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Defense Logistics: Army and Marine Corps Cannot Be Assured That Equipment Reset Strategies Will Sustain Equipment Availability While Meeting Ongoing Operational Requirements

GAO-07-814 Published: Sep 19, 2007. Publicly Released: Sep 19, 2007.
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Highlights

Congress has appropriated billions of dollars for equipment repair, replacement, and recapitalization, collectively known as equipment reset. Because of the potential for equipment reset costs to affect the Department of Defense's (DOD) future budget requirements and related readiness concerns, GAO initiated this review under the Comptroller General's authority. GAO's objectives were to determine the extent to which the Army and Marine Corps (1) track and report equipment reset expenditures in a way that confirms that funds appropriated for reset are expended for that purpose and (2) can be assured that their reset strategies will sustain equipment availability while meeting ongoing operational requirements. GAO reviewed equipment reset policies and analyzed related budget data.

Although the Army and Marine Corps track and report equipment reset expenditures in the operation and maintenance accounts in detail, they do not report detailed equipment reset expenditures within the procurement accounts in a way that confirms that funds appropriated for reset are expended for that purpose because the DOD Financial Management Regulation does not require them to specifically report procurement expenditures for reset in detail. As directed by the Conference Report accompanying DOD's appropriations act for 2007, the Army and Marine Corps report detailed reset obligations and expenditures in their operation and maintenance accounts. While the Army and Marine Corps track reset expenditures and obligations in detail within the procurement accounts, they do not report those expenditures at the same level of detail as with the operation and maintenance accounts because they are not legally required do so. Neither the Army's nor the Marine Corps' monthly Supplemental and Cost of War Execution Reports identify the types of equipment at the subactivity group level, such as aircraft or vehicles. Until the Army and Marine Corps are required to report the obligation and expenditure of funds appropriated for reset in the procurement accounts at a more detailed level, Congress will not have the visibility it needs to exercise effective oversight and to determine if the amount of funding appropriated for equipment reset has been most appropriately used for the purposes intended. The Army and Marine Corps cannot be assured that their reset strategies will sustain equipment availability for deployed units as well as units preparing for deployment to Iraq and Afghanistan while meeting ongoing operational requirements because neither the Army's nor the Marine Corps' reset implementation strategies target shortages of equipment on hand and prioritize equipment needs of units preparing for deployment over longer-term modernization goals. While the Army's Force Generation implementation strategy and reset implementation guidance state that the goal of reset is to prepare units for deployment and to improve next-to-deploy units' equipment-on-hand levels, the Army's reset strategy is based on resetting equipment that it expects will be returning to the United States in a given fiscal year and not on targeting shortages of equipment for units preparing for deployment to Iraq and Afghanistan. Similarly, the Marine Corps' reset goal is to ensure that the Corps is equipped to perform both ongoing operations and future missions; however, over 80 percent of its reset budget is for procurement of equipment that will not be available for many months. Units can continue to report significant shortages during their training cycles that affect their ability to train. Thus, the services may be sacrificing short-term equipment needs for longer-term modernization goals. Until the services' reset strategies target shortages of equipment needed to equip units preparing for deployment and give priority to those units over longer-term needs, the Army and Marine Corps will be unable to minimize operational risk by ensuring the needs of deploying units can be met.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider directing the Secretary of Defense to direct the Under Secretary of Defense, Comptroller to amend the FMR in order to require a more detailed accounting of reset obligations and expenditures within the procurement accounts, similar to the department's reporting of reset obligations and expenditures within the operation and maintenance accounts. Specifically, as stated in our recommendations, the reporting of reset obligations and expenditures within the procurement accounts at more detailed sub-cost category levels would enhance the monthly Supplemental and Cost of War Execution Reports as well as provide greater visibility to Congress for exercising effective oversight and determining if the amount of funding appropriated for equipment reset has been most appropriately used for the purposes intended.
Closed – Implemented
Subsequent to receiving agency comments and finalizing our report, we found that Office of Secretary of Defense officials amended the Financial Management Regulation to expand the reset cost categories within the procurement accounts of the Supplemental & Cost of War Execution Reports as of June 30, 2007. This action met the intent of our recommendation and should result in the Department of Defense providing Congress with greater visibility over funds appropriated for equipment replacement and recapitalization.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To provide Congress with the visibility it needs to exercise effective oversight and to determine if the funding appropriated for equipment replacement and recapitalization within the procurement accounts has been most appropriately used for the purposes intended, the Secretary of Defense should direct the Under Secretary of Defense, Comptroller, to amend the Financial Management Regulation to require that the monthly Supplemental and Cost of War Execution Reports identify expenditures within the procurement accounts for equipment reset at more detailed sub-cost category levels, similar to reporting of obligations and expenditures in the operation and maintenance accounts.
Closed – Implemented
Subsequent to receiving agency comments and finalizing our report, we found that Office of Secretary of Defense officials amended the Financial Management Regulation to expand the reset cost categories within the procurement accounts of the Supplemental & Cost of War Execution Reports as of June 30, 2007. This action met the intent of our recommendation and should result in the Department of Defense providing Congress with greater visibility over funds appropriated for equipment replacement and recapitalization.
Department of Defense To ensure that the Army's and Marine Corps' reset implementation strategies target shortages of equipment needed to equip units preparing for deployment to Iraq and Afghanistan, the Secretary of Defense should direct the Secretary of the Army and Commandant of the Marine Corps to assess their approaches to equipment reset to ensure that their priorities address equipment shortages in the near term to minimize operational risk and ensure that the needs of deploying units can be met.
Closed – Not Implemented
DOD did not concur with our recommendation, stating that there is no need to direct the services to assess their approaches to reset because the services already continually assess their approaches to equipment reset. However, the Army's and Marine Corps' implementation of their reset strategies do not necessarily address shortages of equipment in the short term. Instead, the Army's implementation of its reset strategy is based on plans for repairing, recapitalizing, or replacing equipment returning from overseas theaters in a given fiscal year, while the Marine Corps' implementation of its reset strategy is based on ensuring that Marine Corps units are equipped to perform both ongoing operations and other future missions. Based on GAO's recent report (GAO-11-523) on Marine Corps equipment reset, and our on going review of Army equipment reset 351431, the two services have not reassessed or changed their approaches to equipment reset to ensure that their reset priorities address equipment short falls. The service's approach continue to be focused on budgeting to reset equipment they anticipate will be return to the US, rather than minimizing the readiness and operational risk deploying and contingency forces.

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Topics

Appropriated fundsArmy procurementCombat readinessDefense budgetsDefense procurementEquipment maintenanceFinancial managementLogisticsMilitary budgetsMilitary forcesMilitary materielMilitary procurementProgram evaluationReporting requirementsStrategic planningProgram goals or objectivesProgram implementation