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Testimony: 

Before the Subcommittee on Tactical Air and Land Forces, Committee on 
Armed Services, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:00 p.m. EDT: 

Tuesday, April 4, 2006: 

Force Structure: 

Capabilities and Cost of Army Modular Force Remain Uncertain: 

Statement of Janet St. Laurent, Director, Defense Capabilities and 
Management: 

GAO-06-548T: 

GAO Highlights: 

Highlights of GAO-06-548T, a testimony before the Subcommittee on 
Tactical Air and Land Forces, Committee on Armed Services, House of 
Representatives: 

Why GAO Did This Study: 

The Army considers its modular force transformation the most extensive 
restructuring it has undertaken since World War II. Restructuring the 
Army from a division-based force to a modular brigade-based force will 
require extensive investments in equipment and retraining of personnel. 
The foundation of the modular force is the creation of standardized 
modular combat brigades designed to be stand-alone, self-sufficient 
units that are more rapidly deployable and better able to conduct joint 
operations than their larger division-based predecessors. 

GAO was asked to testify on the status of the Army’s modularity effort. 
This testimony addresses (1) the Army’s cost estimate for restructuring 
to a modular force, (2) progress and plans for equipping modular combat 
brigades, (3) progress made and challenges to meeting personnel 
requirements, and (4) the extent to which the Army has developed an 
approach for assessing modularity results and the need for further 
adjusting designs or implementation plans. 

This testimony is based on previous and ongoing GAO work examining Army 
modularity plans and cost. GAO’s work has been primarily focused on the 
Army’s active forces. GAO has suggested that Congress consider 
requiring the Secretary of Defense to provide a plan for overseeing 
spending of funds for modularity. 

What GAO Found: 

Although the Army is making progress creating modular units, it faces 
significant challenges in managing costs and meeting equipment and 
personnel requirements associated with modular restructuring in the 
active component and National Guard. Moreover, the Army has not 
provided sufficient information for the Department of Defense and 
congressional decision makers to assess the capabilities, costs, 
affordability, and risks of the Army’s modular force implementation 
plans. The Army’s cost estimate for completing modular force 
restructuring by 2011 has grown from an initial rough order of 
magnitude of $28 billion in 2004 to $52.5 billion currently. Although 
the Army’s most recent estimate addresses some shortcomings of its 
earlier estimate, it is not clear to what extent the Army can achieve 
expected capabilities within its cost estimate and planned time frames 
for completing unit conversions. Moreover, according to senior Army 
officials, the Army may request additional funds for modularity beyond 
2011. 

Although modular conversions are under way, the Army is not meeting its 
near-term equipping goals for its active modular combat brigades, and 
units are likely to have shortfalls of some key equipment until at 
least 2012. The Army plans to mitigate risk in the near term by 
providing priority for equipping deploying units and maintaining other 
units at lower equipping levels. However, it has not yet defined 
specific equipping plans for units in various phases of its force 
rotation model. As a result, it is unclear what level of equipment 
units will have and how well units with low priority for equipment will 
be able to respond to unforeseen crises. 

In addition, the Army faces significant challenges in implementing its 
plan to reduce overall active component end strength from 512,400 to 
482,400 soldiers by fiscal year 2011 while increasing the size of its 
modular combat force from 315,000 to 355,000. This will require the 
Army to eliminate or realign many positions in its noncombat force. The 
Army has made some progress in reducing military personnel in noncombat 
positions through military civilian conversions and other initiatives, 
but some of its goals for these initiatives may be difficult to meet 
and could lead to difficult trade-offs. Already the Army does not fully 
plan to fill some key intelligence positions required by its new 
modular force structure. 

Finally, the Army does not have a comprehensive and transparent 
approach to measure progress against stated modularity objectives and 
assess the need for further changes to modular designs. The Army has 
not established outcome-related metrics linked to many of its 
modularity objectives. Further, although the Army is analyzing lessons 
learned from Iraq and training events, the Army does not have a long-
term, comprehensive plan for further analysis and testing of the 
designs and fielded capabilities. Without performance metrics and a 
comprehensive testing plan, neither the Secretary of Defense nor 
congressional leaders will have full visibility into the capabilities 
of the modular force as it is currently organized, staffed, and 
equipped. 

www.gao.gov/cgi-bin/getrpt? GAO-06-548T. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Janet St. Laurent at 
(202) 512-4402 or stlaurentj@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss our ongoing work on the Army's plans 
for restructuring into a modular brigade-based force. In 2004, the Army 
began its modular force transformation to restructure itself from a 
division-based force to a modular brigade-based force--an undertaking 
it considers the most extensive reorganization of its force since World 
War II. This restructuring will require a significant investment of 
billions of dollars at a time when the Army is developing other high- 
cost capabilities, such as the Future Combat Systems.[Footnote 1] For 
example, the administration requested $6.6 billion for modularity as 
part of its fiscal year 2007 budget request. The foundation of the 
modular force is the creation of standardized modular brigade combat 
teams designed to be stand-alone, self-sufficient units that are more 
rapidly deployable and better able to conduct joint and expeditionary 
operations than their larger division-based predecessors. The Army 
plans to achieve its modular restructuring without permanently 
increasing its active component end strength above 482,400 soldiers, 
primarily by eliminating some noncombat positions in which military 
personnel currently serve, and transferring these positions to its 
operational combat forces.[Footnote 2] The February 2006 Quadrennial 
Defense Review (QDR) specified that the Army would create 70 modular 
combat brigades in its active component and National Guard. This 
represents a 7-brigade reduction from the Army's original plan of 
having 77 modular combat brigades. However, according to Army 
officials, resources from the 7 brigades subtracted from the original 
plan will be used to increase support units in the reserve component, 
and Department of Defense (DOD) officials believe that 70 brigades will 
be sufficient to execute the defense strategy. 

