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GAO-10-507R: 

United States Government Accountability Office: 
Washington, DC 20548: 

April 26, 2010: 

Congressional Committees: 

Subject: Force Structure: Assessment of Army Progress in Modular 
Restructuring, Prepositioned Equipment, and Equipment Reset (GAO 10- 
507R) April, 26, 2010: 

The John Warner National Defense Authorization Act for Fiscal Year 
2007, Pub. L. No. 109-364, § 323 directed the Comptroller General to 
assess (1) the Army's progress completing its modular transformation 
initiative; (2) the status of Army efforts to reconstitute its 
prepositioned material stock; and (3) the Army's progress in its 
efforts to repair, recapitalize, and replace equipment used in current 
overseas operations. Enclosed is the final briefing on these issues. 

We will be happy to meet with you to discuss this briefing in more 
detail and answer any questions you may have. If you would like to 
schedule a meeting or if you have any questions, please contact me or 
Margaret Morgan, Assistant Director, morganm@gao.gov or (202-512- 
8975). Contact points for our Office of Congressional Relations and 
Public Affairs may be found on the last page of this report. 

Signed by: 

John H. Pendleton:
Director, Defense Capabilities and Management: 

Enclosure: 

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 Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate: 

The Honorable Ike Skelton:
Chairman:
The Honorable Howard P. McKeon:
Ranking Member:
Committee on Armed Services:
House of Representatives: 

The Honorable Norman D. Dicks:
Chairman:
The Honorable C.W. Bill Young:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives: 

[End of section] 

Enclosure: 

Force Structure: Assessment of Army Progress in Modular Restructuring,
Prepositioned Equipment, and Equipment Reset: 

Briefing to Congressional Defense Committees: 

April 26, 2010: 

Contents: 

* Reporting Requirements in the John Warner National Defense 
Authorization Act for 2007; 
* Approach to Addressing the Mandate; 
* Staffing, Equipping, Funding, and Design of Modular Forces; 
* Reconstitution of Prepositioned Materiel and Equipment; 
* Equipment Reset; 
* Funding for Reconstitution of Prepositioned Materiel and Equipment 
and Equipment Reset; 
* Scope and Methodology. 

GAO's Mandate in the John Warner National Defense Authorization Act 
for Fiscal Year 2007: 

Sec. 323 directed the Comptroller General to report annually to the 
congressional defense committees with his assessment of the following: 

* The progress of the Army in meeting its requirements for that fiscal 
year for: 

1. the repair, recapitalization, and replacement of equipment used in 
the global war on terrorism; 

2. the fulfillment of equipment requirements for units transforming to 
modularity in accordance with the Modular Force Initiative report 
submitted to Congress in March 2006; 

3. reconstitution of equipment and materiel in prepositioned stocks in 
accordance with requirements under the Army Prepositioned Stock 
Strategy 2012 or a subsequent strategy implemented under the 
guidelines at 10 U.S.C. § 2229; and; 

4. equipping and manning modular units in the regular components and 
reserve components of the Armed Forces. 

* The use of funds for meeting requirements 1-3 above, and; 

* The progress of the Army in conducting further testing and 
evaluations of designs under the modularity initiative. 

Approach to Addressing the Mandate: 

To address this recurring mandate, we have performed numerous 
engagements since 2007 that have addressed the required reporting 
elements. A list of related products is included at the end of this 
briefing. 

The mandated reported elements fall into three main areas: (1) modular 
restructuring, (2) equipment reset, and (3) reconstitution of 
prepositioned equipment. 

This briefing will provide the status of our work in each of these 
areas. 

Army's Progress in Modular Restructuring: Status of Staffing Efforts: 

The Army's personnel projections indicate that it will have the active 
duty[Footnote 1] personnel it needs to meet the aggregate staffing 
requirements of its modular force through 2013. 

However, the Army projects continuing shortages in particular ranks--
primarily mid-level officers--and special-skills such as signal 
intelligence, explosive ordnance disposal, and public affairs. 

According to the Army, shortfalls are due to several factors, 
including: 

* lower rates of accessions in the 1990s that have led to smaller 
numbers of mid-level officers available today, and; 

* increased requirements due to growth in the size of the Army and its 
transformation to modular design. 

Army's Progress in Modular Restructuring: Staffing Challenges: 

A growing number of active duty soldiers are unable to deploy with 
their units primarily due to medical conditions related to previous 
deployments, such as orthopedic problems or mental stress. 

The Army expects the number of nondeployable soldiers to increase 
further as the Army phases out its program that keeps deployed or 
deploying soldiers on duty after they are eligible to leave, known as 
Stop-Loss, by March 2011. 

