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entitled 'Defense Logistics: Actions Needed to Improve the Availability 
of Critical Items during Current and Future Operations' which was 
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Report to Congressional Committees: 

April 2005: 

Defense Logistics: 

Actions Needed to Improve the Availability of Critical Items during 
Current and Future Operations: 

GAO-05-275: 

GAO Highlights: 

Highlights of GAO-05-275, a report to congressional committees:

Why GAO Did This Study: 

GAO has identified spare parts supply as a long-standing Department of 
Defense (DOD) management problem. In December 2003, GAO reported on 
problems with Operation Iraqi Freedom (OIF) logistics support including 
shortages of spare parts and supplies in Iraq. This report expands on 
that effort by assessing (1) what supply shortages were experienced by 
U.S. forces in Iraq between October 2002 and September 2004 and what 
impact the shortages had on their operations, (2) what primary 
deficiencies in the supply system contributed to any identified supply 
shortages, and (3) what actions DOD has taken to improve the timely 
availability of supplies for current and future operations. 

To address these objectives, GAO judgmentally selected nine items based 
on lessons learned and after action reports that represented possible 
shortages with operational impacts. 

What GAO Found: 

U.S. troops experienced shortages of seven of the nine items GAO 
reviewed. According to the 2004 National Military Strategy, U.S. forces 
expect to have sufficient quantities of the right items at the right 
time. However, demand for the seven items exceeded availability 
sometime between October 2002 and September 2004. The documented impact 
of these shortages varied between combat units. For example, while 
units in the 3rd Infantry Division reported that tire shortages reduced 
their operational capability, forcing them to abandon equipment, the 
4th Infantry Division reported no similar effect. 

GAO identified five systemic deficiencies that contributed to shortages 
of the reviewed items, including inaccurate Army war reserve spare 
parts requirements and ineffective distribution. Annual updates of Army 
war reserve parts requirements have not been conducted since 1999. As a 
result, the war reserves did not contain enough track shoes, batteries, 
and tires to support U.S. forces during initial operations. Effective 
distribution relies on a seamless process to promptly move supplies 
from the United States to a customer. GAO found that conflicting 
doctrinal responsibilities for distribution management, improperly 
packed shipments, insufficient transportation personnel and equipment, 
and inadequate information systems prevented the timely availability of 
four of the items. 

Systemic Deficiencies Contributing to Shortages of Seven GAO-Selected 
Items

[See Table 1]

Source: GAO analysis.

[A] These are Marine-Corps-only items. 

[End of table]

While U.S. troops developed short-term solutions to manage item 
shortages during OIF, DOD and the services have begun to undertake 
systemic, long-term changes to fix some supply problems identified. 
While GAO did not evaluate their potential for success, the majority of 
the changes are focused on distribution, and not on the full gamut of 
systemic deficiencies GAO identified. 

What GAO Recommends: 

This report contains several recommendations to the Secretary of 
Defense directing that actions, such as ensuring the accuracy of Army 
war reserve requirements and developing and exercising deployable 
distribution capabilities, be taken to improve DOD’s system for 
supplying items to U.S. forces. DOD concurred with the intent of the 
recommendations and cited actions it has taken or will be taking. 

www.gao.gov/cgi-bin/getrpt?GAO-05-275. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact William Solis at (202) 
512-8365 or solisw@gao.gov. 

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

Supply Shortages Reduced Operational Capability and Increased Risk to 
Troops in Iraq: 

Multiple Supply Chain Deficiencies Contributed to Supply Shortages: 

DOD Actions to Improve Supply Availability for Current and Future 
Operations: 

Conclusions: 

Recommendations for Executive Action: 

Matter for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Assault Amphibian Vehicle Generators: 

Appendix III: Armored Vehicle Track Shoes: 

Appendix IV: Interceptor Body Armor: 

Appendix V: Joint Service Lightweight Integrated Suit Technology Suits: 

Appendix VI: BA-5590 and BA-5390 Lithium Batteries: 

Appendix VII: Marine Corps Helicopter Rotor Blades: 

Appendix VIII: Meals Ready-to-Eat: 

Appendix IX: Five-Ton Truck and High-Mobility Multi-Purpose Wheeled 
Vehicle Tires: 

Appendix X: Up-Armored High-Mobility Multi-Purpose Wheeled Vehicle and 
Add-on-Armor Kit: 

Appendix XI: Comments from the Department of Defense: 

Appendix XII: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Systemic Deficiencies Contributing to Shortages of Seven GAO- 
Selected Items: 

Table 2: DOD and Joint Guidance on Distribution: 

Table 3: Systemic Deficiencies Contributing to Shortages of Seven 
Supply Items: 

Table 4: War Reserve Requirements, On-Hand Stock, and Items Requested 
Worldwide: 

Table 5: Status of On-Hand Army War Reserve Spare Parts Requirements as 
of October 2004: 

Table 6: Item and Supply Manager: 

Table 7: Organizations Interviewed during Review: 

Table 8: Forecasted and Actual Demand for Abrams and Bradley Track 
Shoes (March-May 2003): 

Table 9: CECOM Unfunded Requirements for Fiscal Years 2001 through 
2003: 

Figures: 

Figure 1: CENTCOM's Area of Responsibility: 

Figure 2: Total Military Personnel Deployed in CENTCOM's Area of 
Responsibility in Support of Operation Enduring Freedom and Operation 
Iraqi Freedom, December 2002 through September 2004: 

Figure 3: DOD's Joint Distribution System: 

Figure 4: Fiscal Year 2003 Army Working Capital Fund Supply Management 
Requirements and Cumulative Obligation Authority Received: 

Figure 5: Fiscal Year 2003 DLA Supply Management Requirements and 
Cumulative Obligation Authority Received: 

Figure 6: Assault Amphibian Vehicle and Generator: 

Figure 7: Assault Amphibian Vehicle Generator Demand and Back Orders 
for OIF by Quarter (3rd quarter fiscal year 2001 through 4th quarter 
fiscal year 2004): 

Figure 8: Abrams Tank Track: 

Figure 9: Interceptor Body Armor: 

Figure 10: Worldwide Demand, Production Output, and Back Orders for 
Vests by Quarter (December 2001 through September 2004): 

Figure 11: Worldwide Demand, Production Output, and Back Orders for 
Plates by Quarter (December 2001 through September 2004): 

Figure 12: Joint Service Lightweight Integrated Suit Technology Suit: 

Figure 13: BA-5590 Lithium Battery: 

Figure 14: Worldwide Demand, Inventory Levels, and Back Orders for BA- 
5590 and BA-5390 Lithium Batteries by Month (October 2001 through 
August 2004): 

Figure 15: Worldwide Forecasted Requirements, Demand, and Production 
Output for BA-5590 and BA-5390 Lithium Batteries by Month (October 2001 
through August 2004): 

Figure 16: Rotor Blades on CH-53E Super Stallion: 

Figure 17: UH-1N Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

Figure 18: CH-53E Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

Figure 19: Meal Ready-to-Eat: 

Figure 20: Forecasted Requirements, OIF Demand, Production Output, and 
Inventory for MREs (December 2002 through June 2003): 

Figure 21: M-923 5-ton Truck: 

Figure 22: Worldwide Demand, Back Orders, and Inventory Level for the 
5- ton Truck Tire by Month (February 2002 through September 2004): 

Figure 23: Worldwide Demand, Back Orders, and Inventory Level for the 
HMMWV Tire by Month (February 2002 through September 2004): 

Figure 24: TACOM's Actual and Reset Requirements, Funding Executed and 
Received by Month, Fiscal Year 2003: 

Figure 25: Up-Armored HMMWV: 

Figure 26: Add-on-Armor Kit Mounted on HMMWV: 

Figure 27: Up-Armored HMMWV Requirements, Production Output, and 
Redistribution from August 2003 through September 2004: 

Figure 28: Add-on-Armor Requirements and Production Output, November 
2003 through September 2004: 

Figure 29: Up-Armored HMMWV Funding, Requirements, Production Output by 
Month (August 2003 through September 2004): 

Abbreviations Abbreviations: 

AAV: Assault Amphibian Vehicle: 

AMC: Army Materiel Command: 

ATLASS: Asset Tracking Logistics and Supply System: 

CECOM: Communications-Electronics Command: 

CENTCOM: U.S. Central Command: 

DLA: Defense Logistics Agency: 

DOD: Department of Defense: 

HMMWV: High-Mobility Multi-Purpose Wheeled Vehicle: 

JSLIST: Joint Service Lightweight Integrated Suit Technology: 

MRE: Meals Ready-to-Eat: 

OIF: Operation Iraqi Freedom: 

SAIC: Science Applications International Corporation: 

TACOM: Tank-automotive and Armaments Command: 

Letter April 8, 2005: 

The Honorable John W. Warner: 
Chairman: 
The Honorable Carl Levin: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Duncan Hunter:
Chairman: 
The Honorable Ike Skelton: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

To support Operation Iraqi Freedom (OIF), the largest deployment of 
U.S. troops since Operation Desert Shield/Desert Storm in 1990, the 
Department of Defense (DOD) has undertaken a massive logistics 
effort,[Footnote 1] moving more than 2 million short tons of cargo 
including equipment, spare parts, supplies, and other items several 
thousand miles to the Persian Gulf. This effort started in late 2001 as 
U.S. Central Command (CENTCOM)[Footnote 2] began planning for OIF, 
accelerated as troops deployed in the fall of 2002 and major combat 
operations were launched on March 19, 2003, and continues today while 
U.S. and coalition forces undertake stabilization efforts in Iraq. From 
October 2002 through September 2004, DOD reported spending $51.7 
billion for operating support, including fuel, spare parts, and 
facilities management, and $10.7 billion for transportation of 
personnel and supplies to sustain[Footnote 3] U.S. forces before, 
during, and after major combat operations in Iraq. Despite these 
expenditures, there have been widespread reports of serious shortages 
of some critical items needed by U.S. troops. 

DOD relies on a number of individual processes and activities, known 
collectively as supply chain management, to purchase, produce, and 
deliver products and services to the warfighter during contingency 
operations consistent with the National Military Strategy. The goal of 
supply chain management is to deliver the "right items to the right 
place at the right time" for the warfighter. To meet the initial 
increase in demand during a contingency, DOD depends on its war 
reserves--stocks of specifically designated weapon systems, equipment, 
spare parts,[Footnote 4] and other items that are amassed during 
peacetime. The war reserves are intended to fill the gap until the 
national supply system can increase production.[Footnote 5] DOD relies 
on defense working capital funds to finance the flow of supplies to the 
services. These revolving funds are financed by sales revenue rather 
than direct appropriations. Working capital funds allow the Defense 
Logistics Agency (DLA) and the services' logistics agencies to purchase 
needed items from suppliers. Military units then order items from the 
logistics agencies and pay for them with appropriated funds when the 
requested items--either from inventory or manufacturers--are delivered 
to the units. Supplies are shipped from the United States by air and 
sea through DOD's joint distribution system and delivered to deployed 
units. 

Since the 1990s, we have identified DOD's supply chain management as a 
high-risk area because of high inventory levels and a supply system 
that was not responsive to the needs of the warfighter. In a 
substantial body of work, we have examined a range of problems, 
including inventory management and shortages of critical spare 
parts.[Footnote 6] DOD also recognizes supply chain management as a 
serious issue. In the Quadrennial Defense Review for 2001, DOD stated 
its intention to transform its logistics capabilities to improve the 
deployment process and implement new logistics support tools that 
accelerate logistics integration between the services and reduce 
logistics demand and cost. OIF is one of the first major tests of these 
new capabilities, and we have reported on the supply chain issues that 
have impeded support to the warfighter. For example, after visiting the 
theater in 2003, we provided our preliminary observations on the 
effectiveness of logistics support during OIF.[Footnote 7] Among the 
problems we observed were the unavailability of spare parts, hundreds 
of backlogged shipments, and an inability to track shipments at the 
distribution centers. 

Supplying spare parts has been a long-standing DOD management problem. 
Under the Comptroller General's authority, we evaluated the 
effectiveness of spare parts and related logistics support being 
provided to deployed forces for OIF. Our objectives were to assess (1) 
what supply shortages were experienced by U.S. forces in Iraq and what 
impact the shortages had on operations, (2) what primary deficiencies 
in the supply system contributed to any identified supply shortages, 
and (3) what actions DOD has taken to improve the timely availability 
of supplies for current and future operations. 

We developed detailed case studies of nine supply items that were 
reported to be in short supply during OIF. (These items, identified in 
the Results in Brief section, were managed by various organizations 
within DOD including the Army, the Marine Corps, and DLA.) We chose the 
items that we believed presented possible shortages with operational 
impacts based on information available in GAO and military reports, 
military and contractor lessons-learned studies, and other accounts 
covering the time period between October 2002 and September 2004. To 
identify the extent and impact of supply shortages, we visited numerous 
DOD logistics organizations to obtain data on the production, 
availability, and distribution of supply items at the national level. 
When supply data specifically for OIF were not available, we used 
worldwide data since OIF received supply priority. We also interviewed 
members of units that had returned from the theater to determine the 
extent and impacts of item shortages on their operations. We identified 
deficiencies that affected the availability of two or more of the case 
study items. We worked with DOD logistics agencies, operational units, 
and service and geographic commands to evaluate the significance of 
these deficiencies to DOD's overall logistics system. We also 
identified DOD's and the services' short-term and long-term efforts to 
address these shortages. We assessed the reliability of the data we 
obtained for individual items and determined they were sufficiently 
reliable for our purposes. We performed our review from March 2004 
through February 2005 in accordance with generally accepted government 
auditing standards. A detailed discussion of our scope and methodology 
is located in appendix I. 

Results in Brief: 

U.S. troops experienced shortages of seven of the nine items we 
reviewed. According to the 2004 National Military Strategy, U.S. forces 
expect to have sufficient quantities of the right items at the right 
time. During OIF, DOD was responsible for moving millions of tons of 
supplies and spare parts to theater. However, demand for seven items we 
reviewed exceeded availability sometime between October 2002 and 
September 2004. These shortages led, in some cases, to a decline in the 
operational capability of equipment and increased risk to troops. These 
items included generators for assault amphibian vehicles, armored 
vehicle track shoes, Interceptor body armor, lithium batteries, Meals 
Ready-to-Eat, tires for 5-ton trucks and High-Mobility Multi-Purpose 
Wheeled Vehicles, and up-armored High-Mobility Multi-Purpose Wheeled 
Vehicles and add-on armor kits. For example, in August 2003 the Army's 
inventory contained only 505 tires for 5-ton trucks which fell far 
below the worldwide monthly demand of 4,828 tires, most of which were 
needed by troops in Iraq. The remaining two items that we examined-- 
chemical-biological suits and Marine Corps helicopter rotor blades--did 
not experience shortages in theater. The impact of supply shortages on 
military operations is difficult to quantify because it varies from one 
combat unit to another and is not always apparent in DOD's readiness 
systems. For example, while units in the 3rd Infantry Division reported 
that tire shortages reduced their operational capability by forcing 
them to abandon equipment, the 4th Infantry Division reported that its 
tire shortages had no such effect. Detailed case studies, including the 
extent of shortages and their impacts, contributing factors, and short- 
and long-term solutions, for each of the nine items we studied are in 
appendixes II through X. 

Five systemic supply system deficiencies primarily contributed to the 
shortages for the seven items. As discussed in the body of this report, 
studies conducted by DOD and defense contractors indicate that these 
deficiencies also affected other items in the supply system. The five 
deficiencies are identified in table 1. 

Table 1: Systemic Deficiencies Contributing to Shortages of Seven GAO- 
Selected Items: 

Item: Vehicle generators; 
Ineffective distribution. 

Item: Track shoes; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding. 

Item: Body armor; 
Delayed acquisition; 
Ineffective distribution. 

Item: Batteries; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Delayed acquisition. 

Item: Meals Ready-to-Eat; 
Inaccurate supply forecasts; 
Ineffective distribution. 

Item: Tires; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Ineffective distribution. 

Item: Up-armored High-Mobility Multi-Purpose Wheeled Vehicles and kits; 
Delayed acquisition. 

Source: GAO analysis. 

[End of table]

* Inaccurate and inadequately funded Army war reserve requirements. 
Annual updates of the Army's war reserve requirements have not been 
conducted since 1999. According to officials from the Army Materiel 
Command, they had not updated the war reserve requirements because they 
had not received the latest operational guidance from Army 
headquarters. However, an Army official provided us with copies of the 
guidance sent to the Army Materiel Command and attributed the failure 
to run the model to a variety of reasons, including problems with new 
databases. This guidance, based on the annually updated defense 
planning guidance, details the force structure and operations that the 
Army's war reserve must support. Also, Army data showed that war 
reserve requirements had not been not fully funded for many years. This 
indicates that the Army has made a risk management decision to not fund 
war reserves. This decision forced war reserve managers to prioritize 
the use of available funding, and left some items without a war reserve 
to support initial operations. The Army's out-of-date and inadequately 
funded war reserve requirements for spare parts negatively affected the 
availability of three items we reviewed (armored vehicle track shoes, 
lithium batteries, and tires). The underfunding problem continues as 
only $561.7 million, or 24 percent, of the Army's $2,327.4 million war 
reserve requirements were funded as of October 2004. While this funding 
information has been reported to Congress, the likely risk to 
operations of not fully funding the war reserve has not. To improve the 
accuracy and adequacy of Army war reserve requirements we recommend the 
Army update the data for its war reserve model based on the latest 
defense planning guidance, annually update war reserve requirements, 
and disclose to Congress the impact of risk management decisions to not 
fully fund the war reserve. 

* Inaccurate supply forecasts. As indicated by regulation, the Army 
uses computer models to forecast item demand. The regulation also 
indicates that the Army's model be able to switch to a wartime 
forecasting method; however, the model available during pre-OIF 
planning had no such capability. While DLA had a model to forecast 
contingencies, it was not effective for all items, such as Meals Ready-
to-Eat. Therefore, Army item managers had to manually develop forecasts 
for OIF, but they did not always have sufficient or timely information 
on estimated deployment sizes or the duration of operations which are 
needed to forecasted accurate supply requirements. As a result, they 
underestimated the demand for some items. By contrast, Marine Corps 
item managers forecasted requirements from operational plans and 
equipment changes. However, the accuracy of these requirements has not 
yet been completely reconciled with actual usage during OIF. This is 
particularly important because, while the Marine Corps may have 
accurately forecasted requirements and predicted the types of items 
needed, the Marine Corps has not confirmed the proper quantities. DOD's 
requirements processes were not able to accurately forecast supply 
requirements for four items we reviewed (armored vehicle track shoes, 
lithium batteries, Meals Ready-to-Eat, and tires). To improve the 
accuracy of the Army's prewar planning for supplies, we recommend the 
Army develop models that have the capability to accurately forecast 
operational requirements and ensure that item managers receive timely 
data from operational plans. To improve the accuracy of the Marine 
Corps' wartime forecasts, we recommend the service complete its 
reconciliation of forecasted requirements with actual OIF consumption 
data and make needed adjustments to its requirements. 

* Insufficient and delayed funding. By regulation, DOD components are 
supposed to structure their supply chain processes to provide flexible 
and prompt support during crises. During OIF, the Army Materiel Command 
asked for additional funding (known as obligation authority) in order 
to support the forecasted OIF requirements, but did not receive these 
funds in a timely manner. While data are not available to conclusively 
determine why the process could not provide more timely and adequate 
funding, the Army's multi-stage requirements validation process may 
have contributed to the delays. This lack of obligation authority and 
delays in its release impeded the availability of three items we 
reviewed (armored vehicle track shoes, lithium batteries, and tires). 
By contrast, DLA was able to move obligation authority among accounts 
to support projected demands and did not require numerous validations 
to justify its forecasted requirements. To improve the sufficiency and 
timeliness of funding to the Army Materiel Command, we recommend the 
Army establish an expeditious supply requirements validation process 
that provides accurate information to support timely and sufficient 
funding. 

* Delayed acquisition. Despite requirements that the supply system 
provide timely support during crises, specific problems delayed DOD's 
acquisition of three important items we reviewed (Interceptor body 
armor, lithium batteries, and up-armored High-Mobility Multi-Purpose 
Wheeled Vehicles). The lack of key materials and long production lead-
time continue to affect the production of body armor, and DOD has 
reported the limitation to Congress. The initial reliance on a single 
source manufacturer and long production lead-time initially delayed 
maximum production of lithium batteries. DOD's acquisition decision did 
not maximize available capacity to produce up-armored High-Mobility 
Multi-Purpose Wheeled Vehicles and add-on armor kits nor did it give 
Congress visibility over the basis for its acquisition solution. These 
acquisition challenges impeded DOD's ability to respond to rapidly 
increasing demands. To minimize acquisition delays in the future, we 
recommend the Army and Defense Logistics Agency assess the industrial- 
base's capacity to meet updated requirements for critical items within 
the time frames required by operational plans and provide visibility to 
Congress over acquisition of critical items that emerge during 
contingencies. 

* Ineffective distribution. According to DOD guidance, distribution is 
the operational process of synchronizing all elements of the logistics 
system to deliver the "right things" to the "right place" at the "right 
time" to support the combatant commander. We identified several times 
where the joint distribution system was not synchronized to support the 
combatant commander during OIF. Among the problems causing this lack of 
synchronization were (1) conflicting doctrine, or military principles, 
defining the authority of the geographic combatant commander to 
synchronize the distribution of supplies from the U.S. to the theater; 
(2) improper packaging of air shipments from the U.S., which forced 
personnel in theater to spend extra time opening and sorting shipments; 
(3) insufficient transportation equipment and supply personnel in 
theater; and (4) the inability of logistics information systems to 
support the requisition and shipment of supplies into and through Iraq. 
As a result, DOD was not able to distribute sufficient quantities of 
four items we reviewed (assault amphibian vehicle generators, 
Interceptor body armor, Meals Ready-to-Eat, and tires). To improve the 
effectiveness of distribution we recommend that DOD revise current 
joint distribution doctrine to clarify responsibilities and 
authorities; develop and exercise, possibly through a mix of simulation 
and field training, a deployable supply receiving and theater 
distribution capability that includes trained personnel and necessary 
equipment; and establish common logistics information systems that 
support the timely requisition of and visibility over supplies. 

Two of the items we reviewed did not have shortages (chemical- 
biological suits and Marine Corps helicopter rotor blades). While 
acquisition delays and ineffective distribution resulted in a perceived 
shortage of chemical-biological suits among personnel deployed to OIF, 
we could not identify situations where suits were unavailable. 
Similarly, while rotor blades were identified as a possible shortage, 
Marine Corps officials and our analysis of supply data indicated there 
was no actual shortage. 

DOD, the services, and the defense agencies have acted to improve 
supply availability. Many short-term solutions to lessen the impact of 
supply shortages were instituted during combat operations. For example, 
as a result of the lithium battery shortage, the Joint Staff developed 
the "critical few list" to improve the availability of specific items 
that the services and geographic combatant commands report as critical 
to their worldwide operations. DOD is also beginning to make systemic, 
long-term changes to correct some of its supply problems. One of the 
more notable is the Secretary of Defense's designation of the U.S. 
Transportation Command as being responsible for improving distribution. 
In addition, the Army has identified four areas of logistics focus for 
the next 2 years: connecting the logistician, modernizing theater 
distribution, improving force reception, and integrating the supply 
chain. While we did not evaluate these efforts' potential for success, 
we observed that the majority of them focus only on the distribution 
aspects of logistics problems identified during OIF, not the full gamut 
of supply deficiencies we identified. 

In commenting on a draft of this report, the Department of Defense 
concurred with the intent of the recommendations and cited actions it 
has taken or will be taking to eliminate the supply chain deficiencies 
we noted. While many of the actions cited, if completed, could clearly 
resolve some problems, others actions did not appear to fully address 
the need to improve the current practices. In addition, no specific 
timeline for action was provided; therefore, we modified our 
recommendations to require specific completion dates. Therefore, we 
have added a matter for congressional consideration that suggests 
Congress may wish to require DOD to disclose the risks associated with 
not fully funding the Army war reserve. The Department's responses are 
in appendix XI and our evaluation of them appears on page 128 of this 
report. 

Background: 

CENTCOM, whose area of responsibility encompasses 27 countries in South 
and Central Asia, the Horn of Africa, the Arabian Peninsula, and 
Iraq[Footnote 8] began planning for OIF in late 2001 (see fig. 1). 

Figure 1: CENTCOM's Area of Responsibility: 

[See PDF for image]

[End of figure]

Starting in mid-2002, CENTCOM began to improve the U.S. military's 
infrastructure in Kuwait. This included an expansion of fuel and port 
facilities to support the arrival of U.S. military units. Beginning in 
the fall of 2002, CENTCOM began to deploy troops to the OIF area of 
operation. These deployments continued up to, and beyond, the start of 
major combat operations in Iraq on March 19, 2003. According to the 
Defense Manpower Data Center, the number of military personnel deployed 
in CENTCOM's area of responsibility in support of OIF and Operation 
Enduring Freedom steadily increased from over 113,000 in December 2002 
to over 409,000 in May 2003 (see fig. 2). During major combat 
operations, over 280,000 U.S. military personnel were deployed in Iraq, 
Kuwait, and nearby Persian Gulf nations. All of the services were 
represented in the theater, but U.S. Army units formed the bulk of 
military personnel. After major combat operations were officially 
declared over on May 1, 2003, the total number of personnel in 
CENTCOM's area of responsibility began to gradually decrease. However, 
U.S. and coalition forces continue to conduct stabilization operations 
in Iraq and DOD increased the number of military personnel in Iraq to 
support the elections in January 2005. 

Figure 2: Total Military Personnel Deployed in CENTCOM's Area of 
Responsibility in Support of Operation Enduring Freedom and Operation 
Iraqi Freedom, December 2002 through September 2004: 

[See PDF for image]

[End of figure]

Organizations Responsible for Logistics: 

CENTCOM's command authority over units deployed to its area of 
responsibility allows it to direct all necessary military actions to 
assigned military forces, including units deployed in both Operation 
Enduring Freedom in Afghanistan and OIF. Command authority also 
provides the geographic combatant commander with directive authority 
over logistics.[Footnote 9] The services and other defense components, 
however, share the responsibility of supplying U.S. forces.[Footnote 10]

The directive authority gives the combatant commander the ability to 
shift logistics resources within the theater, but logistics support 
outside of the area of responsibility is usually dependent on the 
services. The combatant commander relies on the services' logistics 
components, such as the U.S. Army Materiel Command (AMC), the U.S. 
Marine Corps Logistics Command, and DLA to purchase supplies and manage 
inventory. AMC has major subordinate commands that manage supply 
inventories, such as the Communications-Electronics Command (CECOM) and 
the Tank-automotive and Armaments Command (TACOM). DLA has a role in 
packaging supplies for shipment, while the U.S. Transportation Command 
is responsible for delivering them to theater. The combatant commander 
assigns one service as the lead for logistics support, including 
transportation, in the theater.[Footnote 11] During OIF, the Army was 
the lead service for logistics support. 

War Reserves: 

The military services rely heavily on their specifically designated war 
reserve stock, including weapon systems, equipment, and spare parts, to 
equip units when they first arrive in a theater of operation. The 
Army's war reserves consist of major items including trucks and 
secondary items such as spare parts, food, clothing, medical supplies, 
and fuel. Spare parts have the largest dollar value of the Army's 
secondary items. 

War reserves are protected go-to-war assets that are not to be used for 
purposes such as improving peacetime readiness or filling unit 
shortages. Some of these assets are located in Southwest Asia, the 
Pacific, Europe, and on special war reserve ships. War reserves are 
funded through direct congressional appropriations that are requested 
in the services' annual budget submissions. 

AMC is responsible for determining the Army's requirements for war 
reserve spare parts.[Footnote 12] To do this, AMC officials use a 
computer model--the Army War Reserve Automated Process system. The 
model uses DOD planning guidance and Army information on anticipated 
force structure including a list of the end items and associated spare 
parts. For each end item or part, the model uses data on expected usage 
and spare parts consumption rates based on breakage, geography, 
environment, and rates of equipment loss due to battle damage. 

The Marine Corps Logistics Command and logistics planners from Marine 
operational units are responsible for determining annually the adequacy 
of war reserve stock based on current operational plans. Once this is 
determined, planning officials confirm the availability of the supplies 
with DLA and other supporting logistics agencies that manage individual 
items. 

Operational Requirements: 

DOD forecasts operational requirements for spare and repair parts 
differently than it does for items that result from rapidly emerging 
needs. DOD forecasting methods for spare and repair parts vary by 
service. The Army normally uses a computer model to forecast its spare 
and repair parts requirements based on the average monthly demand over 
the previous 24 months. The Marine Corps also uses models and involves 
operational and logistics planners at several levels of command to 
validate their forecasted requirements. 

Operational requirements to support rapidly emerging needs, such as 
Interceptor body armor and up-armored High-Mobility Multi-Purpose 
Wheeled Vehicle (HMMWV), are developed outside of normal supply 
forecasting procedures. They are identified through operational needs 
statements from the theater that are validated and resourced by the 
Army. Units in theater submit operational needs statements for the 
items, which are combined by their higher headquarters into theater 
requirements. 

The Coalition Forces Land Component Command[Footnote 13] communicates 
these requirements to the Department of the Army, where they are 
validated and resourced by offices of the Assistant Secretary of the 
Army (Financial Management and Comptroller), the Deputy Chief of Staff 
for Operations, the Deputy Chief of Staff for Program and Analysis, and 
the Deputy Chief of Staff for Logistics and eventually transmitted to 
the program manager. 

Supply Item Funding: 

Generally, supplies and equipment for customers--including military 
units and DOD agencies--are purchased using defense working capital 
funds or procurement funds. 

Defense Working Capital Funds: 

Of the nine items we examined, seven are purchased using defense 
working capital funds (assault amphibian vehicle (AAV) generators, 
armored vehicle track shoes, chemical-biological suits, lithium 
batteries, Marine Corps helicopter rotor blades, Meals Ready-to-Eat 
(MRE), and tires). Working capital fund managers at the logistics 
agencies obligate and spend funds to purchase supplies from 
manufacturers and repair items to build up inventories in anticipation 
of sales. Military units then order supplies from the logistics 
agencies. When the requisitioned supplies are delivered, the units pay 
for them with funds that are appropriated annually by Congress. The 
logistics agencies then use this revenue to pay the manufacturers and 
to cover their own operating costs. 

Several funds make up the defense working capital funds, including the 
Army Working Capital Fund, the Navy Working Capital Fund (which 
finances Marine Corps managed items), and the Defense-wide Working 
Capital Fund (which finances Defense Logistics Agency-managed items). 
AMC uses the Army Working Capital Fund to purchase and maintain 
supplies. 

Procurement Funds: 

The remaining two items (Interceptor body armor and up-armored HMMWVs) 
are purchased with procurement funding because they are still in the 
process of initial issuance. Procurement funds are used to pay for such 
expenses as the purchase of weapons and weapon components, 
communication and support equipment, munitions, initial and 
replenishment spare parts, and modernization equipment. Project 
managers for these items receive congressional appropriations to fund 
purchases of additional supplies. 

