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entitled 'Defense Logistics: Better Management and Oversight of 
Prepositioning Programs Needed to Reduce Risk and Improve Future 
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Report to the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 

GAO: 

September 2005: 

Defense Logistics: 

Better Management and Oversight of Prepositioning Programs Needed to 
Reduce Risk and Improve Future Programs: 

GAO-05-427: 

GAO Highlights: 

Highlights of GAO-05-427, a report to the Subcommittee on Readiness, 
Committee on Armed Services, House of Representatives: 

Why GAO Did This Study: 

The importance of prepositioned stocks to the U.S. military was 
highlighted during recent operations in Iraq, as much of the equipment 
and supplies stored at land sites in the region and aboard 
prepositioning ships were used to support operations. Long-standing 
problems in the Department of Defense’s (DOD) prepositioning program 
are systematic of the inventory management issues, and more recently 
supply chain management issues, that GAO has considered as high-risk 
areas since 1990. 

GAO was asked to review the risks facing DOD’s prepositioning programs, 
including an assessment of (1) the near-term operational risk given the 
continuing use of these stocks, (2) the sufficiency of DOD and service-
level oversight of these prepositioning programs, and (3) whether DOD 
has developed a coordinated plan for the future of the department’s 
prepositioning programs that would meet the goals of the recently 
published defense strategy. 

What GAO Found: 

DOD faces some near-term operational risks should another large-scale 
conflict emerge because it has drawn heavily on its prepositioned 
stocks to support ongoing operations in Iraq. And, although remaining 
stocks provide some residual capability, many of the programs face 
significant inventory shortfalls and in some cases, maintenance 
problems. For example, the Army has drawn equipment from virtually all 
of its prepositioned stocks to support operations in Iraq. Some of its 
storage sites have shortfalls of equipment and sustainment items, like 
spare parts, and some stocks are in poor condition. Additionally, the 
Marine Corps has used a significant portion of the stocks downloaded 
from 5 of its 16 prepositioning ships to support operations in Iraq and 
it is unclear when this equipment will be refilled. The Air Force is 
also continuing to use a considerable amount of its prepositioned 
stocks to support combat operations in Iraq and it is unclear when 
these stocks will be refilled. The precise operational risk created by 
these shortfalls is difficult to assess. However, should a new conflict 
arise in the near term, the combatant commander would likely face 
difficult operational challenges. 

The department and the military services have provided insufficient 
oversight over DOD’s prepositioning programs. This inattention has 
allowed long-standing problems with determining program requirements 
and managing inventory to persist. DOD has not enforced its directive 
that could provide centralized oversight over its prepositioning 
programs. Officials told us they did not enforce this directive because 
they were able to provide adequate oversight through other mechanisms. 
Even if the department had enforced its directive, however, the 
requirements underpinning some of DOD’s prepositioning programs are 
questionable and the services do not have sufficient information on the 
inventory level and maintenance condition of some prepositioned stocks. 
Without reliable information on requirements, inventory levels, and 
maintenance condition, DOD cannot provide sufficient oversight over its 
programs, which potentially leaves war fighters at risk of not having 
needed stocks in the future. 

DOD has not developed a coordinated departmentwide plan or joint 
doctrine to guide the future of its prepositioning programs, despite 
the heavy use of prepositioned stocks in recent conflicts and the 
department’s plans to rely on them in the future. DOD’s recently 
published defense strategy indicates that prepositioning programs 
should be more innovative, flexible, and joint. In the absence of a 
departmentwide plan or joint doctrine to coordinate the reconstitution 
and future plans for these programs, the services have been 
recapitalizing stocks and developing future plans without an 
understanding of how the programs will fit together to meet the 
evolving defense strategy. Without a framework that establishes 
priorities for prepositioning among competing initiatives, DOD cannot 
provide assurances to Congress that the billions of dollars that will 
be required to recapitalize the stocks and develop future programs will 
produce programs that operate jointly, support the needs of the war 
fighter, and are affordable. 

What GAO Recommends: 

GAO is making several recommendations to address the risks of inventory 
shortfalls and improve DOD’s management and oversight of its 
prepositioning programs. 

In commenting on a draft of this report, DOD partially or fully 
concurred with GAO’s recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-05-427. 

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: 

Inventory Shortfalls and Poor Equipment Condition Leave Many of DOD's 
Prepositioning Programs at Risk: 

DOD and Some of the Military Services Have Provided Insufficient 
Oversight Over Their Prepositioning Programs: 

DOD Lacks A Plan To Coordinate Future Prepositioning Programs: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Past Products Identifying DOD Inventory Management and 
Prepositioning Challenges: 

Appendix II: Scope and Methodology: 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Description of DOD's Prepositioning Programs: 

Table 2: Current Status and Operations and Maintenance Funding for Army 
Prepositioned Stocks at Key Locations as of January 2005: 

Table 3: GAO Products: 

Table 4: Other Products: 

Figures: 

Figure 1: Locations of Army (USAR), Marine Corps (USMC), Navy (USN), 
and Air Force (USAF) Prepositioned Stocks: 

Figure 2: Sustainment Stocks Stored Outside at Camp Carroll, South 
Korea: 

United States Government Accountability Office: 

Washington, DC 20548: 

September 6, 2005: 

The Honorable Joel Hefley: 
Chairman: 
The Honorable Solomon P. Ortiz: 
Ranking Minority Member: 
Subcommittee on Readiness: 
Committee on Armed Services: 
House of Representatives: 

With fewer troops permanently stationed overseas, prepositioned stocks 
of equipment and supplies have become an integral part of the 
Department of Defense's (DOD) ability to project forces into conflict 
areas faster. The importance of prepositioned stocks to the U.S. 
military was highlighted during recent operations in Iraq. The military 
used equipment and supplies stored at land sites in the region and 
offloaded much of the stocks from its prepositioning ships. Perhaps 
more importantly, the availability of the sites gave the United States 
the facilities it needed to assemble forces for combat. Recognizing the 
importance of the department's prepositioning programs, Congress has 
made significant investments in these programs. In recent years, the 
services have collectively used over $1 billion each year to operate 
and maintain their prepositioning programs; by fiscal year 2005 this 
amount had declined to about $724 million, since a large portion of 
these stocks were used to support military operations in Iraq. However, 
billions of dollars in future investments will be needed to 
recapitalize equipment and develop future programs. The recently 
published National Defense Strategy indicates that prepositioning will 
continue to be an important aspect of DOD's defense posture in the 
future.[Footnote 1] The strategy establishes several goals for the 
future of these programs, including the need for the programs to be 
more flexible and increasingly joint in character. 