In 2010, the Army anticipates that one in five soldiers in an average 
brigade combat team of 3,500 soldiers will be unable to deploy with 
their units. 

Figure 1: Average number of nondeployable soldiers in brigade combat 
teams deployed to Iraq in FY 2007-2009, Army projections for FY 2010, 
and reasons for nondeployability: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2007; 
Administrative[A]: 263; 
Medical: 128; 
Stop-Loss: 0. 

Fiscal year: 2008; 
Administrative[A]: 335; 
Medical: 132; 
Stop-Loss: 0. 

Fiscal year: 2009; 
Administrative[A]: 310; 
Medical: 192; 
Stop-Loss: 0. 

Fiscal year: 2010; 
Administrative[A]: 348; 
Medical: 219; 
Stop-Loss: 175. 

Source Army G-1. 

Note: Soldiers are categorized as administratively nondeployable for a 
number of reasons, such as planning to retire, undergoing critical 
professional development training, or those who are subject to 
disciplinary action. 

These data represent units' status on their latest arrival date, the 
date the unit deploys to theater. 

[End of figure] 

To address the growing number of nondeployable active duty soldiers, 
in July 2009, the Secretary of-Defense announced a temporary increase 
in the size of the Army of up to 22,000 soldiers until September 2013. 

* The Army does not expect to create additional units that could be 
added to its rotational readiness and deployment cycle; therefore, the 
length of time that soldiers remain at home between deployments will 
not be affected by the temporary end-strength increase. Without 
additional units in its rotational force, the Army will not meet its 
goal of increasing the time units have between rotations at the 
current level of demand. 

* The Army plans to use the temporary increase to ensure that 
deploying units have the personnel they need to perform their missions. 

* The Army has requested overseas contingency operations funding to 
pay for these personnel in fiscal year 2011; however, it is unclear 
how the personnel will be funded in fiscal years 2012 and 2013. 

Army's Progress in Modular Restructuring: Status of Equipping Efforts: 

The Army projects that by 2016 the percentage of equipment on hand as 
compared to its requirement will increase and it will have more modern 
equipment across all components (active and reserve). However, these 
protections are based on the assumption that the Army's reset program 
will continue to be funded so that all the equipment on hand in 2010 
will be available in 2016, including equipment that is currently being 
heavily used in Iraq and Afghanistan. 

The Army's plan will require it to continue to rely on some older 
equipment to substitute for modern equipment in some categories, for 
example: 

* tactical radios; 
* medium trucks; 
* high-mobility multipurpose wheeled vehicles. 

Similarly, the Army projects that in 2016 it will continue to have 
shortfalls of some key enabler equipment, including equipment that 
represents emerging technology, for example: 

* unmanned aircraft systems; 
* enhanced position location reporting system; 
* force )00 brigade and below battle command system. 

Army's Progress in Modular Restructuring: Status of Support Force 
Assessments: 

The Army assesses its modular support forces in a two-step process in 
which it first identifies its requirement for specific numbers and 
types of support forces in different operational scenarios and then 
decides what units it can resource based on available resources. The 
goal of this process is to build the best-balanced force within 
available Army end strength. 

In April 2009, the Army completed an analysis of support forces needed 
through fiscal year 2015 based on the operational demands at the time 
and a mix of possible future demand scenarios, as well as goals for 
time between deployments. The demand-based analysis identified 
shortfalls of between 116,000 and 430,000 support personnel that could 
not be resourced. 

Concerned about the magnitude of the shortfalls generated by this 
demand-based approach, in December 2009 the Army completed another 
analysis of support forces, this time using a supply-based approach 
intended to provide a balanced force within its end strength through 
2017. The Army: 

* prioritized retaining support unit types currently in high demand, 
such as medical, aviation, civil affairs, and transportation units, 
and; 

* identified and eliminated support units that were not in high demand 
in current operations. 

Army's Progress in Modular Restructuring: Modular Unit Design and Use 
of Funds: 

We previously reported on the Army's progress in testing and for its 
modular unit designs and the use of fundy the Army tor equipping its 
modular units.[Footnote 2] In November 2008, we reported that the Army 
did not have a comprehensive approach to assessing the need for 
changes to modular designs. We recommended that the Army assess The 
effectiveness of Modular forces with authorized equipment and 
personnel. The Department of Defense (DOD) agreed with our 
recommendation and stated that it is currently assessing the 
capabilities of the modular force. 

