has appropriated more than $38 billion
for Army equipment reset and about $10.9 billion for the Marine Corps.
In addition, the Army estimates that future funding requirements for
equipment reset will be about $12 billion to $13 billion per year for
the foreseeable future. The Marine Corp estimates that its future
funding requirements for equipment reset will be about $2 billion to $3
billion. At a time when the nation faces increased financial
constraints, it is important for both DOD and Congress to be in a
position to weigh the trade-offs between competing requirements and
risk associated with degraded equipment readiness, so that they can
make sound investment decisions on the use of the reset funding. Until
the Army and Marine Corps are required to report the obligation and
expenditure of funds appropriated for reset in the procurement accounts
at a more detailed level, similar to reporting of obligations and
expenditures for the operation and maintenance accounts, they will be
unable to ensure that these funds are being obligated and expended for
equipment reset for deploying units and units deploying to Iraq and
Afghanistan instead of other, more long-term equipment needs.
Furthermore, Congress will not have the visibility it needs to exercise
effective oversight and to determine if the amount of funding
appropriated for equipment reset has been most appropriately used for
the purposes intended.
The Army's and Marine Corps' reset implementation strategies need to
ensure that priority is given to repairing, replacing, and modernizing
the equipment that is needed to equip units preparing for deployment to
Iraq and Afghanistan. The current shortages of equipment on hand for
units that are preparing for deployment could potentially decrease
overall force readiness if equipment availability shortages are not
filled prior to these units' deployments. Without prioritizing reset
implementation strategies and funding so that shortages of equipment on
hand are targeted, the Army and Marine Corps will be unable to minimize
operational risk by ensuring they maintain their ability to equip
deploying units. Until reset implementation strategies are linked to
equipment needs of deploying units, the Army and Marine Corps will be
unable to prioritize their reset plans and funding to ensure that the
short-term needs of deploying units are filled. Furthermore, as the
Army and Marine Corps move forward with equipment reset, they will need
to establish more transparent linkages among the objectives of their
reset implementation strategies, the funds requested for reset, the
obligation and expenditure of appropriated reset funds in both the
operation and maintenance and procurement accounts, and equipment
requirements and related priorities.
Recommendations for Executive Action:
We are making the following two recommendations.
To provide Congress with the visibility it needs to exercise effective
oversight and to determine if the funding appropriated for equipment
replacement and recapitalization within the procurement accounts has
been most appropriately used for the purposes intended, we recommend
that the Secretary of Defense direct the Under Secretary of Defense,
Comptroller, to amend the FMR to require that the monthly Supplemental
and Cost of War Execution Reports identify expenditures within the
procurement accounts for equipment reset at more detailed sub-cost
category levels, similar to reporting of obligations and expenditures
in the operation and maintenance accounts.
To ensure that the Army's and Marine Corps' reset implementation
strategies target shortages of equipment needed to equip units
preparing for deployment to Iraq and Afghanistan, we recommend that the
Secretary of Defense direct the Secretary of the Army and Commandant of
the Marine Corps to assess their approaches to equipment reset to
ensure that their priorities address equipment shortages in the near
term to minimize operational risk and ensure that the needs of
deploying units can be met.
Matter for Congressional Consideration:
Congress should consider directing the Secretary of Defense to direct
the Under Secretary of Defense, Comptroller to amend the FMR in order
to require a more detailed accounting of reset obligations and
expenditures within the procurement accounts, similar to the
department's reporting of reset obligations and expenditures within the
operation and maintenance accounts. Specifically, as stated in our
recommendations, the reporting of reset obligations and expenditures
within the procurement accounts at more detailed sub-cost category
levels would enhance the monthly Supplemental and Cost of War Execution
Reports as well as provide greater visibility to Congress for
exercising effective oversight and determining if the amount of funding
appropriated for equipment reset has been most appropriately used for
the purposes intended.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD did not concur with
our two recommendations. DOD's written comments are reprinted in
appendix IV.
Regarding the first recommendation that DOD direct the Office of
Secretary of Defense, Comptroller, to amend the FMR to provide for a
more detailed accounting of obligations and expenditures within the
procurement accounts for equipment reset to enhance monthly
Supplemental and Cost of War Execution Reports, DOD did not concur and
stated that formalizing procedures at the DOD level through amending
the FMR would be unwieldy and cost prohibitive. The department believes
that the creation of additional detailed line items for each program
involved in reset would add too much complexity and duplication to
existing reports. DOD also stated that a single line item in each
procurement account for all equipment reset, similar to the operation
and maintenance account, would not adequately describe the individual
equipment undergoing reset, whether replacement or overhaul. The intent
of the recommendation is not that the department creates a complex
accounting system within each procurement account. Rather, we are
recommending that the department report reset obligations and
expenditures at more detailed sub-cost category levels, similar to the
operation and maintenance accounts, to provide Congress with the
visibility it needs to identify the types of equipment that are being
procured with the reset funds it appropriates, such as aircraft,
vehicles, or communication and electronic equipment. We have modified
our recommendation to be clearer as to the level of detail we are
recommending for the reporting of obligations and expenditures in the
procurement accounts.
While the department believes handling the procurement accounts in the
same manner as the operation and maintenance accounts would not be
informative because the procurement accounts are considerably more
complex than the operation and maintenance accounts, we continue to
believe that the department should amend the DOD FMR to incorporate a
more detailed breakdown of the procurement accounts similar to the way
the Army and Marine Corps already track and report those obligations
and expenditures in the operation and maintenance accounts. DOD further
cited an alternative accounting method it is pursuing with the Defense
Finance and Accounting Service, which DOD believes may increase
visibility within the procurement account but not at the individual
item level. However, DOD officials did not provide documentation on
this new proposed accounting method when we requested it.
Furthermore, subsequent to receiving agency comments, we noted that the
June 2007 Supplemental and Cost of War Execution Report, received in
mid-August, reflected a more detailed reporting of procurement sub-cost
categories similar to what was suggested in our recommendation.
According to DOD officials, this is an out-of-cycle change to improve
visibility of reset and other program details related to GWOT. The FMR
does not reflect this change nor does it define the new sub-cost
categories. Consequently, we were unable to determine what funding was
included in each sub-cost category. We believe that requiring a more
detailed accounting of obligations and expenditures within the
procurement accounts at the sub-cost category level, similar to
reporting of obligations and expenditures in the operation and
maintenance accounts, would provide Congress the visibility it needs to
exercise effective oversight and determine if the amount of reset
funding appropriated for equipment replacement and recapitalization is
most appropriately used for the purposes intended. Army and Marine
Corps officials have stated that they are currently able to track reset
obligations and expenditures within the procurement accounts and
already provide a similar level of detail in their budget
justifications. Because the department did not agree with our
recommendation, we have added a matter for congressional consideration
suggesting that Congress should consider directing the Secretary of
Defense to direct the Under Secretary of Defense, Comptroller, to amend
the FMR in order to require a more detailed accounting of reset
obligations and expenditures within the procurement accounts as is done
within the operation and maintenance accounts. Specifically, as stated
in our recommendations, a more detailed accounting of obligations and
expenditures within the procurement accounts would enhance monthly
Supplemental and Cost of War Execution Reports as well as provide
greater visibility to Congress to exercise effective oversight and
determine if the funding provided for reset within the procurement
accounts is most appropriately used for the purposes intended.
In response to our second recommendation that the Secretary of Defense
direct the Secretary of the Army and Commandant of the Marine Corps to
assess their approaches to equipment reset to ensure that their
priorities address equipment shortages in the near term to minimize
operational risk and ensure that the needs of deploying units can be
met, DOD did not concur, stating that there is no need to direct the
services to assess their approaches to reset because the services
already continually assess their approaches to equipment reset. The
department believes that the Army's overall equipping strategy, of
which reset is a component, along with its prioritization scheme (the
Dynamic Army Resource Priority List) address equipment shortages in the
near term to equip units that are deployed or deploying. The department
also stated in its comments that the Marine Corps employs a documented,
standardized, and flexible reset strategy designed to meet both current
operational requirements and long-term reconstitution strategies. While
we acknowledge that reset is only one component of the services'
overall equipping strategies and that the services have stated that
their overall equipping strategies ensure that deployed units or
deploying units are equipped as required, as we stated in our report,
the Army's primary goal for equipment reset is to prepare units for
deployment and to improve next-to-deploy units' equipment-on-hand
levels, and the Marine Corps' priority for equipment reset is to
support deployed forces. However, the Army's and Marine Corps'
implementation of their reset strategies do not necessarily address
shortages of equipment in the short term. Instead, the Army's
implementation of its reset strategy is based on plans for repairing,
recapitalizing, or replacing equipment returning from overseas theaters
in a given fiscal year, while the Marine Corps' implementation of its
reset strategy is based on ensuring that Marine Corps units are
equipped to perform both ongoing operations and other future missions.
Congress has appropriated tens of billions of dollars since fiscal year
2002 specifically to address equipment reset concerns raised by the
Army and Marine Corps about equipment degraded by military operations
in Iraq and Afghanistan. However, as we stated in our report, the Army
planned to spend $2.4 billion in fiscal year 2007 reset funding to take
more than 400 Abrams Tanks and more than 500 Bradleys from long-term
storage for depot-level upgrades, which would accelerate its
modernization program by 1 to 2 years. As we stated in our report, the
Army's primary goal for equipment reset is to prepare units for
deployment and to improve next-to-deploy units' equipment-on-hand
levels. Thus, we believe reset funding should address shortages of
equipment needed to equip deploying units and units preparing for
deployment rather than accelerating modernization programs in general
by procuring equipment, which may not be available for several years,
for other equipment strategies such as homeland defense and homeland
security. Therefore, we continue to believe our recommendation is
appropriate and relevant.