Each of the military services prepositions combat or support equipment 
and supplies in order to speed response times of U.S. forces to 
operating locations and reduce the strain on scarce airlift or slower 
sealift assets. For example, the Army stores sets of combat brigade 
equipment and supporting supplies at land sites in several countries 
and aboard prepositioning ships in the Pacific and Indian Oceans. The 
Marine Corps stores equipment and supplies for its forces aboard 
squadrons of maritime prepositioning ships located around the world and 
at land sites in Norway. The Navy stores equipment and supplies to 
support ship offloading, deployable hospitals, and construction 
projects also aboard the maritime prepositioning ships and at land 
sites around the world. The Air Force stores ammunition at land sites 
and aboard prepositioning ships and prepositions base support 
equipment, vehicles, and supporting supplies at several land sites. 

In 1998, we reported on problems ranging from poor inventory visibility 
to unreliable requirements-setting processes in the Army and Air Force 
prepositioning programs.[Footnote 2] Similar problems were more 
recently identified in numerous after-action assessments of the war in 
Iraq, and we testified in March 2004 before the Subcommittee about the 
performance of the Army and Marine Corps' prepositioning programs 
during Operation Iraqi Freedom.[Footnote 3] We found that although the 
programs performed well in general, some Army units faced equipment 
shortfalls and there were instances where certain types of equipment 
were outdated or did not match unit needs. We stated that DOD may need 
to rethink its prepositioning programs to ensure that they are 
compatible with overall transformation goals and the evolving military 
strategy. Following our testimony, Congress directed the Secretary of 
Defense to submit a report on its prepositioning plans by October 1, 
2005.[Footnote 4] Inventory management issues, and more recently supply 
chain management, have been considered high-risk areas by GAO since 
1990. To further assist the Subcommittee in its oversight, you asked 
that we assess the status and plans for DOD's prepositioning programs 
in advance of the department's report. Specifically, you asked us to 
review the risks facing the department's prepositioning programs, 
including an assessment of: (1) the near-term operational risk given 
the continuing use of these stocks, (2) the sufficiency of DOD and 
service-level oversight of these prepositioning programs, and (3) 
whether DOD has developed a coordinated plan for the future of the 
department's prepositioning programs that would meet the goals of the 
recently published defense strategy. 

To assess the near-term operational risk given the continuing use of 
prepositioned stocks, we obtained reports prepared by the military 
services on the inventory levels of their prepositioned stocks compared 
to program requirements[Footnote 5] and discussed the potential near- 
term operational and long-term program risks associated with inventory 
shortfalls and maintenance deficiencies. We visited selected 
prepositioning sites and reviewed available maintenance reports or 
other data used by the services to measure the condition of the 
prepositioned stocks. To assess the sufficiency of DOD and the 
services' oversight of these programs, we discussed the processes used 
by DOD to oversee its prepositioning programs with officials from the 
Office of the Secretary of Defense, the Joint Staff, and the military 
services. To assess whether DOD has developed a coordinated plan for 
the future of its prepositioning programs that would meet the goals of 
the recently published defense strategy, we reviewed the recently 
published National Defense Strategy and discussed the future direction 
of the department's prepositioning programs with officials in the 
Office of the Secretary of Defense, the Joint Staff, and the military 
services. We also collected and analyzed information from the military 
services on the future plans for their prepositioning programs. We also 
discussed the time frames and costs needed to repair or replace 
prepositioned stocks used in recent military operations. We conducted 
our work from July 2004 through May 2005 in accordance with generally 
accepted government auditing standards. Our assessments of data 
reliability revealed significant concerns that are discussed later in 
the report. A more detailed discussion of our scope and methodology is 
contained in appendix II. 

Results in Brief: 

DOD faces some near-term operational risks should another large-scale 
conflict emerge because it has drawn heavily on its prepositioned 
stocks to support ongoing operations in Iraq. And, although remaining 
stocks provide some residual capability, many of the programs face 
significant inventory shortfalls and in some cases, maintenance 
problems.[Footnote 6] There is currently no strategy in place to 
mitigate the operational risks created by inventory shortfalls and poor 
maintenance condition of prepositioned equipment. Combatant commanders 
rely on prepositioned stocks being available and in good maintenance 
condition; otherwise U.S. forces must bring needed stocks with them or 
spend valuable time repairing equipment. The current status of the 
services' programs is summarized as follows: 

* The Army has drawn equipment from virtually all of its prepositioned 
stocks to support operations in Iraq and little of the equipment has 
been returned. Some stocks are currently stored in South Korea, or are 
afloat on prepositioning ships near Guam/Saipan and Diego Garcia. 
However, these sites have shortfalls of equipment and sustainment items 
like spare parts. Some of these shortfalls have existed in these and 
other Army programs for years, however, and are not attributable to the 
war in Iraq. In addition, we found that some of these stocks were in 
poor maintenance condition, especially those stored in South Korea. 

* The Marine Corps is currently using a significant portion of the 
stocks offloaded from 5 of its 16 prepositioning ships to support 
ongoing operations in Iraq. It is unclear when this equipment will be 
returned to prepositioned stocks because much of this equipment will be 
left in Iraq to support the continuing deployment of Marine Corps 
forces there. Conversely, while the Navy used prepositioned assets like 
field hospitals in Iraq, it currently reports few shortfalls. 

* The Air Force also has a reduced capability in its prepositioned 
stocks because it is continuing to use a considerable amount of these 
stocks to support combat operations in both Afghanistan and Iraq. For 
example, it used approximately 43 percent of the total number of its 
prepositioned bare base sets[Footnote 7] to house deployed forces 
supporting Operations Enduring Freedom and Iraqi Freedom. It is unclear 
when these stocks will be refilled. The precise operational risk 
created by these shortfalls is difficult to assess. Operation Iraqi 
Freedom revealed significant issues with the status of prepositioned 
stocks, such as shortages in spare parts and less-than-modern 
equipment. These problems still exist today. While the military 
planners we spoke with told us that they would find a way to work 
around the shortfalls, they offered little in the way of concrete 
plans. Should a new conflict arise in the near term--especially one 
where U.S. forces did not control the timing--the combatant commander 
would likely face even more difficult operational challenges. 