For this hearing, you asked us to update our March 2005 testimony 
before this committee, in which we provided preliminary observations on 
the Army's plan to implement and fund modular forces.[Footnote 3] At 
that time we observed that because the Army is undertaking this effort 
while executing operations in Iraq, Afghanistan, and elsewhere and 
developing other new capabilities, such as the Future Combat Systems, 
DOD may face some long-term affordability challenges as it moves 
forward with these and other initiatives. Since that hearing, in 
September 2005 we issued a report on the costs of modularity, and we 
are drafting a report on the Army's plans for modularity, which we 
expect to issue this spring.[Footnote 4] Specifically, my testimony 
today will address (1) the Army's cost estimates for restructuring to a 
modular force, (2) the Army's progress and plans for equipping modular 
combat brigades, (3) progress made and challenges to managing personnel 
requirements of the modular force, and (4) the extent to which the Army 
has developed an approach for assessing implementation of modularity 
and for further adjusting designs or implementation plans. 

My testimony is based on both our September 2005 report on cost issues 
and on our past and ongoing work examining the Army's plans for 
implementing modularity. For our ongoing work, we interviewed officials 
and obtained documents from Headquarters, Department of the Army; U.S. 
Army Training and Doctrine Command; and U.S. Army Forces Command to 
determine the Army's modular force implementation plans, organizational 
design requirements and supporting analysis, equipment and personnel 
requirements for the brigade combat teams, and plans for equipping and 
staffing modular brigade combat teams to the required levels. We 
visited the first three Army divisions undergoing modular conversions 
to obtain information on the plans for organizing, staffing, and 
equipping the modular brigades and discussed modular force support 
requirements with officials from the U.S. Army Center for Army 
Analysis. To assess the Army's cost estimates, we updated our September 
2005 report with information from the fiscal year 2007 President's 
Budget request and discussions with Army officials about implications 
of the QDR on the cost of modular restructuring. To address equipment 
plans and status, we analyzed Department of the Army data on selected 
equipment the Army identified as essential for achieving the modular 
combat brigades, required operational capabilities and reviewed unit 
readiness reports from those brigades that had completed or were in the 
process of completing their modular conversion as of February 2006. To 
assess personnel plans, we discussed the implications of force 
structure changes and plans for eliminating noncombat positions with 
officials from the Department of the Army Deputy Chiefs of Staff for 
Personnel (G1) and Intelligence (G2). Finally, to assess the framework 
for assessing modularity implementation, we examined key Army planning 
documents and discussed objectives, performance metrics, and testing 
plans with appropriate officials in the Department of the Army 
Headquarters, especially officials from the Deputy Chief of Staff for 
Operations and Training (G3) and the Training and Doctrine Command. In 
addition, we relied on our past reports assessing organizations 
undertaking significant reorganizations. We conducted our work from May 
2005 through March 2006 in accordance with generally accepted 
government auditing standards and determined that the data used were 
sufficiently reliable for our objectives. 

Summary: 

The Army is making progress converting active Army combat units to the 
new modular structure at a time of war. The Army's goals for increasing 
combat power while introducing predictability in deployments for its 
soldiers are important, and the Army leadership in headquarters, 
military and civilian staffs, and operational and support units 
throughout the Army have dedicated considerable attention, energy, and 
time to achieving these goals under tight time frames. However, the 
Army faces significant challenges in executing its modularity plans to 
fully achieve planned capabilities within the time frames it 
established. In short, because of uncertainties in cost, equipment, and 
personnel plans and the absence of a comprehensive approach for 
assessing modularity results, we do not believe decision makers have 
sufficient information to assess the capabilities, costs, and risks 
posed by the transformation to a modular force. I will now turn to our 
four main issues. 

First, the lack of clarity in the Army's cost estimates for modularity 
may limit the Secretary of Defense and Congress's ability to weigh 
competing funding priorities. The Army's cost estimate through fiscal 
year 2011 has increased from an initial rough order of magnitude 
estimate of $28 billion in 2004 to $52.5 billion currently. Of this 
$52.5 billion estimate, $41 billion, or 78 percent, has been allocated 
to equipment, with the remaining $11.5 billion allocated to military 
construction, facilities, sustainment, and training. Although the 
estimate has grown, the Army's rationale for allocating dollar amounts 
to specific aspects of modularity has not become more transparent. For 
example, it is not clear how the Army will distinguish between costs 
associated with modularity and the costs associated with modernizing 
equipment or restoring equipment used during ongoing operations. In 
addition, despite recent force structure changes, schedule changes, and 
design refinements, the Army has not updated its cost estimate or 
funding plan. Moreover, the Army may seek additional funding after 2011 
to buy equipment required for modular restructuring. In short, it is 
not clear what level of capability the Army will achieve with the $52.5 
billion it plans to spend on its modular restructuring through fiscal 
year 2011. As a result, decision makers may not have adequate 
information on which to weigh competing demands for funding. 

Second, while the Army is well under way in creating active component 
modular combat brigades, it is not meeting its equipping goals for 
these brigades and is still developing its equipping strategy, raising 
considerable uncertainty as to the levels of equipment they will have 
in both the near term and longer term. Although active modular combat 
brigades are receiving considerable quantities of equipment, they will 
initially lack required quantities of items such as communications 
systems that are key for providing the enhanced intelligence, 
situational awareness, and network capabilities needed to help match 
the combat power of the Army's former brigade structure. The Army will 
likely face even greater challenges fully equipping 28 planned National 
Guard modular combat brigades since the National Guard has historically 
been underequipped. To mitigate equipment shortages, the Army is 
developing an equipping strategy that will provide varying levels of 
equipment to brigades depending on their phase of readiness--that is, 
whether the brigades are available for deployment, training for 
deployment, or returning from deployment. However, the Army has not yet 
defined specific equipping plans for brigades in each of the various 
readiness phases. Until the Army completes development of its equipping 
strategy, the Secretary of Defense and Congress will not be in a good 
position to assess the Army's equipment requirements and the level of 
risk associated with the Army's plans. 