Lastly, DOD provided technical comments to improve the accuracy and
clarity of the report, which we have reviewed and incorporated in the
report as appropriate. DOD's specific comments and our responses to
them are discussed in detail in appendix IV. In summary, DOD disagreed
with our statements regarding reporting requirements for funds
appropriated for equipment reset through operation and maintenance and
procurement appropriations and Army and Marine Corps equipment reset
implementation strategies. While we agree that DOD is currently not
required to itemize the types of equipment replaced or recapitalized
within the procurement accounts, we continue to believe that the
Conference Report accompanying the DOD appropriations act for 2007
directed the Secretary of Defense to periodically provide a detailed
accounting of reset obligations and expenditures of funds provided in
Title IX of the act, which includes funds for reset, by program and
subactivity group and to provide a listing of equipment procured using
funds appropriated under Title IX of the act. Furthermore, we believe
that detailed reporting of reset obligations and expenditures within
the procurement accounts would provide Congress with the visibility it
needs to exercise effective oversight over reset funding. Similarly,
while we agree that reset is only one component of the Army and Marine
Corps overall equipping strategies, we continue to believe Army and
Marine Corps reset implementation strategies should target shortages of
equipment needed to equip units preparing for deployment to Iraq and
Afghanistan in the near term rather than using supplemental reset
appropriations to fund longer-term modernization goals.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, the Secretary of the Army, and
the Commandant of the Marine Corps. 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].
If you or your staff has any questions, please contact me at (202) 512-
8365 or solisw@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Key contributors to this report are listed in appendix V.
Signed by:
William M. Solis:
Director, Defense Capabilities and Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine the extent to which the Army and the Marine Corps can
track and report equipment reset expenditures in a way that confirms
that funds appropriated for reset are expended for that purpose, we
examined equipment reset funding requests submitted by the Army and the
Marine Corps and amounts appropriated by Congress to the services for
reset for fiscal years 2002 through 2007.[Footnote 69] We collected
data related to equipment reset cost estimates and met with Army and
Marine Corps headquarters officials to discuss the services'
definitions of reset and their reset assumptions. We reviewed reported
obligations and expenditures and budget estimates for Army and Marine
Corps equipment reset funding and determined that the reliability of
these data was sufficient for our purposes. We also met with Army
Budget Office and Marine Corps Programs and Resources officials to
discuss and collect documentation on how their financial management
systems track and report reset costs.
To address whether the Army and Marine Corps can be assured that their
equipment reset implementation strategies will sustain future equipment
readiness for deployed as well as nondeployed units while meeting
ongoing requirements, we examined the processes the services used to
develop their reset funding requests and plans, as well as policies in
place to execute reset. We did not review the services' overall
equipping implementation strategies. To compare planned equipment reset
activities to the Army's and Marine Corps' equipment requirements, we
developed equipment profiles for five equipment items.[Footnote 70]
These equipment items were identified by service officials as well as
previous GAO reports as items critical to ongoing operations. In
addition, we selected these items based on the large number of vehicles
that have gone through multiple rotations or have been in constant use
in the Operation Iraqi Freedom (OIF) theater and because most of these
equipment items may be undergoing repair, replacement, or
recapitalization simultaneously. We conducted interviews and
discussions with officials from Army Tank-automotive and Armaments
Command and program managers for the various equipment items. Our
review included only major end items, primarily ground equipment and
rotary aircraft. We reviewed inventory numbers, location of equipment
(e.g., items deployed and nondeployed), and acquisition plans for
future procurement of new equipment. We also collected and analyzed
Army and Marine Corps readiness data.
For work under both objectives, we held discussions at service
headquarters, met with officials from commands responsible for
executing reset programs, met with an Army division preparing to deploy
to Iraq in 2007, and met with officials in the Office of the Secretary
of Defense to discuss overall reset policies and programs.[Footnote 71]
We reviewed reported obligations and expenditures and budget estimates
for Army and Marine Corps equipment reset funding and determined that
the reliability of these data was sufficient for our purposes.
We performed our work from October 2005 through April 2007 in
accordance with generally accepted government auditing standards.
We interviewed officials, and obtained documentation when applicable,
at the following locations:
* U.S. Army Headquarters, Washington, D.C.
* Army Budget Office, Pentagon, Virginia:
* U.S. Army Materiel Command, Fort Belvoir, Virginia:
* U.S. Army Forces Command, Fort McPherson, Georgia:
* U.S. Army 3rd Infantry Division, Fort Stewart, Georgia:
* Institute for Defense Analysis, Alexandria, Virginia:
* U.S. Army National Guard, Arlington, Virginia:
* U.S. Army Tank-automotive and Armaments Command Headquarters, Warren,
Michigan:
* U.S. Marine Corps Headquarters, Washington, D.C.
* Marine Corps Programs and Resources, Pentagon, Virginia:
* Office of the Secretary of Defense, Washington, D.C.
[End of section]
Appendix II: Marine Corps Reset Categories:
Table: Marine Corps Reset Categories:
Category: OIF equipment density list (EDL);
Definition: Unit list of combat, combat support, and combat service
support equipment that is authorized/required by MARCENT for operations
in the CENTCOM Area of responsibility (AOR).
Category: Operation Enduring Freedom (OEF) EDL;
Definition: Unit list of combat, combat support, and combat service
support equipment that is authorized/required by MARCENT for operations
in the CENTCOM AOR.
Category: Joint Task Force Horn of Africa (HOA) EDL;
Definition: Unit list of combat, combat support, and combat service
support equipment that is authorized/required by MARCENT for operations
in the CENTCOM AOR.
Category: Home station shortfalls;
Definition: Equipment that was removed from a facility/activity in
order to support operations in the CENTCOM AOR and therefore results in
a shortfall that cannot be addressed from remaining inventory. The
equipment is essential for the facility/activity to achieve its
training objectives, mission readiness, or both prior to deploying to
the CENTCOM AOR. A home station is the garrison location, usually in
the continental United States, for a unit that is not deployed for
training or operational mission requirements.
Category: Training system shortfalls;
Definition: Equipment that was removed from a training
facility/activity activity in order to support operations in the
CENTCOM AOR and therefore results in a shortfall that cannot be
addressed from remaining inventory. The equipment is essential for the
facility/activity to achieve its training goals/ objectives.
Category: Global War on Terror (GWOT) support equipment;
Definition: Other GWOT-related equipment requirements (e.g., vehicle
armoring and commercialization of communications equipment in Iraq).
Category: Combat losses;
Definition: Equipment that was destroyed as a result of use in support
of OIF, OEF, or HOA.
Category: Not complete combat losses;
Definition: Equipment that was damaged not beyond economical repair as
a result of use in support of OIF, OEF, or HOA.
Category: Pre-positioned equipment;
Definition: Comprises two different sets of equipment: Maritime
Prepositioning Ships (MPS) and Marine Corps Prepositioning Program -
Norway (MCPP-N). Any equipment off-loaded from MPS or sourced from
stores (MCPP-N) being used in support of GWOT operations that must be
procured for reconstitution of those strategic assets.
Category: Depot maintenance afloat allowance (DMFA);
Definition: A pool of assets used to exchange serviceable for
unserviceable equipment. The use of 30 percent of Marine Corps ground
equipment and 25 percent of aviation assets in OIF/OEF has resulted in
a situation where the rotatable pool of equipment used to sustain depot
rework inductions is no longer available and must be restored to
continue timely equipment restoration efforts. Selected equipment in
critical demand/low density was identified in the DMFA component of the
reset estimate.
Category: Net war reserve material requirements;
Definition: Equipment required to reconstitute war reserve material
consumed or used in support of OIF, OEF, or HOA.
Category: Force Structure Review Group;
Definition: This initiative involves a rebalancing of the force to
provide optimal capabilities and force structure to prosecute the GWOT.
Additional funds are required to access, train, equip, and house the
new units and capabilities. If funding is not received it will delay
the availability of the required capabilities necessary to successfully
prosecute the GWOT until the fiscal year 2008-2010 time frame.
Category: Iraqi training teams;
Definition: Equipment procured for transition training of Iraqi
Security Forces.
Category: Foreign military training units;
Definition: Equipment procured for units specifically designated to
train foreign security forces, excluding Iraqi Security Forces.
Category: Urgent universal needs statements (UUNS);
Definition: Equipment determined critical for mission contingency
accomplishment that is not already included in a deploying unit's table
of allowance or available in the existing inventory for which an urgent
need exists such that expedited fielding is required (e.g., explosive
ordnance disposal robots and X-Ray Backscatter machines for
checkpoints). All UUNS requests are validated/approved by the Marine
Corps Oversight Council.
Category: Operational enhancements;
Definition: Modernization requirements recommended by the Marine Corps
Equipment Review Group. This includes equipment that is an update to
the existing Marine Corps table of equipment (T/E) that increases
capability over current gear, which enhances individual warfighter
effectiveness, mission performance, and unit readiness. The equipment
procured will replace existing unit T/E items.
Category: Modernization;
Definition: Replacing legacy equipment with new, updated, and different
capabilities (e.g., Advanced Combat Optical Gunsights where no rifle
optics existed before).
Source: Appendix 2 of the U.S. Marine Corps' RESET Report to the House
Appropriations Committee.