DOD and the military services have provided insufficient oversight over 
the department's prepositioning programs. This inattention has allowed 
long-standing problems with determining program requirements and 
managing inventory to persist. Management principles, such as those 
embraced in the Government Performance and Results Act of 1993, provide 
federal agencies with a framework for effectively implementing and 
managing programs[Footnote 8]. Management principles include sufficient 
information to support sound decision making and enable Congress to 
provide proper oversight. However, DOD has not implemented its 
directive on war reserve matériel policy that could provide centralized 
oversight over its prepositioning program[Footnote 9]s. Officials from 
the Office of the Secretary of Defense told us they did not implement 
this directive because they did not believe they had the authority to 
enforce its provisions. In addition, officials told us they were able 
to provide adequate oversight over the department's prepositioning 
programs through other mechanisms, such as reviewing quarterly 
readiness assessments and the services' budget submissions. While these 
mechanisms provide DOD with important information on gaps in 
capabilities and resource allocations, they provide only a vague and 
broad description of shortfalls or readiness problems and, therefore, 
are not effective as an oversight tool. Based on our analysis, even if 
the department had implemented its directive, the requirements 
underpinning some of DOD's prepositioning programs are questionable and 
the Army and Air Force do not have reliable information on the 
inventory fill and maintenance condition of some prepositioned stocks. 
For example, as recently as February 2005, information contained in the 
Army's readiness reporting system showed the maintenance condition of 
prepositioned equipment in South Korea to be at a high level. However, 
during our work we found that much of the Army's prepositioned combat 
equipment stored in South Korea had not been properly maintained. 
Without reliable information on requirements, inventory levels, and 
maintenance condition, DOD cannot provide sufficient oversight over its 
programs, which potentially leaves war fighters at risk of not having 
needed stocks in the future. 

DOD has not developed a coordinated departmentwide plan or joint 
doctrine to guide the future of its prepositioning programs, despite 
the heavy use of prepositioned stocks in recent conflicts and the 
department's plans to rely on them in the future. The 2005 National 
Defense Strategy specifically notes the importance of prepositioning in 
the future and indicates that prepositioning programs should be more 
innovative, flexible, and joint in character, but provides few details 
on how it will accomplish these goals. The independent Overseas Basing 
Commission recently echoed the continued importance of the department's 
prepositioning programs in the future. DOD officials told us that the 
future of its prepositioning programs is unclear and dependent on the 
outcome of several interrelated studies ongoing within the department, 
especially reviews of mobility and an additional study being led within 
the department on overseas presence and basing. In the absence of a 
departmentwide plan or joint doctrine to coordinate the 
reconstitution [Footnote 10] and future plans for these programs, the 
military services have been recapitalizing some stocks and developing 
future plans for their programs without a clear understanding of how 
they will fit together to meet the evolving defense strategy. This 
service-centric approach to prepositioning is out of step with the 
department's goals of transforming the military to be more joint and 
expeditionary, and potentially misses opportunities to achieve greater 
efficiencies where service programs overlap in making future investment 
decisions. For example, the Army and Air Force maintain separate 
service-centric bare base programs, although the basic capabilities of 
these programs are the same. Furthermore, the Navy and Marine Corps are 
proposing multibillion dollar procurement programs to support new 
concepts, such as sea basing, while the Defense Logistics Agency is 
proposing floating depots to resupply troops in theater. Without an 
overarching framework that establishes priorities for prepositioning 
among competing initiatives and identifies the resources required to 
implement the future programs, DOD cannot provide assurances to 
Congress that the billions of dollars that will be required to 
recapitalize the stocks and develop future programs will ultimately 
produce programs that will operate jointly, support the needs of the 
war fighter, and are affordable. 

We are making several recommendations to address the risks of inventory 
shortfalls and improve DOD's management and oversight of its 
prepositioning programs. In commenting on a draft of this report, DOD 
partially or fully concurred with our recommendations and indicated 
that it had initiated several actions to address our recommendations. 

Background: 

Prepositioning is an important part of DOD's overall strategic mobility 
framework. It allows DOD to field combat-ready forces in days rather 
than the weeks it would take if the forces and all necessary equipment 
and supplies had to be brought from the United States to the location 
of the conflict. The U.S. military can deliver equipment and supplies 
in three ways: by air, by sea, or by prepositioning. While airlift is 
fast, it is expensive to use and impractical for moving all of the 
material needed for a large-scale deployment. Although ships can carry 
large loads, they are slower than airlift. Prepositioning lessens the 
strain of using expensive airlift and reduces the reliance on slower 
sealift deliveries. Concerned about the reduction in U.S. forces 
overseas and their ability to move forces in the time required to 
resolve potential conflicts quickly, the services have expanded 
prepositioning programs ashore and on ships in potential areas of 
conflict. 

The military services have prepositioning programs to store combat or 
support equipment and supplies near areas with a high potential for 
conflict and to speed response times and reduce the strain on other 
mobility assets. The Defense Logistics Agency prepositions food and 
bulk fuel to support a range of contingency operations and training 
exercises. The Special Operations Command relies on the military 
services to preposition common support items for its forces, such as 
base support items and vehicles. 

The Army's program involves three primary categories of stocks: combat 
brigade sets, operational projects, and war reserve sustainment stocks 
stored at land sites and aboard prepositioning ships around the world. 
The Marine Corps also prepositions equipment and supplies aboard 
prepositioning ships and at land sites in Norway. The Navy's 
prepositioning efforts are comparatively small, used mainly to support 
the Marine Corps' prepositioning program and deploying forces. The Navy 
prepositions equipment and supplies at land sites and aboard the 
maritime prepositioning ships. The Air Force prepositions stocks of war 
reserve equipment and supplies to meet initial contingency requirements 
and to sustain early deploying forces. The Air Force's prepositioned 
war reserve stocks include bare base sets; vehicles; munitions; and a 
variety of consumable supplies, such as rations, fuel, support 
equipment, aircraft accessories, and medical supplies. DOD's 
prepositioning programs are briefly described in the table below. 

Table 1: Description of DOD's Prepositioning Programs: 

Service: Army: 

Types of stocks: Combat brigade sets; 
Description: 
* Stored at land sites and aboard prepositioning ships; 
* Sets are designed to support 3,000 to 5,000 soldiers; 
* Heavy weaponry such as tanks and Bradley fighting vehicles; 
* Support equipment such as trucks and High Mobility Multi-purpose 
Wheeled Vehicles; 
* Spare parts and other sustainment stocks to support the early stages 
of a conflict. 

Types of stocks: Sustainment stocks; 
Description: 
* Stored at land sites and aboard prepositioning ships; 
* Replacement equipment for losses in early stages of operations or 
until resupply is established; 
* Includes major end-items such as aircraft engines and tracked 
vehicles; 
* Secondary items such as meals, clothing, petroleum supplies, 
construction materials, ammunition, medical materials, and repair 
parts. 

Types of stocks: Operational project stocks; 
Description: 
* Stored at land sites and aboard prepositioning ships; 
* Authorized material above unit authorizations designed to support 
Army operations or contingencies; 
* Equipment and supplies for special operations forces, bare base sets, 
petroleum and water distribution, mortuary operations, and prisoner-of-
war operations. 