Distribution Doctrine and Process: 

DOD guidance defines distribution as the operational process of 
synchronizing all elements of the logistics system to deliver the 
"right things" to the "right place" at the "right time" to support the 
combatant commander.[Footnote 14] These elements include physical, 
financial, information, and communication networks, which can be 
divided into two general categories--the actual movement of supplies 
(physical networks) and the use of information technology (financial, 
information, and communication networks) to support distribution system 
activities.[Footnote 15] Table 2 lists the primary DOD regulation and 
joint doctrine[Footnote 16] that guide the distribution process. 

Table 2: DOD and Joint Guidance on Distribution: 

Publication number: DOD Regulation 4140.1-R; 
Title: DOD Supply Chain Materiel Management Regulations; 
Date of publication: May 23, 2003. 

Publication number: Joint Publication 4-0; 
Title: Doctrine for Logistic Support of Joint Operations; 
Date of publication: April 6, 2000. 

Publication number: Joint Publication 4-01; 
Title: Joint Doctrine for the Defense Transportation System; 
Date of publication: March 19, 2003. 

Publication number: Joint Publication 4-01.4; 
Title: Joint Tactics, Techniques, and Procedures for Joint Theater 
Distribution; 
Date of publication: August 22, 2000. 

Source: GAO analysis. 

[End of table]

In its guidance, DOD identifies eight fundamental principles of theater 
distribution: 

1. Centralized management: Identify one manager who is responsible for 
distribution, visibility, and control of items in the theater 
distribution system. 

2. Optimize the distribution system: Give distribution managers the 
ability to maintain visibility in locations under their control and 
provide them with resources to meet changing requirements. 

3. Velocity over mass: Substitute speed and accuracy for large 
investments in inventory. 

4. Maximize throughput: Reduce the number of times that supplies must 
be opened and sorted. 

5. Reduce customer wait time. 

6. Maintain minimum essential stocks: Reduce reliance on large, costly 
stockpiles. 

7. Maintain continuous, seamless, two-way flow of resources: Apply the 
distribution principles to maintain an integrated and seamless 
distribution system. 

8. Achieve time definite delivery: Deliver the right supplies to the 
combatant commander at the right place and time.[Footnote 17]

Figure 3 illustrates the complexity of DOD's joint distribution system. 
The system moves supply items from inventories, vendors, and repair 
facilities in the U.S. to deployed units in the theater. The system 
also returns items to the U.S. for repair and maintenance. 

Figure 3: DOD's Joint Distribution System: 

[See PDF for image]

[End of figure]

Recent Studies of OIF Logistics: 

Several DOD components have recently commissioned assessments of 
logistics operations during OIF with the aim of identifying areas for 
improvement. One study, Objective Assessment of Logistics in Iraq, 
commissioned by the Deputy Under Secretary of Defense (Logistics and 
Materiel Readiness) and the Director for Logistics, Joint Staff, was 
published in 2004 by the Science Applications International Corporation 
(SAIC). This study identified problems with DOD's logistics support and 
contained several recommendations that were endorsed by the Under 
Secretary of Defense (Acquisition, Technology, and Logistics) such as 
synchronizing the distribution chain from the U.S. to CENTCOM's area of 
responsibility and resolving issues with technology. 

Another study, commissioned by the Army Deputy Chief of Staff for 
Logistics, is an independent assessment of the Army's logistics 
experience in OIF by the RAND Corporation's Arroyo Center. This study 
focuses on how Army forces were sustained and the performance of the 
sustainment system during combat operations and initial stability and 
support operations. RAND's report is currently under review by the 
Army. 

Supply Shortages Reduced Operational Capability and Increased Risk to 
Troops in Iraq: 

During OIF, DOD was responsible for moving over 2 million tons of 
supplies and spare parts to theater. U.S. troops experienced shortages 
of seven of the nine items GAO selected for review. According to the 
2004 National Military Strategy, U.S. forces expect to have sufficient 
quantities of the right items at the right time. However, demand for 
the seven items exceeded availability sometime between October 2002 and 
September 2004. The overall impact of these shortages on military 
operations is difficult to quantify because it varied between combat 
units and is not always apparent in DOD's readiness systems. The 
remaining two items that we examined did not experience shortages in 
theater. Detailed case studies for the nine items are in appendixes II- 
X. 

Shortages Occurred during OIF for Seven Critical Items: 

U.S. troops in the OIF theater did not always have sufficient 
quantities of seven items that we reviewed. For some items, the 
shortages occurred primarily during initial troop deployments and major 
combat operations in early 2003; for other items, shortages emerged 
during the sustainment period after major combat operations were 
declared over in May 2003. The overall impact is difficult to quantify 
because it differed between units. For example, while units in the 3rd 
Infantry Division reported that tire shortages affected their mission 
by forcing them to abandon equipment, the 4th Infantry Division 
reported that their tire shortages had no affect on their mission. The 
following describes the shortages for each of the seven items. 

* Generators for AAVs. Marine Corps units in Iraq experienced shortages 
of generators for their AAVs during deployment and combat operations in 
early 2003. The AAV is a landing vehicle that the Marine Corps used as 
an armored personnel carrier in Iraq. Without the generator, which 
provides electric power, the AAV cannot operate. Although 140 
generators were reported shipped from the U.S., Marine forces in 
theater reported receiving only 15. Neither we nor the Marine Corps 
could find the remaining 125 in the supply system. While the service 
did not document any operational impacts specifically due to generator 
shortages, its forces had to strip parts from about 40 nonoperational 
vehicles to maintain the operational capabilities of other vehicles. 

* Track shoes for Abrams Tanks and Bradley Fighting Vehicles. As the 
conflict in Iraq continued, track shoes, essential components of combat 
vehicles such as Abrams tanks and Bradley Fighting Vehicles, were not 
available to meet increasing demands. Although sufficient quantities of 
track shoes existed to meet demand at the beginning of combat, by May 
2003 actual demand was 5 times the forecasted demand primarily because 
of the heavy wear and tear on track shoes as a result of high mileage, 
poor road conditions, and extreme desert heat. Major combat units 
reported that significant shortages of track shoes negatively affected 
their operational capabilities. For example, the 3rd Infantry Division 
reported in June 2003 that 111 (60 percent) of its 185 Abrams tanks 
were unable to perform their missions because of supply shortfalls that 
included track shoes. Furthermore, 159 (67 percent) of the division's 
237 Bradley Fighting Vehicles were not mission capable for the same 
reason. 

* Interceptor Body Armor. Demand for Interceptor body armor[Footnote 
18] exceeded supply during OIF. The Coalition Forces Land Component 
commander decided to increase individual protection by issuing the 
armor to all troops and civilians. As a result, demand for the body 
armor surged, with quarterly demand rising from a pre-war level of 
about 8,600 vests and 9,600 plates, to about 77,000 vests and 109,000 
plates by the time the war commenced on March 2003. Back orders for 
plates peaked at 598,000 in November 2003, while back orders for vests 
reached 328,000 in December. Even though the services did not report 
that the lack of body armor impacted their missions during OIF, there 
were serious concerns. For example, combat support units in the Army 
and Marine Corps were among the last to be equipped with the armor, 
increasing the risk to personnel given the enemy's focus on attacking 
supply routes. 

* Lithium batteries. Army and Marine Corps forces operating in Iraq 
experienced severe shortages of lithium batteries, particularly BA- 
5590s and BA-5390s, during major combat operations in the spring of 
2003. These nonrechargeable batteries power some 60 critical 
communications and electronics systems, such as radios and missile 
guidance systems. Worldwide demand for these batteries surged from a 
peacetime average of below 20,000 per month prior to September 11, 
2001, to a peak rate of over 330,000 in April 2003. As a result, the 
number of back orders rose rapidly to 900,000 by May 2003. According to 
Marine Corps officials, if the war had continued at the same pace into 
May 2003 or beyond, Marine units would have experienced degraded 
communications capability and increased risk as a result of battery 
shortages. 

* MREs. U.S. forces in Iraq experienced shortages of MREs primarily 
during the deployment and major combat phases in February, March, and 
April 2003 before normal dining facilities were established. The peak 
monthly demand for MREs rose to more than 1.8 million cases, while 
inventories dropped to a level of 500,000 cases. In late April when 
other food options became available, demand fell rapidly. While certain 
Army units reported running out of MREs, available data only shows that 
they came close. According to a RAND study, some Army units came within 
an estimated 2 days or less of exhausting their on hand 
quantities.[Footnote 19] Similarly, according to a Center for Naval 
Analysis study, at times Marine Corps combat support units had less 
than 1 day of MREs on hand.[Footnote 20] As a result, both Army and 
Marine Corps units were at risk of running out of food if supply 
distribution was hindered. 

* Tires for 5-ton trucks and HMMWVs. The rising demand for truck tires 
during and after major combat operations in Iraq nearly exhausted 
existing inventories. The demand grew as vehicles were driven long 
distances and were modified with add-on-armor. For example, in August 
2003, the Army's inventory contained only 505 tires for 5-ton trucks, 
which fell far below the worldwide monthly demand of more than 4,800 
tires. As a result, back orders spiked to over 7,000 for 5-ton truck 
tires and to over 13,000 for HMMWV tires. The shortages reduced the 
operational capabilities of these vehicles and negatively impacted 
operations in Iraq. For example, 3rd Infantry Division units reported 
that tire shortages forced them to abandon equipment, and Marine Corps 
units reported stripping and abandoning otherwise good vehicles because 
of a lack of tires. 

* Up-armored HMMWVs and add-on-armor kits. Since the U.S. military 
began identifying requirements for these vehicles during the summer of 
2003, there has been a gap between the number of vehicles required and 
the number being produced by the industrial base. This new requirement 
was based on the need to protect soldiers and Marines executing 
distribution and force protection missions. The up-armored HMMWV 
provides enhanced protection against rifle rounds and explosive blasts 
while the add-on-armor kits[Footnote 21] provide some additional 
protection to previously unarmored vehicles. As of September 2004, only 
5,330 of the 8,105 required vehicles were in theater. The overall 
impact of the shortages of up-armored HMMWVs and add-on-armor kits is 
difficult to measure because units do not report the direct effects of 
using unarmored HMMWVs. However, according to a Center for Army Lessons 
Learned study, the risk of harm to both personnel and equipment from 
improvised explosive devices is greatly reduced when they are 
transported in an up-armored HMMWV. 

Two Items Were Not in Short Supply During OIF: 

Two items we examined--chemical-biological suits and Marine Corps 
helicopter parts--did not experience shortages. In these cases, 
although demands were high because of wartime operations, the defense 
supply system was able to meet the needs of deployed forces. A 
discussion of the availability of the two items follows. 

* Chemical-biological suits. Although there was a perception that 
sufficient quantities of the new Joint Service Lightweight Integrated 
Suit Technology (JSLIST) chemical-biological suits were not available 
during OIF, our work did not identify any actual shortages in the 
theater of operations. Concerns about a shortage of chemical-biological 
suits arose as a result of an October 2002 Congressional request that 
DOD provide suits to all military and civilian personnel located in the 
OIF theater.[Footnote 22] However, according to DLA, the contracting 
agent for chemical-biological suits, and our analysis,[Footnote 23] 
there were sufficient quantities of the suits in the inventory to meet 
the suit demand during OIF. 

* Marine Corps helicopter rotor blades. Although concerns were raised 
about shortages of helicopter parts for Marine Corps helicopters, 
specifically rotor blades, we did not identify any shortages in the 
theater of operations. Marine Corps officials reported there were no 
rotor blade shortages and our analysis of supply data confirms this. In 
addition, the mission capable rates during OIF for the two helicopters 
we reviewed--the UH-1N and the CH-53E--were comparable to peacetime 
rates. 

Impact of Shortages Was Not Always Apparent in DOD's Readiness 
Reporting System: 

We were not always able to identify the impact of specific shortages 
because, although DOD's supply system showed shortages of items in 
theater, DOD's readiness reporting systems did not always show the 
impact of these shortages on unit operational capability. Such systems 
as the Global Status of Resources and Training System and Unit Status 
Reports are intended to identify the ability of units to accomplish 
their missions and the problems affecting mission performance each 
month. In addition, other reporting mechanisms, such as lessons learned 
reports or after-action reports, may also disclose the impact of 
shortages on operations but do not tie directly to readiness reporting. 
As a result, we used a variety of documents, some obtained directly 
from the units, to identify the impact of supply shortages. 

For our nine items, the information reported through the various 
readiness systems, in some cases, was inconsistent with the impact 
cited in reports. For example, in July 2003, unit status reports from 
the 4th Infantry Division's battalions showed that approximately 145 to 
150 of their 176 Bradley Fighting Vehicles were mission capable, 
translating to a mission capability rate of around 84 percent. However, 
a May 2004 lessons learned report prepared by the division indicated 
that the overall mission capability rate for its Bradleys was 32 
percent during the July 2003 time frame and that the degraded status 
was due to a shortage of armored vehicle track shoes and other vehicle 
suspension items. In a June 2003 status report, four of the 3rd 
Infantry Division's five infantry battalions reported that 65 percent 
of their Bradley vehicles were mission capable. However a 3rd Infantry 
Division report for June 2003 showed that 65 percent of the division's 
Bradleys were non-mission capable because of supply-related reasons, 
which unit officials attributed almost exclusively to track shoe 
shortages. 

There were also instances of readiness information about unit status in 
Iraq not being reported. For example, in August 2003, the 4th Infantry 
Division's five Armor battalions and one Calvary unit did not enter any 
mission capability data into the readiness reporting systems about the 
status of their 247 Abrams tanks. However, the May 2004 briefing report 
prepared by the division indicated that by July 2003, 28 percent of the 
division's tanks were non-mission capable. The primary reason given was 
lack of tank shoes and related suspension parts. 

Multiple Supply Chain Deficiencies Contributed to Supply Shortages: 

Five deficiencies contributed to shortages in the supply of seven of 
the nine items that we studied. According to DOD data and contractor 
studies, these deficiencies also affected other items in the supply 
system. The deficiencies were (1) inaccurate and inadequately funded 
Army war reserve requirements, (2) inaccurate supply forecasts, (3) 
insufficient and delayed funding, (4) delayed acquisition, and (5) 
ineffective distribution. Table 3 identifies the deficiencies that 
affected each of the seven supply items. 

Table 3: Systemic Deficiencies Contributing to Shortages of Seven 
Supply Items: 

Item: AAV generators; 
Ineffective distribution. 

Item: Armored vehicle track shoes; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding. 

Item: Interceptor body armor; 

Delayed acquisition; 
Ineffective distribution. 

Item: Lithium batteries; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Delayed acquisition. 

Item: MREs; 
Inaccurate supply forecasts; 
Ineffective distribution. 

Item: Tires for 5-ton trucks and HMMWVs; 
Inaccurate and inadequately funded Army war reserve requirements; 
Inaccurate supply forecasts; 
Insufficient and delayed funding; 
Ineffective distribution. 

Item: Up-armored HMMWVs and add-on-armor kits; 
Delayed acquisition. 

Source: GAO analysis. 

[End of table]

Inaccurate and Inadequately Funded Army War Reserve Requirements for 
Spare Parts Led to Early Shortages during OIF: 

The inaccurate requirements for and poor funding of war reserves 
affected the availability of three of the supply items (armored vehicle 
track shoes, lithium batteries, and tires). Annual updates of the 
Army's war reserve requirements for supply items have not been 
conducted and, as a result, the Army did not have an accurate estimate 
of the spare parts and other items needed for a contingency such as 
OIF. In addition, over the past decade, the Army underfunded its war 
reserve spare parts, which has forced managers to allocate money for 
certain items and not for others. 

Army War Reserve Spare Parts Requirements Were Out of Date and 
Inventory Was Inadequate: 

Army officials told us that annual updates of its war reserve 
requirements for spare parts have not been conducted since 1999. AMC 
uses a computer model, called the Army War Reserve Automated Process, 
to determine its requirements for spare parts in the war reserve. This 
model is supposed to be run on the basis of annually updated defense 
planning guidance and is designed to support the latest war plans and 
Army force structure. According to AMC officials, the model has not 
been run since 1999 because the Department of the Army has not provided 
the latest guidance, which details the force structure and operations 
that the Army's war reserve must support. However, an Army official 
provided us with copies of the Army guidance from 2001, 2003, and 2005 
that AMC could have used to initiate computation of war reserve 
requirements. The Army official stated that AMC did not run the model 
for a variety of reasons such as support for ongoing missions and 
problems with the implementation of a new database and modeling 
system.[Footnote 24]

Because the requirements were out-of-date, the war reserve inventories 
for some spare parts were inadequate and could not meet initial wartime 
demands. For example, the war reserve requirement for nonrechargeable 
lithium batteries (BA-5590s) was not sufficient to support initial 
operations in OIF. The requirement for BA-5590s was set at 180,000 to 
support the first 45 days of operations, but this amount was 
considerably lower than the actual demand of nearly 620,000 batteries 
recorded during the first 2 months of the conflict. CECOM officials 
attributed this mismatch to inaccurate battery failure and usage rates 
in the 1999 model. They also said the model did not include all the 
communications systems that used nonrechargeable lithium batteries. 

In another example, the war reserve requirement for track shoes for 
armored vehicles was inadequate to keep pace with actual demand during 
the early months of combat. As table 4 shows, the pre-OIF war reserve 
requirement for track shoes for Abrams tanks and Bradley Fighting 
Vehicles was, respectively, 5,230 and 5,626; however, in April 2003 the 
actual worldwide demand for these tanks was four times higher. The 
situation was even worse for 5-ton truck tires. 

Table 4: War Reserve Requirements, On-Hand Stock, and Items Requested 
Worldwide: 

Supply item: Track shoe (Abrams); 
War reserve requirement (March 2003): 5,230; 
War reserve on hand (March 2003): 5,623; 
Items requested worldwide (April 2003): 23,462. 

Supply item: Track shoe (Bradley); 
War reserve requirement (March 2003): 5,626; 
War reserve on hand (March 2003): 5,695; 
Items requested worldwide (April 2003): 20,678. 

Supply item: 5-ton truck tire; 
War reserve requirement (March 2003): 259; 
War reserve on hand (March 2003): 16; 
Items requested worldwide (April 2003): 4,800. 

Source: TACOM. 

[End of table]

Since the end of major combat operations, war reserve managers have 
made manual adjustments to the requirements to reflect supply 
experiences from OIF. For example, officials told us that they have 
adjusted the Army and the Marine Corps war reserve requirement for BA-
5590 and BA-5390 lithium batteries upward to more than 1.5 million 
batteries based on the average monthly demand of 250,000 batteries 
experienced during OIF multiplied by 6 months. Similarly, war reserve 
managers at TACOM have increased the requirements for Abrams and 
Bradley tank track shoes to 32,686 and 34,864, respectively. While 
these actions may correct a particular problem, they do not address the 
systemic inaccuracy of the Army's war reserve requirements. 

In prior reports, we have identified problems with the Army's process 
for computing the war reserve spare parts requirements. In a 2001 
report, we recommended that the Secretary of Defense direct the 
Secretary of the Army to develop and use the best available consumption 
factors; improve the methodology used to determine requirements by 
considering planned battlefield maintenance practices; and develop 
industrial-base capacity on current, fact-based estimates for the war 
reserve.[Footnote 25] In a 2002 report, we recommended that the 
Secretary of Defense direct the Secretary of the Army to have the 
Commander of AMC change its process of calculating war reserve 
requirements. [Footnote 26] While the Office of the Secretary of 
Defense concurred with these recommendations, the Army has yet to 
implement them. 

Risk Management Decisions Led to Years of Low Army War Reserve Funding: 

The Army's war reserve requirements for spare parts have been 
significantly underfunded for many years, indicating that the Army has 
made a risk management decision to not fully fund them. In November 
1999, Army documents indicated that the Army had only $1.3 billion in 
parts prepositioned, or otherwise set aside for war reserves, to meet 
its stated requirement of $3.3 billion. AMC data indicate that a lack 
of funding for war reserve spare parts continues to be an issue. As 
table 5 shows, as of October 2004, only about 24 percent ($561.7 
million out of $2,327.4 million) of AMC's total spare parts requirement 
is currently funded and on hand. Moreover, AMC data show this pattern 
of underfunding is expected to continue through fiscal year 2009. 

Table 5: Status of On-Hand Army War Reserve Spare Parts Requirements as 
of October 2004: 

Dollars in millions; 

Major subordinate commands: Aviation and Missile Command: Aviation; 
Requirement: $331.5; 
Value on hand: $56.1; 
Percentage filled: 16.9%. 

Major subordinate commands: Aviation and Missile Command: Missiles; 
Requirement: $98.9; 
Value on hand: $26.8; 
Percentage filled: 27.1%. 

Major subordinate commands: Communications-Electronics Command; 
Requirement: $344.2; 
Value on hand: $81.6; 
Percentage filled: 23.7%. 

Major subordinate commands: Secondary Item Control Division[A]: 
Requirement: $197.0; 
Value on hand: $30.2; 
Percentage filled: 15.3%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Armaments; 
Requirement: $245.4; 
Value on hand: $70.7; 
Percentage filled: 28.8%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Biological and chemical equipment; 
Requirement: $117.8; 
Value on hand: $57.0; 
Percentage filled: 48.4%. 

Major subordinate commands: Tank-automotive and Armaments Command: 
Automotive parts; 
Requirement: $992.5; 
Value on hand: $239.3; 
Percentage filled: 24.1%. 

Total; 
Requirement: $2,327.4; 
Value on hand: $561.7; 

Source: Army Materiel Command. 

Note: Totals do not add due to rounding. 

[A] The Secondary Item Control Division is responsible for items 
managed by agencies outside of AMC, such as DLA or the General Services 
Administration. 

[End of table]

As a result of this low funding, war reserve managers told us that they 
must prioritize how the available funding is allocated based on their 
professional experience. For example, the war reserve manager for TACOM 
reported that he tends to spend his available funds on expensive items 
with long production lead-times, such as tank engines, because they are 
difficult to acquire on short notice. Conversely, lower cost items with 
shorter production lead-times, such as tires, do not receive funding 
priority. 

The Army accepts the risk of unfunded war reserve requirements in order 
to fund other priorities, such as operations and the procurement of new 
systems. Although, the Army has reported the amount of war reserve 
underfunding to Congress, the risk of not funding the war reserve is 
not clearly stated. 

Army Supply Forecasts Did Not Accurately Represent Troop Needs in OIF: 

The Army's requirements process did not accurately forecast the 
supplies needed to support U.S. forces during OIF for four of the items 
we studied (armored vehicle track shoes, lithium batteries, MREs, and 
tires). As indicated by Army regulation,[Footnote 27] AMC normally uses 
a computer model to forecast its spare and repair parts requirements. 
The model uses the average monthly demand over the previous 24 months 
to predict future equipment use and demand. Although the Army 
regulation[Footnote 28] indicates that the model should be able to 
switch to a wartime demand forecasting method, AMC officials stated the 
system has no wartime forecasting capability. As a result, the Army's 
supply requirements forecasting model could not forecast the wartime 
surge in requirements during OIF. In contrast, DLA's model has the 
capability to forecast requirements for contingencies, but it was not 
completely effective, as in the case of MREs. 

Instead of using the model, the Army relied on the expert opinion of 
item managers, who manage supply items at AMC's subordinate commands. 
Item managers, however, did not have sufficient information on 
estimated deployment sizes or duration and intensity of operations to 
accurately forecast supply requirements for OIF. According to TACOM 
officials, AMC initially directed item managers to use their expert 
opinion and knowledge to develop forecasts, without input from 
operational planners in CENTCOM. AMC officials stated that Army 
headquarters did not provide them with formal guidance on the duration 
of the conflict, supply consumption, or size of the deploying force. 
AMC documents show and their contractors confirm that AMC gathered some 
anecdotal information on force size and the duration of operations in 
November 2002. However, item managers at AMC's subordinate commands 
reported they did not always receive adequate guidance from AMC. For 
example, officials at TACOM stated they did not receive planning 
guidance on operational plans from AMC to incorporate into their 
forecasts of track shoe or tire requirements. The forecasted monthly 
requirement for Abrams track shoes was 11,125, which was less than half 
of the actual requirement of 23,462 shoes in April 2003. Forecasts for 
5-ton truck tires were also inaccurate. Worldwide demand was forecasted 
at 1,497 tires during April 2003, less than a third of the actual 
demand of 4,800. 

In contrast, officials at CECOM reported that in the summer of 2002, 
operational planners consulted them about the number of nonrechargeable 
lithium batteries needed to support operations. Subsequently, CECOM 
officials presented these new requirements to AMC and the Joint 
Materiel Priorities and Allocation Board and received $38.2 million in 
additional obligation authority for BA-5590 and BA-5390 
batteries.[Footnote 29] Despite these efforts, demand for batteries 
outpaced production during OIF combat operations. 

The Marines forecast supply requirements for their initial operations 
based on operational plans[Footnote 30] and modeling factors that 
involve both operational and logistics planners. Modeling factors 
include historical supply data, number of personnel involved in an 
operation, distance of operation, and number of days of operation. 
Normally, the forecasting process includes many echelons of Marine 
Corps command. Initially, the 1st Marine Expeditionary Force 
headquarters provides operational plans to the deploying units that 
determine the supply requirements for an operation. Once the deploying 
units forecast a supply requirement, it is returned to headquarters for 
review. Deploying units review the supply requirements again before 
passing them to the Marine Forces Pacific Command for final assessment. 
The Marine Corps Logistics Command, the service's integrated logistics 
manager, sends the requirements to DLA and other supply providers. 
Supply providers then inform the Logistics Command and the deploying 
units about their ability to fill the forecasted requirements. 
According to the Marines, they used this process to forecast supply 
requirements before deploying to OIF. 

After the end of major combat operations, the Marine Corps began an 
after-action review process to analyze the effectiveness of their OIF 
supply forecast. As part of this analysis, the 1st Marine Expeditionary 
Force assessed the correlation between supply forecasts and supply 
usage. This analysis showed that 88 percent of the types of repairable 
supply items forecasted were actually needed,[Footnote 31] and 62 
percent of the types of consumable items forecasted were demanded, in 
the first 90 days. These data indicate that a significant number of 
unneeded items could have been sent to theater, placing an unnecessary 
burden on the distribution system. However, the Marine Corps has not 
analyzed the accuracy of whether the quantities forecasted equaled the 
quantities needed. Without such analysis, the Marines cannot determine 
if their forecasting process provided them with the right items in the 
right quantity at the right time during OIF. 

Insufficient and Delayed Funding Limited the Availability of Supply 
Items for OIF: 

A lack of sufficient funding (obligation authority) within the Army's 
working capital fund and delays with the release of funds limited the 
availability of three reviewed items (armored vehicles track shoes, 
lithium batteries, and tires). The delays may have been due to the 
Army's multi-stage process to validate requirements. In contrast, DLA's 
working capital fund was able to move sufficient obligation authority 
among accounts to support rapidly increasing demands. 

AMC Did Not Receive Sufficient Obligation Authority from the Department 
of the Army to Meet Spare Parts Requirements Promptly: 

According to a DOD regulation,[Footnote 32] DOD components are supposed 
to structure their supply chain processes and systems to provide 
flexible and prompt support during crises. However, during fiscal year 
2003, AMC did not promptly receive obligation authority to match its 
stated requirements. The Department of the Army released $2.9 billion 
of obligation authority into the Army Working Capital Fund to buy 
supplies in October 2002 as part of the fiscal year 2003 budget cycle 
(see fig. 4). This amount was based on the requirements established in 
the President's Budget prepared 2 years earlier. By the time fiscal 
year 2003 began, AMC had identified a new supply requirement of $4.8 
billion to support both peacetime operations and the ongoing global war 
on terrorism, but, the obligation authority provided in October 2002 
did not support this revised requirement. While Army headquarters 
provided some additional funding to AMC, AMC increased its supply 
requirements again in March 2003 to $5.6 billion. However, the total 
obligation authority AMC received at that time equaled only $4.7 
billion. AMC did not receive sufficient obligation authority to support 
the final validated requirements of nearly $6.9 billion until the end 
of fiscal year 2003, 4 months after major combat operations ended. 

Figure 4: Fiscal Year 2003 Army Working Capital Fund Supply Management 
Requirements and Cumulative Obligation Authority Received: 

[See PDF for image]

Notes: 

(1) Reset is a term used to define bringing a vehicle that was used 
during Operation Enduring Freedom and OIF back to a fully mission- 
capable (serviceable) condition. Resetting a vehicle involves extensive 
use of spare parts. 

(2) Numbers are rounded to the nearest tenth of a billion dollars. 

[End of figure]

In addition to establishing requirements to support its peacetime and 
continuing global war on terrorism operations, AMC identified 
additional requirements, called reset requirements, of $1.3 billion to 
support the repair of items coming back from theater. As figure 4 
shows, by the end of fiscal year 2003, AMC had received $6.9 billion of 
its total requirement of $8.2 billion (including reset) in obligation 
authority, a shortfall of $1.3 billion. 

We could not determine exactly why sufficient funding was not provided 
to AMC more quickly, because sufficient records were not available to 
track when AMC and its subordinate commands requested additional 
funding from Army headquarters or the amounts requested. Similarly, 
Army headquarters could not provide information about the timing of its 
requests for additional obligation authority to the Office of the Under 
Secretary of Defense (Comptroller). However, the Army's requirements 
validation process likely contributed to delays in the release of 
obligation authority into AMC's Army Working Capital Fund. After AMC 
completes its internal validation process and requests additional 
funding above the programmed requirement during the year of execution, 
several organizations within Army headquarters reexamine AMC's 
requirements. In the absence of specific direction in Army regulations, 
Army headquarters has developed a process for validating AMC's 
requirements. While the Office of the Deputy Chief of Staff for 
Logistics has the main responsibility for validating AMC's functional 
requirements, the Office of Deputy Chief of Staff for Operations, the 
Office of the Deputy Chief of Staff for Program and Analysis, and the 
Assistant Secretary of Army (Financial Management and Comptroller) must 
also review and agree on the requirements. Once these organizations 
validate the requirements, the Assistant Secretary of the Army 
(Financial Management and Comptroller) requests obligation authority 
from the DOD Comptroller. This lengthy process may have delayed the 
release of funds and contributed to shortages of tires, track shoes, 
and lithium batteries. 

The additional time associated with the Army's validation process was 
exemplified by events during fiscal year 2003. AMC set its revised 
supply requirements to $4.8 billion in October 2002. However, the DOD 
Comptroller did not release the first additional obligation authority 
of $600 million until January 2003, 3 months later. Army headquarters 
office released its next increase of obligation authority of $1.1 
billion in March 2003, for a total of $4.6 billion; nearly 6 months 
after AMC identified the initial requirement. Army officials were 
unable to tell us when they had submitted their requirements to the DOD 
Comptroller because they said they often submitted requests for 
additional obligation authority during the fiscal year informally via e-
mails and telephone calls. Accordingly, detailed records were not kept. 
We were able to confirm that the time between the releases of 
obligation authority from the DOD Comptroller to the department of the 
Army did not take longer than two weeks. This indicates that for most 
of the 6 months, AMC's request for additional obligation authority was 
somewhere in the Department of Army's validation process. 