[End of table]
[End of section]
Appendix III: Army and Marine Corps Ground Equipment and Rotary
Aircraft Deployed and Total Equipment on Hand as of March 2007:
Tables 3 and 4 show the Army's and the Marine Corps' ground equipment
and rotary aircraft deployed to OIF/OEF compared to the total equipment
on hand as of March 2007.
Table 3: Army Equipment Deployed to OIF/OEF and Total Equipment on Hand
as of March 2007:
Items: Wheeled vehicles: HEMTT;
Equipment inventory: 12,836;
Deployed inventory: 3,282;
Percentage deployed: 25.6.
Items: Wheeled vehicles: HET;
Equipment inventory: 2,394;
Deployed inventory: 912;
Percentage deployed: 38.1.
Items: Wheeled vehicles: HMMWV;
Equipment inventory: 95,970;
Deployed inventory: 23,818;
Percentage deployed: 24.8.
Items: Tracked vehicles: Bradley Fighting Vehicle;
Equipment inventory: 3,021;
Deployed inventory: 679;
Percentage deployed: 22.5.
Items: Tracked vehicles: Abrams Tank;
Equipment inventory: 3,406;
Deployed inventory: 366;
Percentage deployed: 10.7.
Items: Tracked vehicles: M88;
Equipment inventory: 1,832;
Deployed inventory: 192;
Percentage deployed: 10.5.
Items: Wheeled/tracked vehicles total;
Equipment inventory: 119,459;
Deployed inventory: 29,249;
Percentage deployed: 24.5.
Items: Rotary wing aircraft: AH-64A/D;
Equipment inventory: 689;
Deployed inventory: 120;
Percentage deployed: 17.4.
Items: Rotary wing aircraft: CH-47D;
Equipment inventory: 392;
Deployed inventory: 63;
Percentage deployed: 16.1.
Items: Rotary wing aircraft: OH-58D;
Equipment inventory: 354;
Deployed inventory: 60;
Percentage deployed: 16.9.
Items: Rotary wing aircraft: UH-60A/L;
Equipment inventory: 1,362;
Deployed inventory: 293;
Percentage deployed: 21.5.
Items: Rotary wing aircraft total;
Equipment inventory: 2,797;
Deployed inventory: 536;
Percentage deployed: 19.2.
Legend: HEMTT = Heavy Expanded Mobility Tactical Truck; HET = Heavy
Equipment Transporter; HMMWV = High Mobility Multi-Purpose Wheeled
Vehicle.
Source: Army G-8.
[End of table]
Table 4: Marine Corps Equipment Deployed to OIF/OEF and Total Equipment
on Hand as of March 2007:
Items: Wheeled and tracked combat vehicles: Amphibious assault vehicle;
Equipment inventory: 1,218;
Deployed inventory: 95;
Percentage deployed: 8.
Items: Wheeled and tracked combat vehicles: Light armored vehicle;
Equipment inventory: 552;
Deployed inventory: 70;
Percentage deployed: 13.
Items: Wheeled and tracked combat vehicles: Wheeled and tracked combat
vehicles: M1A1 Tank;
Equipment inventory: 366;
Deployed inventory: 34;
Percentage deployed: 9.
Items: Wheeled and tracked combat vehicles: M88 Tank Retriever;
Equipment inventory: 59;
Deployed inventory: 6;
Percentage deployed: 10.
Items: Wheeled and tracked combat vehicles: Armored vehicle launched
bridge;
Equipment inventory: 18;
Deployed inventory: 0;
Percentage deployed: 0.
Items: WTCV total;
Equipment inventory: 2,213;
Deployed inventory: 205;
Percentage deployed: 9.
Items: Tactical vehicles: Light tactical vehicle (HMMWV);
Equipment inventory: 15,480;
Deployed inventory: 4,207;
Percentage deployed: 27.
Items: Tactical vehicles: Medium tactical vehicle;
Equipment inventory: 6,898;
Deployed inventory: 1,189;
Percentage deployed: 17.
Items: Tactical vehicles: Logistics vehicle system;
Equipment inventory: 1,770;
Deployed inventory: 251;
Percentage deployed: 14.
Items: Tactical vehicles: 5-ton trucks;
Equipment inventory: 663;
Deployed inventory: 160;
Percentage deployed: 24.
Items: Tactical vehicle total;
Equipment inventory: 24,811;
Deployed inventory: 5,807;
Percentage deployed: 23.
Items: Support vehicles: Construction equipment;
Equipment inventory: 1,187;
Deployed inventory: 217;
Percentage deployed: 18.
Items: Support vehicles: Material handling equipment;
Equipment inventory: 2,197;
Deployed inventory: 285;
Percentage deployed: 13.
Items: Support vehicle total;
Equipment inventory: 3,384;
Deployed inventory: 502;
Percentage deployed: 15.
Items: Other equipment: Communication and electronics equipment;
Equipment inventory: 155,446;
Deployed inventory: 21,617;
Percentage deployed: 14.
Items: Other equipment: Engineering support items;
Equipment inventory: 12,821;
Deployed inventory: 2,130;
Percentage deployed: 17.
Items: Other equipment: Mobile electric power;
Equipment inventory: 6,431;
Deployed inventory: 988;
Percentage deployed: 15.
Items: Other equipment: Trailers;
Equipment inventory: 12,124;
Deployed inventory: 1,520;
Percentage deployed: 13.
Items: Optics;
Equipment inventory: 36,687;
Deployed inventory: 19,735;
Percentage deployed: 54.
Items: Other equipment: Small arms/crew served (excluding M16 rifles
and M9 pistols);
Equipment inventory: 25,752;
Deployed inventory: 5,209;
Percentage deployed: 20.
Items: Other equipment total;
Equipment inventory: 249,261;
Deployed inventory: 51,199;
Percentage deployed: 21.
Legend: HMMWV = High Mobility Multi-Purpose Wheeled Vehicle.
Source: Marine Corps Programs and Resources.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Defense:
Deputy Under Secretary Of Defense For:
Logistics And Materiel Readiness:
3500 Defense Pentagon:
Washington, Dc 20301-3500:
August 3, 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, "Defense Logistics: Army and Marine Corps Cannot Be Assured
Equipment Reset Strategies Will Sustain Equipment Availability While
Meeting Ongoing Operational Requirements," dated June 20, 2007, (GAO
Code 350994/GAO-07-814).
The Department non-concurs with each of the two recommendations. An
explanation of the DoD position is enclosed. Additionally, since
portions of the draft report supporting the recommendations could be
misleading, extensive 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
Enclosure:
As stated:
GAO Draft Report – Dated June 20, 2007:
GAO CODE 350994I/GAO-07-814:
"Defense Logistics: Army and Marine Corps Cannot Be Assured Equipment
Reset Strategies Will Sustain Equipment Availability While Meeting
Ongoing Operational Requirements"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) to amend the
Financial Management Regulation to provide for a more detailed
accounting of obligations and expenditures within the procurement
accounts for equipment reset to enhance monthly Supplemental and Cost
of War Execution Reports.
DOD Response: Non-concur. While it is relatively simple to create an
Operation and Maintenance sub-activity group to account for the
maintenance portion of reset, to handle the procurement appropriations
in the same manner would not be informative. Procurement accounts are
considerably more complex. A single line item in each procurement
appropriation for all equipment reset, similar to the operations
account, would not adequately describe the individual equipment
undergoing reset, whether replacement or overhaul. The alternative,
creation of additional detailed line items for each program involved in
reset would add too much complexity and duplication to existing
financial reports. The Army and Marine Corps have demonstrated to the
GAO that they currently track reset within the procurement accounts,
but to formalize these procedures at the DoD level through amending the
Financial Management regulation would be unwieldy and cost prohibitive.
The Department will continue to stress to the military services the
need to account for obligations and expenditures in an accurate and
timely manner for those items undergoing equipment reset additionally,
we are pursuing an alternative accounting method with The Defense
Finance and Accounting Service (DFAS) which may increase visibility
within the procurement account but not at the individual item level.
The Department will continue to provide Congress with all of the
information they feel necessary to justify budget requests.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Secretary of the Army and the Commandant of the Marine Corps
to assess their approaches to equipment reset to ensure that their
priorities address equipment shortages in the near term to minimize
operational risk and ensure the needs of deploying units can be met.
DOD Response: Non-concur. There is no need for the Secretary of Defense
to direct the Secretary of the Army and Commandant of the Marine Corps
to assess their approach to reset, they each already continually assess
their approaches to equipment reset to ensure that their priorities
address equipment shortages in the near term to minimize operational
risk and ensure the needs of deploying units can and are being met. The
Army's overall equipping strategy, of which reset is a component, along
with its prioritization scheme (the Dynamic Army Resource Priority
List) addresses equipment shortages in the near term to equip units
that are deployed or deploying. Equipping and reset strategies have
been effective for the past five years. The Marine Corps employs a
documented, standardized, and flexible reset strategy designed to meet
both current operational requirements and long-term reconstitution
strategies.
GAO Draft Report – Dated June 20, 2007:
GAO CODE 350994 /GAO-07-814:
"Defense Logistics: Army and Marine Corps Cannot Be Assured Equipment
Reset Strategies Will Sustain Equipment Availability While Meeting
Ongoing Operational Requirements"
Technical Comments:
Highlights, first paragraph, first sentence does not accurately reflect
what the GAO was told. It should be revised to read: "...funds
appropriated for reset are expended for that purpose because neither
Congress, nor the DoD Financial Management Regulation."