Service: Navy/Marine Corps: 

Types of stocks: Maritime prepositioning force; 
Description: 
* Consists of 16 prepositioning ships organized into three squadrons; 
* Each squadron supports about 15,000 Marines for up to 30 days; 
* Includes combat systems, communications systems, construction 
equipment, munitions, medical supplies, and sustainment stocks. 

Types of stocks: Prepositioning program--Norway; 
Description: 
* Several land sites located in central Norway; 
* Designed to support 13,000 Marines for up to 30 days; 
* Includes vehicles, weapons, munitions, rations, and other equipment 
that will be used to support any geographic combatant command. 

Types of stocks: Navy prepositioned assets; 
Description: 
* Assets are stored aboard maritime prepositioning ships and at land 
sites; 
* Equipment to offload prepositioning ships, including material 
handling equipment, ramps and barges, landing and amphibious craft, and 
bulk fuel; 
* Construction equipment such as cranes, forklifts, trucks, and tractor 
trailers; 
* Includes six 500-bed fleet hospitals[A]. 

Service: Air Force: 

Types of stocks: Bare base sets; 
Description: 
* Base operating support equipment used to house forces, and equipment 
and supplies needed to support airfield operations. 

Types of stocks: Vehicles; 
Description: 
* Includes trucks, buses, and High Mobility Multi-purpose Wheeled 
Vehicles. 

Types of stocks: Other support equipment and supplies; 
Description: 
* Includes matériel handling equipment, rations, fuel, fuel support 
equipment, aircraft accessories, and medical supplies at land sites and 
munitions aboard four prepositioning ships. 

Source: GAO. 

[A] The Navy is in the process of transitioning from 500-bed fleet 
hospitals to smaller modular units. 

[End of table] 

The military services preposition these stocks of equipment and 
supplies at several land sites and aboard prepositioning ships around 
the world. Most of the military services preposition equipment and 
supplies in southwest Asia, the Pacific theater, Europe, and aboard 
prepositioning ships. Figure 1 shows the locations of DOD's 
prepositioned stocks. 

Figure 1: Locations of Army (USAR), Marine Corps (USMC), Navy (USN), 
and Air Force (USAF) Prepositioned Stocks: 

[See PDF for image] 

Note: DOD also prepositions smaller stocks of equipment and supplies at 
other locations not identified on this map. 

[End of figure] 

Inventory Shortfalls and Poor Equipment Condition Leave Many of DOD's 
Prepositioning Programs at Risk: 

DOD faces some near-term operational risks should another large-scale 
conflict emerge due to inventory shortfalls and poor maintenance 
condition of some of its prepositioned stocks. For example, the 
department has drawn heavily on its prepositioned stocks to support 
ongoing operations in Iraq and relatively little has been 
reconstituted. In addition, while remaining stocks provide some 
residual capability, many have significant inventory shortfalls and in 
some cases, maintenance problems. Combatant commanders rely on 
prepositioned stocks being available and in good maintenance condition; 
otherwise U.S. forces must bring needed stocks with them or spend 
valuable time repairing equipment. Since these stocks are typically 
used in the early stages of a conflict, it is important for DOD to 
determine the operational risk associated with any shortfalls. 
Operation Iraqi Freedom revealed significant issues with the status of 
prepositioned stocks, such as shortages in spare parts and less-than- 
modern equipment. The same problems continue to exist today in some 
programs. 

The Army Is Reporting Low Inventory Fill and Poor Maintenance Condition 
for Some Prepositioned Stocks: 

The Army is currently reporting low inventory fill for the combat 
brigade sets, operational project stocks, and sustainment stocks that 
comprise its prepositioning program, and some stocks not used in recent 
operations are in poor maintenance condition. For example, the Army 
used much of the equipment and supplies associated with the combat 
brigade sets stored at land sites in Kuwait and Qatar and aboard 
prepositioning ships afloat near Diego Garcia to support operations in 
Iraq. In addition, the Army used some equipment from its other 
prepositioned stocks in Europe, South Korea, and from other 
prepositioning ships located near Guam/Saipan. 

The Army is also reporting low inventory fill for its operational 
projects and sustainment stocks. The Army has a total of 14 operational 
projects that contain equipment and supplies needed for unique mission 
requirements, such as special operations forces, mortuary operations, 
and prisoner handling. Sustainment stocks provide replacement equipment 
and supplies, such as repair parts, petroleum items, and tracked 
vehicles, until normal resupply channels are established. The Army is 
reporting inventory fills for operational projects and sustainment 
stocks--approximately 26 percent and 20 percent respectively--that are 
considerably lower than the program requirements. Some of the Army's 
shortfalls have been long-standing, however, including shortfalls in 
critical areas like spare parts, and are not attributable to the war in 
Iraq. For example, we reported in 2003 that DOD experienced equipment 
readiness problems because of a lack of key spare parts.[Footnote 11] 
Table 2 provides an overview of the inventory levels, maintenance 
condition, and operations and maintenance funding of the Army's 
prepositioned stocks. 

Table 2: Current Status and Operations and Maintenance Funding for Army 
Prepositioned Stocks at Key Locations as of January 2005: 

Dollars in millions. 

Location: Europe; 
Current status: Low inventory fill, with limited combat equipment, 
operational projects, and other stocks stored at sites in Germany, 
Italy, Luxembourg, and the Netherlands. Some stocks were taken out to 
support operations in Iraq, while stocks from Italy were used to 
temporarily refill the prepositioning ships now positioned near Diego 
Garcia; 
Total funding fiscal years 2000-2005: $277.6. 

Location: Kuwait/Qatar; 
Current status: Equipment in use in Iraq and storage warehouses in 
Qatar have been converted to become Central Command's regional 
headquarters; 
Total funding fiscal years 2000-2005: $304.2. 

Location: South Korea; 
Current status: As of March 2005, the brigade set had most of its 
authorized equipment on hand, though a recent maintenance inspection 
revealed maintenance deficiencies. The Army plans to correct the 
maintenance problems with the set in September 2005, as well as 
reconfigure it to be consistent with the Army's new modular 
configuration; 
Total funding fiscal years 2000-2005: $245.9. 

Location: Afloat near Diego Garcia and Guam/Saipan; 
Current status: Two squadrons, each with a partial brigade set, are 
available; 
Total funding fiscal years 2000-2005: $1,835.8. 

Source: GAO analysis of Army data. 

[End of table] 

Some stocks that were taken from prepositioned storage locations and 
used during operations in Iraq are either still in use, or have 
experienced extreme wear and tear. For example, the Army continues to 
use equipment taken from prepositioned stocks to support its units in 
Iraq, delaying the reconstitution and redistribution of the equipment. 
According to Army officials, this equipment may not be returned to the 
prepositioned stocks because the Army is giving priority to 
transforming its forces into more deployable and expeditionary brigade- 
based formations and may use formerly prepositioned equipment to fill 
additional equipment requirements associated with the new formations. 
Importantly, this heavy stress on equipment is a problem across much of 
the Army's equipment that has been used in Iraq, not just the equipment 
taken from prepositioned stocks. 