Regarding the Army's use of funds for equipping its modular units, the 
Army stared in its 2009 report to Congress on tile status of its 
modular transformation[Footnote 3] that the Army is no lager able to 
distinguish between equipment purchased tor developing the modular 
force and modernized fielding. 

Army's Progress in Reconstitution of Prepositioned Materiel and 
Equipment: 

In November 2009 we issued Defense Logistics: Department of Defense's 
Annual Report on the Status of Prepositioned Materiel and Equipment 
Can Be Further Enhanced to Better Inform Congress (GAO-10-172R) in 
response to our mandate under 10 U.S.C. §2229a. We made 
recommendations to improve the Army's future reporting on its 
prepositioned materiel. 

DOD concurred with our recommendations and commented that it will 
incorporate into future reports information on the Army's level of 
fill of its prepositioned sets that include spare parts and include 
information on the progress to replenish its individual prepositioned 
sets and changes in those sets from the previous years to highlight 
readiness concerns as well as major program improvements. 

In fiscal year 2009, the Army continued execution of its Army 
Prepositioned Stock (APS) Strategy 2015 and projects that it will 
replenish and reconstitute all APS equipment sets by 2015, contingent 
on sufficient funding through the period. 

We previously reported in GAO-08-257R, Defense Logistics: Army Has Not 
Fully Planned or Budgeted for the Reconstitution of its Afloat 
Prepositioned Stocks, that the Army did not track funding for 
prepositioned equipment separately from other equipment-related 
requests. Since the 2008 report, the Army has begun to improve its 
tracking of these funds. Specifically, the Army's fiscal year 2009 
Supplemental Overseas Contingency Operations budget identified $319.1 
million in Operations and Maintenance Procurement funds and $987 
million in Other Procurement funds to reset prepositioned stocks. 

We plan to initiate an engagement to review DOD's fiscal year 2010 
annual report on the status of materiel in the prepositioned stocks to 
address Sec. 2229a of Title 10 of the U.S. Code, which requires DOD to 
report to Congress annually on the status of materiel and equipment in 
the prepositioned stocks. DOD issued its last report to Congress on 
the status of materiel and equipment on February 16, 2009, and plans 
to issue its 2010 report in March 2010. 

The law requires us to review DOD's report and submit to congressional 
defense committees any additional information that will further inform 
such committees on issues relating to the status of materiel and 
equipment in prepositioned stocks no later than 120 days after the 
date on which DOD submits its report to Congress. 

Army Equipment Reset: 

In a testimony statement for the House Committee on Armed Services, we 
reported in February 2009 that the harsh operating environments and 
prolonged length of operations in Iraq and Afghanistan have placed 
tremendous stress on deployed equipment. Given that much of this 
equipment was already more than 20 years old and has not been reset 
since the onset of operations in Iraq in 2003, Army and Marine Corps 
equipment reset requirements are expected to significantly increase 
over the next several years as the Iraq drawdown continues and major 
pieces of equipment are returned to the U.S. (GAO-09-380T, Feb. 12, 
2009). 

According to the Army's 2010 Posture Statement, the Army completed the 
reset of 29 brigades worth of equipment in fiscal year 2009, and 
continues the reset of 13 more. In total, the Army reported that it 
had reset more than 98,000 pieces of equipment as depot production had 
doubled since September 11, 2001. 

The Army has received appropriations of over $24 billion for 
procurement funding for reset since fiscal year 2003. We previously 
reported that poor visibility over how reset procurement funds were 
obligated by the system limited the Army's ability to make risk-based 
decisions about what investments it should make (GAO-07-814, Sept. 19, 
2007). 

Since that time, the Army has begun to better track reset funding. For 
example, in the Army's fiscal year 2010 supplemental budget request, 
the Army reported that it obligated about $3.5 billion for depot-level 
maintenance; $3.5 billion for field-level maintenance; and $85 million 
for recapitalization. In addition, the Army identified $319.1 million 
in Operations and Maintenance Procurement and $987 million in Other 
Procurement for prepositioned stocks. 

Additional reset funding is provided through the Army's procurement 
accounts, but these funds are not separately reported as reset. 

We have initiated a new engagement that will focus on DOD's strategy 
to reset equipment returning from Iraq to meet future operational 
needs. The engagement will address the following questions: (1) To 
what extent do DOD's equipping strategies and force generation models 
provide an integrated process for establishing reset requirements for 
equipment returning from Iraq and the time line for reset? (2) To what 
extent do DOD s reset requirements processes address the need to reset 
nonstandard equipment that is issued in theater? (3) To what extent 
are program managers, materiel commands, and maintenance depots 
receiving accurate and timely requirements on the type and amount of 
equipment returning from Iraq to support workload forecasts, and are 
current reset budget trends consistent with reset requirements? 