Third, while the Army has made some progress meeting modular personnel 
requirements in the active component by shifting positions from its 
noncombat force to its operational combat force, it faces significant 
challenges in meeting its goal to reduce its overall active end 
strength to 482,400, as specified by the QDR, while increasing the size 
of its modular combat force. The Army has developed initiatives to 
reduce and realign its end strength, but some of these initiatives may 
not meet the Army's initial expectations. In addition, the Army does 
not plan to fill some key intelligence positions required by its new 
modular force structure design in part because of the requirement to 
reduce overall end strength. Without continued, significant progress in 
meeting personnel requirements, the Army may need to accept increased 
risk in its ability to conduct operations and support its combat forces 
or it may need to seek support for an end strength increase from DOD 
and Congress. 

Finally, the Army lacks a comprehensive and transparent approach to 
effectively measure progress against stated modularity objectives, 
assess the need for further changes to its modular unit designs, and 
monitor implementation plans. GAO and DOD have identified the 
importance of establishing objectives that can be translated into 
measurable metrics, which in turn provide accountability for results. 
The Army has identified objectives for modularity, but metrics for 
assessing the Army's progress on modularity-specific goals are 
extremely limited. In 2004, the Army's Training and Doctrine Command 
(TRADOC) conducted a wide-ranging baseline analysis of the modular 
design using measures of effectiveness; however, the Army does not have 
a long-term plan to conduct similar analysis so that it can compare the 
performance of actual modular units with the TRADOC-validated design. 
Without performance metrics and a comprehensive testing plan, neither 
Army nor congressional leaders will be able to assess the capabilities 
of and risks associated with the modular force as it is currently 
organized, staffed, and equipped. 

Background: 

The Army's conversion to a modular force encompasses the Army's total 
force--active Army, Army National Guard, and Army Reserve--and directly 
affects not only the Army's combat units, but related command and 
support organizations. A key to the Army's new modular force design is 
embedding within combat brigades battalion-sized, reconnaissance, 
logistics, and other support units that previously made up parts of 
division-level and higher-level command and support organizations, 
allowing the brigades to operate independently. Restructuring these 
units is a major undertaking because it requires more than just the 
movement of personnel or equipment from one unit to another. The Army's 
new modular units are designed, equipped, and staffed differently than 
the units they replace; therefore successful implementation of this 
initiative will require changes such as new equipment and a different 
mix of skills and occupational specialties among Army personnel. By 
2011, the Army plans to have reconfigured its total force--to include 
active and reserve components and headquarters, combat, and support 
units--into the modular design. The foundation of the modular force is 
the creation of modular brigade combat teams--combat maneuver brigades 
that will have a common organizational design and will increase the 
rotational pool of ready units. Modular combat brigades will have one 
of three standard designs--heavy brigade combat team, infantry brigade 
combat team, and Stryker brigade combat team. 

Until it revised its plans in March 2006, the Army had planned to have 
a total of 77 active component and National Guard modular combat 
brigades by expanding the existing 33 combat brigades in the active 
component into 43 modular combat brigades by 2007, and by creating 34 
modular combat brigades in the National Guard by 2010 from existing 
brigades and divisions that have historically been equipped well below 
requirements. To rebalance joint ground force capabilities the 2006 QDR 
determined the Army should have a total of 70 modular combat brigades-
-42 active brigades and 28 National Guard brigades. Also in March 2006, 
the Army was in the process of revising its modular combat brigade 
conversion schedule; it now plans to convert its active component 
brigades by fiscal year 2010 instead of 2007 as previously planned, and 
convert National Guard brigades by fiscal year 2008 instead of 2010. As 
of March 2006 the Army had completed the conversion of 19 active 
component brigades to the modular design and was in the process of 
converting 2 active and 7 National Guard brigades. Table 1 shows the 
Army's schedule as of March 2006 for creating active component and 
National Guard modular combat brigades. 

Table 1: Army Schedule for Creating Active Component and National Guard 
Modular Combat Brigades as of March 2006: 

Active component combat brigades; 
FY03: 2; 
FY04: 11; 
FY05: 8; 
FY06: 14; 
FY07: 3; 
FY08: 2; 
FY09: 1; 
FY10: 1; 
Total: 42. 

National Guard combat brigades; 
FY03: --; 
FY04: --; 
FY05: 7; 
FY06: 7; 
FY07: 7; 
FY08: 7; 
FY09: --; 
FY10: --; 
Total: 28. 

Total; 
FY03: 2; 
FY04: 11; 
FY05: 15; 
FY06: 21; 
FY07: 10; 
FY08: 9; 
FY09: 1; 
FY10: 1; 
Total: 70. 

Source: GAO analysis of Army data. 

[End of table] 

According to the Army, this larger pool of available combat units will 
enable it to generate both active and reserve component forces in a 
rotational manner that will support 2 years at home following each 
deployed year for active forces. To do this, the Army has created a 
rotational force generation model in which units rotate through a 
structured progression of increased unit readiness over time. Units 
will progress through three phases of operational readiness cycles, 
culminating in full mission readiness and availability to deploy. 

The Army's objective is for the new modular combat brigades, which will 
include about 3,000 to 4,000 personnel, to have at least the same 
combat capability as a brigade under the current division-based force, 
which range from 3,000 to 5,000 personnel. Since there will be more 
combat brigades in the force, the Army believes its overall combat 
capability will be increased as a result of the restructuring, 
providing added value to combatant commanders. Although somewhat 
smaller in size, the new modular combat brigades are expected to be as 
capable as the Army's existing brigades because they will have 
different equipment, such as advanced communications and surveillance 
equipment, and a different mix of personnel and support assets. The 
Army's organizational designs for the modular brigades have been tested 
by its Training and Doctrine Command's Analysis Center against a 
variety of scenarios, and the Army has found the new designs to be as 
capable as the existing division-based brigades in modeling and 
simulations. 