We also found that some other prepositioned stocks in storage were in 
poor maintenance condition, even though they had not been used in 
Operation Iraqi Freedom. For example, during a March 2005 visit to Camp 
Carroll, South Korea, we found that some of the Army's prepositioned 
stocks at this location were in poor maintenance condition and that 
much of the equipment was overdue for periodic maintenance. Army 
officials confirmed that required cyclic maintenance had not been 
performed on the equipment in the brigade set, operational projects, 
and sustainment stocks for several years. To address this, the Army has 
stepped up its maintenance efforts by bringing in contractor support 
and setting up temporary maintenance facilities to assist in repairing 
the equipment to standard. Moreover, as shown in figure 2, certain 
stocks were stored outside and had been for many years and corrosion 
was evident on some pieces of equipment. Corrosion can significantly 
affect the readiness of prepositioned equipment: DOD spends an 
estimated $20 billion each year to repair the damage to military 
equipment and infrastructure caused by this problem. In this regard, we 
have called for improvements to DOD's long-term corrosion strategy, 
including better planning and establishment of a long-term funding 
mechanism.[Footnote 12] Because of continuing concerns over corrosion, 
we are currently conducting a congressionally directed review of its 
impact on DOD's overall prepositioned assets. 

Figure 2: Sustainment Stocks Stored Outside at Camp Carroll, South 
Korea: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

The Army also maintains European prepositioning storage sites in 
Germany, Italy, Luxembourg, and the Netherlands. However, few stocks 
remain there because they have been drawn out to support operations in 
other locations, including Bosnia and Iraq. The mission in Europe has 
steadily declined since the European drawdown of the early 1990s, and 
the remaining sites are the last remnants of the Army's large-scale 
prepositioning program developed during the Cold War. Army officials 
told us that they are currently using the local national workforce at 
these locations to perform other maintenance workloads, including 
fixing equipment from Iraq. In past reports, we have recommended that 
the Army align its workforce and facilities to meet the reduced post- 
Cold War mission in Europe.[Footnote 13] Officials told us that they 
have reduced infrastructure in response to our recommendations, and are 
contemplating further reductions. In Italy, however, the Army has 
requested about $55 million to construct new storage and maintenance 
facilities that it has said will become the centerpiece of its land 
prepositioning in the region. This region still receives considerable 
funding, as shown in table 2. The Army spent nearly $290 million during 
fiscal years 2000-2004, even though the sites have had an uncertain 
mission and reduced stocks for much of that time. 

The Marine Corps Is Reporting Low Inventory Fill for Some Prepositioned 
Stocks, While the Navy Reports Few Shortfalls: 

The Marine Corps has offloaded about 75 percent of the major end-items 
stored on 5 of its 16 prepositioning ships to support combat operations 
in Iraq. The remaining 11 prepositioning ships are reporting inventory 
fills of 95 percent or greater and good maintenance condition for major 
end-items and sustainment stocks. The Marine Corps also used some of 
its prepositioned major end-items stored at several land sites in 
Norway to support operations in Iraq and Afghanistan and to fill 
shortfalls at Marine Corps bases and on some of the prepositioning 
ships. As a result, these sites are currently reporting an inventory 
fill of about 71 percent. 

It is unclear when this equipment will be returned to prepositioned 
stocks because, according to a Marine Corps official, a large portion 
of the Marine Corps' equipment offloaded from prepositioning ships to 
support the deployment of the I Marine Expeditionary Force to Iraq is 
currently being kept in Iraq to support the rotation of the II Marine 
Expeditionary Force. In a recent congressional testimony on the status 
of its military equipment, a Marine Corps official reported that in 
addition to higher usage rates, equipment is being used under extreme 
conditions which have increased the maintenance requirements. For 
example, to date, more than 1,800 equipment items have been destroyed 
and an additional 2,300 damaged equipment items will require depot 
maintenance.[Footnote 14] 

For the Norway stocks, the Marine Corps is in the process of updating 
the requirements for its program there so that it will be capable of 
providing a global response capability to any regional combatant 
commander. During our September 2004 visit to the prepositioning sites 
in Norway, we discussed this change in the scope of the program and 
Marine Corps officials confirmed that the facilities in Norway can 
support any combatant commander and the stocks are globally deployable 
via air, rail, and sea. This shift in scope is in response to concerns 
about the continued relevance of land stocks in Norway.[Footnote 15] 
According to Marine Corps officials, however, these stocks are 
important to Norway, cost relatively little to maintain (about $3.9 
million in operational costs per year), are stored in excellent 
facilities, and can be taken out to respond to crises as needed. 

The Navy is reporting high inventory fill for its prepositioned assets. 
According to Navy officials, most of its equipment used to offload the 
maritime prepositioning ships was not used in direct combat and has not 
required extensive reconstitution, and other equipment was available to 
backfill the field hospitals and construction forces deployed to 
support operations in Iraq. 

The Air Force Is Reporting Low Inventory Fill and Some Stocks in Poor 
Condition: 

The Air Force has used a considerable amount of its prepositioned 
equipment and supplies to support combat operations in Afghanistan and 
Iraq and, as a result, the inventory fill of many of these stocks is 
low. For example, it used approximately 43 percent of the total number 
of its prepositioned bare base sets to support Operations Enduring 
Freedom and Iraqi Freedom, and due to the extreme desert conditions, 
many of these sets will have to be replaced. A U.S. Central Command, 
Air Forces, official told us that the command is continuing to issue 
prepositioned base operating support equipment and vehicles to forces 
that have been deployed to the area of responsibility. While the Air 
Force is working on refilling its prepositioned equipment and supplies, 
if a conflict arises in the near term, these stocks may not be 
available for use as it is unclear when these stocks will be refilled. 

In addition, the Air Force is experiencing shortfalls in its inventory 
of fuel bladders. These bladders are used to store fuel for Air Force 
aircraft at austere operating locations. Air Force officials stated 
that to support combat operations in Iraq, Central Command, Air Forces, 
has used a considerable number of its prepositioned war reserve fuel 
bladders. As combat operations continue, the Air Force is depleting its 
supply of these bladders, and officials have characterized the impact 
of potential shortfalls in these bladders as its "highest operational 
risk." At the same time, the Air Force is undergoing an initiative to 
modernize its fuel support equipment, including its fuel bladders. As 
part of this initiative, the Air Force requested that Central Command, 
Air Forces, officials not purchase the type of fuel bladders that had 
previously been used. To mitigate the risk, the Air Force has allowed 
Central Command, Air Forces, to purchase some replacement fuel 
bladders; however, it is unclear when its modernization initiative will 
be fully implemented. 