Highlights, paragraph 2, sentence 1: "The Army and Marine Corps cannot
be assured their reset strategies will sustain equipment availability
for deployed units as well as units preparing for deployment to Iraq
and Afghanistan while meeting ongoing operational requirements because
neither the Army's nor the Marine Corps's reset strategies target
shortages of available equipment and prioritize equipment needs of
units preparing for deployment over longer-term modernization goals."
The Marine Corps does in fact employ a documented, standardized, and
flexible reset strategy designed to meet both current operational
requirements and long-term reconstitution strategies. First, regarding
the formulation of budget requirements, USMC Programs and Resources
(P&R) develops requirements for both short-term operational needs and
longer-term reset needs without prejudice or constraint beyond that
levied by OSD and Navy guidance. A copy of the Marine Corps "data call
letter" for FY 2007, the most pertinent example of the internal funding
strategy for reset, detailing such policy is included for support
(titled FY07 Call Letter). Specifically note pages 3 through 7, showing
categories encompassing both current operations (Cost of War) and reset
(Resetting the Force).
Second, tactical level execution of reset, most notably equipment
distribution, is also a comprehensive process involving the evaluation
of short-term deployment needs and long-term modernization efforts. The
Commandant of the Marine Corps prioritizes equipment and manning
priorities in a joint message to all Marine Corps commands. The most
recent message was published in May 2007 with a date/time group 211734Z
(classification of the message is secret and can be provided in the
proper environment). A synopsis is attached in an unclassified status
(Titled SGEWG Decision Making). This document serves as the basis for
equipment distribution prioritization conducted by the Marine Corps's
Strategic Ground Equipment Working Group (SGEWG). This group is
entrusted specifically with the priority distribution of equipment
across Marine Corps units and initiatives. The SGEWG works diligently
to ensure that equipment availability for all units remains at an
optimum level in both the near term for deployed/deploying units and
over the long term to meet our modernization goals. As is noted on the
equipment distribution list, pre-deployment training (Mojave Viper,
Desert Talon, and Mountain Warrior exercises) is afforded the #1
equipping priority. Likewise, in generalized equipping, operational
requirements (OIF, OEF) are given higher priority than longer-term
reset initiatives (such as prepositioning reconstitution or filling
supporting establishment shortfalls). Furthermore, units preparing to
deploy are afforded higher priority than non-deploying units per the
Commandant's message. Most importantly, all Marine Corps units are 100%
equipped upon arrival in theater. Specifically regarding the operations
of the SGEWG, in the general priorities, the Marine Corps does not
identify individual units, but treats all units in accordance with
their placement in the rotation/deployment pipeline. In the event there
is a priority conflict between a specified or general priority, the
requirement is returned to Plans, Policies, and Operations division
(PP&O) and a decision is made on where we can best accept risk.
Discussions on risk are coordinated between all affected commanders
before a decision is made. The SGEWG is the venue for working those
matters of prioritization and distribution. The CMC prioritization of
units, however, is not a waterfall chart - i.e. filling the number one
priority before addressing the second priority, etc. The SGEWG and
prioritization list is an inherently flexible tool for assessing
distribution and recommending where to accept and how to mitigate risk
to the force as a whole.
Consequently, as shown, the Marine Corps has a concrete and
comprehensive plan of equipment distribution explicitly targeting short-
term operational requirements over longer-term reset initiatives,
making the overarching theme of the report factually inaccurate.
The Army equipment strategy of which reset is a small, but important,
component has sustained equipment availability for deployed and
deploying forces while meeting ongoing operational requirements for the
past five years. All deployed units are in the highest two percent
effective readiness status categories for their deployed mission
requirements as defined by the Mission Essential Equipment List.
The Army Equipping strategy leverages all potential equipment
inventories – left behind equipment, redistribution, new procurement,
Sustainment Level Reset (supply transactions), and theater provided
equipment to ensure units have the equipment they require for their
train-up and deployment mission. It is important to note that the Army
started the war with $56B of equipment shortages – this equipping
strategy has been able to successfully bridge / mitigate these
shortfalls until the Army can procure the needed resources.
The Army changed its business process for Sustainment Level Reset items
from maintenance to a supply transaction to mitigate equipment
shortfalls in deployed and deploying units. This allows the Army to
resource equipment shortfalls in units and is one of many equipping
resource solutions that ensure units have the necessary equipment to
meet ongoing operational requirements.
The Army Priority Resource List has also been in place since the war
started. This list ensures that the highest priority units – deployed
and deploying – are resourced from all available inventory before other
requirements.
Page 2. paragraph 1, last two sentence%: "The Marine Corps received
$5.8 billion in fiscal year 2007, slightly more than the $5.1 billion
they received in fiscal year 2006. Of the $5.8 billion, the Marine
Corps plans to fund reset with $.9 billion from operation and
maintenance appropriations and $4.9 billion from procurement
appropriations."
$.7 billion of the $5.8 billion was initially appropriated for
procurement of MRAP vehicles. These are Cost of War funds, not Reset
funds. Therefore, the Marine Corps received $5.1 billion in fiscal year
2007. (See the footnote 1 to Table 1 on page 14. The above sentences
should be footnoted as well with the same narrative.)
Page 5, top line: GAO states that they "did not review the services'
overall equipping strategies." Without understanding the comprehensive
efforts to meet equipment demands, it is not possible to accurately
conclude whether or not the Army and Marines will sustain equipment
availability of deployed and deploying forces.
Page 5, Results in Brief, first sentence needs to be revised as follows
for accuracy: "Although the Army and Marine Corps track and report
equipment reset expenditures in the operation and maintenance accounts
in detail, they have not been requested to report detailed equipment
expenditures.for reset are expended for that purpose because there is
no Congressional requirement."
Page 6, Second complete sentence should be revised for accuracy:
"however, Army and Marine Corps demonstrated they could provide an
historical accounting."
Page 6, Last complete sentence should be revised for accuracy: "Neither
the Army nor the Marine Corps has been required , or requested to
itemize the types of equipment replaced or recapitalized within
procurement accounts such as wheeled and tracked vehicles in the
monthly Supplemental and Cost of War Execution Report"
Page 7, Line 11: The Army has historical execution data upon which to
base future cost estimates. However, estimates are revised based on
actual experience of costs related to repair and recapitalization, the
number of battle losses, and the amount of equipment to be replaced
within a given year.
Page 7, paragraph 2, sentence 1: "The Army and Marine Corps cannot be
assured their reset strategies will sustain equipment availability for
deployed units as well as units preparing for deployment to Iraq and
Afghanistan while meeting ongoing operational requirements because
neither the Army's nor the Marine Corps's reset strategies target
shortages of available equipments and prioritize equipment needs of
units preparing for deployment over longer-term modernization goals."
Please see comments to the first sentence of paragraph 2.
Page 7, last sentence, and Page 8, first sentence: "Similarly, the
Marine Corps' reset goal is to ensure the Corps is equipped to perform
both ongoing operations and other future missions. However, neither the
Army nor the Marine Corps can ensure that their reset strategies can
achieve these goals because neither service's reset strategies target
shortages of available equipment needed to equip deploying units and
units preparing for other missions and contingencies in order to
minimize operational risk."
Please see comments to the first sentence of paragraph 2.
Page 8, line 6: While it is true those HMMWVs that will be
recapitalized will have minimal training value, it is also true that
these will fill critical equipment shortfalls for the Continental
United States (CONUS)-based units in support of homeland defense (HLD)
and homeland security (HLS) missions. On 10 September 2001, the Army
was short $1,148M worth of HMMWVs. The Global War on Terror (GWOT)
generated the operational need for an additional $1,291M for Up-Armored
HMMWVs (UAH). As the war continued, the need for UAHs increased
significantly and all possible assets were sent to Theater to resource
the Army's highest priorities. Until the war ends, we must still
resource the requirements for CONUS-based units – these HMMWVs must be
recapitalized and provided against these critical shortfalls.
Page 8, line 12: The plan to modernize Abrams Tanks and Bradley
Fighting Vehicles as part of the Army's reset strategy is to ensure
that units have the most capable equipment available for the next
mission. The reset definition recognizes the value of upgrading
equipment during this time since major components must be disassembled
as part of the repair process. Upgrading the vehicles at this time
saves dollars in the long term, while also providing enhanced
capabilities. Congress has supported and endorsed the upgrade and
modernization of equipment during the Army reset process. On 18 April
2007, during the House Appropriations Subcommittee on Defense Hearings
on reset, the committee endorsed the modernization of equipment during
reset stating "that is what we like to see. Because if we are going to
do it, we might as well do it right and put the most modern technology
into the equipment."
Page 9, paragraph 1: "In contrast, the Marine Corps reset planning
process emphasizes replacing equipment; however, actions required to
support this strategy have adversely impacted readiness of non-deployed
Marine Corps units. For example, the Marine Corps has had to chose
(sic) between providing equipment to units preparing to deploy to Iraq
and Afghanistan and unit training for other contingencies such as
humanitarian and disaster relief efforts in Pakistan and the
Philippines, theater Security Cooperation events in Central America and
parts of Africa, and protecting our embassies. Until the services'
reset strategies target shortages of equipment needed to equip units
preparing for deployment and ensure those units are given priority over
longer-term equipment needs, the Army and Marine Corps will be unable
to minimize operational risk by ensuring the needs of deploying units
can be met."
As stated earlier, the current inventory of Marine Corps equipment does
not allow for the regular rotation of equipment with forces.
Consequently, equipment cannot be run through depot maintenance after
each rotation of forces without a disruption in combat operations.
While the Marine Corps implemented a primary end item rotation, noted
in the report on page 12, several end items remain in critical demand
and short supply. As the equipment presently being procured is
manufactured and comes into the inventory the ratio of procurement to
maintenance will decrease.