Lack of Clarity in Army's Cost Estimate for Modularity Limits Decision 
Makers' Ability to Weigh Funding Priorities: 

The Army's cost estimate for modularity has continued to evolve since 
our September 2005 report.[Footnote 5] As we reported, the Army's cost 
estimate for transforming its force through fiscal year 2011 increased 
from $28 billion in the summer of 2004 to $48 billion in the spring of 
2005. The latter estimate addressed some of the shortcomings of the 
initial rough order of magnitude estimate and included lessons learned 
from operations in Iraq. For example, it included costs of 
restructuring the entire force, to include 77 brigade combat teams, as 
well as the creation of support and command units. However, it excluded 
some known costs. For example, the $48 billion estimate did not include 
$4.5 billion in construction costs the Army plans to fund through 
business process engineering efficiencies, which historically have been 
difficult to achieve. The Army added these costs when it revised its 
cost estimate in March 2006, bringing the most recent total to $52.5 
billion. As shown in table 2, most of the planned funding for 
modularity--$41 billion, or about 78 percent--will be used to procure 
equipment, with the remaining funds divided between military 
construction and facilities and sustainment and training. In addition, 
Army leaders have recently stated they may seek additional funds after 
2011 to procure additional equipment for modular restructuring. 

Table 2: Modular Force Cost Estimates for the Entire Army by Function: 

Dollars in billions. 

Equipping; 
2005: $4.7; 
2006: $5.8; 
2007: $5.4; 
2008: $5.9; 
2009: $6.5; 
2010: $6.7; 
2011: $6.0; 
Total: $41.0; 
Percentage: 78. 

Military construction/facilities; 
2005: $0.3; 
2006: $0.0; 
2007: $0.5; 
2008: $0.5; 
2009: $1.5; 
2010: $1.5; 
2011: $1.5; 
Total: $5.8; 
Percentage: 11%. 

Sustainment and training; 
2005: $0.0; 
2006: $0.7; 
2007: $0.7; 
2008: $1.2; 
2009: $1.1; 
2010: $1.0; 
2011: $1.0; 
Total: $5.7; 
Percentage: 11%. 

Total; 
2005: $5.0; 
2006: $6.5; 
2007: $6.6; 
2008: $7.6; 
2009: $9.1; 
2010: $9.2; 
2011: $8.5; 
Total: $52.5; 
Percentage: 100%. 

Source: GAO analysis of Army data. 

[End of table] 

In our September report, we highlighted uncertainties related to force 
design, equipment, facilities, and personnel that could drive costs 
higher. Some of these uncertainties have been clarified. For example, 
we noted that costs in equipment and facilities would increase 
significantly if the Secretary of Defense decided to add 5 brigades to 
the Army's active component to create a total of 48 brigade combat 
teams--a decision that was scheduled to be made in fiscal year 2006. 
The decision about the number of brigades was made based on the QDR. 
Instead of a 5 brigade combat team increase, the report stated that the 
Army would create a total of 42 such brigades in the active component, 
a 1 brigade combat team reduction from the Army's plan. In addition, 
the number of National Guard brigade combat teams was reduced from 34 
to 28. In sum, the QDR decisions reduced the number of planned brigade 
combat teams from 77 to 70. However, Army officials stated that the 
Army plans to fully staff and equip these units. Moreover, Army 
officials told us that the Army plans to use resources freed up by this 
decision to increase support units in the reserve component and to fund 
additional special operations capability in the active component. We 
also noted in our September 2005 report that the Army had not completed 
designs for all the support units at the time the estimate was set. 
According to Army officials, these designs have been finalized. Despite 
these refinements to the design and changes to the planned number of 
combat and support brigades, the Army has not made revisions to its 
$52.5 billion cost estimate or funding plan based on these changes. 

Moreover, as I will discuss shortly, uncertainty remains in the Army's 
evolving strategy for equipping its modular combat brigades. As a 
result, based on discussions with Army officials, it remains unclear to 
what extent the $41 billion will enable the Army to equip units to 
levels in the Army's tested design. In addition, it is not clear how 
the Army will distinguish between modularity, costs associated with 
restoring equipment used in operations, or modernizing equipment. In 
estimating its equipment costs for modularity, the Army assumed that 
some equipment from ongoing operations would remain in operational 
condition for redistribution to new and restructured modular units. To 
the extent equipment is not returned from operations at assumed rates, 
it is not clear how this will affect equipping levels of modular units 
or how the Army would pay for such equipment. As a result, the 
Secretary of Defense and Congress may not be in a sound position to 
weigh competing demands for funding and assess whether the Army will be 
able to fully achieve planned capabilities for the modular force by 
2011 within the planned funding level. 

Although the Army Is Well Under Way in Its Active Modular Combat 
Brigade Conversions, Its Ability to Meet Its Equipping Goals by 2011 Is 
Unclear: 

The Army has made progress in creating active component modular combat 
brigades, but it is not meeting its equipping goals for these brigades 
and is still developing its overall equipping strategy, which raises 
concerns about the extent to which brigades will be equipped in the 
near and longer term. While active brigades are receiving significant 
amounts of new equipment, Army officials indicated that they may seek 
additional funding for equipment beyond 2011. Moreover, brigades will 
initially lack key equipment, including items that provide enhanced 
intelligence, situational awareness, and network capabilities needed to 
help the Army achieve its planned capabilities of creating a more 
mobile, rapidly deployable, joint, expeditionary force. In addition, 
because of existing equipment shortages, the Army National Guard will 
likely face even greater challenges providing the same types of 
equipment for its 28 planned modular combat brigades. To mitigate 
equipment shortages, the Army plans to provide priority for equipment 
to deploying active component and National Guard units but allocate 
lesser levels of remaining equipment to other nondeploying units based 
on their movement through training and readiness cycles. However, the 
Army has not yet determined the levels of equipment it needs to support 
this strategy, assessed the operational risk of not fully equipping all 
units, or provided to Congress detailed information about these plans 
so it can assess the Army's current and long-term equipment 
requirements and funding plans. 