In addition to delays in receiving funds, AMC suffered from an overall 
lack of sufficient obligation authority for its major subordinate 
commands that contributed directly to shortages of tires, track shoes, 
and lithium batteries during OIF. Initial priority was to provide 
funding to the U.S. Army Aviation and Missile Command to support 
critical aviation systems and then to TACOM for tracked and tactical 
wheeled vehicles. Without prompt obligation authority, item managers 
could not contract for supplies in anticipation of customer demands. 
According to item managers, they need sufficient obligation authority 
in advance of customer demands in order to have sufficient supplies 
available. TACOM officials reported that the lack of adequate 
obligation authority prevented them from buying supplies, including 
tires and tank track shoes, in anticipation of demands. For example, in 
October 2002, TACOM item managers identified total requirements of 
nearly $1.4 billion, but only had authority to obligate approximately 
$900 million. By May 2003, TACOM's requirements had increased to over 
$2.1 billion, but only $1.5 billion in obligation authority was 
available. By the end of the fiscal year, TACOM's total requirement, 
including funds necessary to reset the force, totaled $2.7 billion, but 
its obligation authority was less than $2.4 billion. This shows that 
obligation authority for tires and tank track shoes lagged behind 
requirements, thereby preventing item managers from buying supplies in 
anticipation of demand. Similarly, CECOM reported that unfunded 
requirements over several prior years affected its purchases of lithium 
batteries. CECOM identified requirements of nearly $1.5 billion for 
fiscal year 2003, but received less than $1.1 billion in obligation 
authority for the year. 

DLA Received Sufficient Obligation Authority to Meet Customer Supply 
Needs: 

In contrast to the Army, DLA received sufficient obligation authority 
from the DOD Comptroller to meet increasing customer supply needs 
during OIF. DLA set the requirements for its supply management business 
area at $18.1 billion and received $16.5 billion of this amount in 
obligation authority in October 2002 (see fig. 5). By February 2003, it 
had received obligation authority that kept pace with increasing 
requirements. As requirements increased during OIF, the agency was able 
to request and receive additional obligation authority to purchase 
supplies in anticipation of customer needs. By the end of the fiscal 
year, DLA's supply requirements had reached $25.0 billion, and it had 
received an equal amount of obligation authority to meet those 
requirements. 

Figure 5: Fiscal Year 2003 DLA Supply Management Requirements and 
Cumulative Obligation Authority Received: 

[See PDF for image]

[End of figure]

DLA officials told us they were able to obtain timely increases in 
obligation authority from the DOD Comptroller because of their 
requirements validation process. The agency conducts an ongoing review 
of its requirements throughout the year to ensure they are updated as 
changes in demand occur. Agency officials then request additional 
obligation authority directly from the DOD Comptroller. This process 
allowed DLA to submit requirements and receive increased obligation 
authority several times during fiscal year 2003. Agency officials 
stated that having accurate requirements ensures that the DOD 
Comptroller accepts the requirements without further validation. 
According to DLA officials, the DOD Comptroller was responsive to the 
agency's needs, providing additional obligation authority within days 
of a request. 

Delayed Acquisition Caused by a Variety of Challenges: 

The supply system faced several challenges in rapidly acquiring three 
of the items we reviewed to meet the emerging demands caused by OIF 
(Interceptor body armor, lithium batteries, and up-armored HMMWVs and 
kits). According to a DOD regulation,[Footnote 33] supply chain 
processes and systems, which include relationships with commercial 
manufacturers, should provide flexible and prompt support during 
crises. The rapid increase in demand for the three items was not 
anticipated, and as DOD's supply system attempted to purchase them, its 
efforts were impeded by problems that varied by item. For example, 
while lithium battery production was limited by the capacity of a sole 
source supplier and long production lead-times, body armor 
manufacturers faced shortages of the material components of the armor. 

Body Armor Production Did Not Support Increasing Demands: 

DLA data show that manufacturers of body armor could not meet the surge 
in demand for the item's two primary components, plates and vests. For 
example, the worldwide demand for plates increased from 9,586 in 
December 2002 to 108,808 in March 2003 to a peak of 478,541 in December 
2003. A comparison of plate production rates over the same time period 
shows that only 3,888 plates were produced during December 2002, 31,162 
during March 2003, and 49,746 during December 2003. 

Increasing requirements exceeded the manufacturer's capacity to produce 
sufficient body armor. For example, in October 2003, CENTCOM expanded 
requirements for body armor to include all U.S. personnel in its area 
of responsibility. The industrial base could not meet this new 
requirement due to a lack of construction materials and long production 
lead-times. Vest production was hindered by the limited availability of 
Kevlar; plate production was initially slowed due to a lack of a 
special backing for the plates and later by the limited availability of 
the primary component of the plates, ceramic tiles. In addition, the 
minimum production lead-time of 3 months limited the manufacturers' 
ability to accelerate production levels to meet increasing demand, 
especially for plates, which are more difficult to manufacture than 
vests. Due to these industrial-base limitations, body armor was not 
issued to all troops in Iraq until January 2004, 8 months after major 
combat operations were declared over. 

Lithium Battery Production Did Not Support Increasing Demands: 

Demand for lithium batteries exceeded inventory and production during 
OIF. As mentioned earlier in this report, the requirement for lithium 
batteries had not been assessed for the war reserve for several years. 
Worldwide demand for lithium batteries increased from 38,956 batteries 
per month in October 2001 to a peak of 330,600 in April 2003. 
Concurrent battery production was 32,000 in October 2001 and 114,772 in 
April 2003, and thus was insufficient to meet demand. CECOM expanded 
battery production from one to three manufacturers and received $38.2 
million to increase production capacity in late 2002; the 8-fold 
increase in battery demand still outstripped production capacity. A 6- 
month production lead-time for the batteries precluded the ability of 
the three manufacturers to meet the peak demand during April 2003. The 
Marines reported being down to only a 2-day supply of batteries in 
CENTCOM's area of responsibility in April 2003, despite OIF's priority 
on worldwide supply shipments. By late 2003, the Army was able to 
acquire enough batteries so that its inventory exceeded back orders. 

Pace of Production of Up-Armored HMMWVs and Kits Did Not Match Maximum 
Capacity: 

Meeting rapidly increasing requirements for armoring HMMWVs also met 
with constraints. For example, CENTCOM stated a requirement for 1,407 
up-armored HMMWVs to support OIF in August 2003 that grew to 8,105 
vehicles in September 2004. Manufacturers were producing 51 up-armored 
HMMWVs per month in August 2003. Recognizing the increase in 
requirements in February 2004, the Army reached an agreement with the 
manufacturers to increase production to 460 vehicles per month by 
October 2004. However, the signed agreement with the manufacturer 
indicated that maximum production could have been increased to 500 
vehicles. 

Funding was not available when the requirements increased. As a result, 
Army officials stated that the up-armored HMMWV manufacturers were 
unable to operate at the maximum capacity. In order to produce vehicles 
at a consistent and high rate, the manufacturer needs to be assured of 
consistent funding at least 3 months in advance of delivery. While 
additional funding was received in fiscal year 2004, program managers 
stated they often did not know when the next funding release would 
occur, further complicating their procurement planning. As of September 
2004, Army data shows that 5,330 of the 8,105 required up-armored 
HMMWVs were in CENTCOM's area of responsibility. 

Similar issues affected the delivery of add-on-armor kits from the 
Army's depot system even more dramatically. Kit production in the 
Army's depot system reached its maximum rate of 3,998 kits per month in 
April 2004 and would have met the requirement sooner had the Army not 
slowed production. Moreover, additional unused capacity was available 
for kit production. In February 2004, a contractor-operated Army 
facility informed Army depot managers that it could produce an 
additional 800 kits per month. While item managers stated they did not 
use this contractor-operated facility due to issues with contract 
timing and price, they did not have information about the reason for 
reducing the level of production at the government-operated facilities. 
Army data show that kit production will meet CENTCOM's September 2004 
requirement for 13,872 kits no later than March 2005. 

DOD's Response to Acquisition Challenge Was Inconsistent: 

DOD's response to the various acquisition challenges presented by these 
items was inconsistent, lacked transparency, and did not fully exploit 
all of its capabilities to influence production. If the Army had 
forecasted an accurate requirement for the batteries, the need for 
additional manufacturers would have been recognized and production 
capacity could have been increased on time to better meet the demand. 
In the case of the other two items, the rapid increase in demand was 
not as predictable and DOD responded differently to each. DOD officials 
made a very aggressive effort to focus on and improve the availability 
of body armor using regulatory authority to increase production. DOD 
also provided visibility over the problem and courses of action to 
Congress. By contrast, DOD's response to the need for more armor 
protection for HMMWVs was more measured and its acquisition solution 
was less transparent. This may have been why members of Congress have 
expressed specific concerns about the availability of these items and 
designated specific funds for them. 

Ineffective Theater Distribution Contributed to Shortages of Supply 
Items: 

DOD's inability to distribute sufficient quantities of items to troops 
adversely affected the delivery of many items. While all seven items 
may have experienced distribution problems, we found that four items 
(AAV generators, Interceptor body armor, MREs, and tires) were directly 
and negatively affected, causing troops to experience shortfalls. 
Distribution is the operational process of synchronizing all elements 
of the logistics system to deliver the "right things" to the "right 
place" at the "right time" to support the combatant commander. This 
complex process involves the precise integration of doctrine,[Footnote 
34] transport equipment, personnel, and information technology. Among 
the problems encountered during OIF were (1) conflicting doctrine 
defining the authority of the geographic combatant commander to 
synchronize the distribution of supplies from the U.S. to theater; (2) 
improper packaging of air shipments from the U.S., which forced 
personnel in theater to spend time opening and sorting shipments as 
they arrived; (3) insufficient transportation equipment and supply 
personnel in theater; and (4) the inability of logistics information 
systems to support the requisition and shipment of supplies into and 
through Iraq. 

Conflicting Doctrine Impeded Effective Distribution: 

We found that conflicting doctrine impeded the establishment of a 
distribution system capable of delivering supplies to the warfighter 
smoothly and on time. Distribution begins with the supplier, ends with 
the warfighter, and includes all systems, both physical and 
informational, needed to move and manage supplies between the two ends. 
Currently, joint doctrine institutionalizes separate management of 
sections of the end-to-end distribution system by placing 
responsibility for logistics support outside the theater with the 
individual services and the U.S. Transportation Command.[Footnote 35] 
However, it also requires the theater commander to synchronize all 
aspects of logistics necessary to support the mission.[Footnote 36] 
This conflicting doctrine is contrary to DOD's distribution principle 
of centralized management, which prescribes that one manager should be 
responsible for the end-to-end distribution of supplies. A SAIC study 
also reports that joint doctrine does not contain any specific or 
prescriptive guidance on how the combatant commander might ensure a 
seamless distribution process.[Footnote 37]

During OIF, the CENTCOM combatant commander could not synchronize the 
distribution process to support the mission, as required by doctrine, 
with the level of control that joint doctrine suggests. Instead, the 
combatant commander had to rely on other DOD components responsible for 
different functions along the distribution process to gain end-to- end 
visibility as supplies moved through the distribution system. For 
example, as we reported in December 2003,[Footnote 38] although CENTCOM 
issued a policy requiring the use of radio frequency identification 
tags on all shipments,[Footnote 39] to track assets shipped to and 
within the theater, tags were not always used. Officials from various 
DOD components reported that, while no data were compiled on the 
frequency of shipments being labeled with radio frequency 
identification tags, only about 30 percent of the pallets and 
containers coming into the theater were tagged. Officials gave various 
reasons for not following the commander's policy, such as personnel 
were not trained to use the technology, tags were not available to 
place on loads moving through the system, and requirements to use the 
technology were not compatible with current operating systems. In 
addition, some Army officials reported that CENTCOM does not have 
jurisdiction over their process for shipping and tracking assets. 
Therefore, while CENTCOM issued guidance directing the implementation 
of an in-transit visibility system that relied on the tags, the command 
could not control the organizations outside of theater responsible for 
applying the tags to ensure their proper use. 

Initial Shipments from the U.S. to the Theater Were Not Properly 
Packaged: 

DOD's distribution principle of maximizing throughput calls for 
reducing the number of times that supplies are opened and sorted in 
transit so that distribution to warfighters is prompt. Early in OIF, 
inefficient packaging and palletizing of air shipments created supply 
backlogs in Kuwait. In turn, these backlogs delayed the delivery of 
supplies shipped by air to units in Iraq, which included armored 
vehicle track shoes, body armor, and tires. Insufficient information 
was available to allow us to link how each individual item was affected 
by this distribution problem. 

According to Army officials, shipments move most efficiently when they 
are packed and palletized[Footnote 40] so that they do not have to be 
unpacked and reloaded while in transit; sending such "pure" shipments 
to a single unit is a standard peacetime procedure. During OIF, Army 
officials expected each pallet or container to contain supplies for 
only one unit or location. However, initial shipments included spare 
parts and supplies for several geographically separate units. DLA 
officials stated that U.S. distribution centers could not handle the 
high volume of supplies and many shipments were loaded with items for 
more than one customer or "mixed." They also said that the volume of 
supplies arriving daily for consolidation into air shipments 
overwhelmed distribution centers in the U.S. The facilities were 
structured to handle peacetime requirements and lacked the necessary 
equipment and personnel to handle the surge capacity associated with 
wartime. Officials stated that mixed cargo was often sent to the 
theater without being sorted in order to make room for incoming 
supplies. Moreover, the lack of sorting continued because of a 
miscommunication between CENTCOM and DLA, the shipper. CENTCOM expected 
the peacetime practice of pure pallets would continue during OIF, while 
DLA officials focused on moving pallets to theater regardless of 
whether they were pure or mixed. However, at that same time RAND 
analysts reported that DLA facilities were sending pure pallets to U.S. 
Army units in Europe and Korea. 

Once in theater, mixed shipments had to be manually opened, sorted, and 
re-palletized at theater distribution points, causing additional 
delays. According to staff at the Theater Distribution Center in 
Kuwait, some mixed shipments were not marked with all the intended 
destinations so the contents of the shipments had to be examined. Army 
officials stated that because mixed pallets of supplies were initially 
sent to theater, over 9,000 pallets piled up at the center. By the fall 
of 2003, 30 percent of the pallets arriving at the center still had to 
be reconfigured in some way. The Army and DLA recognized the problem 
and worked in conjunction with CENTCOM to establish a "pure palleting" 
process at the distribution center in Pennsylvania. This resulted in 
potentially longer processing times in the United States in order 
reduce customer wait time in theater. 

According to a RAND study,[Footnote 41] the pallets arriving in theater 
between January and August 2003 contained more than 20,000 cardboard 
boxes of small items. Over 4,300 boxes, about one in every five, were 
mixed and may have been opened and the contents sorted before being 
forwarded on to customers, which further delayed delivery. The RAND 
study showed that it took an average of 25 to 30 days for such mixed 
boxes to travel from a port in theater, through the theater center, to 
the supply activity that ordered it. In contrast, when a box with items 
for only one unit was shipped, it took an average of 5 to 10 days to 
reach the customer. 

Shortages of Supply Personnel and Transportation Equipment Hampered 
Supply Distribution: 

The lack of sufficient logistics resources, such as trained supply 
personnel and cargo trucks, hindered DOD's efforts to move supplies 
promptly from ports and theater distribution centers to the units that 
had ordered them, as expected under the DOD principle of optimizing the 
distribution system. As a result, some troops experienced delays in 
receiving MREs and other supplies, thereby reducing operational 
capabilities and increasing risk. 

According to military personnel, there was a shortage of support 
personnel in theater prior to and during the arrival of combat forces. 
Moreover, those that arrived were often untrained or not skilled in the 
duties they were asked to perform. The effects of these shortages of 
trained personnel were most evident at the Theater Distribution Center 
and resulted in delays in the processing (receipt, sorting, and 
forwarding) of supplies, and backlogs. For example, in the late 
February to early March 2003 time frame, the Center had only about 200 
reserve personnel and did not reach its authorized staffing level of 
965 supply/support personnel until May 2003. Moreover, when the center 
opened, it already had an estimated 5,000-pallet backlog and its 
commander employed ad hoc work details drawn from surrounding support 
units to help. Furthermore, organizations outside of the theater, such 
as TACOM, sent personnel to Kuwait to ensure that specific items, such 
as tires, were properly processed and sent to the correct customers. 

Moreover, according to after-action reports, lessons learned studies, 
and discussions with military personnel, the lack of adequate ground 
transportation, especially cargo trucks, contributed significantly to 
the distribution problems. For example, an Army official with the 377th 
Theater Support Command, which was responsible for logistics support in 
Kuwait, stated that when combat began his unit needed 930 light/medium 
and medium trucks but had only 515 trucks on hand. Although his unit 
"managed" with what was available, he said that the shortage of 
equipment used to haul supplies into Iraq created a strain on materiel 
movement. Both the Marine Corps and the 3rd Infantry Division also 
reported that available transportation assets could not meet their 
capacity requirements. Even high-priority items, such as food did not 
always move as intended. According to a CENTCOM after- action report, 
contractors responsible for moving MREs from ports to the Theater 
Distribution Center at times had only 50 of the 80 trucks needed. DLA 
officials reported that at one time 1.4 million MREs were stored at a 
port in theater, awaiting transport to customers. 

One cause for the distribution resource problems was the failure of the 
force deployment planning process to properly synchronize the flow of 
combat and support forces. DOD normally uses time-phased force 
deployment data to identify and synchronize the flow of forces during 
an operation. Key elements of this process include requirements for 
military transportation companies, contractor provided services, and 
host nation logistics support. However, the process was "thrown out" in 
the planning leading up to OIF. Around November 2002, DOD started to 
use another method for deployment planning, referred to as the Request 
for Forces process. 

The Request for Forces process segregated the initial deployment plan 
into over 50 separate deployment orders. DOD's priority was for combat 
forces to move into theater first. Under this new process, logistics 
unit commanders had to justify the flow of their units and equipment 
into the theater--often with little success. According to some DOD 
planners, this approach did not adequately meet planner needs, 
especially the needs of logisticians. Each deployment order required 
its own transportation feasibility analysis, which resulted in a choppy 
flow of forces into the theater. This in turn caused imbalances in the 
types of personnel needed in the theater to handle logistics 
requirements. Furthermore, a RAND study suggests that distribution 
assets, particularly for components such as the 377th Theater Support 
Command and the 3rd Corps Support Command, were either deleted from the 
deployment plan or shifted back in the deployment timeline.[Footnote 
42] As a result, logistics personnel could not effectively support the 
increasing numbers of combat troops moving into theater. 

DOD took steps to mitigate the impact of some distribution problems, 
but these did not always work. For example, according to a RAND report, 
priority was given to moving critical supplies, such as food, water, 
ammunition, and fuel. Other items, to include spare parts, were moved 
on a very limited, opportune basis. As a result, according to one after-
action report, it took nearly 2 weeks after U.S. forces moved into Iraq 
for the first shipment of spare parts to reach combat forces, and this 
delivery was inadequate to support an entire division engaged in combat 
operations. Moreover, the Army confirmed that after 45 days of enemy 
engagement, moving water still consumed over 60 percent of available 
theater transportation trucks. A Marine Corps after-action 
report[Footnote 43] listed repair parts distribution as a "near-
complete failure."

In order to move supplies to the troops, both the Army and Marines 
contracted for additional trucks. For example, the Marine Corps 
contracted for $25.6 million in services from several commercial 
trucking companies to support combat operations. It justified this 
action by identifying deficiencies in the provision of transportation 
support they expected from other components in theater. However, Army 
officials stated that its contractors did not always have sufficient 
trucks to move supplies as required because contracts did not specify a 
level of operational readiness for trucks. As a result, even if trucks 
were available, they were not always functional. In its after-action 
report, the 3rd Infantry Division stated that available transportation 
assets and contracted host nation support could not meet divisional 
requirements for carrying capacity. 

Information Systems did not Support Supply Distribution: 

According to military doctrine, financial, communication, and 
information systems used to support supply distribution must be 
accessible, integrated, connected, and contain accurate and up-to-date 
information.[Footnote 44] In other words, these systems need to provide 
a seamless flow of all types of essential data from the point of 
production to the warfighter. However during OIF, the logistics systems 
used to order, track, and account for supplies were not well 
integrated; moreover, they could not provide the essential information 
necessary to effectively manage theater distribution. 

Data Transmission Problems Hindered Supply Requisitions: 

Logistics information systems in use during OIF could not effectively 
transmit data, making it difficult to process and track requisitions 
for critical supplies. A number of factors limited communications 
between the various logistics systems, including a lack of bandwidth in 
the theater to satisfy all systems users, systems that were 
incompatible with each other, units lacking the necessary equipment or 
being delayed in connecting to the supply system, and distances being 
too great for supply activities to effectively transmit data by radio. 
For example, the supply activities in the Army's 3rd Infantry Division 
only received about 2,500 of the over 10,000 items--including armored 
vehicle track shoes, lithium batteries, and tires--they requisitioned 
between August 2002 and September 2003. Officials at the 3rd Infantry 
Division attributed this issue specifically to communications problems 
between systems. Army officials also attribute poor communications as a 
major factor leading to a $1.2 billion discrepancy between the amount 
of supplies shipped to the theater and the amount actually acknowledged 
as received, which we reported on in December 2003.[Footnote 45]

The Marine Corps similarly experienced communications problems between 
its information technology systems during OIF. Marine forces deployed 
with two different versions of the Marine Corps Asset Tracking 
Logistics & Supply System logistics information system, which were not 
compatible with each other. Marine Corps units in the 1st Marine 
Expeditionary Force were using the Asset Tracking Logistics & Supply 
System I for frontline logistics, while the 2nd Marine Expeditionary 
Force was using the Asset Tracking Logistics & Supply System II+ for 
theater support.[Footnote 46] Therefore, requisitions from Marine 
support activities at the front lines could not be transmitted directly 
to Marine logistics units in the rear. Instead, the Marines used other 
processes, such as e-mail and satellite phone to requisition supplies. 
However, this left ordering units without any information on the status 
of their requisitions. As a result, many duplicate orders were 
submitted and may have unnecessarily added more cargo to the already 
overwhelmed theater distribution system. A study by SAIC also noted 
that the lack of logistics communications was a weaknesses during 
OIF.[Footnote 47] The Army's Deputy Chief of Staff for Logistics has 
since provided satellite communications equipment to the units 
operating in theater to help alleviate these communication 
difficulties. 

Available Logistics Information Systems Did Not Provide Adequate 
Visibility: 

Another major problem encountered during OIF was a lack of adequate 
visibility over supplies in the distribution system. While the 
operation order for OIF called for the use of radio frequency 
identification, tracking was limited primarily by a failure to place 
radio frequency identification tags on all shipments sent to the 
theater and a lack of fixed scanners needed to read radio frequency 
identification tags. For example, some ports, such as one we observed 
in Bahrain, had no scanners at all. 

Another equally challenging problem was that scanners often failed 
under the harsh environmental conditions. According to one Army 
assessment, only 50 percent of the scanners inspected in Kuwait were 
operational. In addition to problems with the radio frequency 
identification technology, there was no suitable information system 
infrastructure to track and identify supply assets. SAIC reported that 
the Joint Total Asset Visibility system could not provide commanders 
with the asset visibility they needed, while military officials in 
theater told us they knew of no joint system that tracked supplies from 
the point of production to the warfighter. Rather, logistics personnel 
relied on a number of unintegrated tracking systems. As a result, 
CENTCOM and the major combat forces in the Army and Marine Corps could 
not adequately track or identify supplies moving to and within the 
theater. 

The lack of in-transit visibility over supplies significantly effected 
distribution. For example, an Army official responsible for logistics 
operations at the Theater Distribution Center noted that incomplete 
radio frequency identification tags forced the center's personnel to 
spend time opening and sorting incoming shipments. This, in turn, 
significantly increased processing time, contrary to DOD's principle of 
maximizing throughput. As a result, according to a CENTCOM issue paper, 
around 1500 Small Arms Protective Inserts plates for body armor were 
lost. Another CENTCOM report stated that 17 containers of MREs were 
left at a supply base in Iraq for over a week because no one at the 
base knew they were there. According to Marine Corps officials, they 
became frustrated with their inability to "see" supplies moving towards 
them and lost trust and confidence in the logistics system and 
processes. For example, the Marines could only verify the receipt of 15 
out of 140 AAV generators that were shipped to them. 

Changes to Unit Address Codes Disrupted Logistics Information Systems: 

The use of new OIF-specific address codes, known as Department of 
Defense Activity Address Codes, for ordering supplies limited the 
effectiveness of logistics information technology.[Footnote 48] The 
codes ensure that supplies are sent to the correct address of the 
ordering unit and that the correct unit is charged for the supplies. 
Because of poor linkages between Army logistics and financial systems, 
a problem of where to ship and who to bill surfaces unless a unit or 
activity deploys intact. For example, while some parts of the 3rd 
Infantry Division remained in the U.S. during OIF, the majority of the 
division deployed to Iraq. To ensure that ordered supplies went to the 
correct location of a deployed unit and that the unit was correctly 
charged, new codes specifically set up for OIF were issued to deploying 
entities. Meanwhile, the original codes remained with that portion of 
the unit that did not deploy. Approximately 10,000 new codes were 
created for OIF. This caused significant disruptions to logistics 
information systems as new data had to be manually updated in each 
system. Many problems occurred during this process, such as the 
issuance of inactive codes, use of codes already assigned to other 
units, and incorrect data being input into logistics systems. These 
problems were another factor contributing to the $1.2 billion 
discrepancy between supplies shipped and supplies received. 

Furthermore, there was a delay in updating the master code schedule 
that contained all the locations associated with the new codes. This 
caused significant problems for the Theater Distribution Center. 
According to an April 10, 2003 Theater Distribution Center log entry, 
"Upwards of 50% of pallets shipped to Doha and 20-30% of pallets 
shipped to Arifjan are being returned/rejected with the reason being, 
'it doesn't belong here.' The master [codes] are not being updated when 
units move in or out and the [theater distribution center] is double 
and triple handling cargo." Given that the center was already 
experiencing problems with personnel and equipment shortages; 
additional handling of the same supplies increased their difficulties. 

Logistics Personnel Were Not Trained on Some of the Logistics 
Information Systems in Use: 

A lack of adequate training for logistics personnel also negatively 
impacted the performance of logistics information systems. For example, 
according to a 101st Airborne after-action review, loading codes and 
interfacing with data caused problems that training could have 
resolved. Lack of training also contributed to problems with asset 
visibility. According to a logistics study, units were generally not 
trained in the use of radio frequency identification devices. Marine 
Corps officials likewise stated that their personnel were untrained in 
the use of tracking equipment. 

DOD Actions to Improve Supply Availability for Current and Future 
Operations: 

As a result of logistics issues that arose during OIF, DOD, the 
services, and the defense agencies have undertaken a number of actions 
to improve the availability of equipment and supplies during ongoing 
and future operations. Some are short-term actions aimed at improving 
immediate supply availability. For example, as a result of the battery 
shortage, the Joint Staff Logistics Directorate established in July 
2003 a revolving "critical few list" of approximately 25 items that the 
services and various commands report as most critically needed 
worldwide. The Joint Staff Logistics Directorate, in conjunction with 
the services, determines the causes of the shortages and makes 
recommendations to the Office of the Secretary of Defense and the 
services for corrective action and execution. Other actions are long- 
term, systemic changes that are designed to improve the overall 
effectiveness of the supply system. While we did not evaluate the 
changes' potential for success, we observed that the majority of them 
focus on the distribution aspects of logistics problems, not the full 
range of supply deficiencies we identified. However, other GAO 
engagements are currently underway to assess some of these initiatives. 
(Specific short-term and long-term actions related to each item are 
noted in the appendixes.)

* Inaccurate and inadequately funded war reserve requirements. The Army 
has not updated or run its war reserve model in order to systemically 
ensure the accuracy of its war reserve requirements. Due to its risk 
management decisions, it has also not funded its war reserve 
requirements. However, the Army has made manual changes to its war 
reserve inventory levels, based on the usage of certain items during 
OIF. 

* Inaccurate supply forecasts. DOD and the services have not undertaken 
systemic actions specifically aimed at improving the accuracy of supply 
forecast. However, DLA has undertaken action to improve its customer 
support through its Customer Relationship Management program, which 
could potentially improve its ability to forecast customer demands. 

* Insufficient and delayed funding. The Army has not undertaken long-
term actions to expedite its funding process during contingencies to be 
more responsive to customer needs. However, it has undertaken short-
term actions to obtain additional funding for specific supply items. 
For example, AMC directed funding towards armored vehicle track shoes. 

* Delayed acquisition. DOD has not undertaken long-term actions to 
address acquisition issues that contributed to shortages of certain 
case study items. However, DLA has undertaken other actions to improve 
its ability to leverage industrial-base capabilities. DLA seeks to 
improve industrial-base support through its collaborative planning 
initiatives with industry. For example, its Strategic Materiel Sourcing 
program establishes long-term contracts for approximately 500,000 (of a 
total 4.6 million) items the agency considers critical to its 
customers' needs. In addition, its Strategic Supplier Alliances program 
establishes formal relationships with the agency's top 32 sole source 
suppliers. 

* Ineffective distribution. DOD has undertaken many initiatives to 
improve its distribution system, including the Secretary of Defense's 
designation of the U.S. Transportation Command as the Distribution 
Process Owner. According to a Secretary of Defense memorandum,[Footnote 
49] the U.S. Transportation Command is responsible for improving the 
overall efficiency and interoperability of distribution-related 
activities. In January 2004, the command established a CENTCOM 
Deployment and Distribution Operations Center, which is responsible for 
directing airport, seaport, and land transportation operations within 
the OIF theater. DOD's Pure Pallet initiative seeks to reduce 
inefficiencies in the distribution process and improve in-transit 
tracking of shipments by building containers and pallets with radio 
frequency identification tags that are designated to units within a 
specific geographic location. 

The Army and DLA have also undertaken numerous actions to improve the 
distribution system. The Army has identified four areas of focus for 
the next 2 years: (1) "Connect Army Logisticians" by using technology 
to provide logisticians and warfighters with real-time visibility over 
distribution and warfighter requirements, (2) "Modernize Theater 
Distribution" by developing a distribution-based logistics system to 
support the warfighter, (3) "Integrate the Supply Chain" by providing a 
system wide view of the supply chain through the integration of 
processes, information, and responsibilities, and (4) "Improve Force 
Reception" by enhancing the Army's ability to deploy forces to theaters 
of operation by establishing an early port opening capability that will 
result in-theater expansion and increased theater sustainment. 
Furthermore, the Army has expanded its Rapid Fielding Initiative, which 
accelerates acquisition and fielding processes to ensure that troops 
deploy with high-priority items. DLA has also expanded its Forward 
Stocking Initiative by opening a fifth forward stock depot in Kuwait to 
reduce customer wait time and transportation costs. Moreover, AMC and 
DLA have formed a partnership in which they will explore the use of 
commercial systems to increase supply readiness, improve in-transit 
visibility, cut costs, and improve parts resupply to field locations. 