Scope and Methodology: 

To assess the Army's progress staffing, equipping, assessing, and 
funding and the design of the modular force, we: 

* compared data on available personnel and projected personnel against 
Army requirements and identified staffing challenges; 

* reviewed Army guidance, strategies and assumptions related to 
mitigating staffing challenges and assessing Army support forces; 

* examined documentation and data on the Army's efforts to equip the 
total Army; we compared equipment the Army projected to have by 2016 
with assumed equipment requirements overall and for key enabler items 
and Identified any equipping challenges; and; 

* discussed with DOD officials issues related to staffing, equipping 
assessing support forces, funding, and the design of modular units. 

To assess progress in reconstituting the Army's prepositioned 
equipment, we reviewed the results of GAO's most recent report 
responding to the congressional mandate under 10 U.S.C. §2229a 
concerning DOD's report on the status of its prepositioned stocks. 

To assess the Army's use of funds for equipment reset and 
reconstitution of prepositioned equipment, we reviewed Army reports to 
Congress and examined budget documents on the status of equipment 
reset and prepositioned equipment. 

We conducted the performance audits on which this briefing is based 
from December 2008 through March 2010 in accordance with generally 
accepted government auditing standards. Those standards require that 
we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

Although we did not independently test the reliability of Army data 
electronically, we determined the data were sufficiently reliable for 
the purposes of this briefing based on discussions with Army officials 
about the data quality control procedures used to ensure the 
reliability of the relevant equipment and personnel databases. 

We provided a draft of this briefing to the DOD for review and 
comment. However, DOD did not provide comments. The Army provided 
technical comments which we have incorporated where appropriate. 

GAO Related Products: 

Defense Logistics: Department of Defense's Annual Report on the Status 
of Prepositioned Materiel and Equipment Can Be Further Enhanced to 
Better Inform Congress. [hyperlink, 
http://www.gao.gov/products/GAO-10-172R]. Washington, D.C.: November 
4, 2009. 

Force Structure: The Army Needs a Results-Oriented Plan to Equip and 
Staff Modular Forces and a Thorough Assessment of Their Capabilities. 
[hyperlink, http://www.gao.gov/products/GA0-09-131]. Washington, D.C.: 
November 14, 2008. 

Defense Logistics: Department of Defense's Annual Report on the Status 
of Prepositioned Materiel and Equipment Can Be Enhanced to Better 
Inform Congress. [hyperlink, http://www.gao.gov/products/GAO-09-147R]. 
Washington, D.C.: December 15, 2008. 

Force Structure: Restructuring and Rebuilding the Army Will Cost 
Billions of Dollars for Equipment but the Total Cost Is Uncertain. 
[hyperlink, http://www.gao.gov/products/GAO-08-669T]. Washington, 
D.C.: April 10, 2008. 

Force Structure: Better Management Controls Are Needed to Oversee the 
Army's Modular Force and Expansion Initiatives and Improve 
Accountability for Results. [hyperlink, 
http://www.gao.gov/products/GA0-08-145]. Washington, D.C.: December 
14, 2007. 

Defense Logistics: Army and Marine Corps Cannot Be Assured That 
Equipment Reset Strategies Will Sustain Equipment Availability While 
Meeting Ongoing Operational Requirements. [hyperlink, 
http://www.gao.gov/products/GAO-07-814]. Washington, D.C.: September 
19, 2007. 

Defense Logistics: Preliminary Observations on the Army's 
Implementation of Its Equipment Reset Strategies. [hyperlink, 
http://www.gao.gov/products/GAO-07-439T]. Washington, D.C.: January 
31,2007. 

[End of section] 

Footnotes: 

[1] We reported on staffing challenges affecting the reserves in GAO, 
Reserve Forces: Army Needs to Finalize an Implementation Plan and 
Funding Strategy for Sustaining an Operational Reserve Force, 
[hyperlink, http://www.gao.gov/products/GAO-09-898] (Washington, D.C.: 
Sept. 17, 2009). 

[2] See, GAO The Army Needs a Results-Oriented Plan to Equip and Staff 
Modular Forces and a Thorough Assessment of Their Capabilities, 
[hyperlink, http://www.gao.gov/products/GA0-09-131] (Washington, D.C.: 
Nov.14, 2008). 

[3] Department of the Army, Prioritization of Funds for Equipment 
Readiness and Strategic Capability, Report to Congress (Washington, 
D.C., Feb. 2, 2009). 

[End of section] 

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