Army Facing Difficulty Meeting Its Goals for Equipping Active Modular 
Combat Brigades: 

The Army faces challenges meeting its equipping goals for its modular 
brigades both in the near and longer term. As of February 2006, the 
Army had converted 19 modular combat brigades in the active force. 
According to the Army Campaign Plan, which established time frames and 
goals for the modular force conversions, each of these units 
individually is expected to have on hand at least 90 percent of its 
required major equipment items within 180 days after its new equipment 
requirements become effective.[Footnote 6] We reviewed data from 
several brigades that had reached the effective date for their new 
equipment requirements by February 2006, and found that all of these 
brigades reported significant shortages of equipment 180 days after the 
effective date of their new equipment requirements, falling well below 
the equipment goals the Army established in its Campaign Plan. 
Additionally, the Army is having difficulty providing equipment to 
units undergoing their modular conversion in time for training prior to 
operational deployments, and deploying units often do not receive some 
of their equipment until after their arrival in theater. At the time of 
our visits, officials from three Army divisions undergoing modular 
conversion expressed concern over the lack of key equipment needed for 
training prior to deployment. 

The Army already faced equipment shortages before it began its modular 
force transformation and is wearing out significant quantities in Iraq, 
which could complicate plans for fully equipping new modular units. By 
creating modular combat brigades with standardized designs and 
equipment requirements, the Army believed that it could utilize more of 
its total force, thereby increasing the pool of available and ready 
forces to meet the demands of sustained rotations and better respond to 
an expected state of continuous operations. Also, by comparably 
equipping all of these units across the active component and National 
Guard, the Army further believes it will be able to discontinue its 
practice of allocating limited resources, including equipment, based on 
a system of tiered readiness,[Footnote 7] which resulted in lower- 
priority units in both active and reserve components having 
significantly lower levels of equipment and readiness than the higher 
priority units. However, because of the need to establish a larger pool 
of available forces to meet the current high pace of operational 
commitments, the Army's modular combat brigade conversion schedule is 
outpacing the planned acquisition or funding for some equipment 
requirements. The Army has acknowledged that funding does not match its 
modular conversion schedule and that some units will face equipment 
shortages in the early years of transformation. The Army says it will 
manage these shortfalls; however, according to Army officials, the Army 
may continue to seek modular force equipment funding beyond 2011 and 
may exceed its $52.5 billion modularity cost estimate. 

Equipment Shortages Include Key Equipment the Army Identified as 
Essential for Achieving Modular Force Capabilities: 

Active modular combat brigades will initially lack required numbers of 
some of the key equipment that Army force design analyses determined 
essential for achieving their planned capabilities. Army force 
designers identified a number of key organizational, personnel, and 
equipment enablers they determined must be present for the modular 
combat brigades to be as lethal as the division-based brigades they are 
replacing, achieve their expected capabilities, and function as 
designed. Essential among these is the equipment that will enable the 
modular combat brigades to function as stand-alone, self-sufficient 
tactical forces, capable of conducting and sustaining operations on 
their own if required without also deploying large numbers of support 
forces. They include battle command systems to provide modular combat 
brigades the latest command and control technology for improved 
situational awareness; advanced digital communications systems to 
provide secure high-speed communications links; and advanced sensors, 
providing modular combat brigades their own intelligence-gathering, 
reconnaissance, and target acquisition capabilities. 

We reviewed several command and control, communications, and 
reconnaissance systems to determine the Army's plans and timelines for 
providing active modular combat brigades some of the key equipment they 
need to achieve their planned capabilities and function as designed. 
According to Army officials responsible for managing the distribution 
and fielding of equipment, in 2007 when 38 of 42 active component 
modular combat brigades are to complete their modular conversions, the 
Army will not have all of this equipment onhand to meet the new modular 
force design requirements. These shortfalls are due to a range of 
reasons, but primarily because the modular conversion schedule is 
outpacing the planned acquisition or funding. For example, the Army 
does not expect to meet until at least 2012 its modular combat brigade 
requirements for Long-Range Advanced Scout Surveillance Systems, an 
advanced visual sensor that provides long-range surveillance capability 
to detect, recognize, and identify distant targets. In addition, 
because of an Army funding decision, the Army only plans to meet 85 
percent of its requirements across the force for Single Channel Ground 
and Airborne Radio Systems, a command and control network radio system 
that provides voice and data communications capability in support of 
command and control operations. Finally, a recent DOD decision could 
set back the Army's schedule for the acquisition of Joint Network Node, 
a key communications system that provides secure high-speed computer 
network connection for data transmission down to the battalion level, 
including voice, video, and e-mail. According to Army officials, DOD 
recently decided to require the Army to have Joint Network Node undergo 
developmental and operational testing prior to further acquisition, 
which could delay equipping active and National Guard modular combat 
brigades. 