Conclusions: 

In times of war, the defense supply system needs to be as responsive 
and agile as the combat forces that depend upon it. In the Quadrennial 
Defense Review for 2001, DOD stated its intention to transform its 
logistics capabilities to improve the deployment process and implement 
new logistics support tools that accelerate logistics integration 
between the services and reduce logistics demand and cost. OIF tested 
this system as well as industry's capability to meet rapidly increasing 
demands, and, in many instances, the system failed to respond quickly 
enough to meet the needs of modern warfare. While units in Iraq 
achieved success on the battlefield, the supply chain did not always 
adequately support the troops and combat operations. A number of 
problems prevented DOD from providing supply support to its combat 
forces at many points in the process, which reduced operational 
capabilities and forced combat commanders to accept additional risk in 
completing their missions. An inability to adequately predict the needs 
of warfighters at the onset of the war, coupled with a slow process for 
obtaining additional resources once those needs were identified, 
resulted in critical wartime shortages. In addition, even when 
sufficient supply inventories were available within the system, they 
were not always delivered to the combat forces when they needed them. 
All of these problems were influenced to some extent by a lack of 
accurate and timely information needed to support processes and 
decisions. 

Unless DOD's logistics process improves the availability of critical 
supplies during wartime, combat forces engaged in future operations 
will likely be exposed to risks similar to those experienced in Iraq. 
These risks will continue to exist unless DOD is able to improve the 
availability of war reserve supplies at the start of operations and 
overcomes problems forecasting accurate wartime demands. Moreover, 
delays in the Army's funding processes will continue to place U.S. 
troops at risk by not enabling AMC to swiftly meet surges in wartime 
demands. In addition, future combat operations may be adversely 
affected unless DOD is able to anticipate acquisition delays that could 
affect the availability of critical supplies and provide transparency 
into how it expects to mitigate production risks. Finally, merely 
increasing the availability of supplies in the inventory will not help 
combat forces in the field. Troops will continue to face reduced 
operational capabilities and unnecessary risks unless DOD's supply 
chain can distribute the right supplies to the right places when 
warfighters need them. 

While DOD took immediate steps to overcome some shortages, and is 
beginning to develop solutions to some of the problems identified 
during OIF, most systemic solutions have tended to center on resolving 
distribution problems. If supply logistics transformation is to be 
successful, DOD's supply chain reform will need to include solutions 
for the full gamut of identified deficiencies contributing to supply 
shortages during OIF. An integrated approach to addressing all of these 
deficiencies will increase DOD's potential to achieve responsive, 
consistent, and reliable support to warfighters, a goal envisioned in 
the National Military Strategy and its logistics concepts and necessary 
to support the continued dominance of the U.S. military. 

Recommendations for Executive Action: 

To improve the effectiveness of DOD's supply system in supporting 
deployed forces for contingencies, we recommend that the Secretary of 
Defense direct the Secretary of the Army to take the following three 
actions and specify when they will be completed: 

* Improve the accuracy of Army war reserve requirements and 
transparency about their adequacy by: 

* updating the war reserve models with OIF consumption data that 
validate the type and number of items needed,

* modeling war reserve requirements at least annually to update the war 
reserve estimates based on changing operational and equipment 
requirements, and: 

* disclosing to Congress the impact on military operations of its risk 
management decision about the percentage of war reserves being funded. 

* Improve the accuracy of its wartime supply requirements forecasting 
process by: 

* developing models that can compute operational supply requirements 
for deploying units more promptly as part of prewar planning and: 

* providing item managers with operational information in a timely 
manner so they can adjust modeled wartime requirements as necessary. 

* Reduce the time delay in granting increased obligation authority to 
the Army Materiel Command and its subordinate commands to support their 
forecasted wartime requirements by establishing an expeditious supply 
requirements validation process that provides accurate information to 
support timely and sufficient funding. 

We also recommend that the Secretary of Defense direct the Secretary of 
the Navy to improve the accuracy of the Marine Corps' wartime supply 
requirements forecasting process by completing the reconciliation of 
the Marine Corps' forecasted requirements with actual OIF consumption 
data to validate the number as well as types of items needed and making 
necessary adjustments to their requirements. The department should also 
specify when these actions will be completed. 

We recommend that the Secretary of Defense direct the Secretary of the 
Army and Director of the Defense Logistics Agency to take the following 
two actions: 

* minimize future acquisition delays by assessing the industrial-base 
capacity to meet updated forecasted demands for critical items within 
the time frames required by operational plans as well as specify when 
this assessment will be completed and: 

* provide visibility to Congress and other decision makers about how 
the department plans to acquire critical items to meet demands that 
emerge during contingencies. 

We also recommend the Secretary of Defense take the following three 
actions and specify when they will be completed: 

* revise current joint logistics doctrine to clearly state, consistent 
with policy, who has responsibility and authority for synchronizing the 
distribution of supplies from the U.S. to deployed units during 
operations,

* develop and exercise, through a mix of computer simulations and field 
training, deployable supply receiving and distribution capabilities 
including trained personnel and related equipment for implementing 
improved supply management practices, such as radio frequency 
identification tags that provide in-transit visibility of supplies, to 
ensure they are sufficient and capable of meeting the requirements in 
operational plans, and: 

* establish common supply information systems that ensure the DOD and 
the services can requisition supplies promptly and match incoming 
supplies with unit requisitions to facilitate expeditious and accurate 
distribution. 

Matter for Congressional Consideration: 

To improve visibility over the adequacy of the Army's war reserves, 
Congress may wish to consider requiring the Secretary of Defense to 
provide it information that discloses the risks associated with not 
fully funding the Army war reserve. This report should include not just 
the level of funding for the war reserve, which is currently reported, 
but timely and accurate information on the sufficiency of the war 
reserve inventory and its impact on the Army's ability to conduct 
operations. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, DOD agreed with the 
intent of the recommendations and cited actions it has or is taking to 
eliminate supply chain deficiencies. Some of the actions could resolve 
the problems we identified when completed. Because DOD did not specify 
dates for completing all of its actions, we modified our 
recommendations to require specific time lines for their completion. 
DOD is taking other actions that are not sufficient to fulfill our 
recommendations and, in several cases the department's comments did not 
specifically address how it plans to improve current practices. In 
addition to our evaluation below, we address each of DOD's comments in 
appendix XI where its complete response is reprinted. 

The department cited several actions it is taking to improve the 
accuracy of war reserve requirements, support prewar planning through 
supply forecasting, minimize future acquisition delays, and improve 
supply distribution. However, it did not clearly identify time lines 
for fully implementing most of these actions. For example, initiatives 
to improve modeling and data for determining war reserves had no dates 
for implementation. In some cases, the department provided tentative 
schedules, such as with the fielding of the Army's Logistics 
Modernization Program to improve supply forecasting, which it expects 
to be in full use in fiscal year 2007. In another instance, it provided 
a May 2006 deadline for the developing an information technology plan 
to improve distribution, but did not indicate when the plan's 
recommendations will be implemented. Therefore, we have modified our 
recommendations to require that DOD specify when these actions will be 
completed. 

In two instances DOD cited actions we do not consider sufficient to 
fulfill our recommendations. The department stated that its annual 
Industrial Capabilities Report to Congress, as well as the budget 
process and other forums, provide adequate information on acquisition 
of critical items. While we agree that the report provided visibility 
about some items, such as body armor, it did not identify concerns 
about acquiring up-armored HMMWVs and kits. Therefore, we do not 
believe current reporting forums provide Congress with the consistent 
visibility and information needed to make informed decisions on actions 
that could speed the acquisition of critical items. In another 
instance, DOD cites the establishment of the Deployment and 
Distribution Center in CENTCOM as its means of testing improvements to 
distribution capabilities. While the center may improve deployable 
logistics capability, the department did not commit to actions, as we 
recommended, that would ensure through simulation and field training 
that there are sufficient trained personnel and equipment to meet the 
requirements of the operational plans--a problem in theater before and 
during the arrival of combat forces. Therefore, we continue to believe 
these recommendations have merit. 

DOD did not commit to any specific action to improve transparency to 
Congress of the risks associated with inadequately funding Army war 
reserves. The department said this risk is already reported to Congress 
in the budget process and a number of other ways. As stated in this 
report, the methods cited by DOD, such as the budget documentation, do 
not ensure consistent transparency by clearly stating the operational 
risks of underfunding the Army war reserves. Therefore we believe our 
recommendation has merit and have added a matter for congressional 
consideration that suggests Congress may wish to require DOD to 
disclose the risks associated with not fully funding the Army war 
reserve. 

While DOD agreed with the intent of three recommendations, it did not 
commit to any specific actions to address them. The recommendations 
would (1) ensure item managers are provided operational information in 
a timely manner, (2) reduce the time delay in granting increased 
obligation authority to AMC and its subordinate commands, and (3) 
revise joint doctrine to clarify responsibility and authority for 
synchronizing distribution. We believe that these recommendations have 
merit and have cited the reasons in our comments in Appendix XI. 

We are sending copies of this report to the appropriate congressional 
committees; the Secretary of Defense; the Secretaries of the Army and 
the Navy; the Commandant of the Marine Corps; the Commander, U.S. 
Central Command; the Commander, U.S. Transportation Command; the 
Director of the Defense Logistics Agency; and other interested parties. 

If you or your staff members have any questions regarding this report, 
please contact me at (202) 512-8365. Key contributors to this report 
are listed in appendix XII. 

Signed by: 

William M. Solis, Director: 
Defense Capabilities and Management: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To address our objectives, we employed a case study approach, selecting 
nine supply items with reported shortages as a way to assess the 
availability of supplies and spare parts during Operation Iraqi Freedom 
(OIF). We judgmentally selected the nine items because we believed they 
presented possible shortages with operational impacts based on our 
prior work on OIF logistics and other sources such as military "after- 
action" reports on OIF operations, military and contractor "lessons 
learned" studies, briefings, congressional testimonies, and interviews 
with Department of Defense (DOD) and military service officials 
covering the time period between October 2002 and September 2004. We 
selected the items to encompass a variety of supply sources and users 
within DOD, the Army, and the Marine Corps. The items we selected and 
the supply sources for each item are shown in table 6. 

Table 6: Item and Supply Manager: 

Item: Assault Amphibian Vehicle (AAV) generators; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Columbus) and Marine Corps Logistics Command. 

Item: Armored vehicle track shoes; 
Supply manager: Army Materiel Command (Tank-automotive and Armaments 
Command). 

Item: Interceptor body armor; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Chemical-biological suits; 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Lithium batteries; 
Supply manager: Army Materiel Command (Communications-Electronics 
Command). 

Item: Helicopter rotor blades; 
Supply manager: Naval Inventory Control Point Philadelphia. 

Item: Meals Ready-to-Eat (MRE); 
Supply manager: Defense Logistics Agency (Defense Supply Center 
Philadelphia). 

Item: Tires for 5-ton trucks and High-Mobility Multi-Purpose Wheeled 
Vehicles (HMMWV); 
Supply manager: Army Materiel Command (Tank- automotive and Armaments 
Command). 

Item: Up-armored HMMWVs and add-on armor kits; 
Supply manager: Program Executive Office Combat Support and Combat 
Service Support, Warren, Mich. 

Source: GAO. 

Note: The Defense Logistics Agency (DLA) became the manager of lithium 
batteries in October 2004. 

[End of table]

To verify the existence of reported shortages and to determine their 
extent, we interviewed DOD logistics officials and industrial-base 
suppliers. We also collected and analyzed supply data, such as 
requirements, customer demands, inventory levels, production levels, 
back order quantities, and funding levels, for the period between 
September 2001 through September 2004 for the selected items. We 
considered an item to be in short supply if the data we obtained showed 
that demands placed by the warfighter exceeded availability in the 
supply system. To determine the impact of shortages for the selected 
items, we interviewed officials in Army and Marine Corps combat forces 
that were deployed in OIF and also reviewed DOD and military services' 
after-action reports, lessons learned studies, readiness reports, and 
other documents. For a complete list of these organizations, see table 
7. 

Table 7: Organizations Interviewed during Review: 

Office of the Under Secretary of Defense (Comptroller), Arlington, Va. 

Joint Staff Directorate of Logistics, Arlington, Va. 

Office of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics, Arlington, Va. 

U.S. Central Command, MacDill Air Force Base, Fla. 

U.S. Pacific Command, Camp Smith, Hawaii. 

U.S. Transportation Command, Scott Air Force Base, Ill. 

U.S. Army: Assistant Secretary of the Army for Financial Management and 
Comptroller, Arlington, Va. 

U.S. Army: Assistant Secretary of the Army for Acquisition, Logistics, 
and Technology, Arlington, Va. 

U.S. Army: Assistant Secretary of the Army for Acquisition, Logistics, 
and Technology, Program Executive Office Combat Support and Combat 
Service Support, Warren, Mich. 

U.S. Army: Office of the Deputy Chief of Staff (Logistics), Arlington, 
Va. 

U.S. Army: Office of the Deputy Chief of Staff (Operations), Arlington, 
Va. 

U.S. Army: U.S. Army Central Command/Coalition Forces Land Component 
Command (Logistics), Fort McPherson, Ga. 

U.S. Army: U.S. Army Forces Command, Fort McPherson, Ga. 

U.S. Army: U.S. Army Materiel Command. 

U.S. Army: U.S. Army Materiel Command: Office of the Deputy Chief of 
Staff (Budget Management), Fort Belvoir, Va. 

U.S. Army: U.S. Army Materiel Command: Office of the Deputy Chief of 
Staff (Logistics), Fort Belvoir, Va. 

U.S. Army: U.S. Army Materiel Command: Communications-Electronics 
Command, Fort Monmouth, N.J. 

U.S. Army: U.S. Army Materiel Command: Tank-automotive and Armaments 
Command, Warren, Mich. 

U.S. Army: U.S. Army Materiel Command: Tank-automotive and Armaments 
Command, Ground Systems Industrial Enterprise, Rock Island, Ill. 

U.S. Army: U.S. Army Materiel Command: Tank-automotive and Armaments 
Command, Anniston Army Depot, Anniston, Ala. 

U.S. Army: U.S. Army Materiel Command: Tank-automotive and Armaments 
Command, Lima Army Tank Plant, Lima, Ohio. 

U.S. Army: 3rd Infantry Division, Fort Stewart, Ga. 

U.S. Army: 4th Infantry Division & III Corps, Fort Hood, Tex. 

U.S. Army: 101st Airborne Division (Air Assault), Fort Campbell, Ky. 

U.S. Marine Corps: Headquarters Marine Corps, Installation and Logistic 
Department, Arlington, Va. 

U.S. Marine Corps: Marine Forces Pacific, Camp Smith, Hawaii. 

U.S. Marine Corps: Marine Corps Logistics Command, Albany, Ga. 

U.S. Marine Corps: Marine Corps Aviation Supply Logistics Office, 
Arlington, Va. 

U.S. Marine Corps: Marine Corps Systems Command, Quantico, Va. 

U.S. Marine Corps: 1st Marine Expeditionary Force, Camp Pendleton, Ca. 

U.S. Marine Corps: 2nd Marine Expeditionary Force, Camp Lejeune, N.C. 

U.S. Marine Corps: 3rd Marine Air Wing, Miramar, Calif. 

Naval Inventory Control Point Philadelphia, Pa. 

National Guard Bureau, Arlington, Va. 

Defense Logistics Agency: Defense Logistics Agency Headquarters, Fort 
Belvoir, Va. 

Defense Logistics Agency: Defense Supply Center Columbus, Ohio. 

Defense Logistics Agency: Defense Supply Center Philadelphia, Pa. 

RAND Arroyo Center, Santa Monica, Ca. 

AM General Corporation, Mishawaka, Ind. 

Armor Holdings, Inc. (formerly O'Gara-Hess Eisenhardt), Fairfield, 
Ohio. 

Source: GAO. 

[End of table]

To determine what deficiencies contributed to identified supply 
shortages, we interviewed officials and collected documentation from 
DOD's supply management organizations. On the basis of case studies, we 
identified deficiencies that affected the supply of two or more of the 
items. We analyzed data from DOD logistics agencies, operational units, 
and service and geographic commands to evaluate the significance of 
these deficiencies to DOD's overall logistics system. We also reviewed 
prior GAO reports, DOD and military services' after-action reports, 
military and contractor lessons learned studies, DOD directives and 
regulations, and reports by DOD and external experts, including 
Accenture, the Center for Naval Analysis, the RAND Corporation's Arroyo 
Center, the Science Applications International Corporation, and the 
U.S. Army Audit Agency. In addition, we analyzed supply data for each 
item to identify and corroborate deficiencies contributing to item 
shortages. 

To determine what actions DOD has taken to improve the availability of 
supplies for current and future operations, we collected data from 
military service and joint command headquarters personnel to identify 
short-and long-term efforts to address supply shortages. However, we 
did not evaluate their potential for success. We also reviewed DOD 
logistics and strategic planning documents that provide guidance on 
improving logistics support for military readiness. 

We assessed the reliability of the supply data we obtained by 
interviewing agency officials knowledgeable about the data and 
corroborated it with other information about supply shortages gathered 
from other DOD and military service organizations. When data 
specifically for Iraq were not available, we used worldwide data since 
OIF received supply priority. With the exception of data on track 
shoes, we determined that the data were sufficiently reliable for our 
purposes. In the case of track shoes, we determined that the data 
provided by the Army's Tank-automotive and Armaments Command (TACOM) 
were not sufficiently reliable for our purposes and did not use it. 
However, we were able to identify relevant information from TACOM's 
periodic reporting to describe the item's supply status. We determined 
that these data were sufficiently reliable for our purposes. In the 
case of lithium batteries, the Communications-Electronics Command 
(CECOM) switched database systems in July 2003. We determined that the 
data from the new system were sufficiently reliable for the purposes of 
showing trends and graphing, but we based our findings on program data 
prior to the system change. We also identified relevant information 
from other DOD sources to confirm reported shortages of lithium 
batteries. The limitations of data collected for armored vehicle track 
shoes and lithium batteries are included in appendixes III and VI, 
respectively. We also determined that funding data were sufficiently 
reliable for our purposes by comparing data received from multiple 
sources within DOD. 

We performed our audit from March 2004 through March 2005 in accordance 
with generally accepted government auditing standards. 

[End of section]

Appendix II: Assault Amphibian Vehicle Generators: 

Background: 

The Marine Corps' AAV is a full-tracked landing vehicle designed to 
carry up to 25 people from ship to shore and is used as an armored 
personnel carrier on land. The Marine Corps used more than 550 AAVs to 
transport personnel during operations in OIF. Among the critical parts 
of the AAV is its generator, which provides needed electrical power 
(see fig. 6). 

Figure 6: Assault Amphibian Vehicle and Generator: 

[See PDF for image]

[End of figure]

The supply and distribution of AAV generators is a shared 
responsibility. The Marine Corps Logistics Command manages the supply 
of repairable generators; the Defense Supply Center Columbus supplies 
new generators. During OIF, the 2nd Force Service Support Group was 
responsible for moving supply shipments from the port to Iraq, and the 
1st Service Support Group[Footnote 50] had responsibility for moving 
supplies once they reached Iraq. The 3rd Assault Amphibian Battalion, 
part of the 1st Marine Expeditionary Force, was in charge of 
maintenance for all AAVs in theater. 

Extent and Impact of Shortages: 

AAV generators were not available to the warfighter at some point 
between October 2002 and September 2004. We consider generators to have 
been a shortage because 84 were ordered, but only 15 were received. The 
Marine Corps' 3rd Assault Amphibian Battalion experienced a shortage of 
generators needed to repair AAVs during and after major combat 
operations in Iraq, according to officials. Both the Marine Corps 
Logistic Command and GAO have reported that the long distances the 
vehicles traveled, combined with combat conditions, placed the 
equivalent of 5 years of wear and tear on the vehicles over a 6-to 8- 
week period. As a result of this accelerated wear and tear, the 
vehicles' parts--including generators--wore out quickly. To meet the 
rapid rise in demand (see fig. 7), the battalion submitted orders for 
84 generators between January and June 2003. According to supply 
management data, the Defense Supply Center Columbus sent 64 new 
generators and the Marine Corps Logistics Command sent 76 repaired 
generators[Footnote 51]--a total of 140--to the theater during major 
combat operations. However, the battalion reported that it received 
only 15 generators. Officials from the 1st Force Service Support Group 
in Iraq stated they did not know why they did not receive all of the 
generators shipped from the Marine Corps Logistics Command and the 
Defense Supply Center Columbus. 

Figure 7: Assault Amphibian Vehicle Generator Demand and Back Orders 
for OIF by Quarter (3rd quarter fiscal year 2001 through 4th quarter 
fiscal year 2004): 

[See PDF for image]

[End of figure]

While a 3rd Assault Amphibian Battalion official stated their demand 
for generators exceeded the number received in theater, they did not 
report any decline in AAV operational readiness. The reported 
operational readiness of AAVs in the Iraqi theater remained at about 89 
percent most of the time between February 2003 and October 
2003.[Footnote 52] However, in order to maintain this readiness rate, a 
3rd Assault Amphibian Battalion official noted that spare parts from 
about 40 non-operational vehicles were used to support combat capable 
vehicles. 

Causes of Shortages: 

Poor asset visibility in the Marine Corps' in-theater distribution 
system contributed to the shortage of generators needed to repair AAVs. 
Although good asset visibility is one of the main tenets of logistics 
supply systems,[Footnote 53] the Marines had difficulty maintaining 
visibility over the 140 generators shipped to the theater. Marine Corps 
Logistics Command and Defense Supply Center Columbus officials tracked 
generators to the theater, but their visibility over these shipments 
ended there. Once the generators arrived in theater, the 2nd Force 
Service Support Group became responsible for maintaining visibility of 
supply. However, they stated they did not have visibility of the 
generators shipped into Iraq. The 1st Force Service Support Group, 
which directly supported units fighting in Iraq, also indicated an 
inability to track requisitioned supplies. While 15 of the generators 
were received by the 3rd Assault Amphibian Battalion, neither the 
Marine Corps' Force Service Support Groups nor we were able to track 
the remaining 125 generators. 

A contributing factor to the shortage of generators was difficulties 
the Marine Corps faced in maintaining visibility over requisitioned and 
warehoused spare parts because of incompatible and unstable software 
and other visibility systems. Before OIF began, the Marines experienced 
difficulties maintaining visibility over the generators in their in- 
theater distribution center in Kuwait. Defense Supply Center Columbus 
officials reported that generators were shipped to the theater to 
support requirements forecasted by deploying units. However, according 
to an official with the 3rd Assault Amphibian Battalion, instead of 
being delivered to the units, generators were warehoused in the 
distribution center. One reason for the poor asset visibility at the 
warehouse in February 2003, was the failure of the warehousing 
software--Storage Retrieval, Automated, Tracking, Integrated System-- 
to work properly. Moreover, the 1st Force Service Support Group used 
one version of the Asset Tracking Logistics and Supply System (ATLASS) 
requisitioning software in theater, while the 2nd Force Service Support 
Group used another version, ATLASS II+. Because the two versions could 
not interface, personnel of the 1st Force Service Support Group 
reported that they reentered requisition information manually to move 
data between the systems. Personnel at the Marine's distribution center 
in Kuwait entered requisitions into the Supported Activity Supply 
System, a stand-alone inventory system. According to Marine Corps 
Logistics officials, neither system could track requisitions or parts 
related to them through the supply requisition process. 

In addition, Marine Corps personnel were expected to use radio 
frequency identification[Footnote 54] technology to help maintain asset 
visibility during supply distribution. According to 2nd Force Service 
Support Group personnel, Marine units in theater did not have 
sufficient training or equipment to read the tags in order to support 
the use of this technology. 

Efforts to Improve Availability: 

Short-term Efforts: 

When the supply system did not respond to the demand for generators, 
Marine Corps personnel noted that units went outside the supply system, 
through e-mail and telephone communications, to locate supplies, such 
as generators, for AAVs and other equipment. 

To minimize data entry errors, Marine Corps personnel developed an 
electronic process to transfer data between the ATLASS and ATLASS II+ 
software systems. According to logistics personnel, to improve 
visibility of requisitions through the system, the Marine Corps 
streamlined its requisitioning process by using ATLASS to enter 
requisitions into the Supported Activity Supply System and by 
eliminating the use of ATLASS II+ in theater. 

To support greater use of radio frequency identification tags in 
theater, the Marine Corps, according to the 2nd Force Service Support 
Group officials, has provided training to personnel deploying to Iraq 
and increased the use of the technology to improve asset visibility. 

Long-term Efforts: 

According to 2nd Service Support Group officials, the Marine Corps is 
evaluating an Army information system that monitors assets moving 
through the supply system to determine if the Army's system can be 
adapted for Marine Corps use. 

The 2nd Marine Expeditionary Force has developed a Marine Air-Ground 
Task Force Distribution Center initiative. The Marines stated that the 
initiative, implemented in September 2004, helps them manage the 
distribution system by bringing together the Traffic Management Office, 
deployed supply units, and transportation assets to replicate the in- 
theater supply process. The initiative will enable them to fully 
replicate the supply system, including the use of radio frequency 
identification tags and satellite transponders. 

[End of section]

Appendix III: Armored Vehicle Track Shoes: 

Background: 

During OIF, U.S. forces relied heavily on armored vehicles such as 
Abrams tanks and Bradley Fighting Vehicles.[Footnote 55] For example, 
at the beginning of combat operations in Iraq, the 3rd Infantry 
Division had a fleet of 252 Abrams tanks and 325 Bradley Fighting 
Vehicles drawn from Army prepositioned stock. Troops used Abrams tanks 
to lead attacks in urban areas with the support of infantry equipped 
with Bradley Fighting Vehicles. Army officials said that Abrams tanks 
and Bradley Fighting Vehicles were extremely effective for operations 
in urban terrain. Critical components of both types of armored vehicles 
are the track that enables the vehicles to move, which are composed of 
dozens of metal shoes[Footnote 56] (see fig. 8). 

Figure 8: Abrams Tank Track: 

[See PDF for image]

[End of figure]

The Army's TACOM Track and Roadwheel Group buys the track shoes that 
are used on Abrams tanks and Bradley Fighting Vehicles. Goodyear is the 
sole source supplier of Abrams track shoes and the major producer of 
Bradley track shoes. VAREC also produces Bradley track shoes. In fiscal 
year 2003, TACOM reported spending $195.2 million to purchase track 
shoes for all tanks and vehicles. However, worldwide demand for Abrams 
and Bradley track shoes totaled $257.4 million. Of the $195.2 million, 
TACOM reportedly spent $98.6 million on Abrams track shoes and $52.4 
million on Bradley track shoes. 

We were unable to obtain reliable data on forecasted requirements, 
demands, back orders, and inventory for track shoes from TACOM's Track 
and Roadwheel Group. The group's officials told us that because the 
models and studies used to compute the data can produce inaccurate 
results, they could not validate the data. As a result, we were unable 
to document the extent of shortages based on these data. However, group 
officials were able to provide us with data used to inform AMC on the 
status of track shoe shortages. According to TACOM, these data are 
based on information provided by units in theater and best represent 
true demand. We corroborated this secondary data with classified data 
and used it in our analysis. 

Extent and Impact of Shortages: 

Track shoes for the Abrams tanks and Bradley Fighting Vehicles were not 
available to the warfighter at some time between October 2002 and 
September 2004. We consider this item to have a shortage because demand 
exceeded the amount of inventory available to meet the needs of the war 
fighters. 

U.S. forces and logistics personnel reported critical shortages of 
track shoes for Abrams tanks and Bradley Fighting Vehicles during OIF, 
and these shortages negatively affected their mission. In undertaking 
their mission, U.S. forces subjected these tanks and vehicles to the 
equivalent of 3 years of high-intensity training during major combat 
operations in Iraq. Because of the extensive mileage placed on the 
tanks and Bradley vehicles--exacerbated by bad road conditions and 
extreme heat--vehicle parts, particularly track shoes, wore out 
quickly. 

Although TACOM was able to meet the track shoe demands of units 
preparing to deploy as well as those already deployed in OIF, it began 
to experience difficulties in providing track shoes to units in theater 
around April 2003. The demand for Abrams tank and Bradley Fighting 
Vehicle track shoes in May 2003 was 5 times the March 2003 forecasted 
demand (see table 8). To meet the surge in demand for Abrams track 
shoes, TACOM negotiated with Goodyear to increase the production rate 
from 15,000 Abrams track shoes per month (from the normal peacetime 
rate of 10,000 per month) to 17,000 per month for December 2002, then 
to 20,000 per month in May 2003, and to 25,000 per month in July 2003. 
However, these increases in production still were not sufficient to 
meet OIF demands. In May 2003, for example, the actual demand for 
Abrams track shoes rose to more than 55,000. 

Table 8: Forecasted and Actual Demand for Abrams and Bradley Track 
Shoes (March-May 2003): 

March 2003 forecasted demand; 
Abrams track shoes: 11,125; 
Bradley track shoes: 12,787. 

April 2003 actual demand; 
Abrams track shoes: 23,462; 
Bradley track shoes: 20,678. 

May 2003 actual demand; 
Abrams track shoes: 55,313; 
Bradley track shoes: 55,875. 

Source: TACOM. 

[End of table]

As a result of track shoe shortages, some Abrams tanks and Bradley 
Fighting Vehicles could not operate during the summer months in 2003. 
For example, the 4th Infantry Division reported it could not obtain 
sufficient quantities of track shoes to meet operational needs. At one 
point during post-combat operations, the division had an operational 
requirement for 23,626 Abrams track shoes, of which 8,002 were shipped, 
but only 1,028 were received. To support the Bradley Fighting Vehicles, 
the division had an operational requirement of 29,911 track shoes, of 
which 4,591 were shipped, but only 744 were received. As a result of 
its inability to obtain more track shoes and other suspension parts, 
the 4th Infantry Division reported its readiness rates for both types 
of combat vehicles deteriorated. For example, one of its brigades 
reported that 11 of its 44 Abrams tanks were unavailable during post 
combat operations because of the lack of track shoes. 

Track shoe shortages also negatively impacted the 3rd Infantry 
Division. On June 11, 2003, the division reported that of the 185 
Abrams tanks it had on hand, 111 (60 percent) were deemed "non-mission 
capable due to supply." For the 237 Bradley Fighting Vehicles it had on 
hand, 159 (67 percent) were deemed non-mission capable due to supply. 
According to 3rd Infantry Division officials, the reason tanks and 
vehicles were unavailable was because replacement track shoes were not 
available to the units. For example, between April 16-18, 2003, one 
divisional supply support activities in Kuwait had 22,074 Abrams track 
shoes and 18,762 Bradley track shoes on back order. 