During our review, we were also told that some bare base sets that the 
Air Force prepositions at Andersen Air Force Base on Guam are in poor 
maintenance condition and are unusable. According to a Pacific Air 
Forces official, the sets stored at Andersen Air Force Base have 
deteriorated due to a lack of required maintenance. Air Force 
maintenance personnel are responsible for the war reserve stocks 
prepositioned at this location as an additional duty to the maintenance 
of operating stocks also stored at the base. The official told us that 
the quality of maintenance performed by Air Force personnel on the war 
reserve bare base sets has been a long-standing problem at this 
location. Air Force officials told us that bare base sets stored in 
Southwest Asia and South Korea did not have these same maintenance 
problems because contractors have been hired to maintain these sets. 

When we discussed these issues with Air Force officials, they told us 
that they believed they could overcome shortfalls and any maintenance 
problems in the event of a conflict by using supplemental funding or 
cross-leveling equipment from other theaters. Additionally, Pacific Air 
Forces officials told us that they would be able to obtain some 
vehicles from countries where they will operate by using contracts 
already in place. 

Shortfalls in Inventory Fill Exist for Stocks Prepositioned to Support 
Special Operations Forces: 

The Army, Air Force, and Navy preposition common support equipment and 
supplies for use by their special operations forces.[Footnote 16] 
However, the services have traditionally underfunded these stocks and, 
as a result, inventory shortfalls exist in most of these stocks. 
Lessons learned from recent military operations in Iraq further 
highlighted the need for special operations forces to have stocks of 
prepositioned equipment and supplies to support these forces in 
multiple austere environments. Special Operations Command officials 
told us that special operations forces are often among the first units 
to deploy and, therefore, have a need to draw prepositioned stocks. The 
department recognized this and recent guidance issued by DOD directs 
the military services to fully fund inventory shortfalls in these 
stocks of common items prepositioned to support special operations 
forces.[Footnote 17] The military services have agreed to provide 
funding for prepositioned stocks for special operations forces 
beginning in fiscal year 2006. 

Shortfalls Create Some Operational Risks: 

Since prepositioned stocks are integral to the military's war plans, 
shortfalls in these programs create risks that combatant commanders 
would have to mitigate in the event of a new conflict. It could cost 
time or manpower to fill shortages or fix equipment. Since these stocks 
are typically used in the early stages of a conflict, it is important 
for DOD to determine the operational risk associated with any 
shortfalls. The military planners we spoke to told us that they would 
find a way to work around the shortfalls, but offered little in the way 
of concrete plans. 

Operation Iraqi Freedom revealed significant lessons for DOD's 
prepositioning managers, especially in the Army, such as shortages in 
spare parts and less-than-modern equipment. Prior to the onset of 
combat operations in Iraq, the Army had significant shortages in its 
prepositioned stocks, especially in spare parts. The Army overcame 
these shortfalls by having the units that were drawing the 
prepositioned stocks bring their own spare parts, in addition to 
obtaining spare parts from nondeploying units.[Footnote 18] However, 
according to the Army's after-action assessments of the war, the Army 
had shortages in these and other items, including food, water, fuel, 
construction materials, and ammunition. The available stocks of these 
supplies were insufficient to meet sustainment requirements at the 
outset of the deployment and it took the supply chain months to 
respond. At the time of our work, we found that many of the same 
shortfalls that existed in the Army's program are still evident, and 
may be getting worse. For example, as of mid-March 2005, the Army had 
only 21 percent of its authorized prepositioned repair parts on hand in 
South Korea. According to Army officials, if a military conflict should 
arise there, their strategy to mitigate these shortfalls would be to 
cross-level required parts from available sustainment stocks as needed. 

Although the precise operational risks created by shortfalls in the 
Marine Corps and Air Force's prepositioned stocks are difficult to 
assess, officials from these services told us that these risks can be 
managed. This is because the Marine Corps has kept about two-thirds of 
its prepositioned combat capability available for potential 
contingencies and that equipment is reported to be in good condition. 
Moreover, Air Force officials stated that if a conflict arises, they 
will be able to fill shortfalls and repair equipment as needed by using 
supplemental funding and obtaining some vehicles and other stocks in 
other countries through contracts already in place. Air Force officials 
stated, however, that this presumes that they will have the time and 
necessary funding available to address the shortfalls. 

Combatant commanders rely on prepositioned stocks being available and 
in good maintenance condition. Prior to Operation Iraqi Freedom, the 
combatant commander built up the required forces over a period of 
months, and had time to overcome any inventory shortages in the 
prepositioned stocks or resolve any maintenance issues with 
prepositioned equipment. However, should a new conflict arise in the 
near term--especially one where U.S. forces did not control the timing-
-the combatant commander would likely face even more difficult 
operational challenges. During our visit to South Korea, officials told 
us that their strategy to mitigate maintenance issues with the Army's 
prepositioned stocks stored there, should a conflict arise, would be to 
surge maintenance personnel as needed to fix equipment, use arriving 
personnel to assist in maintenance execution, and cross-level required 
parts from available sustainment stocks. Officials acknowledged, 
however, that it could take longer than planned to get the equipment 
ready in the event of a conflict. 

Another factor making it difficult to assess the potential operational 
risks is the lack of sound information available to assess and manage 
DOD's prepositioning programs. Such programs need valid inventory 
requirements that meet the needs of the war fighters, and reliable 
information about inventory levels and maintenance condition for those 
requirements. These long-standing management problems are discussed in 
the next section of this report. 

DOD and Some of the Military Services Have Provided Insufficient 
Oversight Over Their Prepositioning Programs: 

Oversight over prepositioning programs by DOD and the military services 
has been insufficient, despite the importance of prepositioning to the 
military. This inattention has allowed long-standing problems to 
linger. Management principles, such as those embraced in the Government 
Performance and Results Act of 1993,[Footnote 19] provide federal 
agencies a framework for effectively implementing and managing 
programs. Management principles include sufficient information to 
support sound decision making and enable Congress to provide proper 
oversight. However, DOD has not adhered to its directive on war reserve 
matériel policy that could provide oversight over its prepositioning 
programs. In addition, service oversight has been inadequate, 
particularly in the Army's processes for determining requirements and 
the Army and Air Force processes for assessing inventory shortfalls and 
maintenance condition. This limited oversight unnecessarily leaves the 
programs at risk of being unavailable when required and lacking the 
right mix of equipment and supplies to support the war fighter. 