National Guard Faces Significant Equipping Challenges: 

In addition to the challenges the Army faces in providing active 
component modular combat brigades the equipment necessary for meeting 
expected capabilities, the Army will face greater challenges meeting 
its equipping requirements for its 28 planned National Guard combat 
brigades. The Army's modular force concept is intended to transform the 
National Guard from a strategic standby force to a force that is to be 
organized, staffed, and equipped comparable to active units for 
involvement in the full range of overseas operations. As such, Guard 
combat units will enter into the Army's new force rotational model in 
which, according to the Army's plans, Guard units would be available 
for deployment 1 year out of 6 years. However, Guard units have 
previously been equipped at less than wartime readiness levels (often 
at 65 to 75 percent of requirements) under the assumption that there 
would be sufficient time for Guard forces to obtain additional 
equipment prior to deployment. Moreover, as of July 2005, the Army 
National Guard had transferred more than 101,000 pieces of equipment 
from nondeploying units to support Guard units' deployments overseas. 
As we noted in our report last year on National Guard equipment 
readiness,[Footnote 8] National Guard Bureau officials estimated that 
the Guard's nondeployed units had only about 34 percent of their 
essential warfighting equipment as of July 2005 and had exhausted 
inventories of 220 critical items. Although the Army says it plans to 
invest $21 billion into equipping and modernizing the Guard through 
2011, Guard units will start their modular conversions with less and 
much older equipment than most active units. This will add to the 
challenge the Army faces in achieving its plans and timelines for 
equipping Guard units at comparable levels to active units and fully 
meeting the equipping needs across both components. Moreover, the Army 
National Guard believes that even after the Army's planned investment, 
the Army National Guard will have to accept risk in certain equipment, 
such as tactical wheeled vehicles, aircraft, and force protection 
equipment. 

To Mitigate Equipment Shortages, Army Plans to Rotate Equipment among 
Units Based on Their Movement through Training, Readiness, and 
Deployment Cycles: 

Because the Army realized that it would not have enough equipment in 
the near term to simultaneously equip modular combat brigades at 100 
percent of their requirements, the Army is developing a new equipping 
strategy as part of its force rotation model; however, it has not yet 
determined equipping requirements for this new strategy. Under the 
force rotation model, the Army would provide increasing amounts of 
equipment to units as they move through training phases and near 
readiness for potential deployment so they would be ready to respond 
quickly if needed with fully equipped forces. The Army believes that 
over time, equipping units in a rotational manner will enable it to 
better allocate available equipment and help manage risk associated 
with specific equipment shortages. 

Under this strategy, brigades will have three types of equipment sets-
-a baseline set, a training set, and a deployment set. The baseline set 
would vary by unit type and assigned mission and the equipment it 
includes could be significantly reduced from the amount called for in 
the modular brigade design. Training sets would include more of the 
equipment units will need to be ready for deployment, but units would 
share the equipment that would be located at training sites throughout 
the country. The deployment set would include all equipment needed for 
deployment, including theater-specific equipment, high-priority items 
provided through operational needs statements, and equipment from Army 
prepositioned stock. With this cyclical equipping approach, the Army 
believes it can have from 12 to 16 active combat brigades and from 3 to 
4 Army National Guard combat brigades equipped and mission ready at any 
given time. 

However, the Army has not yet determined equipping requirements for 
units as they progress through the rotational cycles. While the Army 
has developed a general proposal to equip both active and Army National 
Guard units according to the readiness requirements of each phase of 
the rotational force model, it has not yet detailed the types and 
quantities of items required in each phase. We noted in our October 
2005 report on Army National Guard equipment readiness[Footnote 9] that 
at the time of the report, the Army was still developing the proposals 
for what would be included in the three equipment sets and planned to 
publish the final requirements in December 2005. However, as of March 
2006 the Army had not decided on specific equipping plans for units in 
the various phases of its force rotation model. 

Because the Army is early in the development of its rotational 
equipping strategy and has not yet defined specific equipping plans for 
units as they progress through rotational cycles, the levels of 
equipment the deploying and nondeploying units would receive are 
currently not clear. Therefore, it is difficult to assess the risk 
associated with decreasing nondeploying units' readiness to perform 
other missions or the ability of units in the earlier stages of the 
rotational cycle to respond to an unforeseen crisis if required. 

The Army Faces Challenges in Managing Personnel Requirements for Its 
New Modular Force Structure: 

The Army has made some progress meeting modular personnel requirements 
in the active component by shifting positions from its noncombat force 
to its operational combat force but faces significant challenges 
reducing its overall end strength while increasing the size of its 
modular combat force. The Army plans to reduce its current end strength 
of 512,400, based upon a temporary authorized increase[Footnote 10], to 
482,400 soldiers by 2011 in order to help fund the Army's priority 
acquisition programs. Simultaneously, the Army plans to increase the 
number of soldiers in its combat force from approximately 315,000 to 
355,000 in order to meet the increased personnel requirements of its 
new larger modular force structure. The Army plans to utilize several 
initiatives to reduce and realign the Army with the aim of meeting 
these planned manpower levels. 

For example, the Army has experienced some success in converting 
nonoperational military positions into civilian positions, thereby 
freeing up soldiers to fill modular combat brigades' requirements. 
During fiscal year 2005, the Army converted approximately 8,000 
military positions to civilian-staffed positions within the Army's 
institutional force. However, officials believe additional conversions 
will be more challenging to achieve. In addition to its success with 
the military-to-civilian conversions, the Army has been given statutory 
authority to reduce active personnel support to the National Guard and 
Reserves by 1,500.[Footnote 11] However, the Army must still eliminate 
additional positions, utilizing these and other initiatives, so it can 
reduce its overall end strength while filling requirements for modular 
units. 