To alleviate the impact of track shoe shortages on Bradley Fighting 
Vehicle readiness, theater commanders wanted to bring an additional 
1,407 up-armored HMMWVs into theater. However, as detailed in appendix 
X, the procurement of additional up-armored HMMWVs was also 
problematic. 

Causes of Shortages: 

Inaccurate war reserves requirements, inaccurate forecasted 
requirements, and erratic funding affected TACOM's ability to provide 
track shoes. 

Inaccurate War Reserve Requirements: 

Inaccurate war reserves requirements negatively affected TACOM's 
ability to provide track shoes to units in theater at the beginning of 
OIF. Governed by Army Regulation 710-1, war reserves are intended to 
provide the Army with interim support to sustain operations until it 
can be resupplied with materiel from the industrial base. For TACOM, 
the war reserve requirement for 3,635 Abrams track shoes and 1,800 
Bradley track shoes identified in September 2001 was not enough to 
support OIF demands. Although the war reserve requirement increased in 
December 2002, the new requirement for 5,230 Abrams track shoes and 
5,626 Bradley track shoes was still not enough to meet demands. 

To more accurately reflect track shoe usage in OIF, TACOM officials, in 
December 2003, increased the war reserves requirements to 32,686 Abrams 
track shoes and 34,864 Bradley track shoes. TACOM officials made the 
change manually rather than using the Army War Reserve Automated 
Process,[Footnote 57] which was last run in fiscal year 1999. Since 
then, the number and type of vehicles have changed, but the official 
process has not been performed again to update the requirements. TACOM 
officials have been waiting for input based on the defense planning 
guidance from the Department of the Army to initiate a new process. At 
the time of our review, they were not certain when they would receive 
the guidance. Until the model is run, TACOM officials will continue to 
make manual changes to war reserves requirements. 

In addition, both we and Accenture have questioned the validity of the 
Army's war reserve requirements. In a 2001 report, we found that war 
reserve requirements could be inaccurate because the calculations were 
not updated to reflect new consumption rates; requirements 
determination methodology might not be consistent with planned 
battlefield maintenance practices; and requirements were based on 
internal estimates of what the industrial-base could provide rather 
than on well-defined industry data itself.[Footnote 58] A 2003 study by 
Accenture concluded that part of the reason for the low war reserve 
requirements was that the forecasting process is labor intensive, time 
consuming, and suffers from inaccurate input data.[Footnote 59]

Inaccurate Forecasted Requirements: 

In fiscal year 2003, TACOM underestimated the amount of Abrams and 
Bradley track shoes needed worldwide. Although TACOM revised its 
requirements at the end of each quarter, its estimates for Abrams and 
Bradley track shoes still fell short. 

For example, in April 2003 the forecasted monthly requirement for 
Abrams track shoes was 11,125, which was less than half of the actual 
demand of 23,462 shoes. The track shoe budget forecasts further 
illustrate the discrepancy between forecasted and actual requirements. 
Based on its budget-forecasting tool, TACOM forecasted it would need 
$46.8 million for Abrams track shoe purchases for fiscal year 2003. At 
the end of the year, actual demands for Abrams track shoe totaled 
$194.9 million--a 416 percent increase. For Bradley track shoes, the 
group forecasted it would need $17.8 million in fiscal year 2003 to 
meet customer demands. However, actual demands totaled $62.6 million-- 
a 351 percent increase--by the end of the fiscal year. 

Even if TACOM's revised track shoe estimates had been accurate, it 
would have been too late to meet the summer 2003 demand. In order to 
have supplies on hand when demands are received, item managers need to 
award contracts allowing for sufficient procurement lead- 
time.[Footnote 60] TACOM officials explained that track shoe 
manufacturers need an average of 4 to 6 months to produce and deliver 
track shoes once they receive a contract. The high demands for track 
shoes in the late spring and summer of 2003 were not forecasted in 
October 2002, which would have been the time when contracts should have 
been awarded so that TACOM could adequately meet customer needs. 

The failure to forecast the high demand experienced during the early 
months of OIF was partly due to the requirements forecasting model used 
and to the lack of information and guidance provided to TACOM. In its 
conclusions, the Accenture study on track shoe shortages found that the 
requirements forecasting model failed to accurately forecast future 
demands because the model uses a simple moving average based on 24 
months of historical demand[Footnote 61] that does not support dynamic 
changes in item usage. This meant that large increases in demand during 
the last couple of months of the 24-month period would not result in a 
corresponding increase in the forecasted demand. In addition, TACOM 
officials stated they did not receive adequate planning guidance on 
operational plans from AMC prior to the onset of combat operations that 
they could incorporate into their forecasts for track shoes. 
Consequently, TACOM determined the requirements based on the model and 
on the item managers' expertise and knowledge of the item, as allowed 
under Army Regulation 710-1. 

Subsequent requirements throughout fiscal year 2003 also were 
understated. TACOM officials reported that although they regularly 
requested information about the track shoes' usage and durability, 
which would have helped them better gauge actual demand, they received 
limited information and input from units in the field. As OIF continued 
throughout 2003, TACOM held teleconferences with AMC Logistics Support 
Element representatives and with units in theater to obtain updated 
information about item usage. 

Erratic Funding for Track Shoe Production: 

During fiscal year 2003, TACOM did not receive sufficient obligation 
authority in time to buy track shoes to meet growing demands. TACOM's 
total funding requirements in fiscal year 2003 amounted to $257.4 
million--$194.9 million for Abrams track shoes and $62.5 million for 
Bradley track shoes. TACOM officials told us that they could not buy 
sufficient track shoes because they had received only $216 million in 
obligation authority to buy all of the items they managed. However, 
TACOM spent only $151.0 million on track shoes-- $98.6 million for 
Abrams tanks and $52.4 million for Bradley Fighting Vehicles. 

In addition to insufficient obligation authority, the uncertainty of 
the funding flow affected the manufacturer's ability to produce track 
shoes. A primary producer of track shoes for TACOM, Goodyear, was in 
danger of closing down its track shoe production plant in April 2003 
because of a lack of contracts. TACOM officials stated that they could 
not award contracts consistently because they did not know how much 
obligation authority they would receive or when the next allotment 
would arrive. Because of the acute shortage of track shoes, TACOM 
immediately awarded contracts to Goodyear whenever obligation authority 
became available. As a result of accelerated deliveries, Goodyear 
reported that it had a very low level of remaining workload and was in 
danger of closing down the track shoe production plant unless it 
received additional contracts. 

According to TACOM officials, additional obligation authority was 
aggressively requested throughout fiscal year 2003 to support purchases 
of track shoes as well as other supply items. As an item critical to 
mission success, officials stated that track shoes usually receive more 
funding than other commodities managed by TACOM; however, releases of 
additional obligation authority were delayed in some instances. TACOM 
officials stated that when they need additional obligation authority, 
they request it from AMC, which then requests it from Army 
headquarters. These requests must be validated and justified (based on 
past sales) at each level before the Office of the Under Secretary 
Defense (Comptroller) approves for the release of additional obligation 
authority. TACOM officials expressed frustration with the process and 
complained that both AMC and Army Headquarters were not aggressively 
pursuing the issue and did not fully grasp the magnitude of impact to 
units in theater because of the lack of obligation authority provided 
to item managers. 

Efforts to Improve Availability: 

Short-term Efforts: 

To address inaccuracies in war reserve requirements, TACOM has manually 
updated its requirements levels for track shoes, rather than wait for 
AMC to implement the next Army War Reserve Automated Process. 

To overcome inaccuracies in the requirements forecasting model, TACOM 
depended on item managers' judgment and expertise to determine demand 
more accurately. Item managers worked with available information 
provided by AMC and with input from units in theater. In addition, 
priority was given to the Iraqi theater of operations and available 
track shoe production was shipped to support units in Iraq. TACOM 
worked with theater commanders to expedite and prioritize shipments of 
track shoes. 

To address funding shortfalls, TACOM continually requested that any 
additional obligation authority be made available to buy track shoes 
during fiscal year 2003. Because track shoes were considered critical 
mission-essential items and their shortage greatly impacted theater 
operations, officials from the Track and Roadwheel Group said that they 
usually received more funding and attention than other supply groups 
within TACOM. For example, in June 2003, the Track and Roadwheel Group 
received $64 million that was specifically meant to prevent Goodyear 
from closing down its track shoe production plant. In August 2003, 
TACOM received an additional $70 million for track shoe purchases. 

To improve track shoe availability during OIF, the Army made a $5.2 
million investment in Goodyear production facilities to meet the surge 
requirements and to sustain the viability of the track shoe 
supplier.[Footnote 62]

Long-term Efforts: 

At the time of this review, TACOM officials did not identify any long- 
term efforts to correct problems identified with war reserves, 
requirements, or funding shortfalls. 

[End of section]

Appendix IV: Interceptor Body Armor: 

Background: 

The U.S. military's new Interceptor body armor is composed of two 
primary components: an Outer Tactical Vest and two Small Arms 
Protective Insert plates (see fig. 9). The Outer Tactical Vest consists 
of a combination of a soft fabric vest and para-aramid fiber panels 
that provide protection against shrapnel and 9 mm ammunition. The 
plates consist of a combination of ceramic tiles and polyethylene fiber 
[Footnote 63] that, when inserted into the vest, provide protection 
against rifle rounds up to 7.62 mm. The vest accepts two plates, one 
for the front and one for the back. Additional attachments can increase 
protection.[Footnote 64]

The new body armor provides improved protection and weigh less than the 
older version--the Personnel Armor System for Ground Troops, or "flak" 
vest--which protects only against shrapnel. The new body armor weighs 
16.4 pounds, while the older vest weighs 25.1 pounds. 

Figure 9: Interceptor Body Armor: 

[See PDF for image]

[End of figure]

The Army planned to issue the Interceptor body armor to U.S. forces 
over an 8-year period between 2000 and 2007. It began to distribute the 
armor to military personnel during Operation Enduring Freedom. On the 
basis of the armor's effectiveness the Army decided to accelerate its 
fielding for OIF. 

DLA's Defense Supply Center Philadelphia manages the Interceptor body 
armor for the Army. The Marine Corps has its own version of the body 
armor that is constructed with the same materials as the Army version. 
The Marine Corps Systems Command and the U.S. Army Robert Morris 
Acquisition Center manage it for the Marine Corps. Both services rely 
on the same manufacturers. 

Extent and Impact of Shortages: 

Interceptor body armor was not available in sufficient quantities to 
U.S. military forces in Iraq sometime between October 2002 and 
September 2004. We consider this item to have a shortage because demand 
exceeded the production output necessary to meet the needs of the war 
fighter. While there were shortages of Interceptor body armor during 
OIF, Coalition Forces Land Component Command officials stated that 
military personnel deployed with either the vest component of the new 
body armor or the old body armor. CENTCOM officials stated that all 
personnel in Iraq had the new armor by January 2004; 8 months after 
combat operations were declared over. 

The new body armor was initially intended for limited numbers of 
personnel, such as dismounted infantry, however, this changed during 
OIF. In May 2003, the Army changed the basis of issue to include every 
soldier in Iraq. Then in October 2003, CENTCOM further expanded 
issuance of the body armor to include all U.S. military and DOD 
civilian personnel working within CENTCOM's area of responsibility 
including Iraq, Kuwait, and Afghanistan. 

Demand for the vest component part of Interceptor body armor increased 
rapidly both at the beginning of OIF, when troops began combat 
operations, and again in late 2003 during stabilization operations. 
Worldwide quarterly demand for vests rose from 8,593 in December 2002 
to 77,052 in March 2003--the onset of combat operations. The demand for 
vests continued to spike upward topping out at 210,783 in December 
2003. The number of back orders also rapidly increased over this period 
of time (see fig. 10). By December 2003 the worldwide number of back 
orders reached 328,023 with DLA mandating that OIF requisitions receive 
priority. In contrast, during December 2003 the number of vests 
actually produced to meet demand was only 23,900. 

Figure 10: Worldwide Demand, Production Output, and Back Orders for 
Vests by Quarter (December 2001 through September 2004): 

[See PDF for image]

Notes: Back order data were not available for the period between 
October 2002 and February 2003. 

[End of figure]

Similarly, the demand for plates increased with the onset of combat 
operations and again during stabilization operations in late 2003. The 
demand for plates increased more than ten-fold, from a quarterly demand 
of 9,586 plates in December 2002 to a quarterly demand of 108,808 
plates in March 2003 at the beginning of OIF. As figure 11 shows, with 
the change in the basis of issue for the Interceptor body armor in 
October 2003, the demand for plates rose rapidly again, peaking at 
478,541 plates in December 2003. In addition, during late 2003, the 
number of back orders for plates also increased rapidly. By November 
2003, the number of worldwide back orders peaked at 597,739 plates, 
with DLA giving OIF requisitions priority. In contrast, during this 
month, production output totaled only 40,495 plates. 

Figure 11: Worldwide Demand, Production Output, and Back Orders for 
Plates by Quarter (December 2001 through September 2004): 

[See PDF for image]

Note: Back order data were not available for the period between October 
2002 and February 2003. 

[End of figure]

Military officials expressed serious concerns over the shortage of 
Interceptor body armor. Army officials stated that soldiers' morale 
declined as units waited for the armor to reach theater. Because of the 
shortages, CENTCOM officials stated they prioritized the issue of the 
new body armor to those who were most vulnerable. In addition, there 
was a lack of body armor among support personnel, such as the Army's 
377th Theater Support Command, while insurgents were attacking and 
interdicting supply routes in Iraq. Because of the shortages, many 
individuals bought body armor with personal funds. The Congressional 
Budget Office estimated (1) that as many as 10,000 personnel purchased 
vests, (2) as many as 20,000 purchased plates with personal funds, and 
(3) the total cost to reimburse them would be $16 million in 
2005.[Footnote 65]

Causes of Shortages: 

Temporary shortages of the Interceptor body armor occurred because of 
acquisition delays related to lack of key materials and distribution 
problems in theater. 

Lack of Critical Materials Delayed Acquisition: 

A lack of sufficient quantities of key materials used to make vests and 
plates delayed acquisition to meet the increasing demand for 
Interceptor body armor. According to DLA officials, shortages of 
critical materials still limit worldwide production to approximately 
35,000 vests and 50,000 plates per month. A production lead-time of 
three months has also limited the industrial-base's capacity to 
accelerate its production levels to meet increasing demand. 

DLA officials stated that the production of vests and plates was 
impaired by a limited availability of critical materials. The shortfall 
of vests was due to a lack of Kevlar, a para-aramid fiber that was in 
short supply. DuPont Chemicals is the only domestic producer of the 
para-aramid fiber panels used in the vests. However, an exception under 
the Defense Federal Acquisition Regulation Supplement[Footnote 66] 
allowed vest contractors to use Twaron[Footnote 67] fiber panels 
manufactured in the Netherlands as a replacement for Kevlar fiber 
panels. 

The shortfall in ceramic plates was due to insufficient quantities of 
two materials needed to produce them. The initial shortfall was due to 
the limited availability of SpectraShield.[Footnote 68] Until April 
2004, Honeywell was the only domestic producer of SpectraShield, and it 
had other competing commercial requirements for the material. Plate 
producers responded to the limited availability of SpectraShield by 
manufacturing modified plates that replaced SpectraShield with Kevlar 
and other para-aramid fiber materials. While these plates met ballistic 
protection requirements, they weighed a half pound more and required a 
service waiver for acceptance. 

In April 2004, DSM Dyneema, a foreign firm that produces Dyneema, a 
SpectraShield-equivalent, opened a production facility in the U.S. and 
began to produce and sell the product. SpectraShield and Dyneema are 
the only materials that meet the services' ballistic protection and 
weight requirements for Interceptor body armor. Due to their limited 
availability, both materials are under Defense Priorities and 
Allocation System control.[Footnote 69] Plate production was later 
constrained by the limited availability of ceramic tiles. According to 
DLA, current production output is subject to further increase as DSM 
Dyneema increases its Dyneema production and additional ceramic tiles 
are qualified as meeting specification requirements. 

Accelerated Fielding Affected Distribution: 

Attempts to accelerate fielding of the new body armor met with some 
success, but also caused problems. According to an Army Office of the 
Inspector General report,[Footnote 70] accelerated fielding resulted in 
supplying body armor to soldiers at a much faster pace than normal. The 
armor was distributed in some cases virtually directly from the factory 
to the warfighter. The report stated that the accelerated fielding did 
not allow time for the project manager to coordinate with units and 
allow them to establish sufficient accountability in theater, as 
required by Army regulations. However, lack of in-transit visibility, 
inaccurate reporting of on-hand quantities, lag time in recording 
receipt of plates, and other accounting errors resulted in temporary 
loss of visibility of between 5,000 and 30,000 sets of plates. 

Efforts to Improve Availability: 

Short-term Efforts: 

To meet the surging demand for plates, DOD used authority under the 
Defense Production Act[Footnote 71] to allocate production of 
SpectraShield. More specifically, the Office of the Deputy Under 
Secretary of Defense (Industrial Policy) used its authority under the 
Defense Priorities and Allocation System to direct Honeywell to 
accelerate deliveries of SpectraShield in support of OIF on six 
occasions in 2003. According to the Acting Under Secretary of Defense 
(Acquisition, Technology, and Logistics), Honeywell did this at the 
expense of its commercial orders. To increase industrial-base 
production capacity, DLA stated that it increased its number of vest 
suppliers from 1 to 4; plate manufacturers from 3 to 8 (including 
manufacturers of overweight plates); and ceramic tile suppliers from 4 
to 10 (including suppliers of overweight tiles). 

Long-term Efforts: 

DLA has recommended that it have management of Interceptor body armor 
requirements for all of the services. It has recommended that the 
services establish war reserve stock levels for the new body armor to 
mitigate lead-time in industrial-base production. It has also requested 
the authority to purchase and maintain an inventory of materials 
necessary for producing vests and plates as well as contract with 
vendors who have the capacity to use such stored materials during times 
of high demand. 

[End of section]

Appendix V: Joint Service Lightweight Integrated Suit Technology Suits: 

Background: 

JSLIST is a protective clothing ensemble that includes a lightweight 
chemical-biological protective suit, multi-purpose over-boots, and 
gloves (see fig. 12). When combined with a chemical protective mask, 
JSLIST provides protection from chemical and biological agents. The 
suit can be worn over a uniform and body armor. Once it is removed from 
the packages, the suit can provide protection for 45 continuous days. 
However, once exposed to an agent, it must be replaced within 24 hours. 
The sealed suit package has a shelf life of 14 years. The U.S. military 
began fielding JSLIST in November 2002. Before then, the Army relied on 
the Battle Dress Overgarment and the Marine Corps depended on the 
Saratoga suit. 

Figure 12: Joint Service Lightweight Integrated Suit Technology Suit: 

[See PDF for image]

[End of figure]

Although the military services manage their own inventories of JSLIST 
suits, DLA serves as the contracting agent. The largest producer is the 
National Institute for the Severely Handicapped. The primary 
subcontractor, Blücher, a German company, makes the suit's filter 
fabric liner. A critical component of the liner is the carbon beads, 
which absorb chemical and biological agents. The carbon beads are 
produced for Blücher--through a sole source contract--by a Japanese 
company, Kureha. 

Extent and Impact of Perceived Shortages during OIF: 

JSLIST was perceived to not be available for the warfighter between 
October 2002 and September 2004; however, we do not consider this a 
shortage because all personnel in theater were issued a JSLIST or 
Saratoga suit and the required spare by February 22, 2003. Some Army 
officials in theater, as well as National Guard officials in the U.S., 
indicated a shortage of JSLIST; however our analysis indicated no 
actual shortage. Despite this perception of a shortage, neither the 
Army nor Marine Corps indicated any impact on operational capabilities 
of deployed units. The Army began to field additional JSLIST suits to 
units deployed in theater in November 2002, in response to a 
congressional request.[Footnote 72] By February 22, 2003, the Army's 
Central Command reported that every Army unit had two suits for every 
soldier in theater; moreover, the theater supply base had one spare 
suit for every soldier. Similarly, the Marine Corps reported it had 
sufficient stock during OIF to issue one Saratoga suit[Footnote 73] and 
hold two additional suits for each Marine. 

Reasons for Perceived Shortages: 

The perception of a JSLIST shortage emerged in late 2002 and early 2003 
because of a change in requirements, poor asset visibility, and 
concerns about production capacity. 

Requirements Changed in Fall 2002: 

Changes in requirements increased the demand for JSLIST. Before October 
2002, the Army's and Marine Corps' requirements called for one chemical-
biological protective suit and one backup for each soldier or marine in 
theater. To meet this requirement, the services planned to use the 
older suits (e.g., the Army's Battle Dress Overgarment and the Marine's 
Saratoga suit) and eventually supplemented them with the newer JSLIST. 
In October 2002, however, the House Committee on Government Reform 
requested that DOD direct the services to issue JSLIST to all U.S. 
forces stationed in the Middle East, thereby increasing the servicewide 
demand for JSLIST. According to Marine Corps officials, this request 
expanded the number of personnel who needed suits to include not only 
DOD military personnel but also DOD civilian contractors and members of 
other external organizations. Although Marine Corps officials state 
they planned to provide protective suits for non-military personnel 
before the congressional request, and had acquired and stocked 400 sets 
of Saratoga suits for this eventuality, they found more personnel than 
expected who needed the protective gear. Although the services were 
required to provide suits for all personnel in theater, there was no 
DOD policy to guide the procurement of these items. 

Although the availability of JSLIST was sufficient, the sizes of the 
available suits were a problem for some soldiers. Initial orders for 
JSLIST did not take into account the fact that the suits would be worn 
over body armor and, thus, larger sizes were needed. According to DLA 
officials, units also did not consider that some National Guardsmen and 
reservists would need larger suits than those typically stocked to 
support the active-duty forces. 

Lack of Asset Visibility: 

In some cases, the poor visibility[Footnote 74] over National Guard and 
Army Reserve supply inventories affected the perceived nonavailability 
of JSLIST. For example, Army officials noted that some National Guard 
and reserve units could not promptly find a sufficient number of JSLIST 
in their inventory to meet requirements. Their inventory systems did 
not provide visibility over inventory in different locations.[Footnote 
75] As a result, Army officials said the deployment of National Guard 
and reservist personnel was delayed until a sufficient number of JSLIST 
were located within their inventory. 

Production Concerns: 

Although DLA reported operational unit concerns about the production of 
carbon beads, the agency was able to meet suit demand during OIF. 
Because of the single source subcontractor's limited ability to produce 
carbon beads, the total monthly production was limited to 70,000 to 
80,000 suits. DLA officials stated this level of production was 
sufficient to meet JSLIST requirements and prior GAO analysis supports 
their claim.[Footnote 76] However, DLA officials noted they are 
concerned about their ability to meet the services' current requirement 
to replace the 400,000 to 500,000 suits issued in OIF. 

Efforts to Improve Availability: 

Short-term Efforts: 

To meet the additional requirement to supply DOD civilian contractors 
and other non-military personnel with JSLIST, Army officials noted that 
suits were shipped directly to the theater for issue. In addition, 
Marine Corps officials reported drawing on their prepositioned war 
reserve stocks to meet the additional requirement. 

To meet the demand for larger sizes, the Director of DLA testified that 
DLA provided 2,000 custom-made suits for personnel outside the original 
size range.[Footnote 77] Moreover, Army officials said that Federal 
Express was used to expedite the shipment of these suits. 

Long-term Efforts: 

To meet suit requirements for all personnel in theater, Army officials 
report that DLA has introduced four larger suit sizes into its 
inventory. 

As part of an effort to improve asset visibility, the Department of the 
Army has implemented an Individual Protective Equipment Centralized 
Management Initiative designed to provide units with visibility and 
shelf-life management of inventory in the United States. 

To increase production capability, DLA officials stated that they 
worked in conjunction with DOD to increase the production capability of 
the existing industrial base and to develop new protective suits for 
future use. For example, DLA officials stated that Blücher is 
conducting research to develop an alternative carbon bead in order to 
reduce reliance on a sole source producer. In addition, they announced 
that in June 2004, the JSLIST Additional Source Qualification program 
at Quantico, Virginia, accepted the use of a new bead from Blücher, 
which will be available for future suits. 

[End of section]

Appendix VI: BA-5590 and BA-5390 Lithium Batteries: 

Background: 

BA-5590 and BA-5390 nonrechargeable lithium batteries[Footnote 78] 
provide a portable power source for nearly 60 critical military 
communication and electronic systems, including the Single Channel 
Ground and Airborne Radio System, the Javelin missile guidance system, 
and the KY-57 transmission security device. U.S. troops depend on these 
systems to communicate, acquire targets, and gain situational awareness 
on the battlefield. The BA-5590 was developed specifically for military 
use more than a decade ago and, according to military officials, is the 
most widely used communications battery in the supply system (see fig. 
13). The BA-5390 served as a substitute battery when shortages of BA- 
5590s occurred during OIF. Prior to the start of Operation Enduring 
Freedom, the Army was moving to a rechargeable battery at the direction 
of the Environmental Protection Agency. Funding was provided for the 
environmentally safe battery, not the disposable lithium battery. 
However, these disposable batteries are well-adapted to fast-paced 
mobile operations because they do not have to be recharged. 

Figure 13: BA-5590 Lithium Battery: 

[See PDF for image]

[End of figure]

Before OIF, SAFT manufactured all BA-5590 lithium batteries for the 
U.S. military. In late 2002, Ultralife Batteries started supplying BA- 
5390s to the military and in early 2003 Eagle-Picher Technologies began 
delivering BA-5590s to augment SAFT's output. 

Before and during OIF, CECOM's Logistics and Readiness Center bought 
and managed DOD's family of lithium batteries. As of September 30, 
2004, this responsibility was transferred to DLA's Defense Supply 
Center Richmond. CECOM, however, will continue to be responsible for 
technical issues related to lithium batteries. 

During the time period covered by our review, CECOM used several 
methods to derive inventory management data. Before July 2003, CECOM 
used the old Commodity Command Standard System. We consider data 
derived from this legacy system to be sufficiently reliable for our 
purposes. In July 2003, CECOM converted to a new database, the 
Logistics Modernization Program, which encountered stabilization and 
data clean-up issues. To overcome these issues, CECOM item managers 
obtained inventory management information from the Logistics 
Modernization Program as well as manual computations. While these data 
are sufficiently reliable for the purpose of showing trends and graphs, 
our findings rely primarily on data from the Commodity Command Standard 
System from the period before July 2003. 

Extent and Impact of Shortages: 

Nonrechargeable lithium batteries, specifically BA-5590s and BA-5390s, 
were available in limited quantities to the warfighter between October 
2002 and September 2004. We consider this to be a shortage because the 
monthly demand and back orders for these batteries exceeded the monthly 
inventory that CECOM had available to supply U.S. forces in OIF. 

While demand for nonrechargeable lithium batteries increased 
dramatically after September 11, 2001, it quickly outpaced the 
available supply, as U.S. troops began preparing for combat operations 
in Iraq. Demand rose from a peacetime average of below 20,000 
batteries[Footnote 79] per month before September 2001 to an average of 
38,313 batteries per month after the United States launched the global 
war on terrorism and Operation Enduring Freedom in 
Afghanistan.[Footnote 80] In January 2003, as thousands of troops were 
deploying to the Gulf region, the number of batteries requisitioned 
surged to 140,000 and, in April 2003 during major combat operations, 
the number peaked at 330,600 (see fig. 14). When major combat 
operations were declared over in May 2003, demand began to fall. Since 
the fall of 2003, the demand has leveled off to an average of about 
62,000 per month. 

Figure 14: Worldwide Demand, Inventory Levels, and Back Orders for BA- 
5590 and BA-5390 Lithium Batteries by Month (October 2001 through 
August 2004): 

[See PDF for image]

Note: Data on inventory and back orders was not available for October 
and November 2001. 

[End of figure]

U.S. troops encountered severe shortages of nonrechargeable lithium 
batteries because inventory levels (including on-hand and war reserve 
stocks) were low. As figure 14 shows, inventory levels remained on 
average below 15,000 batteries during 2002 and into early 2003, 
increasing only in May 2003 after major combat operations were declared 
over and demand began to decline. At the same time, the number of back- 
ordered batteries grew to about 250,000 in January 2003 and, by May 
2003, had nearly quadrupled to 900,000. As demand fell and requisitions 
were filled, the number of back orders began to drop in the summer of 
2003 and, by the end of 2003, inventory levels exceeded back orders. 

Army and Marine Corps units faced critically low supplies of BA-5590s 
and BA-5390s during the spring of 2003. On March 24, 2003, a few days 
after combat operations began, the Marines reported they were down to 
less than a 2-day supply (rather than the required 30-day, on-hand 
safety level). In early April, Marine officials projected that, given 
existing worldwide inventories, production capacity, and consumption 
rates, they would experience degraded communications capacity by early 
May if the war continued at the same pace. To mitigate the shortages, 
the military took some actions, including requiring stationary units to 
use alternative power sources (e.g., rechargeable batteries) and 
instituting a weekly Materiel Priority Allocation Board[Footnote 81] 
meeting to apportion batteries to combat units that needed them the 
most. 

Causes of the Shortages: 

The critical shortages of BA-5590s and BA-5390s during OIF resulted 
from four related conditions: inadequate war reserve requirements, 
inaccurate forecasted requirements, lack of full-funding, and 
acquisition delays due to industrial-base limitations. 

Inadequate War Reserve Requirements: 

The Army's war reserve requirements for nonrechargeable lithium 
batteries were not sufficient to support initial operations. According 
to Army Regulation 710-1, the war reserve is intended to provide the 
Army with interim support to sustain operations until it can be 
resupplied with material from the industrial base. According to CECOM 
officials, before OIF, the war reserve requirement for BA-5590s was set 
at about: 

180,000 batteries to sustain the first 45 days of war.[Footnote 82] 
However, this amount was considerably below the actual demand of nearly 
620,000 batteries recorded during March and April 2003. Officials 
stated that the low pre-war requirement was generated by the Army's war 
reserve model,[Footnote 83] which was last updated in 1999; moreover, 
this model used inaccurate battery failure rates and did not include 
all of the equipment that used nonrechargeable lithium batteries. Based 
on their experience during OIF, CECOM officials have increased the 
current Army and Marine Corps war reserve requirement for BA-5590s and 
BA-5390s to more than 1.5 million total batteries, an amount equal to 
OIF's average monthly demand of 250,000 batteries times 6 months of 
continuous combat operations. War reserve planners expected inventories 
to reach the 1.5 million mark by February 2005. 