Furthermore, the Marine Corps does not specifically train for disaster
relief efforts, as they are not in the core focus of the Marine Corps
(an expeditionary fighting force). It also seems illogical to state
that the Marine Corps must prioritize equipment for such specific
disaster relief operations as Pakistan and the Philippines, as
disasters are unpredictable, both in timing and location, and not a
primary objective of Marine Corps training. Finally, the Marine Corps
mission to protect U.S. Embassies involves no reset activities
whatsoever. Marines protecting embassies do not suffer training
inadequacies due to deployed operations. Ideally, the sentence stating
"For example, the Marine Corps has had to chose (sic) between providing
equipment to units preparing to deploy to Iraq and Afghanistan and unit
training for other contingencies such as humanitarian and disaster
relief efforts in Pakistan and the Philippines, theater Security
Cooperation events in Central America and parts of Africa, and
protecting our embassies." should read "For example, the Marine Corps
has had to prioritize the distribution of equipment between theater-
specific training exercises, such as Mojave Viper, and training done at
home stations. Ultimately, however, the Marine Corps reset strategy
will source all home stations and training stations with the full
compliment of equipment."
Page 10, sentence 4: "Most of the Marine Corps equipment is not
rotating out of theater at the conclusion of each force rotation."
This statement is factually true. However, it should be noted that this
is due to low equipment density. Furthermore, the current strategy of
leaving behind equipment provides the best possible equipping solution
in the short-term.
Page 11, line 3, 6, and 7: References to "national level" reset are
technically not correct and should be changed to "sustainment level"
reset, the Army has two levels of maintenance: Field and Sustainment.
Page 15, paragraph 1. sentence 4: "Rotation of equipment was not
possible after operations began because spare equipment was not
available for use while equipment was in depot maintenance."
As noted earlier, this continues to be the case. Until equipment
procured with reset funds appropriated in FY06 and FY07 deliver in
force, the Marine Corps will experience equipment deficiencies at
certain lower priority bases, stations, and units.
Page 17, top of the page, second and third lines should be revised for
accuracy: "...because there is no congressional requirement to report."
Page 17. Starting at line 10 should be revised as follows for accuracy:
"While the Army and Marine Corps track reset expenditures and
obligations in detail within the procurement accounts, they have not
been requested to report those expenditures at the same level of detail
as with the operation and maintenance accounts. However, army and
Marine Corps officials demonstrated that they could provide an
historical accounting of those reset obligations and expenditures back
to fiscal year 2002 if requested to do so."
Page 18, Second complete sentence should be revised for accuracy:
"...itemized accounting is not currently required by the Congress, or
the reset cost category of the DoD FMR."
Page 18. paragraph 2 sentence 4: "The Marine Corps does not provide
these additional reports." While true, the statement is slightly
disingenuous. Only the Army was requested/required to provide the cited
reports by Congressional language. The Marine Corps was not
requested/required to do such, and consequently does not do such.
Furthermore, the Marine Corps can provide greater detail from the
established accounting system on the execution of reset funding. At a
minimum, budget line item level detail can be provided if requested.
Page 19, the second complete sentence is inaccurate should be deleted.
The statement, "In addition, because the Army was not required to track
the execution of its reset appropriations from the onset of operations,
it does not have historical execution data upon which to base future
cost estimates," is inconsistent with the statement on page 17 which
currently reads, "However, Army and Marine Corps officials stated that
they could provide an historical accounting of those reset obligations
and expenditures back to 2002 if required to do so."
Page 19, the last complete sentence is inaccurate and should be deleted
for the reasons cited above.
Page 20, first, fourth, and last sentences: ".neither the Army's nor
the Marine Corps's reset strategies target shortages of available
equipment and prioritize needs of units preparing for deployment over
longer-term modernization goals."
"Similarly, the Marine Corps' reset goal is to ensure that the Corps is
equipped to perform both ongoing operations and other future missions;
however, 90 percent of the Marine Corps fiscal year 2006 and fiscal
year 2007 supplemental budget requests are for procurement of new
equipment that will not be available for many months."
"Furthermore, the Army's and Marine Corps's reset strategies do not
ensure that reset of equipment needed to support units that are
preparing for deployment are given priority over other longer-term
equipment needs, such as equipment modernization in support of the
Army's modularity initiative, because reset strategies are not linked
to meeting deploying unit equipment needs."
The first two sentences cited are verbatim repeats of statements made
earlier in the GAO document and addressed earlier in this response. The
last phrase of the last sentence cited (underlined) is the most
objectionable. As asserted earlier, SGEWG works diligently to ensure
that equipment availability for all units remains at an optimum level
in the near term for deployed/deploying units. Furthermore, this
statement contradicts GAO's own earlier assertion (page 8) that
"...deployed Army and Marine Corps units and units about to deploy
generally report high readiness rates."
Page 21, sentence 6: "...according to a unit preparing to deploy, the
model High Mobility, Multi- Purpose Wheeled Vehicles (HMMWVs) they were
given to train with were limited in number and were significantly
different from the armored HMMWVs they were expecting to use while in
theater."
GAO does not specify which branch of service to which the unit in
question belonged. If referring to a Marine Corps unit, the statement
is in fact incorrect. Marine Corps units preparing for deployment,
through Mojave Viper exercises, train on identical equipment sets to
those currently in theater.
Page 22, line 15: The aggregate requirement to improve equipment levels
for units across the Army is accomplished as apart of our Program
Objective Memorandum / budget submissions. As units get closer to
deployment, all equipping solutions are leveraged to ensure that units
have the equipment they require to execute their mission.
Page 23 sentence 5: ".the Marine Corps has had to make trade-offs
between unit training for other types of contingencies and units
preparing to deploy to OIF."
This statement is factually true. The Marine Corps has placed a
priority on training units for OIF as that is presently the largest and
most deadly contingency the Marine Corps is presently involved in. The
Marine Corps has limited financial and manpower resources and must
prioritize to ensure mission accomplishment and combat casualty
minimization.
Page 24, sentence 3: "The Army and Marine Corps's reset strategies do
not ensure that the repairing, replacing, and recapitalization of
equipment needed to support units that are preparing for deployment are
being given priority over other longer-term equipment needs because
reset strategies are not linked to meeting deploying unit equipment
needs."
This statement is a near-verbatim repeat of earlier assertions in the
GAO document. The Marine Corps's reset strategy is linked to meeting
deploying unit equipment needs. The Marine Corps level of spending on
replacement versus repair and recapitalization is high because of low
equipment density. The Army equipment strategies do target equipment
shortages and ensure that operational risk is minimized while meeting
the needs of deploying units.
Page 24, third paragraph: Sustainment level reset does give priority to
deploying unit equipment needs and considers the need to upgrade
equipment as part of our reset strategies. Tank and Bradley upgrades
provide improved war-fighting capabilities as well as better
reliability, availability, and maintenance improvements while saving
costs.
Page 25, paragraph 2, sentence 1: "The Marine Corps reset planning
process does not include an evaluation of trade-offs between the
shorter-term need to improve the degraded readiness of Marine Corps
units in the United States against longer-term requirements for
procurement to replace deployed items that may not impact readiness for
some time. For example, the Marine Corps has requested supplemental
appropriations to procure 3,700 MRAP vehicles to replace HMMWVs, while
also planning to procure additional HMMWVs as part of reset to replace
older variants and deployed A2 HMMWVs severely degraded due to OW
missions. However, many of these HMMWVs will not be fielded for more
than 2 years. In the short-term, the Marine Corps needs the MRAPs for
increased force protection while the requirement for HMMWV replacements
will continue beyond OIF/OEF. Until reset strategies are linked to the
equipment needs of deploying units, the Army and Marine Corps will be
unable to prioritize their reset plans and funding to ensure that the
short-term needs of deploying units can be met."
The narrative of this paragraph appears to confuse the purpose and
intent of reset the force efforts. Reset is, in broad terms and pointed
out in the introduction of the GAO draft report, restoring the
capabilities impacted by operations in Iraq and Afghanistan to meet
future contingencies. MRAPs are an equipment set specific to the
conflict in Iraq and, consequently, will not be incorporated into the
standard Marine Corps inventory at the levels employed for current
operations. As a result, HMMWVs are still required in reset as the
medium-term capability set for future contingencies. Likewise, MRAPs,
being employed exclusively for OIF, are operational "costs of war."
Such strategy is also included in footnotes to the table on page 14 of
the report.
Page 28, paragraph 2, sentence 2:, "We did not review the services'
overall equipping strategies." This statement is cause for concern,
especially in light of the title of the document in question Army and
Marine Corps Cannot Be Assured Equipment Reset Strategies Will Sustain
Equipment Availability While Meeting Ongoing Operational Requirements.
The report title in cover sheet should be changed to the title
originally listed in the draft read ahead documents Army and Marine
Corps Equipment Reset Strategies (GAO Code 350994). The old title
articulated the focus of the audit vice the current title which is
unsupported by fact.
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
The following are GAO's comments to the Department of Defense's (DOD)
technical comments dated August 3, 2007.