Oversight Has Been Insufficient: 

The overarching departmental guidance is contained in DOD directive 
3110.6, updated in December 2003, which provides policy guidance on the 
department's war reserve matériel program and assigns oversight and 
accountability responsibilities within the department. The secretaries 
of the military departments, directors of defense agencies, and the 
combatant commands are responsible for setting program requirements and 
the Defense Logistics Agency has responsibility for storage and 
distribution of the stocks. At the department level, their 
responsibilities are as follows: 

* The Undersecretary of Defense for Acquisition, Technology, and 
Logistics is required to assess the adequacy of war reserve stocks 
annually. 

* The Undersecretary of Defense for Policy is required to provide 
planning guidance that includes war reserve requirements. 

* The Chairman of the Joint Chiefs of Staff is required to validate the 
operational requirements of the geographic combatant commands. 

A provision of the directive related to oversight states that the 
department is to assess the adequacy of its war reserve stocks. In 
order to assess adequacy, the directive requires the secretaries of the 
military departments and the directors of defense agencies to submit 
annual reports on war reserve matériel levels to the Under Secretary of 
Defense for Acquisition, Technology, and Logistics within the Office of 
the Secretary of Defense. Officials within the Deputy Under Secretary 
of Defense for Supply Chain Integration told us that this oversight 
responsibility had been delegated to their office. However, the 
directive has not been implemented and, therefore, the reporting 
requirement contained in the directive has not been enforced. Neither 
the services nor the Under Secretary's office could provide us with 
copies of these reports. Officials told us that they had suspended this 
reporting requirement in 2002; however, the directive had been updated 
in late 2003 and the reporting requirement was maintained. Officials 
also stated that although they had been given responsibility for 
implementing the oversight provisions of the directive, since their 
office primarily deals with only sustainment issues, they did not have 
sufficient authority or personnel to meet the requirements stated by 
the directive, specifically to assess the adequacy of the services' 
prepositioning programs. 

Officials further told us they did not believe the reporting 
requirement in the directive was necessary because they were able to 
provide adequate oversight of the department's prepositioning programs 
through other mechanisms, such as reviewing the services' budget 
submissions and quarterly readiness assessments. Quarterly readiness 
reviews and integrated priority list submissions allow the combatant 
commanders and others to identify issues that have reached critical 
thresholds that may limit war-fighting capabilities. These assessments, 
some of which have included issues related to prepositioned stocks, are 
briefed to DOD's senior leadership and may be included in a 
legislatively mandated quarterly readiness report to Congress. However, 
we have previously reported that these reports provide a vague and 
broad description of readiness problems and, therefore, are not 
effective as an oversight tool.[Footnote 20] Furthermore, officials at 
one combatant command told us that these assessments do not provide a 
sufficient mechanism to determine the inventory readiness of stocks 
prepositioned in their area of responsibility. Also, a DOD official 
told us that they review the budget submissions from the military 
services and approve how much the services allocate to their 
prepositioning programs. In our view, while such mechanisms provide the 
department with important information on gaps in capabilities and 
resource allocation, they do not constitute sufficient, sustained 
program oversight. 

Such oversight problems have existed for years and several prior 
reports have cited the lack of centralized oversight and direction in 
the department's prepositioning programs, particularly in the Army. For 
example, the Institute for Defense Analyses concluded in a 1997 report 
that the military services do not coordinate their war reserve planning 
among themselves or with the combatant commanders. The report 
specifically called on the Army to reinvent the entire war reserve 
process, and work with the unified combatant commands and other Army 
commands to build credible requirements and better planning factors. 
The Army Matériel Command Inspector General also reported in 2001 that 
the Army and the combatant commands had not uncovered, mitigated, or 
elevated issues about the readiness of the Army's prepositioning 
programs to the department level. Further, the report stated that the 
lack of centralized oversight fostered inefficiencies and impacted the 
effectiveness of the Army's prepositioning program. 

Lack of Valid Requirements and Insufficient Information Makes Oversight 
Difficult: 

The Army does not have sound requirements for some of its 
prepositioning programs and both the Army and Air Force do not have 
sufficient information about inventory levels and maintenance 
condition, making oversight difficult. Without valid requirements 
underpinning the services' prepositioning programs, it is impossible to 
reliably assess the impact of reported shortfalls or equipment in poor 
maintenance condition. As a result, the services cannot assess the 
overall readiness of their prepositioning programs, which potentially 
leaves war fighters at risk of not having needed stocks in the future. 
In addition, assessing the readiness of prepositioned stocks requires 
reliable information about inventory levels and maintenance condition. 
Inventory levels are measured against requirements set by the services, 
while maintenance condition describes whether on-hand items work well 
enough to perform their mission. Because prepositioned stocks are 
intended to be used in the early stages of a conflict, the stocks need 
to be completely filled and in working order. Otherwise, the purpose of 
prepositioning is likely defeated. Such problems with questionable 
requirements and insufficient information are long-standing, and make 
it difficult for the services and the department to assess readiness, 
provide oversight, and support sound decision making about where to 
make program investments. 

Questionable Requirements: 

During our review, we found that the requirements underpinning some of 
the Army's prepositioning programs are questionable, which may make the 
impact of shortfalls difficult to assess. Specifically, Army officials 
told us that the war reserve information system used to calculate the 
requirements for some sustainment stocks had not been successfully 
updated since 1999, although Army officials told us that they are 
required to compute these requirements on an annual basis.[Footnote 21] 
While the Army is planning on recalculating these requirements by the 
end of 2005, it is currently unclear what the requirements for these 
stocks should be. As a result, program managers cannot be sure what to 
buy because they do not know if inventory shortfalls are valid. We 
reported on the operational impacts of this problem in our March 2004 
testimony on prepositioned stocks used during Operation Iraqi 
Freedom.[Footnote 22] Additionally, in our April 2005 report, we found 
that because the process used to determine requirements for Army war 
reserve spare parts had not been updated, the war reserve inventories 
for some spare parts were inadequate in Operation Iraqi Freedom and 
could not meet initial wartime demands.[Footnote 23] In addition, 
inaccurate and inadequately funded Army war reserve requirements 
contributed to shortages in other items, such as track shoes for Abrams 
tanks and Bradley Fighting Vehicles and lithium batteries. 