Inaccurate Forecasted Requirements: 

In addition to low war reserves, CECOM's official monthly forecasted 
requirements for nonrechargeable lithium batteries were far below those 
needed to meet a wartime contingency. Forecasted requirements are 
developed primarily on the basis of actual demand data for an item from 
the preceding months[Footnote 84] and are used to support funding 
requests to purchase additional supplies. In 2002, CECOM increased its 
monthly forecasted requirements from a monthly peacetime norm of 24,000 
batteries to a monthly average of 36,000 in response to the global war 
on terrorism (see fig. 15). These monthly requirements grew to nearly 
60,000 in March 2003 when combat operations began in Iraq, but this 
number was only one-fifth of the actual demand recorded that spring. 
Forecasted requirements continued to lag behind demand until mid-summer 
when they caught up. According to officials from Central Command Joint 
Logistics, the pre-OIF monthly requirement figures were low because 
some combatant commanders did not submit their requirements and 
estimates did not reflect all battery usage; as a result, officials 
said that calculating requirements was purely guesswork. 

Figure 15: Worldwide Forecasted Requirements, Demand, and Production 
Output for BA-5590 and BA-5390 Lithium Batteries by Month (October 2001 
through August 2004): 

[See PDF for image]

Notes: 

(1) The jump in forecasted requirements in April 2003 was the result of 
reducing the demand base to 6 months to calculate requirements. 

(2) According to CECOM, fluctuations in production output after July 
2003 reflect changes in deliveries from one month to the other. 

[End of figure]

In the summer of 2002, CECOM and AMC officials developed a more 
realistic contingency requirement for nonrechargeable lithium 
batteries. Using information from the Operation Plan and other sources, 
they forecasted a need for 300,000 to 325,000 batteries per 
month.[Footnote 85]

As figure 15 shows, this estimate closely paralleled the actual demand 
of 330,000 at the height of major combat operations in April 2003. 
CECOM officials presented this requirement to AMC and the Joint 
Materiel Priorities and Allocation Board in the fall of 2002 to bolster 
their request for $38.2 million of additional obligation authority to 
ramp up BA-5590 and BA-5390 production. They received the funding in 
early December 2002. 

Army Decisions Did Not Provide Full Funding for Batteries: 

The Army's risk-based decision not to fund full requirements for CECOM, 
particularly lithium nonrechargeable batteries, during several years 
prior to OIF compounded the shortage problem. As table 9 shows, CECOM 
had unfunded requirements ranging from $85 million to $419 million for 
the 3 fiscal years up to and including OIF. In fiscal year 2003, for 
example, CECOM identified requirements for the command of nearly $1.5 
billion, but received less than $1.1 billion in obligation authority 
for the year, resulting in an unfunded requirement of $419 million, or 
more than 28 percent of the total amount required. 

The command's unfunded requirements specifically for BA-5590 lithium 
batteries varied from a high of $4.2 million in fiscal year 2001 to a 
low of $1.2 million in fiscal year 2002. However, the low figure for 
fiscal year 2002 occurred because AMC directed CECOM to spend $11.5 
million to specifically support its BA-5590 requirement. Our analysis 
shows that even if CECOM had been able to fund 100 percent of its BA-
5590 battery requirement in fiscal year 2002, it would not have been 
able to meet the growing demands from the global war on terrorism. A 
fully funded requirement ($22.6 million) would have provided about 
33,000 batteries per month, and actual demand exceeded that for most of 
the year. 

Table 9: CECOM Unfunded Requirements for Fiscal Years 2001 through 
2003: 

Dollars in millions; 


CECOM requirements; 
Fiscal year 2001: $498; 
Fiscal year 2002: $568; 
Fiscal year 2003: $1474.7. 

CECOM unfunded requirements; 
Fiscal year 2001: $85; 
Fiscal year 2002: $207; 
Fiscal year 2003: $419. 

Percent unfunded; 
Fiscal year 2001: 17.1%; 
Fiscal year 2002: 36.4%; 
Fiscal year 2003: 28.4%. 

Source: CECOM and AMC data. 

[End of table]

Acquisition Delays Due to Industrial-Base Limitations: 

The surge in demand for nonrechargeable lithium batteries exceeded the 
amount that the industrial base could produce, thereby delaying 
acquisition. Before OIF, CECOM had contracted with only one qualified 
producer, SAFT, to make BA-5590s. To support the global war on 
terrorism, SAFT doubled its production from 32,000 batteries per month 
in October 2001 to 60,000 per month in September 2002. After receiving 
$38.2 million in additional obligation authority in December 2002, 
CECOM increased its orders for BA-5590s with SAFT and added BA-5590s to 
its contract with Eagle-Picher. It also contracted with Ultralife to 
make a substitute battery, the BA-5390. According to CECOM officials, 
both batteries have a 6-month production lead time.[Footnote 86] 
Despite CECOM's efforts, the long lead-time precluded the ability of 
these three producers to meet the surge in demand during major combat 
operations. Army officials stated that if they had received funding 
earlier they would have been able to mitigate the effects of this long 
lead time. As figure 15 shows, while production output increased to 
over 100,000 batteries per month in the spring of 2003, it did not 
approach 200,000 until the late summer of 2003 or reach its peak of 
250,000 until early in 2004. 

A recent study identified a limited industrial base as the primary 
cause of the BA-5590 battery shortage. A March 2004 Science 
Applications International Corporation report concluded that battery 
shortages and lack of availability were an industrial-base 
challenge.[Footnote 87] The supplier was not able to increase 
production to meet the unforecasted six-fold increase in demand. 

Efforts to Improve Availability: 

Short-term Efforts: 

To overcome production constraints, CECOM negotiated with two other 
producers, in addition to SAFT, to manufacture BA-5590s and BA-5390s. 
It also worked with the three producers to augment battery production 
by going to a 24/7 schedule. In addition to expedite shipments, CECOM 
had SAFT bypass the depot and ship batteries directly to Charleston Air 
Force Base for air shipment to the theater. According to CECOM, a 
capital investment of $5 million was made in the three producers in May 
2003 to expand their production capacity. 

DOD took a number of actions to get the limited supply of 
nonrechargeable batteries to units that needed them most. According to 
CENTCOM, the Joint Chiefs of Staff issued a directive to send all 
available BA-5590s and BA-5390s to CENTCOM's area of responsibility 
until June 2003. The Joint Staff also put these batteries on the 
"critical few list," which focused attention on improving the 
availability of specific items the services and geographic combatant 
commands reported as critical to their worldwide operations. CECOM and 
Marine Corps officials said they shifted available batteries from 
military installations worldwide and also bought batteries on the 
commercial market. The Army, Marines, and Coalition Forces Land 
Component Command also directed troops, especially those in rear units, 
to use rechargeable batteries when possible. In addition, the Army 
required soldiers to use rechargeable batteries for garrison duty and 
training and to maximize their use during peacekeeping operations. 
Marine combat units were instructed to do everything possible to reduce 
nonrechargeable battery consumption rates. Moreover, Coalition Forces 
Land Component Command was appointed the theater's item manager for 
batteries, with responsibility for prioritizing and releasing batteries 
to units. 

Long-term Efforts: 

To correct problems with war reserve requirements, CECOM officials said 
they set the current war reserve requirement for BA-5590s and BA-5390s 
to more than 1.5 million batteries to better reflect the experiences in 
OIF. This requirement was expected to be filled by February 2005. 

To improve battery availability, the Deputy Under Secretary of Defense 
for Logistics and Materiel Readiness, in January 2004, directed the 
transfer of battery inventory management from CECOM to DLA as of 
September 30, 2004. 

In terms of technological efforts, CECOM officials said they are 
developing newer, lighter-weight rechargeable batteries that could be 
powered by solar panels or other energy sources while troops are on the 
move to reduce dependence on disposable batteries. 

[End of section]

Appendix VII: Marine Corps Helicopter Rotor Blades: 

Background: 

During Operation Iraqi Freedom, the Marine Corps relied on a variety of 
helicopters to support its forces during combat operations. These 
include the UH-1N Huey, a twin-engine utility helicopter used in 
command and control, re-supply, casualty evacuation, liaison, and troop 
transport, and the CH-53E Super Stallion, a triple-engine cargo 
helicopter used to transport heavy equipment and supplies. Both types 
of helicopters require numerous spare parts, including rotor blades, to 
maintain their operational status (see fig. 16). In Iraq, Marines 
reported that enemy fire and harsh environmental conditions, such as 
heat, sand, and unimproved airfields, increased the wear and tear on 
the rotor blades. 

Figure 16: Rotor Blades on CH-53E Super Stallion: 

[See PDF for image]

[End of figure]

All Marine Corps helicopter spare part supplies, including rotor 
blades, are managed by the Naval Inventory Control Point Philadelphia. 

No Supply Shortages Existed During Operation Iraqi Freedom: 

There were no shortages of rotor blades between October 2002 and 
September 2004, although there were indications of concern due to 
increased wear and tear caused by operating from unimproved airfields, 
the harsh environment, and back orders. We do not consider this a 
shortage because the supply system filled back orders within 2 months 
and Marine Corps officials from the 3rd Marine Air Wing reported no 
major supply shortages of rotor blades for the UH-1N and CH-53E 
helicopters during OIF. The supply system was able to provide a 
sufficient replacement quantity of UH-1N and CH-53E rotor blades 
despite increased demands. For example, the Marine Corps took the 
forecasted 16 UH-1N helicopter rotor blades, to Iraq. As figure 16 
shows, from March 2003 through August 2004, the Marines requisitioned 
22 additional rotor blades to support their mission, and the supply 
system met those demands by filling orders within 2 months of receiving 
the order. 

In addition, air wings from outside the theater supported the demand in 
Iraq by providing rotor blades from various air stations, ship supply, 
and Marine Aviation Logistics squadrons. As a result, the Marines were 
able to maintain a mission capable rate for the UH-1N of 75.4 percent 
during OIF,[Footnote 88] compared with a peacetime rate of 79.9 percent 
in 2000.[Footnote 89] To date, the Naval Inventory Control Point 
Philadelphia continues to meet UH-1N rotor blade demands for OIF. 

Figure 17: UH-1N Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

[See PDF for image]

[End of figure]

The 3rd Marine Air Wing took 33 of the forecasted requirement of 64 
rotor blades to support CH-53E helicopters in Iraq. As figure 18 shows, 
55 additional rotor blades were ordered through the supply system, with 
14 on back order from March 2003 through September 2004. The supply 
system met those demands by filling orders within 1 month of receiving 
the order. As a result, the Marines were able to maintain a mission 
capable rate for the CH-53E helicopter of 67.5 percent during combat 
operations, compared with a peacetime rate of 72.3 percent in 2000. 

Figure 18: CH-53E Rotor Blade Demand and Back Orders by Month (March 
2003 through September 2004): 

[See PDF for image]

[End of figure]

Marine Corps officials stated that there were no shortages of rotor 
blades for UH-1N and CH-53E helicopters and our analysis of the 3rd Air 
Wing's demand and the supply system's ability to promptly provide rotor 
blades during OIF supports their assertion. 

Efforts to Maintain Rotor Blade Supply: 

Short-term Efforts: 

Even though they were able to get enough rotor blades from the supply 
system to meet their demands, Marines took a number of actions during 
OIF to extend the life of rotor blades in theater. Marines improved the 
durability of CH-53E rotor blades and other bladed helicopter parts by 
coating them with titanium paint and a tape covering in order to 
protect the leading edge of the blade from sand erosion. In addition, 
as the pace of combat operations slowed, Marines built permanent 
airfields with paved landing areas, which decreased blade erosion 
during take-off and landing. 

Long-term Efforts: 

The Marine Corps and Naval Inventory Control Point Philadelphia 
attribute their ability to provide rotor blades to using models to 
determine numbers and timing of spare parts and upgrades to sustain 
helicopter operations. The Marine Corps and the Naval Inventory Control 
Point Philadelphia maintain a 5-year old system, the Common Rate 
Calculation System/Common Application Development System, which uses 4- 
year historical demand data for the entire aircraft community for 
particular helicopters, engineering data and worldwide environmental 
factors to produce more accurate demand projections. 

[End of section]

Appendix VIII: Meals Ready-to-Eat: 

Background: 

The standard military ration for the individual combatant is a 
prepackaged, self-contained ration known as a MRE (see fig. 19). A MRE 
consists of 1,300 calories per bag and is designed to sustain an 
individual engaged in heavy activity, such as military training or 
actual military operations, when normal food service facilities are not 
available. MREs are issued in cases of 12 and MREs have a shelf life of 
3 years when stored at 80°F. 

Figure 19: Meal Ready-to-Eat: 

[See PDF for image]

[End of figure]

DLA's Defense Supply Center Philadelphia manages the MRE supply for all 
services. It has supplied a total of 5.1 million MRE cases for OIF. 

Extent and Impact of Shortages: 

MREs were not available to the warfighter at some point between October 
2002 and September 2004. We consider this item to have a shortage 
because demand exceeded the amount available to meet the needs of the 
warfighters. 

As figure 20 indicates, as the demand for MREs in OIF grew between 
December 2002 and March 2003, the worldwide inventory declined. A 
shortage of MREs began in February 2003 and continued into March 2003 
when monthly demand peaked at 1,810,800 cases, although only 500,000 
cases were available in the inventory. Figure 20 also shows the 
production output of MREs increased from December 2002 through April 
2003. As a result of DLA's actions to maintain an industrial base 
capable of a large surge in production, the industrial base was able to 
increase its monthly production of MREs.[Footnote 90] Consequently, DLA 
never reported any back orders for MREs during OIF. In late April 2003, 
as U.S. forces transitioned from MREs to other food consumption 
options, monthly demand decreased significantly to 650,000 MRE cases. 
That month, the industrial base produced 1.3 million cases. From May 
2003 on, a sufficient quantity of MREs were available in inventory to 
meet demand. 

Figure 20: Forecasted Requirements, OIF Demand, Production Output, and 
Inventory for MREs (December 2002 through June 2003): 

[See PDF for image]

[End of figure]

Army and Marine Corps units did not always have all the MREs they 
needed. According to CENTCOM after-action reports, Army combat units 
were supposed to arrive in theater with a 7 to 10 day supply of MREs. 
However, CENTCOM reported that many units did not arrive with this 
quantity, thereby placing a strain on the in-theater inventory. An 
analysis of Army logistics reports by the RAND Corporation indicated 
that some units came within 2 days or less of exhausting on-hand 
quantities. According to the 2nd Force Service Support Group, Marine 
Corps combat units averaged a 6-to 8-day supply throughout the war, but 
there were times when some forces had less than 1-day on-hand supply. 
Marine Corps' Combat Service Support Companies, which directly support 
combat units, also reported critical shortages of MREs. According to 
the 1st Force Service Support Group, direct support units were supposed 
to maintain a 2-day supply. However, according to a study by the Center 
for Naval Analysis, there were times in late March and mid-April 2003 
when direct support units had less than a 1-day supply. 

Causes of Shortages: 

Problems with requirements planning, the release of Operations and 
Maintenance funding,[Footnote 91] and distribution contributed directly 
to shortages of MREs in theater. 

Requirements Not Accurately Forecasted: 

DLA's forecasted requirements did not support MRE customer demand for 
the first month of combat operations because of rapid changes in the 
size of troop deployments. DLA's forecasted requirement for March 2003 
was 996,556 cases of MREs; this number fell short of meeting the 
customer demand of 1,810,800 cases. The March 2003 forecasted 
requirement did not include data that anticipated initial in-theater 
personnel levels would be doubled because of a faster deployment of 
certain units. In a lesson-learned report, CENTCOM stated that the 
forecasted MRE requirement for the period of deployment was predicated 
on a 30-day supply for 50,000 personnel. This forecast was quickly 
exceeded by the deployment of 100,000 personnel during that 30-day 
period. The resulting demand placed a strain on existing in-theater MRE 
inventories. However, DLA's model provided accurate planning estimates 
for MRE customer demand for all other months. 

Funding Was Not Available When Needed: 

The Army experienced a delay in the release of operations and 
maintenance funding for MREs, despite DOD requirements that supply 
chain processes provide timely support during crises. Although the Army 
wanted to submit MRE requisitions to DLA in September 2002, it could 
not do so because it lacked the Operations & Maintenance funding 
necessary to purchase them. When the Army submitted the requisitions in 
December 2002, DLA shipped MREs to Kuwait. However, this 4-month delay 
in funding contributed to the shortage of MREs by delaying shipments of 
MREs into the theater. 

The Marine Corps faced a similar funding problem that delayed the 
processing of ration requests for OIF. As reported in a Marine Corps 
lessons-learned report, a January 6, 2003, request for a withdrawal of 
rations from the war reserve was delayed due to lack of available 
operations and maintenance funding from Headquarters Marine Corps. The 
Marine Corps provided notification of partial funding and the Marine 
Corps' first request for rations was passed to DLA on January 16, 2003. 
Funding was available to provide for the remainder of the requirement 
and funded requisitions were passed to DLA on February 10, 2003, 5 days 
before the Marines' required delivery date of February 15, 2003. 

Numerous Distribution Problems Impeded Supply: 

A number of distribution problems in the logistics supply chain 
hampered MRE availability. 

Inaccurate Delivery Time Forecasts: 

One problem was that actual MRE delivery times exceeded the forecasted 
delivery times. Most MREs were transported by ship from the U.S. to a 
seaport of debarkation in theater and then by ground transportation to 
combat units. CENTCOM officials estimated it would take 30 to 45 days 
to transport MREs from the United States to a warehouse in theater. 
However, they stated that the actual total time to move these rations 
averaged 49 days: 31 days for transit to the theater, 3 days to gain a 
berth at port, 5 days to discharge supplies, and 10 days for movement 
from the port to the theater warehouse. Officials also noted that there 
were times when it took as long as 60 days to transport MREs from the 
United States to Kuwaiti ports because multiple, rather than single, 
vessels were used in the transport process--a factor that initial 
delivery time estimates did not take into account. 

Limited Materiel Handling Equipment and Transportation Assets: 

The lack of sufficient materiel handling equipment[Footnote 92] and 
transportation assets in theater up to and during combat operations 
caused delays in unloading supplies from ships and transporting them to 
combat units. Because of the lack of adequate handling equipment, 
logistics personnel could not efficiently unload the large shipments of 
MREs arriving at ports in Kuwait, resulting in a backlog of ships 
waiting to be unloaded. DLA officials stated that, at one point in 
time, 1.4 million MREs were sitting at a port in theater, waiting to be 
processed. In addition, there were insufficient transportation assets 
to move MREs from ports to theater distribution warehouses. In 
particular, local contractors responsible for delivering rations did 
not have sufficient trucks to make regular deliveries to theater 
distribution warehouses. In addition, there were insufficient materiel 
handling equipment and transportation assets to move MREs from storage 
locations to combat units. For example, according to one OIF after- 
action report there were times when 80 trucks were needed to move 
rations forward but only 50 were available. 

Poor In-transit Visibility: 

Poor in-transit visibility also delayed distribution of MRE shipments 
in several ways. CENTCOM officials stated that logistics personnel 
could not always rely on radio frequency identification device 
technology to account for shipments. Despite a CENTCOM requirement that 
radio frequency identification device tags be used for all shipments to 
theater, CENTCOM estimated initial use was only about 30 percent. Among 
other problems experienced were the failure to attach tags to all 
containers and a lack of sufficient tracking devices to read tags in 
order to identify subsistence items stored in containers. As a result, 
logistics personnel stated they had to manually review all packing 
documents to identify the contents of containers, thereby slowing down 
the distribution of supplies. 

Because of poor tracking, sufficient supplies of MREs sometimes existed 
but were not visible. For example, during the MRE shortage, a DOD 
official found over 17 20-foot containers with MREs at a supply base 
located halfway to Baghdad; the MREs were there for a week because no 
one knew they were there. 

Efforts to Improve Availability: 

Short-term Efforts: 

To reduce MRE consumption during the shortage, Army and Marine Corps 
officials stated that units switched to alternate feeding methods such 
as Unitized Group Rations. CENTCOM reported working with various 
carriers and the (Military) Surface Deployment and Distribution 
Command[Footnote 93] to use sustainment packages weeks ahead of their 
scheduled issue dates. 

To improve the distribution of MREs, military officials formed a joint 
working group including members from DLA, the Coalition Forces Land 
Component Command, CENTCOM, and U.S. Transportation Command. This group 
communicates regularly to improve in-transit visibility over rations. 
CENTCOM officials stated that due to the lateness of ships arriving in 
theater, DLA located additional rations in other theaters that were 
shipped to OIF. 

Long-term Efforts: 

To ensure timely visibility of anticipated requirements, DLA has 
recommended that collaboration between it, the Combatant Commands, and 
the services be enhanced. To improve the timeliness of funding, DLA is 
working with the services to refine their plans for releasing funding 
early in the deployment process. To deal with distribution problems in 
theater, the Secretary of Defense in September 2003 designated the U.S. 
Transportation Command as the Distribution Process Owner. The 
Transportation Command established a Deployment and Distribution 
Operations Center in January 2004. The center is responsible for 
improving the distribution process within theater by directing airport, 
seaport, and land transportation operations. 

[End of section]

Appendix IX: Five-Ton Truck and High-Mobility Multi-Purpose Wheeled 
Vehicle Tires: 

Background: 

The U.S. Army depends on a variety of trucks and other vehicles to 
support combat operations. During OIF, it relied on the 5-ton capacity 
cargo truck to transport all types of supplies and on the HMMWV to 
carry troops and armaments, as well as to serve as an ambulance and 
scout vehicle. The 5-ton truck (fig. 21) is outfitted with six radial 
tires and the HMMWV with four radial tires. The tires are specific to 
each type of vehicle and are not interchangeable. 

Figure 21: M-923 5-ton Truck: 

[See PDF for image]

[End of figure]

The Army's TACOM Tire Group manages the tire inventory for wheeled 
vehicles, including the 5-ton truck and the HMMWV, for U.S. forces 
worldwide. These tires are produced for the military by several 
manufacturers, including Goodyear and Michelin. 

Extent and Impact of Shortages: 

Tires for the 5-ton truck and the HMMWV were not available to the 
warfighter at some time between October 2002 and September 2004. We 
consider this item to have a shortage because demand exceeded the 
amount of inventory available to meet the needs of the warfighters. 
U.S. forces and logistics personnel reported critical shortages of 5- 
ton truck and HMMWV tires during OIF that negatively impacted their 
mission. According to TACOM officials, the increased pace of the 
operations resulted in high-vehicle mileage that caused significant 
wear and tear on these tires. 

Prior to the onset of OIF in March 2003, TACOM had no back orders for 5-
ton truck tires and reported it was able to support demands from 
customers worldwide. However, as figure 22 shows, back orders started 
to accumulate after OIF began and, by October 2003, the number had 
peaked at 7,063 tires per month. Similarly, worldwide demand for tires 
rose after March 2003. As figure 22 indicates, this demand increased 
fourfold over the course of 1 year, climbing from a peacetime level of 
1,189 tires in April 2002 to a wartime level of 4,800 tires in April 
2003. While demand remained high during the summer of 2003, inventory 
levels dropped to below 1,000 and were insufficient to meet customer 
needs. For example, in August 2003 when demand reached 4,828 tires, 
TACOM recorded only 505 tires in its inventory worldwide.[Footnote 94] 
According to TACOM officials, demands from OIF received priority and 
much of the available inventory supported operations in Iraq. 

Figure 22: Worldwide Demand, Back Orders, and Inventory Level for the 5-
ton Truck Tire by Month (February 2002 through September 2004): 

[See PDF for image]

[End of figure]

TACOM reported no back orders for HMMWV tires prior to OIF. However, as 
figure 23 shows, back orders began to increase in April 2003 and peaked 
at 13,778 tires in September 2003 as demand increased and industry took 
several months to respond. According to TACOM officials, back orders 
accumulated because of the increasing demands coming from OIF. 
Worldwide demand rose rapidly in June 2003, peaked at 16,977 tires in 
August 2003, and gradually declined during the winter months (see fig. 
23). Over the span of 1 year, worldwide demand increased more than four-
fold, from a peacetime rate of 3,251 tires per month in June 2002 to 
15,224 tires per month in June 2003. While demand grew during the 
summer of 2003, inventory levels were insufficient to meet customer 
needs. For example, in July 2003, TACOM recorded only 4,286 HMMWV tires 
in its inventory, but had demands for a total of 14,435 tires. 
Fluctuating demands were caused by the intensity of the war fight and 
the changing mixture of weapons systems employed. 

Figure 23: Worldwide Demand, Back Orders, and Inventory Level for the 
HMMWV Tire by Month (February 2002 through September 2004): 

[See PDF for image]

[End of figure]

Army and Marine Corps units reported that tire shortages negatively 
affected operations in Iraq.[Footnote 95] Units of the 3rd Infantry 
Division reported that they could not get the required number of tires 
to support their mission and that the shortage of tires forced them to 
leave vehicles and supplies behind. In addition, TACOM reported in June 
2003 that it could only provide 64 percent of the spare parts, 
including tires that the 4th Infantry Division considered urgent. 
Although the 4th Infantry Division reported shortages in theater, it 
did not report any mission impact due to tire shortages. In an after- 
action report, the U.S. Marine Corps documented that cannibalization, 
stripping, and abandoning otherwise good vehicles occurred because of 
the lack of spare tires. 

Causes of Shortages: 

Problems with war reserve stocks, forecasted requirements planning, 
funding, and distribution contributed to shortages of the 5-ton and 
HMMWV radial tires during OIF. 

Insufficient War Reserves Stock: 

The number of tires in war reserve stocks was not sufficient to support 
customer demands when OIF began. According to Army regulations, war 
reserve stocks are intended to meet the initial increase in demand 
during wartime and to fill the gap until the national supply system can 
increase production. In December 2002, TACOM officials managing war 
reserves established a requirement for 259 tires for 5-ton trucks. 
However, officials had only 38 tires on hand at that time, and 3 months 
later in March 2003, they had only 16 tires on hand. As of October 
2004, the war reserve requirement for the 5-ton truck tire remained at 
259 tires, but there were only 2 tires in the inventory. As figure 22 
shows, the demand for 5-ton truck tires was always higher than 259 
tires, starting with 978 tires in February 2002 and continuing 
throughout OIF. Therefore, the war reserve requirement of 259 tires was 
too low to support initial demands from units in theater. 

For HMMWV radial tires, TACOM managers had a sufficient number of tires 
to meet the war reserve requirement of 1,505 tires in December 2002. In 
March 2003, managers increased the HMMWV tire war reserve requirement 
to 7,908 tires, but they failed to adequately stock tires in the 
inventory. At that time, they only had 1,483 tires on hand. As of 
October 2004, the war reserve requirement for HMMWV tires remained at 
7,908 tires, but there were only 3,764 tires in the inventory. 

TACOM officials told us that they do not adequately stock tires in the 
war reserves because they lack the necessary funding. This was the 
result of risk based decisions about how to allocate DOD funds. As of 
October 2004, TACOM's war reserve requirements for all items it manages 
(including tires) totaled $1,355.7 million. However, it has received 
only $828.9 million to support those requirements. As a result, TACOM 
officials have used a risk management approach to prioritize the 
funding of their requirements. For example, they gave funding priority 
to more expensive items, such as tank engines, which have long lead- 
times and are difficult to procure, rather than to less expensive 
items, such as tires, which can be produced faster. When OIF began, 
tires stocked in war reserves were inadequate to support initial 
customer demands because of these decisions. 

Inaccurate Forecasted Requirements: 

TACOM's forecasted requirements for vehicle tires underestimated the 
actual demand for tires during fiscal year 2003. For example, TACOM 
forecasted that worldwide requirements,[Footnote 96] for the 5-ton 
truck tire would reach 1,497 tires per month in April 2003; however, 
the actual demand for this tire rose to 4,800 for that month, more than 
three times higher than the forecasted requirements. Similarly, TACOM 
forecasted that customers would need 5,800 HMMWV tires per month in 
June 2003; instead, actual worldwide demand for HMMWV tires grew to 
15,224 per month, three times higher than the forecasted amount. 

In June 2003, TACOM changed its requirements forecasting model for 
tires and other spare parts from a 12-month average demand base to a 30-
day average demand base to respond to the sharp increase in actual 
demand. According to TACOM officials, the 12-month average demand base 
model did not react quickly enough to actual demands, which were at 
times three or four times higher than the monthly forecasted 
requirements. By changing the model to a 30-day average demand base, 
TACOM was able to stock up on inventory faster. 

In setting forecasted requirements for tires, TACOM officials stated 
they relied heavily on past historical demand data because it received 
little guidance on the expected demand activities or operational plans 
from Army headquarters. TACOM expected an increase in demand for fiscal 
year 2003 because of the growing demand from southwest Asia, especially 
Kuwait, prior to the onset of OIF. Officials from TACOM's Tire Group 
told us they put an emphasis on past historical demand data to forecast 
their future requirements. Similarly, TACOM's Track and Roadwheel Group 
reported that they relied on historical data, including information 
from Operation Desert Storm/Shield and operations in Bosnia, to help 
them forecast future requirements in the absence of official guidance. 

Insufficient and Erratic Funding: 

According to TACOM officials, the Tire Group did not receive adequate 
funding (referred to as obligation authority) from the Department of 
the Army's working capital fund to buy additional tires to meet 
customers' needs. Furthermore, when obligation authority became 
available, they did not receive it promptly. In fiscal year 2003, TACOM 
had worldwide demands for tires totaling $246.3 million; however, it 
received only $212 million in obligation authority, about 86 percent of 
its total requirements. By comparison, during the same fiscal year, 
TACOM received about $118.5 million worth of requisitions for all tires 
needed in OIF. As TACOM exhausted its obligation authority during 
fiscal year 2003, additional releases came in sporadically. For 
example, in July 2003, TACOM reported that it had used all of its 
obligation authority but still had $22 million worth of contracts that 
needed funding; by August 2003, however, TACOM reported that it had 
funds available to continue awarding contracts.[Footnote 97] TACOM's 
Tire Group complained that the 'stop-start' funding releases 
complicated their efforts in maintaining a consistent supply of tires 
from tire manufacturers by preventing them from providing a steady 
stream of funds in advance of production lead-time. 

TACOM's Tire Group also did not know when or how much the next release 
of obligation authority would be. In order to ensure that the 
industrial base could provide supplies promptly, TACOM needed funding 
at least one procurement lead-time (e.g., the time it takes a 
manufacturer to make and deliver the tire) in advance of the delivery 
date. For most tires, the procurement lead-time is 3 to 6 months. 
Therefore, in order to meet unexpected surges in demand, TACOM needed 
to have funding available 3 to 6 months prior to the surge. 

In addition to the Tire Group, TACOM as a whole was underfunded in 
fiscal year 2003. Figure 24 shows that throughout fiscal year 2003, 
TACOM was funded below its actual requirements. At the beginning of 
fiscal year 2003, TACOM identified its requirements at $1,357 million; 
however, it was provided with only $885 million in obligation 
authority. By May 2003, TACOM came close to using all of its obligated 
authority without any assurance that additional funding would arrive. 
As a result, TACOM officials asked their support groups to conserve 
funding for the most critical items until additional funding arrived. 
However, in June 2003: 

TACOM received additional funding, which allowed item managers to 
resume awarding contracts for supplies. For fiscal year 2003, TACOM 
identified its actual requirements at $2,726 million (including $345 
million for reset)[Footnote 98] but it received only $2,379 million in 
obligation authority. 