While the Army is attempting to reduce end strength and realign 
positions to the combat force via several initiatives, it may have 
difficulty meeting its expectations for some initiatives. For example, 
the Army expected that the Base Realignment and Closure (BRAC) 
decisions of 2005 could free up approximately 2,000 to 3,000 positions 
in the institutional Army, but the Army is revisiting this assumption 
based upon updated manpower levels at the commands and installations 
approved for closure and consolidation. Army officials believe they 
will be able to realign some positions from BRAC, but it is not clear 
whether the reductions will free up 2,000 to 3,000 military personnel. 
In the same vein, Army officials expected to see reductions of several 
hundred base support staff resulting from restationing forces currently 
overseas back to garrisons within the United States. However, Army 
officials are still attempting to determine if the actual savings will 
meet the original assumptions. 

In addition, the Army's new modular force structure increases 
requirements for military intelligence specialists, but according to 
Army officials the Army will not be able to fully meet these 
requirements. The modular force requires the Army to adjust the skill 
mix of its operational force by adding 8,400 active component 
intelligence specialist positions to support its information 
superiority capability--considered a key enabler of modular force 
capabilities. However, the Army plans to fill only about 57 percent of 
these positions by 2013 in part because of efforts to reduce overall 
end strength. According to Army officials, despite these shortfalls, 
intelligence capability has improved over that of the previous force; 
however, shortfalls in filling intelligence requirements have stressed 
intelligence specialists with a high tempo of deployments. However, 
since intelligence was considered a key enabler of the modular design-
-a component of the new design's improved situational awareness--it is 
unclear how this shortage in planned intelligence capacity will affect 
the overall capability of modular combat brigades. 

If the Army is unable to transfer enough active personnel to its combat 
forces while simultaneously reducing its overall end strength, it will 
be faced with a difficult choice. The Army could accept increased risk 
to its operational units or nonoperational units that provide critical 
support, such as training. Alternatively, the Army could ask DOD to 
seek an end strength increase and identify funds to pay for additional 
personnel. However, DOD is seeking to reduce end strength in all the 
services to limit its personnel costs and provide funds for other 
priorities. 

The Army Has Objectives and Time Frames for Modularity but Lacks 
Performance Metrics to Measure Progress: 

The Army lacks a comprehensive and transparent approach to effectively 
measure its progress against stated modularity objectives, assess the 
need for further changes to its modular unit designs, and monitor 
implementation plans. 

Army Lacks Performance Metrics to Measure the Results of Modularity: 

GAO and DOD, among others, have identified the importance of 
establishing objectives that can be translated into measurable, results-
oriented metrics, which in turn provide accountability for results. In 
a 2003 report we found that the adoption of a results- oriented 
framework that clearly establishes performance goals and measures 
progress toward those goals was a key practice for implementing a 
successful transformation.[Footnote 12] DOD has also recognized the 
need to develop or refine metrics so it can measure efforts to 
implement the defense strategy and provide useful information to senior 
leadership. 

The Army considers the Army Campaign Plan to be a key document guiding 
the modular restructuring. The plan provides broad guidelines for 
modularity and other program tasks across the entire Army. However, 
modularity-related metrics within the plan are limited to a schedule 
for creating modular units and an associated metric of achieving unit 
readiness goals for equipment training and personnel by certain dates 
after unit creation. Moreover, a 2005 assessment by the Office of 
Management and Budget identified the total number of brigades created 
as the only metric the Army has developed for measuring the success of 
its modularity initiative. Another key planning document, the 2005 Army 
Strategic Planning Guidance, identified several major expected 
advantages of modularity, including an increase in the combat power of 
the active component force by at least 30 percent, an increase in the 
rotational pool of ready units by at least 50 percent, the creation of 
a deployable joint-capable headquarters, a force design upon which the 
future network-centric developments can be readily applied, and reduced 
stress on the force through a more predictable deployment cycle. 
However, these goals have not translated into outcome-related metrics 
that are reported to provide decision makers a clear status of the 
modular restructuring as a whole. Army officials stated that unit 
creation schedules and readiness levels are the best available metrics 
for assessing modularity progress because modularity is a 
reorganization encompassing hundreds of individual procurement programs 
that would be difficult to collectively assess in a modularity context. 

While we recognize the complexity of the modular restructuring, we also 
note that without clear definitions of metrics, and periodic 
communication of performance against these metrics, the Secretary of 
Defense and Congress will have difficulty assessing the impact of 
refinements and enhancements to the modular design, such as changes in 
the number of modular combat and support brigades reported in the QDR 
and any changes in resource requirements that may occur as a result of 
these changes. 

Army Lacks a Long-term Plan for Comprehensively Evaluating Modular 
Designs: 

In fiscal year 2004, TRADOC's Analysis Center concluded that the 
modular brigade combat team designs would be more capable than division-
based units based on an integrated and iterative analysis employing 
computer-assisted exercises, subject matter experts, and senior 
observers. This analysis culminated in the approval of modular brigade-
based designs for the Army. The assessment employed performance metrics 
such as mission accomplishment, units' organic lethality, and 
survivability, and compared the performance of variations on modular 
unit designs against the existing division-based designs. The report 
emphasized that the Chief of Staff of the Army had asked for "good 
enough" prototype designs that could be quickly implemented, and the 
modular organizations assessed were not the end of the development 
effort. 

Since these initial design assessments, the Army has been assessing 
implementation and making further adjustments in designs and 
implementation plans through a number of venues, to include: 

* unit readiness reporting on personnel, equipment, and training; 

* modular force coordination cells to assist units in the conversion 
process; 

* modular force observation teams to collect lessons during training; 
and: 

* collection and analysis teams to assess units' effectiveness during 
deployment. 

TRADOC has approved some design change recommendations and has not 
approved others. For example, TRADOC analyzed a Department of the Army 
proposal to reduce the number of Long-Range Advanced Scout Surveillance 
Systems, but recommended retaining the higher number in the existing 
design in part because of decreases in units' assessed lethality and 
survivability with the reduced number of surveillance systems. 