GAO's Responses to DOD's Technical Comments:
1. DOD stated that our statement that "the Army and Marine Corps do not
report detailed equipment reset expenditures within the procurement
accounts in a way that confirms that funds appropriated for reset are
expended for that purpose because DOD FMR does not require them to
specifically report procurement expenditures for reset in detail" does
not accurately reflect what we were told, and suggested revising the
statement to reflect the fact that neither Congress nor the DOD
Financial Management Regulation (FMR) require the services to
specifically report procurement expenditures for reset in detail. While
the Conference Report accompanying the DOD appropriations act for 2007
directed the Secretary of Defense to periodically provide a detailed
accounting of reset obligations and expenditures of funds provided in
Title IX of the act, which includes funds for reset, by program and
subactivity group and to provide a listing of equipment procured using
funds appropriated under Title IX of this act,[Footnote 72] the Army
and Marine Corps are not legally required to provide this detailed
accounting. The Army and Marine Corps currently provide detailed
reports of obligations and expenditures within the operation and
maintenance accounts, but have chosen not to provide the same detailed
accounting of obligations and expenditures within the procurement
accounts. We have revised the report as appropriate.
2. DOD disagreed with our statement that the Army and Marine Corps
cannot be assured that their reset implementation strategies will
sustain availability for deployed units as well as units preparing for
deployment to Iraq and Afghanistan while meeting ongoing operational
requirements because neither the Army's nor the Marine Corps' reset
implementation strategies target shortages of available equipment and
prioritize equipment needs of units preparing for deployment over
longer-term modernization goals. DOD noted that the Army equipment
strategy, of which reset is a small but important component, has
sustained equipment availability for deployed and deploying forces
while meeting ongoing operational requirements for the past 5 years.
The Marine Corps employs a documented, standardized, and flexible reset
strategy designed to meet both current operational requirements and
long-term reconstitution strategies. While we acknowledge that reset is
only one component of the services' overall equipping strategies, as we
stated in our report, the Army's primary goal for equipment reset is to
prepare units for deployment and to improve next-to-deploy units'
equipment-on-hand levels, and the Marine Corps' priority for equipment
reset is to support deployed forces. However, the Army's and Marine
Corps' implementation of their reset implementation strategies do not
necessarily address shortages of equipment in the short term. Instead,
the Army's implementation of its reset strategy is based on plans for
repairing, recapitalizing, or replacing equipment returning from
overseas theaters in a given fiscal year, while the Marine Corps'
implementation of its reset strategy is based on ensuring that Marine
Corps units are equipped to perform both ongoing operations and other
future missions. For example, as we stated in our report, an Army unit
preparing to deploy was given a limited number of High Mobility Multi-
Purpose Wheeled Vehicles (HMMWV), which were significantly different
from the armored HMMWVs it was expected to use in Iraq. However, at the
same time the Army was planning to recapitalize 7,500 HMMWVs at a cost
of $455 million, which would have limited training value for deploying
units because the unarmored HMMWVs have different handling
characteristics than those they would use in Iraq. Also, because the
recapitalization did not include armor, the HMMWVs would not be
deployed and would not fulfill the short-term needs of deploying units.
3. GAO agrees with the suggested change and revised the report as
appropriate.
4. DOD stated that our statement that we did not review the services'
overall equipping strategies made it impossible for an accurate
conclusion as to whether the Army and Marine Corps will sustain
equipment availability of deployed and deploying forces, because
without reviewing the services' overall equipping strategies we would
not understand the comprehensive efforts to meet equipment demands.
While we acknowledge that reset is only one component of the services'
overall equipping strategies, our report focuses on the services' reset
implementation strategies and related reset funding, not the overall
equipping strategies, which would include other equipment priorities
such as modernization, homeland defense, and homeland security.
Further, as we have previously testified,[Footnote 73] for certain
equipment items, the Army and Marine Corps have not developed complete
sustainment, modernization, and replacement strategies or identified
funding needs for all priority equipment items.
5. See comment 1.
6. GAO agrees with the suggested change and revised the report as
appropriate.
7. See comment 1.
8. GAO agrees with the suggested change and revised the report as
appropriate.
9. See comment 2.
10. See comment 2.
11. DOD stated that while it is true that the HMMWVs that will be
recapitalized will have minimal training value, these vehicles will
fill critical equipment shortfalls for the Continental United States-
based units in support of homeland defense and homeland security
missions. Prior to September 11, 2001, the Army was short $1.1 billion
worth of HMMWVs. However, as we stated in our report, the Army's
primary goal for equipment reset is to prepare units for deployment and
to improve next-to-deploy units' equipment-on-hand levels, and the
Marine Corps' priority for equipment reset is to support deployed
forces. Reset implementation strategies should target shortages of
equipment needed to equip deploying units and units preparing to deploy
to Iraq and Afghanistan, rather than other longer-term equipment goals
such as modernization, homeland defense, and homeland security.
12. DOD disagreed with our statement that the Army's fiscal year 2007
reset strategy includes plans to modernize Abrams Tanks and Bradley
Fighting Vehicles to accelerate achieving long-term strategic goals
under the Army's modularity initiative, stating that the plan to
modernize these vehicles is to ensure that units have the most capable
equipment available for the next mission. However, accelerating
modernization programs in general to achieve a modular force structure
may be sacrificing other short-term needs for longer-term goals.
13. DOD disagreed with our statement that the Marine Corps' reset
planning process emphasizes replacing equipment but that actions
required to support this strategy have adversely affected readiness of
nondeployed Marine Corps units preparing to deploy to Iraq and
Afghanistan and unit training for other contingencies such as
humanitarian and disaster relief. DOD stated in its comments that the
Marine Corps does not specifically train for disaster relief efforts
and it is illogical to state that the Marine Corps must prioritize
equipment for such specific disaster relief operations as Pakistan and
the Philippines as disasters are unpredictable and not a primary
objective of Marine Corps training. We acknowledge that disaster relief
operations are not the primary objective of the Marine Corps training.
However, as part of its decision-making process on how to invest its
reset funds, the Marine Corps has had to make trade-offs between short-
term needs, for example, units preparing to deploy to Iraq and
Afghanistan, and unit training for nondeployed units for other
contingencies and deploying troops for other operations such as
disaster relief;
that is, potentially longer-term needs. We have revised the report as
appropriate.
14. GAO agrees with the suggested change and revised the report as
appropriate.
15. GAO agrees with the suggested change and revised the report as
appropriate.
16. See comment 13.
17. See comment 1.
18. See comment 1.
19. See comment 1.
20. GAO agrees with the suggested change and revised the report as
appropriate.
21. DOD disagreed with our statement that because the Army was not
required to track the execution of its reset appropriations from the
onset of operations, it does not have historical execution data upon
which to base future cost estimates and that it is inconsistent with
the statement that Army and Marine Corps officials said that they could
provide an historical accounting of those reset obligations and
expenditures back to 2002 if required to do so. While we agree that the
Army now has historical execution data upon which to base future cost
estimates, at the time of our review, Army officials stated that they
did not track execution data at the onset of operations. Subsequently,
Army officials provided execution data as of fiscal year 2002 broken
down by operation and maintenance (i.e., field-level repair, depot-
level repair, Army pre-positioned stock, and recapitalization--
rebuild) and procurement (i.e., recapitalization--upgrade and
replacement). However, Army officials stated that they had to
extrapolate these numbers because the data were not tracked that way at
the onset of operations. We have revised the report to reflect the
Army's position.
22. See comment 21.
23. DOD disagreed with our statements that neither the Army's nor the
Marine Corps' reset implementation strategies target shortages of
available equipment and prioritize needs of units preparing for
deployment over longer-term modernization goals and stated that the
phrase "because reset strategies are not linked to meeting deploying
unit equipment needs" was most objectionable. Furthermore, DOD stated
that this statement contradicts an earlier assertion that deployed Army
and Marine Corps units and units about to deploy generally report high
readiness rates. As we stated in our report, while we acknowledge that
reset is only one component of the services' overall equipping
strategies, we continue to believe that the Army's and Marine Corps'
reset implementation strategies should target short-term equipment
shortages rather than longer-term modernization goals. We believe the
Army and Marine Corps should use reset funding in accordance with the
services' stated goals of reset, that is, to prepare units for
deployment and to improve the next-to-deploy units' equipment on hand.
Using reset funding to accelerate modernization goals by procuring new
equipment that may not be available for many years may be sacrificing
short-terms needs for longer-term goals. The statement that deployed
Army and Marine Corps units and units about to deploy generally report
high readiness rates was taken out of context. As we stated in our
report, although deployed Army and Marine Corps units and units about
to deploy generally report high readiness rates, the services have
reported a decrease in nondeployed units' readiness rates, in part due
to equipment shortages. While the readiness of nondeployed units may
not be as high a priority as the readiness of deployed or deploying
units, nondeployed units can be called up at any time should other
contingencies occur.
24. DOD disagreed with our statement that a unit preparing to deploy
was given HMMWVs to train with that were limited in number and were
significantly different from the armored HMMWVs it was expected to use
while in theater. DOD stated in its comments that if we were referring
to the Marine Corps the statement is in fact incorrect because Marine
Corps units preparing for deployment through Mojave Viper exercises
train on identical equipment sets to those currently in theater. The
unit in question was an Army unit. We have revised the report as
appropriate.
25. See comment 21.
26. DOD agreed with our statement that the Marine Corps has had to make
trade-offs between unit training for other types of contingencies and
units preparing to deploy to OIF. DOD stated in its comments that the
Marine Corps has placed a priority on training units for OIF as that is
presently the largest and most deadly contingency the Marine Corps is
presently involved in and the Marine Corps has limited financial and
manpower resources and must prioritize to ensure mission accomplishment
and combat casualty minimization. As we stated in our report, the
Commandant of the Marine Corps has testified[Footnote 74] that the
Marine Corps has had to chose between providing equipment to units
preparing to deploy to Iraq and Afghanistan and unit training for other
contingencies while also deploying troops to support other operations,
such as humanitarian and disaster relief efforts in Pakistan and the
Philippines, Theater Security Cooperation events in Central America and
parts of Africa, and protecting our embassies. We have revised our
report as appropriate.