Figure 24: TACOM's Actual and Reset Requirements, Funding Executed and 
Received by Month, Fiscal Year 2003: 

[See PDF for image]

[End of figure]

Constraints in the Distribution Process: 

Distribution constraints, both in the continental U.S. and in OIF, 
contributed to customers not receiving supplies. The distribution 
system was not prepared to handle the volume of supplies ordered by 
customers or the speed with which supplies needed to be delivered. 

In the summer of 2003, the Defense Distribution Center Susquehanna, 
Pennsylvania, became overwhelmed by the volume of incoming shipments 
from contractors delivering supplies for units in Iraq. Because of the 
increased volume, the center gave contractors delivery appointment 
times that were 2 to 3 weeks in the future, thereby delaying the 
delivery and processing of many items, including tires. 

Once tires were in the distribution center's warehouse, the requirement 
to build pallets to ship them to the theater caused further delays. 
Officials told us that the backlog of pallet building resulted in 
delays of up to 30 days or more before tire shipments could be released 
from the center. To alleviate this backlog, all tires shipped in and 
after June 2003 were diverted to the Defense Depot Red River, Texas, to 
be palletized and shipped directly to aerial ports of embarkations at 
Charleston and Dover Air Force Base. 

Once tires were shipped from the U.S., TACOM lost all visibility of 
tire shipments within CENTCOM's area of responsibility. At the Port of 
Kuwait, containers could not be identified because radio frequency 
identification tags that should have been on the pallets were lost 
during shipment, thus increasing processing time. In addition, once 
these shipments left the port, receipts were not posted at the customer 
supply support center to verify delivery. Officials also stated that 
because of the lack of in-transit visibility, shipments were frequently 
diverted to other destinations without TACOM's knowledge or 
authorization. 

Efforts to Improve Availability: 

TACOM initiated several temporary actions and one long-term action to 
improve the availability of tires to customers in the field. However, 
TACOM officials did not identify efforts to improve funding problems 
experienced during OIF, and they told us that they are not aware of any 
initiatives at AMC headquarters or the Department of the Army that 
address funding issues. 

Short-term Efforts: 

To ensure that forecasted requirements better reflected actual demands, 
in June 2003, TACOM's Tire Group changed the average demand base it 
used to calculate requirements from 12 months to 30 days. By making 
this change, the Tire Group captured demand data in real-time and 
allowed item managers to better estimate future requirements. As 
result, item managers were able to justify procuring more tires to meet 
future demands. 

To ensure continuous production while awaiting additional obligation 
authority, officials from TACOM's Tire Group noted persuading 
manufacturers to continue making tires. Tire manufacturers continued 
making tires while waiting for contracts and made capital investments 
to procure more tire molds, enabling them to increase production once 
contracts were awarded and obligation authority became available. 

To ensure quicker distribution of tires to customers in theater, TACOM 
sent a group of supply personnel to Camp Arifjan in Kuwait to expedite 
the processing of TACOM's shipments of tires and other spare parts. In 
response to complaints that TACOM's tire and spare parts shipments were 
being diverted and not reaching the right customers, TACOM's supply 
personnel also helped to look for these shipments and get them 
delivered. 

Long-term Efforts: 

To help solve the long-term distribution problems in theater, in 
September 2003 the Secretary of Defense designated the U.S. 
Transportation Command (TRANSCOM) as DOD's Distribution Process Owner. 
TRANSCOM established a Deployment and Distribution Operation Center in 
January 2004. Under the control of CENTCOM, this center is responsible 
for improving the distribution process within theater by directing all 
airport, seaport, and land transportation operations. 

[End of section]

Appendix X: Up-Armored High-Mobility Multi-Purpose Wheeled Vehicle and 
Add-on-Armor Kit: 

Background: 

The HMMWV is a highly mobile, diesel-powered, four-wheel-drive vehicle 
with a 4,400 pound payload. Using common components and kits, the HMMWV 
can be configured to become a troop carrier, armament carrier, shelter 
carrier, ambulance, anti-tank missile carrier, or scout vehicle. The 
initial number and type of HMMWVs in each unit is based on standard 
equipment lists. According to officials, they are the most numerous 
U.S. military vehicles in CENTCOM's area of responsibility. The Army 
reported that there were 18,656 vehicles--both armored and unarmored--
in theater, as of July 2004.[Footnote 99]

Up-Armored HMMWV: 

One version of the HMMWV is a production model known as an Up-Armored 
HMMWV, also designated as the M1114 model (see fig. 25). This model is 
produced by AM General Corporation and armored by O'Gara-Hess 
Eisenhardt, requirements for CENTCOM's area of operations, including 
Iraq and Afghanistan, call for this up-armored variant. The M1114 model 
of the vehicle features ballistic-resistant windows and steel-plate 
armor on the doors and underside to protect against rifle rounds and 
explosive blasts, fragmentation protection, and additional armor for 
the turret gunner on the roof to protect against artillery, as well as 
a powerful air conditioning system. 

Figure 25: Up-Armored HMMWV: 

[See PDF for image]

[End of figure]

Add-on-Armor Kits: 

In order to provide armor protection to existing unarmored HMMWVs in 
theater, the Army has developed an add-on-armor kit to be mounted on 
vehicles. The basic kit includes armored doors, under-door armor 
plates, seat-back armor, ballistic glass windows, and a heavy-duty air 
conditioning system. Seven Army depots and arsenals, managed by the 
Ground Systems Industrial Enterprise,[Footnote 100] currently produce 
the kits. The Army began shipping the kits to Iraq by mid-November 2003 
and started mass production at their depots in December 2003. The Army 
also contracted with O'Gara Hess Eisenhardt to produce additional armor 
kits to meet theater requirements. 

Figure 26: Add-on-Armor Kit Mounted on HMMWV: 

[See PDF for image]

[End of figure]

Requirements for up-armored HMMWVs and add-on-armor kits are identified 
through operational needs statements directly from the theater that are 
validated and resourced by the Army. Units in theater submit the 
statements for the items, which are combined by their higher 
headquarters into bulk Coalition requirements. The Coalition Forces 
Land Component Command communicates these requirements for vehicles and 
kits to the Department of the Army, where they are validated and 
resourced by the Army's Deputy Chiefs of Staff and eventually 
transmitted to the Program Executive Office--Combat Service and Combat 
Service Support Tactical Vehicles, who manages the procurement of both 
the up-armored HMMWVs and the add-on-armor kits. 

Extent and Impact of Shortages: 

Up-armored HMMWVs and add-on-armor kits were not available to the 
warfighter at some time between October 2002 and September 2004. We 
consider this item to have a shortage because vehicles and kits were 
not available to meet the validated requirements developed by the 
warfighters. The Army has been consistently unable to meet recurring 
spikes in demand for vehicles and kits. However, the overall impact of 
the Army's inability to deliver the vehicles and kits is difficult to 
measure. 

Extent of Up-Armored HMMWV Shortages: 

Since the Coalition Forces Land Component Command first began 
identifying up-armored HMMWV requirements for CENTCOM's area of 
responsibility in the summer of 2003, there has been a gap between the 
number of vehicles required and the number of vehicles the industrial 
base is producing. By September 2004, TACOM and the Army had provided 
5,330 of the 8,105 required vehicles in theater. To meet Coalition 
Forces Land Component Command's requirements, the Army program managers 
worked with O'Gara-Hess Eisenhardt to produce an additional 2,533 new 
up-armored HMMWVs and the Department of the Army redistributed an 
additional 2,797 existing vehicles to Iraq from elsewhere in the world. 
Figure 27 shows that Coalition Forces Land Component Command 
requirements for vehicles increased faster than O'Gara-Hess Eisenhardt 
was producing them, with requirements growing from 1,407 vehicles in 
August 2003 to 8,105 vehicles by September 2004. The Army worked with 
the manufacturers to increase production from 51 vehicles per month in 
August 2003 to 400 vehicles per month in September 2004. According to 
Army officials, O'Gara-Hess Eisenhardt will increase production to its 
maximum capacity of 550 vehicles per month and will meet current 
requirements by March 2005. 

Figure 27: Up-Armored HMMWV Requirements, Production Output, and 
Redistribution from August 2003 through September 2004: 

[See PDF for image]

[End of figure]

Extent of Add-on-Armor Kit Shortages: 

As of September 2004, the Army supplied 8,771 of the 13,872 Add-on 
Armor kits required by CENTCOM but still needed 5,101 additional kits 
to meet all requirements. The Ground Systems Industrial Enterprise 
depots and arsenals were required to produce 12,372 while O'Gara-Hess 
Eisenhardt was required to produce the remaining 1,500 kits. As shown 
in figure 28, by September 2004 the validated requirement of 8,400 kits 
grew to 13,872. To meet the 8,400 requirement, program managers worked 
with several Army depots to increase production from 35 kits a month in 
December 2003 to 600 kits per month by July 2004. At this production 
level, theater requirements would have been met by August 2004. However 
during this same month, Coalition Forces Land Component Command 
increased the requirement to 13,872 kits. Army officials stated that it 
would take 3 to 4 months to meet this new demand and accordingly 
expected the requirement to be met by early 2005. 

Figure 28: Add-on-Armor Requirements and Production Output, November 
2003 through September 2004: 

[See PDF for image]

[End of figure]

The overall impact of up-armored vehicle and add-on-armor kit shortages 
is difficult to measure because units do not report the direct effects 
of using unarmored HMMWVs, but the reason for increasing requirements 
is well documented. Current HMMWVs are protected only by canvas tops 
and have no additional armor protection. According to the Center for 
Army Lessons Learned, the harm to both personnel and equipment from 
improvised explosive devices is greatly reduced when traveling in an up-
armored HMMWV.[Footnote 101] This has generated a theater-wide concern 
for increased vehicle protection. While units have used field- 
improvised steel enclosures and other modifications to increase vehicle 
protection, up-armored vehicles and add-on-armor kits provide better 
protection. The center specifically mentions that the up-armored HMMWVs 
would improve the force protection of civil affairs teams as well as 
provide ideal transport for teams of engineers operating in the 
constricted urban environments of Iraq. 

Causes of Shortages: 

There are two primary causes for the shortages of up-armored vehicles 
and add-on-armor kits. First, a decision was made to pace production 
rather than use the maximum available capacity. Second, funding 
allocations did not keep up with rapidly increasing requirements. 

Production Was Not Paced to Match Maximum Capacity: 

DOD paced the production of armor for HMMWVs to meet initial CENTCOM 
requirements, but did not use the maximum available production capacity 
as the requirements increased dramatically after the onset of OIF. 
According to Army officials, the total Army up-armored HMMWV 
requirement prior to OIF was approximately 360 vehicles per year, to be 
produced at a rate of 30 vehicles per month. However, beginning in 
August 2003, Coalition Forces Land Component Command developed new 
requirements for additional up-armored HMMWVs based on requests from 
units in theater; the requirement increased 576 percent from 1,407 to 
8,105 vehicles by September 2004. There was also a significant increase 
in the requirement for kits. In November 2003, the initial requirement 
for Add-on Armor kits was 8,400 kits. By September 2004, the 
requirement had increased to 13,872 kits. 

O'Gara-Hess Eisenhardt, the sole producer of the up-armored HMMWV, 
increased production, in accordance with agreements with the Army; 
however, that rate of production has not been sufficient to meet 
increasing demands. The schedule of monthly production increases agreed 
to by the Army and O'Gara-Hess Eisenhardt was based on meeting existing 
requirements established at a particular time as well as funding 
constraints. For example, the Army had requirements of 4,149 vehicles 
in February 2004 to meet CENTCOM's needs. In meeting this requirement, 
the Army redistributed over 3,000 existing up-armored HMMWVs to 
CENTCOM's area of responsibility and agreed to have O'Gara-Hess 
Eisenhardt to produce the rest of the vehicles. The Army had planned to 
meet the February 2004 requirement by July 2004 without having O'Gara- 
Hess Eisenhardt reach its maximum capacity. 

As shown in figure 27, the vehicle production rate has increased every 
month from 51 vehicles in August 2003 to 400 vehicles by September 
2004, with a planned production of 460 vehicles per month by October 
2004. However, the signed agreement with O'Gara-Hess Eisenhardt 
indicates that the maximum production could have been increased to 500 
vehicles per month in October 2004 if needed. Interviews with Army and 
contractor personnel indicated that there were other constraints on 
production, such as the availability of communication equipment. 

Despite increasing requirements for the add-on-armor kits, additional 
available production capacity was not used. Prior to CENTCOM's 
requirement for 8,400 kits in November 2003, the Army had already begun 
designing and shipping some 'pilot' kits in theater. When it received 
the requirements in 2003 for 8,400 kits, the Ground Systems Industrial 
Enterprise's depots and arsenals began ordering raw materiel such as 
steel and ballistic glass and ramped up production from 35 kits per 
month in December 2003 to 3,998 kits per month in April 2004. As total 
production neared the 2003 requirement, production was slowed to 333 
per month by September 2004. Because the kits take three to four months 
to produce, it was not until January 2004 that the depots and arsenals 
began shipping substantial quantities to theater. 

Our review of Army data and interviews with Army officials shows that 
additional capacity to produce kits was available within the Ground 
Systems Industrial Enterprise system. Managers at Ground Systems 
Industrial Enterprise indicated that seven arsenals and depots could 
have maintained the maximum level of production without affecting other 
operations at the depot, filling the kit requirement early in 2004. In 
addition, in February 2004, a contractor operated Army facility 
informed the Ground Systems Industrial Enterprise managers that it 
could produce another 800 4-door kits per month. While the managers 
stated that they did not use the contract operated facility due to 
issues with contract timing and price, they did not have information on 
the decision to slow the pace of production. 

DOD decision makers determined the pace at which both up-armored HMMWVs 
and kits would be produced, but did not inform Congress about the total 
available production capacity. We have not been able to determine what 
criteria were used to set the pace of production; however, in both 
cases, additional production capacity was available, particularly for 
the kits. As a result of the lack of visibility into and acceptance of 
decisions made about the rate of production, DOD received criticism 
about the availability of armored vehicles in Iraq. 

Funding for Up-Armored HMMWV Production Was Not Received in a Timely or 
Predictable Manner: 

While funds were available to support the planned pace of production of 
up-armored HMMWVs,[Footnote 102] program managers were not aware of the 
time frame for releasing funds. Although TACOM received over $1.4 
billion between fiscal years 2003 and 2004 to produce 7,502 vehicles, 
it was not released in a timely and predictable manner. Figure 29 shows 
that in August 2003, the managers received requirements for 1,407 
vehicles. However, it had received funding to produce only 648 
vehicles. By October 2003, program managers had a requirement to 
produce 3,279 vehicles, but received funding to produce only 1,456 
vehicles. Significant differences continued until April 2004, when 
requirements reached 4,454 vehicles and the program managers received 
funding to produce 4,320 vehicles. 

Figure 29: Up-Armored HMMWV Funding, Requirements, Production Output by 
Month (August 2003 through September 2004): 

[See PDF for image]

[End of figure]

The disbursement of funds affected program managers' ability to plan 
and contract with O'Gara-Hess Eisenhardt to produce sufficient 
quantities of up-armored HMMWVs. As shown in figure 29, requirements 
increased in June 2004 to 6,223 vehicles and again in August to 8,105 
vehicles. However, additional funding--$572 million--was not received 
until August 25, 2004 to meet demands. As a result, Army officials 
stated it could not ask O'Gara-Hess Eisenhardt to ramp up to its 
maximum capacity of 550 vehicles per month because it did not have the 
funding at the time requirements increased. Furthermore, program 
managers explained that if O'Gara-Hess Eisenhardt is to efficiently 
produce vehicles at a consistent and high rate, the company should be 
assured of consistent funding at least 3 months in advance of delivery. 
The program officials stated that they did not know when funding would 
come, how many disbursements they would be receiving in a given fiscal 
year, or what amount of funding to expect, thus further complicating 
their procurement planning. 

Efforts to Improve Availability: 

Short-term Efforts: 

The major short-term solution to the up-armored HMMWV funding issue has 
been the receipt of additional funding from congressional increases, 
supplemental funding, and Office of Secretary of Defense additions. For 
fiscal years 2003 and 2004, the Army received over $1.4 billion to 
produce 7,502 up-armored HMMWVs to meet worldwide requirements, 
including 8,105 vehicles required for CENTCOM's area of operation, 
mostly from congressional increases and supplementals. Specifically in 
fiscal year 2004, the Army received $1.19 billion in congressional plus-
ups, supplementals, and Office of Secretary of Defense additions above 
its $51.7 million received in the President's Budget to produce more up-
armored HMMWVs. 

To meet continuing needs for force protection, Congress recommended 
$865 million in the 2005 appropriations bill to be used by the Army to 
armor additional HMMWVs and other vehicles. As part of the Rapid 
Response Force Protection Initiative, Congress intends the funds to be 
used to purchase and modify a variety of vehicles currently used in 
theater to respond rapidly to the threat of improvised explosive 
devices and mortar attacks experienced by deployed U.S. forces. 

To improve the industrial capability, the Army worked with O'Gara-Hess 
Eisenhardt as well as Army depots to increase production of vehicles 
and kits. For example, program managers worked with O'Gara-Hess 
Eisenhardt to increase up-armored HMMWV production from an average of 
30 vehicles a month to 400 vehicles a month by September 2004. The 
company plans to increase production to a maximum 550 vehicles a month 
to meet current requirements by March 2005. Army also ran 24-hour 
assembly lines at its depots and produced over 1,000 add-on-armor kits 
per week between March and April 2004 when materials were available to 
make the kits. 

Long-term Efforts: 

At the time of this review, Army officials had not identified any long- 
term efforts to improve the availability of up-armored HMMWVs or add-on-
armor kits. 

[End of section]

Appendix XI: Comments from the Department of Defense: 

DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS: 
3500 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-3500:

MAR 23 2005:

Mr. William Solis:
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
Washington, DC 20548:

Dear Mr. Solis:

This is the Department of Defense (DoD) response to the GAO draft GAO- 
05-275, DEFENSE INVENTORY: Actions Needed to Improve the Availability 
of Critical Items During Current and Future Operations, dated February 
18, 2005 (GAO Code 350492). The GAO draft report highlights five 
deficiencies that caused shortages of spare parts and supplies to U.S. 
Forces in Iraq between October 2003 and September 2004 on seven of nine 
items reviewed. The DoD concurs with the intent of the recommendations 
in the report and has already taken actions as needed to eliminate 
deficiencies.

Detailed comments on the draft report recommendations are included in 
the enclosure. The DoD appreciates the opportunity to comment on the 
draft report.

Signed by: 

Bradley Berkson: 
Acting:

Enclosure: As stated:

GAO-05-275/GAO CODE 350492:

"DEFENSE INVENTORY: ACTIONS NEEDED TO IMPROVE THE AVAILABILITY OF 
CRITICAL ITEMS DURING CURRENT AND FUTURE OPERATIONS":

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to improve the accuracy of Army war 
reserve requirements and transparency about their adequacy by:

* updating the war reserve models with OIF consumption data that 
validate the type and number of items needed,

* modeling war reserve requirements at least annually to update the war 
reserve estimates based on changing operational and equipment 
requirements, and:

* disclosing to Congress the impact on military operations of its risk 
management decision about the percentage of war reserves being funded.

(Pages 52-53/Draft Report):

DoD RESPONSE: Concur with intent. The Army recognizes the need to 
improve the accuracy of its war reserve requirements, update those 
requirements annually, and appropriately disclose unfunded requirements 
and has already taken action to do so.

Army actions are as follows:

a. Army War Reserves (WR) are computed based on specific scenarios 
associated with areas where the outbreak of contingencies is 
potentially high based on the Strategic Planning Guidance. Thereafter, 
the Army Prepositioned Stocks/WR are strategically prepositioned in the 
proximity of those areas to enable rapid responses in the event 
contingencies occur. Prior to the commencement of the Global War on 
Terrorism (GWOT) and the start of Operations Enduring Freedom and Iraqi 
Freedom (OEF/OIF), the risk management decisions made by Army 
leadership on military operations were factors on how WR funding was 
allocated against an unknown future requirement in addition to the 
overall level of risk. The Army is taking steps to better compute WR 
requirements and to increase WR funding. These steps include:

(1) Recently, the Army Materiel Systems Analysis Activity, teaming with 
RAND Corp., developed a methodology to capture OIF consumption data. 
This data will be used to update the sparing model's candidate item 
spares population and predictive failure rates (failure factors) found 
within the Army WR Requirements Automated Process (AWRAP).

(a) This revised candidate item and failure factor data will be used to 
develop the Army's Fiscal Year 2005 (FY 2005) WR Secondary Item (WRSI) 
requirements. The requirements development process is currently 
scheduled for completion in September 2005. The results will drive Army 
funding requirements in the next budget cycle.

(b) WRSIs are critical consumable and reparable secondary items 
acquired in peacetime to sustain operations as prescribed by the 
Strategic Planning Guidance (SPG). This inventory provides the initial 
supply support for the Army's prepositioned brigade sets, medical sets, 
operational project stocks, and sustainment stocks for committed forces 
and must be stocked on the shelf to ensure that future requirements 
will be available to sustain a theater until resupply is established.

(2) The AWRAP, used to compute new WRSIs and generally conducted 
biennially to coincide with the building of the Program Objective 
Memorandum (POM), has been changed to an annual update to keep pace 
with dynamic Department of the Army (DA), Department of Defense (DoD), 
and Joint operational guidance.

(a) In January 2005, Army G-4 published the AWRS Secondary Items 
Computation Guidance which enables USAMC and United States Army Medical 
Materiel Agency to calculate new secondary items sustainment stock 
requirements based on the new warfighting scenarios. Updated 
consumption rates and planning factors from Force Structure Analysis 
(mini Total Army Analysis) were used to ensure that we will have an 
improved, responsive capability to compute WRSI requirements that are 
aligned with how the Army builds its force structure requirements.

(b) WRSIs will continue to play an important role in enabling the Army 
to meet both its current warfighting requirements and any future 
contingencies. However, without adequate funding, there is substantial 
risk to their availability. Risk associated with inadequate funding is 
already reported to Congress in various forums as required, including 
the budget process, testimony to hearings, and congressional inquiries.

RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to improve the accuracy of its wartime 
supply requirements forecasting process by:

* developing models that can compute operational supply requirements 
for deploying units more promptly as part of prewar planning, and:

* providing item managers with operational information in a timely 
manner so they can adjust modeled wartime requirements as necessary.

(Page 53/Draft Report):

DoD RESPONSE: Concur with intent. The Army recognizes the need to 
improve the accuracy of its wartime supply requirements forecasting 
process and already has taken actions to do so.

On-going actions within the Army are as follows:

a. Using preliminary logistics intelligence/information, Army weapon 
system managers made stockage level decisions, largely based on 
historical data gathered from the first conflict in the region, 
Operation Desert Storm (ODS). The empirical data gathered from ODS 
indicated that we could expect a threefold increase in the monthly 
demand rate for the majority of class IX items. The Requirements 
Determination & Execution System (RD&ES) defaults were set at that 
level to allow for forecasting the increased usage rate. The RD&ES 
system is a useful tool in forecasting anticipated Class IX usage 
rates, provided the correct feeder data is introduced into the system. 
The historical Class IX consumption data of ODS proved to understate 
requirements for the current operation. The lack of a dynamic 
forecasting system, capable of reacting quickly to unknown situations, 
clearly contributed to the Class IX shortage problems. For example 
during OIF, modeled forces and their equipment changed from wheeled to 
tracked several times over, thereby frustrating supply forecasts; 
earlier environment protection decisions warranted the stockage of 
rechargeable batteries instead of lithium batteries; additionally, 
operational decisions to place add-on-armor to all deployed wheeled 
vehicles increased vehicle wear and tear with the effect being an 
increase in the demand for CL IX repair parts.

b. The USAMC did take steps to increase the forecasting accuracy --the 
demand forecast period was reduced from 24 months to 12 and even 6 
months. Past demands were modified with Program Change Factors to 
reflect the astronomical growth. With all the shortcomings discussed in 
this report, logistics support to OIF did enjoy much success. Readiness 
rates for deployed equipment hover very close to the DA peacetime goal 
of 90 percent, even though deployed equipment has endured Operational 
Tempo (OPTEMPO) rates as much as 12 times higher than normal peacetime 
rates.

c. Prior to the out break of OIF/OEF, the Army had developed the 
Deployment Stock Package Analyzer (DSPA) to use in conjunction with the 
RD&ES. This model uses the same candidate item spares data base as our 
WR model, but computes the change in demand patterns that could be 
expected from deployed units, offsets the requirement by the stocks on 
hand, and develops a strategic stockage level to support the expected 
surge. Army was in the process of refining algorithms, developing 
policy for item managers and using units, and obtaining funding when 
GWOT broke out. We were working to incorporate DSPA into the Commodity 
Command Standard System, our strategic level legacy system. In the 
meantime, we are moving into an Enterprise Resource Planning 
environment. The requirement to support deployment surges will be 
addressed in both our strategic and retail systems. The Logistics 
Modernization Program has been fielded to the Communications- 
Electronics Command and is undergoing design stabilization. Future 
fieldings are event driven with fielding to the Aviation and Missile 
Command tentatively scheduled for second quarter FY 2006 and the Tank- 
automotive and Armament Command first quarter FY 2007. The Global 
Combat Support System-Army is being blueprinted now. Fielding is 
scheduled to FY 2007-FY 2009.

RECOMMENDATION 3: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to reduce the time delay in granting 
increased obligation authority to the Army Material Command and its 
subordinate commands to support their forecasted wartime requirements 
by establishing an expeditious supply requirements validation process 
that provides accurate information to support timely and sufficient 
funding. (Page 53/Draft Report):

DoD RESPONSE: Concur with intent. We agree that supply requirements 
validation process to support timely and sufficient funding must be 
expeditious. However, with the value of required resources the 
validation process must also be justifiable.

Since the start of OEF/OIF, Army demand exceeded predictions. As a 
result, Army had a requirement for $1.6 billion above their budgeted 
amount. Since this requirement was forwarded for funding in the year of 
execution, the Army Staff needed to ensure the validity of the 
underlying assumptions and requirements determination process. In order 
to provide additional Obligation Authority or Total Obligation 
Authority (cash infusion), Army had to forward and justify their 
request to the OSD Comptroller. It was absolutely necessary to scrub 
and validate the request for additional funds at a lower level to 
ensure DoD was able to justify the additional funding. Prior to FY 
2003, the Army received $1.4 billion for additional spare parts in 
anticipation of demand. The Army received the initial funding increase 
for FY 2003 in January, 2003. The requirement continued to increase as 
operations continued and $4.0 billion in additional working capital 
funds and $762 million in additional appropriations were funded by the 
end of FY 2003. At no time was the Army out of money and their requests 
for increases were expeditiously considered.

RECOMMENDATION 4: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Navy to improve the accuracy of the Marine 
Corps' wartime supply requirements forecasting process by completing 
the reconciliation of the Marine Corps' forecasted requirements with 
actual OIF consumption data to validate the number as well as types of 
items needed and making necessary adjustments to their requirements. 
(Page 53/Draft Report):

DoD RESPONSE: Concur with intent. The Marine Corps has already taken 
action to improve the accuracy of its wartime supply requirements 
forecasting process by initiating a study and analysis that will 
reconcile actual OIF consumption against War Reserve material 
forecasted requirements. Part of the analysis will review the 1003V 
Withdrawal Plan requirements and compare to actual OIF consumption 
data. 

RECOMMENDATION 5: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army and the Director of the Defense 
Logistics Agency to:

* minimize future acquisition delays by assessing the industrial base 
capacity to meet updated forecasted demands for critical items within 
the time frames required by operational plans, and:

* provide visibility to Congress and other decision makers about how 
the department plans to acquire critical items to meet demands that 
emerge during contingencies.

(Page 53/Draft Report):

DoD RESPONSE: Concur with intent. The Army and DLA already have taken 
actions to minimize future acquisition delays by assessing the 
industrial base capacity and annual reports are provided to Congress.

Specific actions taken by the Army and DLA are as follows:

The Army issued Army Regulation 700-90 policy, dated December 2004, on 
the Army's Industrial Base Process which requires that the Army publish 
hardware priorities, war reserve stocks, and industrial preparedness 
measures that support war reserve and replenishment objectives, and the 
Army's Critical Items List. Also, it requires that Program Managers 
assess the industrial base ability to support life cycle requirements, 
develop Industrial Preparedness Planning Lists for those end items that 
need monitoring or action to ensure sufficient capacity, and perform 
surge planning to enable acceleration of program production and 
maintenance. The Army is participating in the development of the Joint 
Chiefs of Staff Critical Item List which is designed to identify items 
with industrial base weaknesses. To acquire critical items and to meet 
demands that emerge during contingencies, the Army has improved its 
acquisition and fielding processes. The Army has implemented the Rapid 
Fielding Initiative (RFI) to ensure that Soldiers have the latest 
available equipment. Equipment fielding schedules are revised to 
support operational plans and procurement and fielding cycles being 
compressed. In coordination with field commanders, mission-essential 
items are identified for rapid fielding, laying the foundation for 
acquisition transformation. Additionally, Army is accelerating fielding 
of select future capabilities to the force. Army has also instituted a 
Rapid Equipping Force that works directly with operational commanders 
to find solutions to operational requirements.

DLA currently assesses industrial base capacity to meet updated 
forecasted demands within the time frames required by operational plans 
during the acquisition cycle for long-term contracts. Additive demand 
associated with wartime and/or contingency support is identified as a 
separate surge and sustainment delivery schedule in solicitations 
released to industry. The forecasted, time-phased quantities are based 
on Service estimates provided through the annual deliberate planning 
process and/or actual requirements compiled from requisition data from 
previous contingency operations (like Operations Enduring Freedom and 
Iraqi Freedom (OEF/OIF)). Vendor responses must include an assessment 
of their capability to meet both peacetime and wartime demand. When 
shortfalls in industrial capability are identified, DLA works with 
industry to develop cost-effective solutions to production constraints 
that will improve industry capacity and response times. In some cases, 
the agency uses special appropriated Warstopper funding to invest in 
industrial capability improvements to avoid more expensive inventory- 
based solutions that could include the purchase of war reserve material 
that may or may not actually be used during a conflict.

In January 2005, DoD logistics leaders approved DLA's approach to 
enhance its support for medical items. DLA's medical readiness team 
worked closely with military service counterparts to ensure total 
wartime requirements were clearly identified. The medical directorate 
then assessed industrial base capability to meet the wartime/ 
contingency requirement to determine shortfalls in coverage. The 
shortfalls were reviewed with the military services and a joint risk 
assessment is used to prioritize the Agency's gap reduction strategy. 
Investments in contracts with surge and sustainment coverage for 
medical items eliminate any acquisition delays and ensure delivery 
within the time frames required by the operational plans.