Army officials maintain that ongoing assessments provide sufficient 
validation that the modularity concept works in practice. However, 
these assessments do not provide a comprehensive evaluation of the 
modular design as a whole. Further, the Army does not plan to conduct a 
similar overarching analysis to assess the modular force capabilities 
to perform operations across the full spectrum of potential conflict. 
In November 2005, we reported that methodically testing, exercising, 
and evaluating new doctrines and concepts is an important and 
established practice throughout the military, and that particularly 
large and complex issues may require long-term testing and evaluation 
that is guided by study plans.[Footnote 13] We believe the evolving 
nature of the design highlights the importance of planning for broad- 
based evaluations of the modular force to ensure the Army is achieving 
the capabilities it intended, and to provide an opportunity to make 
course corrections if needed. For example, one controversial element of 
the design was the decision to include two maneuver battalions instead 
of three in the brigade combat teams.[Footnote 14] TRADOC's 2004 
analysis noted that the brigade designs with the two maneuver battalion 
organization had reduced versatility compared to the three maneuver 
battalion design, and cited this as one of the most significant areas 
of risk in the modular combat brigade design. Some defense experts, to 
include a current division commander and several retired Army generals, 
have expressed concerns about this aspect of the modular design. In 
addition, some of these experts have expressed concerns about whether 
the current designs have been sufficiently tested and whether they 
provide the best mix of capabilities to conduct full-spectrum 
operations. In addition, the Army has recently completed designs for 
support units and headquarters units. Once the Army gets more 
operational experience with the new modular units, it may find it needs 
to make further adjustments to its designs. Without another broad-based 
evaluation, the Secretary of Defense and congressional leadership will 
lack visibility into the capabilities of the brigade combat teams as 
they are being organized, staffed, and equipped. 

Concluding Remarks: 

The fast pace, broad scope, and cost of the Army's restructuring to a 
modular force present considerable challenges for the Army, 
particularly as it continues to be heavily involved in fighting the 
Global War on Terrorism. These factors pose challenges to Congress as 
well to provide adequate oversight of the progress being made on 
achieving modularity goals and of funds being appropriated for this 
purpose. In this challenging environment, it is important for the Army 
to clearly establish and communicate its funding priorities and 
equipment and personnel requirements and assess the risks associated 
with its plans. Moreover, it is important for the Army to clearly 
establish a comprehensive long-term approach for its modular 
restructuring that reports not only a schedule of creating modular 
units, but measures of its progress toward meeting its goal of creating 
a more rapidly deployable, joint, expeditionary force. Without such an 
approach, the Secretary of Defense and Congress will not have the 
information needed to weigh competing funding priorities and monitor 
the Army's progress in its over $52 billion effort to transform its 
force. 

Mr. Chairman and members of the subcommittee, this concludes my 
prepared remarks. I would be happy to answer any questions you may 
have. 

Contacts and Acknowledgments: 

For future questions about this statement, please contact Janet St. 
Laurent at (202) 512-4402. Other individuals making key contributions 
to this statement include Gwendolyn Jaffe, Assistant Director; Margaret 
Best; Alissa Czyz; Christopher Forys; Kevin Handley; Joah Iannotta; 
Harry Jobes; David Mayfield; Sharon Pickup; Jason Venner; and J. Andrew 
Walker. 

FOOTNOTES 

[1] Future Combat Systems is a program that consists of a family of 
systems composed of advanced network combat and sustainment systems, 
unmanned ground and air vehicles, and unattended sensors and munitions. 

[2] Army personnel assigned to noncombat positions provide management, 
administrative, training, and other support. Operational combat forces 
include personnel assigned to the Army's combat, combat support, and 
combat service support units, including the modular brigade combat 
teams. 

[3] GAO, Force Structure: Preliminary Observations on Army Plans to 
Implement and Fund Modular Forces, GAO-05-443T (Washington, D.C.: Mar. 
16, 2005). 

[4] GAO, Force Structure: Actions Needed to Improve Estimates and 
Oversight of Costs for Transforming Army to a Modular Force, GAO-05-926 
(Washington, D.C.: Sept. 29, 2005). 

[5] GAO-05-926. 

[6] The Army defines this in its Campaign Plan as the effective date on 
which the new modular organizational designs' equipment requirements 
formally apply to converting brigades. The Army calls this a Modified 
Table of Organization and Equipment, which documents the specific types 
and amounts of equipment Army units are authorized to have. 

[7] Under this model, which the Army calls its tiered readiness system, 
high priority or first to deploy units in the active component received 
much higher levels of resources than lower priority or later deploying 
active and reserve component units. While some units maintained high 
levels of readiness, a large part of both the active and reserve 
components were in a low state of readiness with the expectation that 
there would be sufficient time to add the required resources prior to 
deployment. 

[8] 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). 

[9] GAO-06-111. 

[10] The National Defense Authorization Act for Fiscal Year 2006, Pub. 
L. No. 109-163, § 401 (Jan. 6, 2006), sets the end strength level for 
the Army at 512,400 but stipulates costs of active duty personnel of 
the Army for that fiscal year in excess of 482,400 shall be paid out of 
funds authorized to be appropriated for that fiscal year for a 
contingent emergency reserve fund or as an emergency supplemental 
appropriation. 

[11] The Ronald W. Reagan National Defense Authorization Act for Fiscal 
Year 2005, Pub. L. No. 108-375, § 515 (Oct. 28, 2004) reduces the 
minimum number of active component advisors required to be assigned to 
units of the selected reserve from 5,000 to 3,500. 

[12] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, GAO-03-669 (Washington, 
D.C.: July 2, 2003). 

[13] GAO, Military Readiness: Navy's Fleet Response Plan Would Benefit 
from a Comprehensive Management Approach and Rigorous Testing, GAO-06-
84 (Washington, D.C.: Nov. 22, 2005). 

[14] Brigades are made up of battalions; battalions made up of 
companies. 

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