27. DOD disagreed with our statement that the Army and Marine Corps'
reset strategies do not ensure that the repairing, replacing, and
recapitalization of equipment needed to support units that are
preparing for deployment are being given priority over other longer-
term equipment needs because reset strategies are not linked to meeting
deploying unit equipment needs, stating that the Army equipping
strategies do target equipment shortages and the Marine Corps' level of
spending on replacement versus recapitalization is high because of low
equipment density. As we stated in our report, while we acknowledge
that reset is only one component of the services' overall equipping
strategies, the Army's primary goal for equipment reset is to prepare
units for deployment and to improve next-to-deploy units' equipment-on-
hand levels, and the Marine Corps' priority for equipment reset is to
support deployed forces. However, the Army's and Marine Corps' reset
implementation strategies do not necessarily address shortages of
equipment in the short term. Instead, the Army's reset implementation
strategy is based on plans for repairing, recapitalizing, or replacing
equipment returning from overseas theaters in a given fiscal year,
while the Marine Corps' reset implementation strategy is based on
ensuring that Marine Corps units are equipped to perform both ongoing
operations and other future missions. While we acknowledge that the
Marine Corps reset implementation strategy may be focused on longer-
term goals due to low equipment density, we continue to believe the
Army's and Marine Corps' reset implementation strategies should target
short-term equipment shortages to equip deploying units and units
preparing to deploy to Iraq and Afghanistan rather than longer-term
modernization goals. We have revised the report as appropriate.
28. DOD disagreed with our statement that the Army's reset strategy has
included funding requests for certain items to accelerate achieving
longer-term strategic goals under the Army's modularity initiative. DOD
stated in its comments that sustainment-level reset does give priority
to deploying unit needs and considers the need to upgrade equipment as
part of reset implementation strategies, and that tank and Bradley
upgrades provide improved warfighting capabilities as well as better
reliability, availability, and maintenance improvements while saving
costs. While we acknowledge that achieving these modularity milestones
for Abrams Tanks and Bradleys will achieve greater commonality in
platforms and reduce overall logistical and financial requirements by
reducing the number of variants that must be supported, we continue to
believe that using reset funds to accelerate modernization programs
such as these by 1 to 2 years to achieve a modular force structure as
well as funding other longer-term equipment goals, such as homeland
defense and homeland security, may be sacrificing short-term needs for
longer-term goals. Also, as we stated in our report, the Army has
reported that modularity requirements (i.e., longer-term modernization
goals) mirror the equipment that the Army already procures for its
units and it is unable to precisely track modularity funds and
distinguish those funds from reset funds. We have revised the report as
appropriate.
29. DOD disagreed with our statement that the Marine Corps' reset
planning process does not include an evaluation of trade-offs between
the shorter-term need to improve the degraded readiness of Marine Corps
units in the United States against longer-term requirements for
procurement to replace deployed items that may not affect readiness for
some time. DOD stated in its comments that the narrative of the
paragraph appears to confuse the purpose and intent of reset efforts
and that reset is, in broad terms and as pointed out in the
introduction of the draft report, restoring the capabilities affected
by operations in Iraq and Afghanistan to meet future contingencies. DOD
stated that Mine Resistant Ambush Protected vehicles (MRAPs) are an
equipment set specific to the conflict in Iraq and, consequently, will
not be incorporated into the standard Marine Corps inventory at the
levels employed for current operations and, as such, are considered
operational costs of war, not reset, and that HMMWVs are still required
in reset for future contingencies. While we acknowledge that funding
for MRAPs is considered a cost of war, not a reset cost, the request
for HMMWVs has not been reduced to reflect the number of MRAPs that
will replace those HMMWVs. We continue to believe that the Marine
Corps' reset planning process should include a trade-off between the
shorter-term need for MRAPs and the longer-term need for HMMWVs. As we
stated in our report, the Marine Corps as well as the Army have noted
equipment shortages in readiness reports' remarks sections with
deploying units planning to fall in on equipment in theater. And, as we
have testified, since 2003, deploying units have continued to
subjectively upgrade their overall readiness rates as they approach
deployment dates, despite decreasing overall readiness levels among
those same units. We have revised the report as appropriate.
30. DOD stated in its comments that because we did not review the
services' overall equipping strategies, the title should be changed to
reflect the title of the draft document presented at the exit
conference, Army and Marine Corps Equipment Reset Strategies, because
the current report title is unsupported by fact. This report discusses
reset implementation strategies only and does not include overall Army
and Marine Corps equipping strategies. As we have discussed in our
report, the Army and Marine Corps have not developed complete
sustainment, modernization, and replacement strategies or identified
funding needs for all priority equipment.[Footnote 75] Congress has
appropriated tens of billions of dollars specifically for equipment
reset since fiscal year 2002. This report is limited to a discussion of
how the Army and Marine Corps have tracked and reported the obligation
and expenditure of those funds and how the services' strategies for
equipment reset can sustain equipment availability while meeting
ongoing operational requirements. We continue to believe that the title
of the report, Defense Logistics: Army and Marine Corps Cannot Be
Assured That Equipment Reset Implementation Strategies Will Sustain
Equipment Availability While Meeting Ongoing Operational Requirements,
remains valid and supported by the facts as we have presented them and
that the report does not warrant a change in title.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
William M. Solis (202) 512-8365 or solisw@gao.gov:
Acknowledgments:
In addition to the contact named above, David A. Schmitt, Assistant
Director; Renee Brown; Frank Cristinzio; Luke Hartig; Brent Helt; Donna
M. Rogers; Yong Song; and Maria Storts made key contributions to this
report.
[End of section]
Footnotes:
[1] Supplemental appropriations for reset are used to fund the
incremental costs above the baseline budget that are necessary to
repair and replace equipment needed for ongoing operations.
[2] The baseline budget funds equipment maintenance for nondeployed
equipment and the purchase of equipment to fulfill longer-term
equipment requirements.
[3] The total $5.8 billion reset funding includes $0.7 billion
initially appropriated for procurement of Mine Resistant Ambush
Protected vehicles, which was later reclassified as a cost of war, not
reset.
[4] Reset is funded through two appropriations--operation and
maintenance appropriations and procurement appropriations. Operation
and maintenance appropriations fund repair and maintenance of equipment
while procurement appropriations primarily fund replacement of
equipment. Recapitalization of equipment is further subdivided into
rebuild, which is funded with operation and maintenance appropriations,
and upgrade (enhanced capability), which is funded with procurement
appropriations.
[5] Army Posture Statement, Statement before the House Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. Peter J.
Schoomaker, U.S. Army Chief of Staff). Statement on the Army's Reset
Strategy and Plan for Funding Reset Requirements, Statement before the
House Committee on Armed Services, 109th Cong. (2006) (statement of
Gen. Peter J. Schoomaker, U.S. Army Chief of Staff).
[6] Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps). Statement before the House Committee
on Armed Services, 109th Cong. (2006) (statement of Gen. Mike Hagee,
Commandant of the Marine Corps).
[7] GAO, Defense Logistics: Preliminary Observations on the Army's
Implementation of Its Equipment Reset Strategies, GAO-07-439T
(Washington, D.C.: Jan. 31, 2007), and 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).
[8] GAO, Military Readiness: DOD Needs to Reassess Program Strategy,
Funding Priorities, and Risks for Selected Equipment, GAO-04-112
(Washington, D.C.: Dec. 19, 2003), and Military Readiness: DOD Needs to
Identify and Address Gaps and Potential Risks in Program Strategies and
Funding Priorities for Selected Equipment, GAO-06-141 (Washington,
D.C.: Oct. 25, 2005).
[9] GAO, Defense Logistics: Improved Oversight and Increased
Coordination Needed to Ensure Viability of the Army's Prepositioning
Strategy, GAO-07-144 (Washington, D.C.: Feb. 15, 2007), and 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).
[10] GAO, Reserve Forces: Army National Guard's Role, Organization, and
Equipment Need to Be Reexamined, GAO-06-170T (Washington, D.C.: Oct.
20, 2005).
[11] GAO, Global War on Terrorism: Fiscal Year 2006 Obligation Rates
Are Within Funding Levels and Significant Multiyear Procurement Funds
Will Likely Remain Available for Use in Fiscal Year 2007, GAO-07-76
(Washington, D.C.: Nov. 13, 2006), and Defense Management: Processes to
Estimate and Track Equipment Reconstitution Costs Can Be Improved, GAO-
05-293 (Washington, D.C.: May 5, 2005).
[12] GAO-05-293.
[13] GAO, Reserve Forces: Plans Needed to Improve Army National Guard
Equipment Readiness and Better Integrate Guard Into Army Force
Transformation Initiatives, GAO-06-111 (Washington, D.C.: Oct. 4,
2005).
[14] Pub. L. No. 109-364, § 323 (2006).
[15] 31 U.S.C. § 717.
[16] The five equipment items we profiled are the M1 Tank, Bradley
Fighting Vehicle (Army only), High Mobility Multi-Purpose Wheeled
Vehicle, Heavy Expanded Mobility Tactical Truck (Army only), and the
Marine Corps CH-53E helicopter.
[17] DOD Financial Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," § 230406. According to an
OSD official, the updated version referred to in this report, although
not yet available online, was adopted in January 2007.
[18] H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
[19] GAO-07-439T.