Information on the acquisition of critical go-to-war items is reported 
to Congress annually through the Industrial Capabilities Report to 
Congress. This report summarizes industrial capability assessments that 
were performed and highlight actions taken to resolve industrial 
capability shortfalls that could impact national defense. Additionally, 
information concerning acquisition of critical items is provided 
Congress through various forums including the budget process, hearings, 
and congressional inquiries.

RECOMMENDATION 6: The GAO recommended that the Secretary of Defense:

* revise current joint logistics doctrine to clearly establish 
responsibility and authority for synchronizing the distribution of 
supplies from the U.S. to deployed units during operations,

* develop and exercise, through a mix of computer simulations and field 
training, deployable supply receiving and distribution capabilities 
including trained personnel and related equipment for implementing 
improved supply management practices, such as radio frequency 
identification tags that provide in-transit visibility of supplies, to 
ensure they are sufficient and capable of meeting the requirements in 
operational plans, and:

* establish common supply information systems that ensure the DoD and 
the Services can requisition supplies promptly and match incoming 
supplies with unit requisitions to facilitate expeditious and accurate 
distribution. (Page 54/Draft Report):

DoD RESPONSE: Concur with intent. In September 2003, the Department of 
Defense appointed the Commander, U.S. Transportation Command 
(USTRANSCOM), as the Distribution Process Owner. In this capacity, 
USTRANSCOM is tasked with developing efficient and effective 
distribution solutions to enhance strategic support to worldwide 
customers. The DPO is the DoD's one entity to revolutionize this 
system, working with the services and combatant commanders in 
synchronizing the distribution of personnel and equipment from factory 
to foxhole.

Actions addressing the GAO recommendation are underway as identified 
below:

In an effort to synchronize distribution with clearly established 
responsibility and authority within the DoD, USTRANSCOM established an 
Integrated Process Team (IPT). This team analyzes End-to-End (13213) 
distribution processes by supply class. The two principle organizations 
executing E2E analysis are the DLA and USTRANSCOM. The Deployment and 
Distribution IPT also partners with the Joint Forces Command (JFCOM) to 
integrate the deployment process architecture into the distribution 
process architecture. The basic task of synchronizing the chain from 
CONUS to an employed theater of operations is incorporated into an 
ongoing effort within the E2E IPT with key deliverables by September 
2005 and May 2006.

To improve distribution capabilities available to the combatant 
commander, the USTRANSCOM in concert with USCENTCOM have jointly 
established a forward logistics capability that is testing a mix of 
supply chain operations in a real world contingency environment. The 
establishment of the Deployment and Distribution Center in CENTCOM 
provides the warfighter a cadre of logistics experts from USTRANSCOM, 
the Defense Logistics Agency and national partners to provide a range 
of distribution related services such as scheduling, tracking, tracing 
and arranging for redistribution within the theater and back to home 
station. The center is equipped with a suite of modern distribution 
systems to allow real time information flow between all parties in the 
supply chain. This deployable capability will be continued to be field 
tested and combined with lessons learned from training exercises and 
best of breed commercial practices to continually improve the 
distribution process.

The Department issued policy on July 30, 2004, from the Under Secretary 
of Acquisition, Technology and Logistics directing that the DoD 
Components "...immediately resources and implement the use of high data 
capacity active Radio Frequency Identification (RFID) in the DoD 
operational environment" specifically to enhance in-transit visibility 
of our supplies. This direction expanded the use of active RFID to all 
Services, DLA and USTRANSCOM shipping full container loads to all 
overseas locations. Since that time, the DoD Components have resourced 
this requirement and are moving to implement.

At the end of September 2005, USTRANSCOM will begin information 
technology (IT) transition analysis. Process-based products include: 
capability gaps; improvement recommendations; performance metrics; 
impact to policy; identification of IT/systems supporting process 
activities; and changes to as-is Joint Distribution Architecture (JDA), 
representing the to-be architecture. The Supply Chain Operations 
Reference (SCOR) Model is the baseline used to develop the JDA. 
USTRANSCOM will begin to vet distribution process improvements in 
January 2006 through the Joint Capabilities Integration and Development 
Systems (JCIDS) for approval by the Joint Requirements Oversight 
Council (JROC). Anticipated duration of the JCIDS coordination is 4 to 
12 months.

A pilot analysis was completed in May 2004 and USTRANSCOM is currently 
conducting IT transition analysis. The IT analysis will be integrated 
into the holistic IT analysis for all supply classes and deployment, 
beginning in FY 2006. Non-IT process recommendations will begin the 
JCIDS coordination this month, combined with additional Joint Theater 
Logistics OIF Lessons Learned process change recommendations, let by 
JFCOM.

IT analysis, discussed above, will be used to automate distribution 
process improvements, where appropriate, and integrate IT systems for 
E2E synchronization and total asset visibility. IT integration analysis 
will be conducted, in collaboration with national partners, using three 
teams: functional capabilities-based analysis team, consisting of 
functional process experts from each Service and DLA; technical 
analysis team, consisting of IT integration experts; and, business case 
analysis team, consisting of financial-technical experts.

USTRANSCOM will conduct the IT analysis in two, 120-day periods, with a 
final IT Transition Plan expected by May 2006. The first period, 
October 2005 to January 2006, will be dedicated to analyzing IT 
solutions to close process capability gaps. Teams will select IT 
solutions and develop a holistic IT transition plan for deployment and 
distribution during the second period, February 2006 to May 2006. Once 
completed, the product will be an IT transition plan recommending the 
most effective systems integration solution to synchronize 
distribution, at best value to the government. 

GAO's Comments: 

The following are GAO's comments on DOD's letter dated March 23, 2005. 

1. The department cited action it is taking to improve modeling and 
data for determining war reserves that may meet our recommendation to 
update the war reserve models, once it is fully implemented. We agree 
that by developing a methodology that will capture and use OIF 
consumption data to update the model within the Army War Reserve 
Requirements Automated Process, DOD should improve the accuracy of the 
Army's war reserve requirement. However, the department provided no 
timeline for the implementation of this effort. Therefore we modified 
our recommendation to require that DOD specify when this action will be 
completed. 

2. We agree that the department's decision to conduct annual updates of 
the Army War Reserve Requirements Process to compute new war reserve 
requirements to keep pace with Army, DOD and joint operational guidance 
should improve the accuracy of the requirements, as long as the updates 
are conducted as required. 

3. DOD did not commit to any specific action to address our 
recommendation to disclose the risks associated with the percentage of 
war reserves being funded. After acknowledging a lack of adequate 
funding and the associated risk of such underfunding to the 
availability of war reserve items, DOD noted the Army was already 
reporting these risks to Congress in various forums. However, as noted 
in this report, budget documentation does not clearly state the risk of 
underfunding the war reserves; and we believe the other methods cited 
by DOD in its comments do not ensure consistent transparency to 
Congress of risks to military operations. We continue to believe our 
recommendation has merit and should be implemented. In addition, we 
have added a matter for Congressional consideration that suggests 
Congress may wish to require DOD to disclose the risks associated with 
not fully funding the Army war reserve. 

4. The near and long-term actions DOD cited to improve modeling support 
for prewar planning could address our recommendation when completed. 
However, we remain concerned because their effectiveness will not be 
known until these initiatives are fully implemented years from now. 
After agreeing that the Army currently lacks a dynamic forecasting 
system, the department stated that for the near-term it has been 
implementing a new database to compute demand changes during 
contingency operations that will work in conjunction with the current 
supply forecasting system, but did not state when the change would be 
completed. Moreover, according to DOD, the long-term solution to the 
Army's forecasting problem is fielding of a new supply management 
system, the Logistics Modernization Program. However, the full 
implementation of this initiative is tentatively scheduled for fiscal 
year 2007, but could be affected by events. Furthermore, as indicated 
in this report, there are also issues with the reliability of the data 
used in the Logistics Modernization Program that may affect its ability 
to properly forecast demands. Therefore, we continue to believe our 
recommendation has merit until these actions are fully implemented. We 
have also modified our recommendation to require that DOD specify when 
these actions will be completed. 

5. The department did not commit to any specific actions to ensure item 
managers are provided operational information in a timely manner so 
they can improve the accuracy of modeled wartime forecasts. In the 
report, we noted the importance of item managers in setting 
requirements for supplies during OIF and cited concerns about failure 
to provide them operational information promptly. Furthermore, DOD 
noted that Army weapon system (item) managers made stockage decisions 
for OIF largely based on historical data that proved to be understated 
because operational tempo was as much as 12 times higher than normal 
peacetime rates. However, DOD's response did not mention how it would 
better equip these managers to affect wartime forecasts if necessary. 
We believe that until and even after the proposed improvements to 
modeling are successfully implemented, item managers will remain a 
vital part of forecasting operational supply requirements. Therefore, 
we continue to believe our recommendation has merit. 

6. DOD's response to our recommendation to reduce the time delay in the 
Army's process for granting increased obligation authority to the Army 
Materiel Command noted the validation process is necessary and must be 
expeditious, but did not cite any specific actions it would be taking 
to achieve that end. We agree with the department that an appropriate 
validation process is critical to justifying additional obligation 
authority or a cash infusion, particularly in light of the size of the 
increases over budgeted amounts. Our recommendation did not ask the 
Army to sacrifice due diligence in this process. Rather, our concern 
is, as noted in this report, AMC did not receive sufficient obligation 
authority to support meet its requirements until four months after 
major combat operations ended. As shown in this report, the cause for 
this delay was the time consuming process used by the Army to validate 
AMC's requests, not the Office of Secretary of Defense's process for 
delivering the funds. As we reported, without an expeditious funding 
approval process, item managers had difficulty buying supplies in a 
timely manner in the right quantity to meet war fighter needs, 
resulting in decreased operational capabilities and increased risk. 
Therefore, we continue to believe our recommendation has merit. We have 
also modified our recommendation to require that DOD specify when this 
action will be completed. 

7. We agree with the department's actions in response to our 
recommendation that the Navy improve the accuracy of the Marine Corps' 
wartime supply forecasting process. The planned actions should, when 
completed, improve the accuracy of that process. However, DOD provided 
no clear schedule for the implementation of this initiative. Therefore, 
we have also modified our recommendation to require that DOD specify 
when this action will be completed. 

8. DOD's response to our recommendation cites Army and DLA actions to 
minimize future acquisition delays by assessing the industrial base 
capacity to meet updated forecasted demands for critical items, that 
when fully implemented, could achieve the intent of the recommendation. 
The Army Regulation 700-90, dated December 2004 established a framework 
for systematically assessing the industrial base's ability to support 
requirements. As noted in our report, the Joint Chiefs of Staff 
Critical Few List identifies rapidly emerging or critical items at the 
service and geographic command level and the Rapid Fielding Initiative 
accelerates acquisition of high priority items for troops. In 
combination, these and other initiatives may provide a means to reduce 
acquisition delays. In addition, DLA's review of industry and continued 
use of War Stopper funding to invest in industrial capacity, should 
help DOD avoid some future acquisition delays. Therefore, we have also 
modified our recommendation to require that DOD specify when these 
actions will be completed. 

9. DOD did not commit to any action to provide consistent visibility to 
Congress and other decision makers about how the department plans to 
acquire critical items to meet emerging demands. It stated that it 
already addresses this recommendation annually through the Industrial 
Capabilities Report Congress and other forums. While we agree that DOD 
provided visibility about some items, such as body armor in the 
February 2004 Industrial Capabilities Report, neither the report or the 
other forums addressed the issues we identified about the acquisition 
of up-armored HMMWVs and kits. Providing clear information in 
consistent manner for critical items with rapidly emerging demands 
could have clarified the department's acquisition challenges and 
equipped Congress to allocate funds or take other actions to increase 
the speed of acquisition. 

10. In response to our recommendation to clarify responsibility and 
authority for synchronizing distribution of supplies, DOD stated it had 
appointed U.S. Transportation Command as the responsible organization 
for distribution in September 2003. However, neither the command nor 
the department have committed to revising joint doctrine to clarify how 
the command will interact with the services and geographic commands to 
accomplish this. As mentioned in our report, current doctrine 
prescribes a disjointed distribution management structure that does not 
support the timely delivery of supplies to the war fighter. While it is 
taking steps to analyze distribution processes, we believe DOD must 
also commit to making institutional changes through joint doctrine to 
ensure the geographic combatant commander benefits from a seamless 
distribution process. Therefore, we continue to believe our 
recommendation has merit. We have also modified our recommendation to 
require that DOD specify when this action will be completed. 

11. DOD cited the establishment of the Deployment and Distribution 
Center in CENTCOM as its means of responding to our recommendation to 
develop and exercise deployable supply receiving and distribution 
capabilities. While this center may test a forward deployable logistics 
capability based on a cadre of logistics experts with enhanced 
communications capabilities, we do not see the department's commitment 
to ensuring through simulation and field training that there are 
sufficient number trained personnel and related equipment to meet the 
requirements of operational plans. As noted in our report, the lack of 
sufficient logistics resources in theater before and during the arrival 
of combat forces hindered DOD's efforts to move supplies promptly from 
ports to units. We believe having a pre-established deployable 
capability that includes sufficient and trained personnel, at all 
levels of command; communications systems; and necessary equipment will 
speed the establishment of a theater distribution system. Therefore, we 
believe additional actions are necessary to fully address our 
recommendation. We have also modified our recommendation to require 
that DOD specify when these actions will be completed. 

12. DOD stated that it is taking a number of actions to develop a 
holistic information technology plan to improve distribution. According 
to DOD, this plan, which is expected to be completed in May 2006, will 
recommend systems integration solutions to synchronize end-to-end 
distribution. We remain concerned that until this plan is completed and 
its recommendations fully implemented, DOD and the services will not be 
able to achieve their goal of distributing the right supplies to the 
right places when war fighters need them. Therefore we have also 
modified our recommendation to require DOD to specify when the plan's 
recommendations will be implemented. 

[End of section]

Appendix XII: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Richard G. Payne, (757) 552-8119; 
John W. Lee, (202) 512-8329: 

Acknowledgments: 

In addition to those named above, Nancy L. Benco, John C. Bumgarner, 
Michele C. Fejfar, Emily Gupta, Shvetal Khanna, Harry A. Knobler, 
Kenneth R. Knouse, Jr., Elizabeth D. Morris, Tinh T. Nguyen, Kenneth E. 
Patton, Terry L Richardson, Cary B. Russell, Rebecca Shea, Christopher 
W. Turner, John W. Vanschaik, Jason G. Venner, Gerald L. Winterlin, and 
John C. Wren made key contributions to this report. 

(350492): 

FOOTNOTES

[1] DOD defines "logistics" as the science of planning and carrying out 
the movement and maintenance of forces. Logistics has six functional 
areas: supply, maintenance, transportation, civil engineering, health 
services, and other services. This report will focus on supply and 
transportation. 

[2] CENTCOM is one of DOD's five geographic combatant commands whose 
area of responsibility encompasses 27 countries in Southwest Asia, 
South and Central Asia, and the Horn of Africa. 

[3] DOD defines sustainment as the provision of personnel, logistic, 
and other support required to maintain and prolong operations or combat 
until successful accomplishment or revision of the mission or of the 
national objective. 

[4] Spare parts are defined as repair parts and components, including 
kits, assemblies, and subassemblies (both reparable and non-reparable) 
required for equipment maintenance. 

[5] See Centralized Inventory Management of the Army Supply System, 
Chapter 6, Section I, Paragraph 6-1, c. (3), Army Regulation 710-1 
(Apr. 15, 2003) and GAO, Defense Inventory: Army War Reserve Spare 
Parts Requirements Are Uncertain, GAO-01-425 (Washington, D.C.: May 10, 
2001). 

[6] See GAO, Defense Inventory: The Department Needs a Focused Effort 
to Overcome Critical Spare Parts Shortages, GAO-03-707 (Washington, 
D.C.: June 27, 2003) and Defense Inventory: Analysis of Consumption of 
Inventory Exceeding Current Operating Requirements Since September 30, 
2001, GAO-04-689 (Washington, D.C.: Aug. 2, 2004). 

[7] GAO, Defense Logistics: Preliminary Observations on the 
Effectiveness of Logistics Activities During Operation Iraqi Freedom, 
GAO-04-305R (Washington, D.C.: Dec. 18, 2003). 

[8] CENTCOM is one of DOD's five geographic combatant commands. The 
others are: U.S. European Command, U.S. Pacific Command, U.S. Southern 
Command, and U.S. Northern Command. 

[9] See Doctrine for Logistic Support of Joint Operations, Executive 
Summary, p. vi, Joint Publication 4-0 (Apr. 6, 2000). 

[10] See Joint Publication 4-0, Chapter I, p. I-3-4. 

[11] See Joint Tactics, Techniques, and Procedures for Joint Theater 
Distribution, Chapter II, p. II-7, Joint Publications 4-01.4 (Aug. 22, 
2000). 

[12] See Army Regulation 710-1, Chapter 6, Section IV, Paragraph 6-24. 

[13] During OIF, CENTCOM's army component, Army Central Command, was 
placed in overall command of all ground forces and renamed Coalition 
Forces Land Component Command. 

[14] See Joint Publication 4-01.4, Chapter I, p. I-1. 

[15] See Joint Publication 4-01.4, Chapter I, p. I-2-3. 

[16] DOD defines joint doctrine as the fundamental military principles 
that guide the employment of forces of two or more services in 
coordinated action toward a common objective. 

[17] See Joint Publication 4-01.4, Chapter I, p. I-7 and I-8. 

[18] The armor used by U.S. forces during OIF is composed of two 
primary components: an Outer Tactical Vest and two Small Arms 
Protective Insert plates, which, when combined, provide protection 
against both shrapnel and rifle rounds. 

[19] See unpublished research report by RAND Arroyo Center on the 
sustainment of Army units in Operation Iraqi Freedom by Eric Peltz and 
Marc Robbins. 

[20] See Center for Naval Analysis, Marine Corps Operations in OIF: 
Volume IV--Ground Logistics (Sustainment & Distribution Capacity 
Management, Classes I & V (W)), CRM D0008872.A2/Final (Alexandria, Va.: 
January 2004), 56-59. 

[21] These kits, first available in November 2003, consist of armored 
doors, armor plates below the doors, an armor plate for the protection 
of the seat backs, and a windshield and windows made of ballistic 
glass. 

[22] Letter from Subcommittee on National Security, Veterans Affairs, 
and International Relations to Secretary of Defense Donald Rumsfeld, 
October 2, 2002. 

[23] GAO, Chemical and Biological Defense: U.S. Ability to Meet 
Protective Suit Inventory Requirements Faces Risk, GAO-04-290 
(Washington, D.C.: Apr. 28, 2004). 

[24] This new database, called the Logistics Modernization Program, has 
only been implemented at CECOM. 

[25] GAO, Defense Inventory: Army War Reserve Spare Parts Requirements 
Are Uncertain, GAO-01-425 (Washington, D.C.: May 10, 2001). 

[26] GAO, Defense Inventory: Improved Industrial Base Assessments for 
Army War Reserve Spares Could Save Money, GAO-02-650 (Washington, D.C.: 
July 12, 2002). 

[27] See Army Regulation 710-1, Chapter 4, Section I, Paragraph 4-2. 

[28] See Army Regulation 710-1, Chapter 4, Section I, Paragraph 4-2, a. 
(4) (b). 

[29] The Joint Materiel Priorities and Allocation Board, sets, changes, 
or recommends policies for allocating supplies in the DOD system. 

[30] DOD defines operation plans as plans for the conduct of military 
operations in a hostile environment prepared by the commander of a 
unified or specified command in response to a requirement established 
by the Joint Chiefs of Staff. 

[31] A secondary repairable is a spare part that when broken is 
repaired and returned to inventory rather than replaced. 

[32] See DOD Supply Chain Material Management Regulations, Chapter 1, 
C1.3.2.1, DOD Regulation 4140.1-R (May 23, 2003). 

[33] See DOD Regulation 4140.1-R, Chapter 1, C1.3.2.1. 

[34] DOD defines doctrine as the fundamental principles by which the 
military forces or elements thereof guide their actions in support of 
national objectives. It is authoritative but requires judgment in 
application. 

[35] See Chapter I, p. I-4, I-7, I-8, and I-10, Joint Publication 4-0. 

[36] See Chapter I, p. I-7, Joint Publication 4-0. 

[37] SAIC, Objective Assessment of Logistics in Iraq, Contract No. GS- 
10F-0091L, Task Order 73510 (March 2004), p78. 

[38] GAO-04-305R. 

[39] Radio frequency identification tags are used to track shipping 
containers and pallets and their contents while in transit. The tags 
continuously transmit radio signals, which can be read using hand-held 
or fixed scanners. 

[40] DOD uses a pallet, called the 463L pallet, for air shipments. The 
pallet is an 88" ¥ 108" aluminum flat base used to facilitate the 
loading and unloading of aircraft. 

[41] See unpublished research report by RAND Arroyo Center on the 
sustainment of Army units in Operation Iraqi Freedom by Eric Peltz and 
Marc Robbins. 

[42] See unpublished research report by RAND Arroyo Center on the 
sustainment of Army units in Operation Iraqi Freedom by Eric Peltz and 
Marc Robbins. 

[43] U.S. Marine Corps Enduring Freedom Combat Assessment Team, 
Operation Iraqi Freedom, Implications for Seabasing, October 22, 2003. 

[44] See Joint Publication 4-0, Chapter I, p. I-17 through I-19 and 
Joint Publication 4-01.4, Chapter I, I-8 and I-9. 

[45] GAO-04-305R. 

[46] Generally, the 1st Marine Expeditionary Force served as the combat 
force during the operation, while the 2nd Marine Expeditionary Force 
provided theater-level supply support. 

[47] See SAIC, Objective Assessment of Logistics in Iraq, Contract No. 
GS-10F-0091L, Task Order 73510 (March 2004) Chapter 5. 

[48] A Department of Defense Activity Address Code is a six-position 
numeric code that uniquely identifies a unit, activity, or organization 
that has the authority to requisition and/or receive materiel. 

[49] Secretary of Defense, "Actions to Improve Logistics and Global 
Supply Chain Management," Memorandum (Washington D.C.: Sept. 16, 2003). 

[50] These support groups belong, respectively, to the 2nd Marine 
Expeditionary Force, which generally provided theater-level supply 
support for OIF, and the 1st Marine Expeditionary Force, which 
generally served as the combat force for OIF. 

[51] The Marine Corps Logistics Command, Albany, Ga. used repairable 
generators obtained from its Foreign Military Sales program. Under this 
program, the U.S. government authorizes the sale or transfer of 
military equipment, including spare parts, to foreign countries either 
through government-to-government agreements or through direct sales 
from U.S. manufacturers. 

[52] The operational readiness rate refers to the capability of 
equipment other than aircraft to perform the mission or functions for 
which it is organized or designed and may be used in general terms to 
express a level or degree of readiness. 

[53] Joint Tactics, Techniques, and Procedures for Joint Theater 
Distribution, Chapter I, p. I4, Joint Pub 4.01.4 (Aug. 22, 2000). 

[54] Radio frequency identification tags are used to track shipping 
containers and pallets and their contents while in transit. The tags 
continuously transmit radio signals, which can be read using hand-held 
or fixed scanners. 

[55] Abrams tanks and Bradley Fighting Vehicles are the Army's dominant 
ground combat vehicles. Both provide mobile firepower while protecting 
crews from the combat environment. 

[56] Each vehicle has a track assembly that rotates on each side. Each 
track assembly consists of a number of track shoes attached together to 
form an endless track. The metal track shoes engage the teeth of the 
track drive sprockets, which allows power to be transferred from the 
vehicle to the track. As the sprocket moves the track, it moves the 
vehicle. An Abrams tank has 156 track shoes; a Bradley Fighting Vehicle 
has 166. 

[57] According to Army Regulation 710-1, Chapter 6, paragraphs 6-25 and 
6-26, AMC is to compute requirement levels based on guidance from the 
Department of Army Headquarters using the Army War Reserve Automated 
Process system. This system is a process that computes requirements for 
repair parts and minor secondary items and several auxiliary processes 
that support the requirement process. 

[58] GAO, Army War Reserves Spare Parts Requirements are Uncertain, GAO-
01-425 (Washington, D.C.: May 2001). 

[59] Accenture, TACOM Track Study: Findings, Solutions & 
Recommendations, December 19, 2003. 

[60] A lead-time is the interval in months between the initiation of 
procurement action and the item's receipt into the supply system. 

[61] Army Regulation 710-1 states that an active database of the past 
24-month demand history should be used to compute future demand. 
However, the length of the demand base used to forecast requirements 
can vary from the standard 24 months. 

[62] According to the Annual Industrial Capabilities Report to Congress 
in February 2004, Goodyear required an annual minimum production 
requirement of about 264,000 track shoes to meet its business case. 

[63] The ceramic tile is composed of various ceramic composites such as 
boron carbide, silicon carbide, and aluminium oxide. The tile is backed 
by multiple layers of polyethylene fiber. 

[64] Additional attachments include throat and groin protectors. 

[65] The Congressional Budget Office's estimate for H.R. 4200, National 
Defense Authorization Act for Fiscal Year 2005, p. 16. 

[66] The Defense Federal Acquisition Regulation Supplement, Part 225 
governs the acquisition of foreign products and services. 

[67] Twaron is a para-aramid fiber that can be substituted for Kevlar. 

[68] SpectraShield is a polyethylene fiber used as a backing for the 
ceramic plate and is the only material that meets Army and Marine Corps 
ballistic protection and weight requirements for the new body armor. 

[69] The Defense Priorities and Allocation System assures the timely 
availability of industrial resources to meet current national defense 
and emergency preparedness requirements. 

[70] Department of the Army, Office of the Inspector General, Special 
Inspection of the Processes Used to Provide Body Armor to U.S. and 
Coalition Forces in Operation Iraqi Freedom and Operation Enduring 
Freedom, December 2003-February 2004, April 20, 2004. 

[71] The Defense Production Act is the primary legislation for ensuring 
that industrial resources and critical technology items essential for 
national defense are available when needed. 

[72] The congressional request was prompted by our finding that DOD 
could not easily identify, track, and locate defective Battle Dress 
Overgarments. The Committee's request was subject to available 
inventories and urgent deployment constraints. 

[73] The Saratoga suit is considered equivalent to the JSLIST in 
protection against chemical and biological agents. Therefore, the use 
of the Saratoga suit by the Marine Corps was sufficient to meet the 
congressional request. 

[74] DOD defines visibility as the capability to provide users with 
timely and accurate information on the location, movement, status, and 
identity of units, personnel, equipment, material, and supplies. 

[75] GAO, DOD Business Systems Modernization: Billions Continue to Be 
Invested with Inadequate Management Oversight and Accountability, GAO- 
04-615 (Washington, D.C.: May 27, 2004) found that asset visibility was 
not maintained over JSLIST suits at the unit level. We also found in 
GAO, DOD Management: Examples of Inefficient and Ineffective Business 
Processes, GAO-02-873T (Washington, D.C.: June 25, 2002) that DOD's 
visibility system did not provide accurate information about the 
quantities and location of JSLIST suits in its inventory. 

[76] GAO, Chemical and Biological Defense: U.S. Ability to Meet 
Protective Suit Inventory Requirements Faces Risk, GAO-04-290 
(Washington, D.C.: Apr 28, 2004). 

[77] Statement by Vice Admiral Keith W. Lippert, Director of the 
Defense Logistics Agency, before the Subcommittee on Readiness, House 
Armed Service Committee, March 30, 2004. 

[78] These are part of the 5X90 family of lithium batteries. The BA- 
5590 contains lithium sulfur dioxide (Li/SO2) cells and has a use-life 
of about 24 hours. The BA-5390 contains lithium manganese dioxide (Li/ 
MnO2) cells and has a use-life of about 36 hours. Both batteries have a 
shelf life of 5 years. 

[79] BA-5590 and BA-5390 batteries are distributed in packages of four 
batteries. In this report, we use the number of individual batteries. 

[80] According to CECOM officials, demand represents worldwide demand. 

[81] The Joint Materiel Priorities and Allocation Board--which performs 
duties for the Chairman, Joint Chiefs of Staff--sets, changes, or 
recommends priorities for allocating supplies in the DOD system when 
competing requirements among DOD components cannot be resolved. 

[82] BA-5390s were not part of the pre-OIF war reserve inventory 
because the U.S. military did not use them until the fall of 2002. 

[83] Army War Reserve Automated Process computes requirements for 
secondary items, such as spare parts, for the war reserve. 

[84] CECOM's change in the demand base to 6 months was reflected in the 
April 2003 forecasted requirements. 

[85] CECOM officials stated that this figure included a Marine Corps 
requirement. 

[86] According to CECOM this relatively long lead-time includes time 
for testing. 

[87] Science Applications International Corporation (SAIC), Objective 
Assessment of Logistics in Iraq (March 2004). 

[88] Mission capable is defined as the material condition of an 
aircraft indicating it can perform at least one and potentially all of 
its designated missions. 

[89] The Marine Corps provided fiscal year 2000 as a representative 
peacetime year. 

[90] After Desert Shield/Desert Storm, DLA established a "War Stopper" 
program to ensure sufficient wartime surge capacity for critical items. 
It took preemptive steps, such as establishing surge contracts and 
investing funds in equipment and facilities, to ensure that these items 
would be available in sufficient quantities during contingency 
operations. 

[91] The operations and maintenance budget covers the costs of 
purchasing supply items associated with carrying out military 
operations. 

[92] Materiel handling equipment refers to mechanical devices that 
allow supplies to be handled easily and economically to, through, and 
from production facilities, in warehouses and storage, and in receiving 
and shipping areas. 

[93] This command, formerly known at the Military Traffic Management 
Command, provides global surface deployment command and control and 
distribution operations. 

[94] Inventory as depicted in figure 22 does not include war reserve 
stock. As of October 2004, there were 2 5-ton truck tires in war 
reserves. 

[95] Units in Iraq reported shortages of tires in general, and not 
solely the 5-ton or the HMMWV radial tires. 

[96] TACOM's worldwide forecasted requirements included those for OIF. 
According to TACOM officials, much of the worldwide demand was driven 
by demand from OIF. 

[97] The primary long-term contract was with Goodyear while Michelin 
provided some additional tires. 

[98] Reset is a term used to define bringing a vehicle that was used 
during Operation Enduring Freedom and OIF back to a fully mission- 
capable (serviceable) condition so that units can be combat-ready for 
other deployments. Resetting a vehicle involves extensive use of spare 
parts to bring the vehicles up to a fully mission-capable condition. 

[99] The U.S. Army recognizes three levels of armor protection for 
HMMWVs in Iraq. Level 1 is the Up-armored HMMWV, level 2 is a HMMWV 
with an add-on-armor kit, and level 3 is field-improvised armor. 

[100] Ground System Industrial Enterprise is a TACOM organization 
responsible for managing TACOM's arsenals and depots. 

[101] Center for Army Lessons Learned, Initial Impressions Report, 
Operation Iraqi Freedom, May 2004. 

[102] Neither AM General nor O'Gara-Hess Eisenhardt reported that the 
Army was not able to pay them for the vehicles they produced. 

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