[20] DOD provides monthly Supplemental and Cost of War Execution
Reports to Congress by service, defense agency, contingency operation,
and appropriation.
[21] DOD Financial Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," § 230406 refers to these
more detailed costs as sub-cost categories.
[22] Army officials initially stated that because they were not
required to track execution data at the onset of operations, they could
not provide those historical data. Subsequently, Army officials
provided execution data as of fiscal year 2002 broken down by operation
and maintenance (i.e., field-level repair, depot-level repair, Army pre-
positioned stock, and recapitalization--rebuild) and procurement (i.e.,
recapitalization--upgrade and replacement). However, Army officials
stated that they had to extrapolate these numbers because the data were
not tracked that way at the onset of operations.
[23] GAO-07-76 and GAO-05-293.
[24] Army FRAGO, FY07 Reset FRAGO (Sept. 29, 2006).
[25] Equipment reset is one element of the services' overall equipment
strategies. For example, the Army leverages all available equipment
such as left behind equipment, theater-provided equipment, and new
procurement as part of its overall equipping strategy within the
ARFORGEN implementation strategy of which reset is a component. The
Marine Corps' strategic ground equipment working group (SGEWG)
implements the Commandant's guidance and prioritizes equipment
distribution as part of an overall decision-making process employed by
the Commandant of the Marine Corps.
[26] Nondeployed units reporting readiness under the Unit Status
Reporting System include units preparing to deploy.
[27] Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
[28] In response to a recommendation from a GAO report (GAO-05-293),
DOD modified its Cost of War report to break down into further detail
the operation and maintenance reconstitution category into field-,
intermediate-, and depot-level maintenance. According to an OSD
official, in January 2007, DOD amended its financial management
regulations to establish reset-specific categories within operation and
maintenance (i.e., field-, intermediate-, and depot-level maintenance)
and one overall reset-specific category within procurement.
[29] Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
[30] GAO-07-439T.
[31] Army Equipment Reset, Gen. Charles Anderson, Director Force
Development, Army G-8, et al., Statement before the House Committee on
Armed Services, Subcommittees on Readiness and Air and Land Forces
(Jan. 31, 2007).
[32] U.S. Marine Corps and U.S. Navy Reset Requirements, Statement
before the House Committee on Armed Services, Subcommittees on
Readiness and Seapower and Expeditionary Forces, 110th Cong. (2007)
(statement of Lt. Gen. Emerson N. Gardner, Jr., Deputy Commandant
Programs and Resources, U.S. Marine Corps).
[33] Repair includes the special technical inspection and repair of
aircraft.
[34] According to an OSD official, during the summer of 2006, OSD and
the services began using a standardized definition of reset. Reset is
defined as actions taken to restore units to a desired level of combat
capability with the units' future mission. It encompasses maintenance
and supply activities that restore and enhance combat capability to
unit and pre-positioned equipment that was destroyed, damaged,
stressed, or worn out beyond economic repair due to combat operations
by repairing or rebuilding the equipment or procuring replacement
equipment. Included are major repairs/overhauls and recapitalization
(rebuild or upgrade) funded by procurement; research, development,
test, and evaluation; and operation and maintenance that enhance
existing equipment through the insertion of new technology or restore
selected equipment to a zero-miles/zero-hours condition.
[35] Army reset cost estimates do not include contractor logistics
support for equipment readiness, field-level maintenance required to
keep equipment operational, or the replacement of ammunition.
[36] The Marine Corps reset model further breaks down recapitalization,
reconstitution, and modernization into a total of 16 categories, for
example, pre-positioned equipment. See app. II for a complete list of
the 16 reset categories.
[37] Costs of war are the costs associated with personnel, personnel
support, operations, and transportation.
[38] Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
[39] Theater-provided equipment includes major equipment items, such as
up-armored HMMWVs left in theater by units returning to the United
States and retained in theater to hand off to follow-on units. The Army
has designated these items as critical for OIF/OEF missions.
[40] U.S. Marine Corps and U.S. Navy Reset Requirements, Statement
before the House Committee on Armed Services, Subcommittees on
Readiness and Seapower and Expeditionary Forces, 110th Cong. (2007)
(statement of Lt. Gen. Emerson N. Gardner, Jr., Deputy Commandant
Programs and Resources, U.S. Marine Corps).
[41] GAO-04-112 and GAO-06-141.
[42] GAO-07-144 and GAO-05-427.
[43] GAO-06-170T.
[44] GAO-07-76 and GAO-05-293.
[45] At the time of that report (GAO-05-293), the term
reconstitution,was used instead of reset. Reconstitution was defined as
units restoring their equipment to a condition that enables them to
conduct training exercises, achieve required readiness levels, and
prepare for future deployments.
[46] GAO-06-111.
[47] GAO-05-293.
[48] John Warner National Defense Authorization Act for Fiscal Year
2007, Pub. L. No. 109-364, § 323 (2006).
[49] While the Conference Report does not specifically make reference
to the operation and maintenance and procurement accounts, these are
the two accounts through which DOD funds equipment reset.
[50] H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
[51] DOD Federal Management Regulation, vol. 12, ch. 23, "Contingency
Operations Cost Categories and Definitions," § 230406. The reset sub-
cost category applicable to procurement funds, 6.1.7, encompasses
procurement activities that restore and enhance combat capability to
unit and pre-positioned equipment that was destroyed, damaged,
stressed, or worn out beyond economic repair due to combat operations
by procuring replacement equipment and includes major repairs,
overhauls, and recapitalization funded through both procurement and
research, development, test, and evaluation.
[52] Recapitalization within the procurement sub-cost category includes
rebuilds or upgrades that enhance existing equipment through new
technology or restore selected equipment to a zero-miles/zero-hours
condition.
[53] Army officials initially stated that because they were not
required to track execution data at the onset of operations they could
not provide that historical data. Subsequently, Army officials provided
execution data as of fiscal year 2002 broken down by operation and
maintenance (i.e., field-level repair, depot-level repair, Army pre-
positioned stock, and recapitalization--rebuild) and procurement (i.e.,
recapitalization--upgrade and replacement). However, Army officials
stated that they had to extrapolate these numbers because the data were
not tracked that way at the onset of operations.
[54] GAO-07-76 and GAO-05-293.
[55] Congressional Budget Office, Issues in Budgeting for Operations in
Iraq and the War on Terrorism (Washington, D.C.: Jan. 18, 2007).
[56] Equipment reset is one element of the services' overall equipment
strategies. For example, the Army leverages all available equipment,
such as left behind equipment, theater-provided equipment, and new
procurement as part of its overall equipping strategy within the
ARFORGEN implementation strategy of which reset is a component. The
Marine Corps' SGEWG implements the Commandant's guidance and
prioritizes equipment distribution as part of an overall decision-
making process employed by the Commandant of the Marine Corps.
[57] Army FRAGO, FY07 Reset Frago (Sept. 29, 2006).
[58] The Army defines operational risk as the ability to achieve
military objectives in a near-term conflict or other contingency.
[59] The Army's fiscal year 2007 framework for reset, FRAGO, provides
details on equipment-related reset with the desired end state of
rapidly restoring the capability of the Army to meet current and future
Combatant Commander operational demands.
[60] GAO-07-439T.
[61] Army Regulation 220-1Field Organizations: Unit Status Reporting
(Dec. 19, 2006).
[62] Marine Corps Order P3000.13D, Marine Corps Status of Resources and
Training System Standing Operating Procedures (Apr. 17, 2002).
[63] Army and Marine Corps commanders report readiness for deployments
using "percent effective" ratings that capture the unit commander's
overall assessment of his/her unit's ability to perform its current
mission despite low levels of equipment on hand, equipment
serviceability, or personnel readiness categories that would result in
lower overall "C-Ratings," which units typically use to report
readiness.
[64] GAO-07-439T.
[65] According to DOD officials, the level of spending on replacement
versus recapitalization is high because of low equipment density.
[66] The Army Modular Heavy Brigade Combat Team (HBCT) force structure
calls for 31 HBCTs equipped with combinations of two different types of
Abrams Tanks and Bradleys. Seventeen HBCTs would be equipped with the
digitized Abrams M1A2 System Enhancement Program Tanks and digitized
M2A3 Bradleys. The remaining 14 HBCTs would be equipped with the Abrams
M1A1 Integrated Management Tanks and Bradley Operation Desert Storm
upgraded vehicles.
[67] According to DOD officials, the Marine Corps' reset strategy of
replacement versus recapitalization is high because of low equipment
density.
[68] According to DOD officials, MRAPs are being procured exclusively
for OIF and, as such, are considered a cost of war. Accordingly, the
Marine Corps reclassified $0.7 billion of fiscal year 2007 reset
funding as cost of war funding.
[69] The Marine Corps began receiving reset funding in fiscal year
2002. Prior to fiscal year 2002, the Marine Corps used the term
reconstitution.
[70] The five equipment items we profiled are the M1 Tank, Bradley
Fighting Vehicle (Army only), High Mobility Multi-Purpose Wheeled
Vehicle, Heavy Expanded Mobility Tactical Truck (Army only), and the
Marine Corps CH-53E helicopter.
[71] GAO-06-141.
[72] H.R. Conf. Rep. No. 109-676, at 359 (2006), which accompanied the
Department of Defense Appropriations Act, 2007, Pub. L. No. 109-289
(2006).
[73] GAO-06-604T.
[74] Marine Posture Statement, Statement before the Senate Committee on
Armed Services, 110th Cong. (2007) (statement of Gen. James T. Conway,
Commandant of the Marine Corps).
[75] GAO-06-141.
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