Additionally, we identified problems with DOD's process for 
establishing requirements for prepositioned munitions. For example, 
during our visit to U.S. Forces Korea, officials told us that the 
command is not afforded the opportunity to proactively participate in 
the determination of either total munitions requirements or, more 
specifically, prepositioned munitions requirements. In October 2002, we 
reported that DOD's munitions requirements determination process did 
not fully consider the combatant commander's preferences for munitions 
and weapon systems that will be used against targets identified in 
projected scenarios.[Footnote 24] We recommended that the Secretary of 
Defense establish a direct link between the munitions needs of the 
combatant commands and the munitions requirements determinations and 
purchasing decisions made by the military services. In October 2003, 
DOD issued instruction 3000.4, which required that the munitions 
requirements developed by each of the military services address the 
operational objectives of the combatant commanders against potential 
threats. In addition, it directed the military services to work 
directly with the military service component and the combatant commands 
to develop near-and out-year munitions requirements. Finally, it 
directed combatant commanders to review the military services' 
generated munitions requirements and report any issues needing 
resolution during the planning and programming process. We found that 
these requirements are not being met. Only the Air Force visits the 
command prior to developing total munitions requirements to support 
purchasing decisions. The other services do not coordinate with the 
command prior to generating munitions requirements. Further, U.S. 
Forces, Korea, officials told us that they do not have the opportunity 
to review the service-generated munitions requirements prior to 
purchasing decisions and have no input to what munitions will be 
prepositioned or where those munitions will be located. While officials 
in the Office of the Secretary of Defense and Joint Staff expressed 
skepticism about the way U.S. Forces, Korea, had developed their 
munitions requirements, they agreed that the proper coordination was 
not occurring. As a result, the needed linkage between the combatant 
command's needs and the munitions purchases made by the services 
continues to be inadequate and raises questions as to whether combatant 
commands will have what they need should a conflict arise. 

Unreliable Information: 

We also found that the Army and Air Force lack reliable information on 
the inventory fill and maintenance condition for some prepositioned 
stocks. The lack of reliable inventory information may provide program 
managers with an unrealistic view on the preparedness of these 
programs. 

* Army officials told us that its information management system does 
not provide reliable information on the inventory levels and 
maintenance condition of its operational projects and sustainment 
stocks. Army managers told us that this lack of inventory visibility 
has persisted for many years, and sometimes the only way to get 
reliable information is to contact the storage site directly. 

* As recently as February 2005, the Army reported in the unclassified 
inventory information that it extracts from its main readiness 
reporting system[Footnote 25] that a high percentage of the combat 
brigade set prepositioned in South Korea was fully mission capable. 
However, in an October 2004 Army assessment, inspectors had found that 
a high percentage of the equipment reviewed was not mission capable. 

* Air Force officials also told us that they do not have adequate 
information available to assess the overall readiness of their 
prepositioned stocks. While this information is decentralized and 
available in some cases to base and component commanders, information 
on inventory levels and maintenance condition is not available to Air 
Force managers overseeing the war reserve matériel program. Air Combat 
Command and Central Command, Air Forces, officials told us that in 
order to obtain information on the readiness of most prepositioned 
stocks, they had to contact the storage locations since this 
information is not readily available to them. Pacific Air Forces 
officials told us that they developed their own automated system to 
track the inventory levels and maintenance condition of the war reserve 
matériel prepositioned in their area of responsibility because the Air 
Force lacked a comprehensive system that provides reliable and timely 
readiness information on its war reserve program. 

Problems with Requirements and Reliability of Information Have Been 
Long-standing, but Remain Unresolved: 

The problems we found during our review with requirements determination 
and reliability of inventory information are not new. Our review of 
past reports going back to 1995 revealed that similar issues have been 
reported repeatedly, but have not been resolved. The findings from 
several past studies are described below, and appendix I provides a 
more comprehensive summary of the major findings from more than 30 past 
reports by us and the department's own studies. 

Inventory management issues, and more recently supply chain management, 
have been considered high-risk areas by us since 1990. Specific to the 
prepositioning programs, we have previously reported numerous times on 
long-standing management problems. For example, we reported in our last 
review of prepositioning programs in 1998 that the Army and Air Force 
had poorly defined, outdated, and otherwise questionable requirements 
in their programs.[Footnote 26] Our 1998 report also noted that it was 
difficult for DOD to assess the readiness of its prepositioned stocks 
and the impact of any shortfalls due to the poor information the 
services used to manage these programs. We also reported in 2001 that, 
among other things, a potential mismatch existed between the Army's 
methodology for determining spare parts requirements and the Army's 
anticipated battlefield needs.[Footnote 27] And more recently, we 
reported in January 2005 that DOD does not have the ability to provide 
timely or accurate information on the location, movement, status, or 
identity of its supplies due to long-standing data accuracy and 
reliability problems within existing inventory management 
systems.[Footnote 28] 

The department's own auditors and an Army command have also been 
sharply critical of program management, especially how program 
requirements have been determined. For example, the Army Matériel 
Command reported in 2003 that the requirements computation for war 
reserve stocks and stockage lists for prepositioned stocks did not 
accurately portray what was needed for Operation Iraqi Freedom. These 
stockage lists did not contain the most critical items needed to 
sustain combat equipment during the operation.[Footnote 29] In 
addition, the Army Audit Agency reported in 2004 that Army program 
managers had not reviewed the requirements for many of the operational 
projects it examined. As a result, some operational projects contained 
inaccurate, overstated, or questionable requirements. Of $1.5 billion 
in requirements examined, about $727 million were valid, $472 million 
were invalid, and about $280 million were questionable.[Footnote 30] In 
addition, the Air Force Audit Agency reported in May 2003 that Air 
Force personnel did not properly segregate certain war reserve 
requirements from peacetime operating spare parts requirements, 
resulting in more than $118.8 million of overstated requirements for 
peacetime.[Footnote 31] 

Past reports have also revealed problems with the reliability of 
inventory information. In 2001, Army auditors reported that the lack of 
reliable data on operational projects and sustainment stocks impeded 
the overall readiness capability of the Army's prepositioning program. 
In addition, the Army reported that there was a general lack of 
confidence in the information management system used to provide 
information on inventory levels.[Footnote 32] More recently, the Army 
Matériel Command's 2003 report on lessons learned in Iraq also found 
that different automated systems provided different inventory levels at 
the same storage location during operations in Iraq.[Footnote 33] 
Similarly, a June 2004 CNA Corporation after-action report on the 
Marine Corps' prepositioning program in Operation Iraqi Freedom found 
that the Marine Corps did not have reliable information on the status 
of some prepositioned equipment used to support operations in 
Iraq.[Footnote 34] Specifically, due to a lack of automated tracking 
systems, the Marine Corps had to use manual methods for tracking 
equipment with hand counts and written reports. As a result, Marine 
Corps commanders did not have clear and accurate tools for determining 
where cargo was in the pipeline, and more importantly, forecasting when 
equipment would arrive and when integration would be complete. 

DOD Lacks A Plan To Coordinate Future Prepositioning Programs: 

DOD has not developed a coordinated departmentwide plan or joint 
doctrine to guide the future of its prepositioning programs, despite 
the heavy use of prepositioned stocks in recent conflicts and the 
department's plans to rely on them in the future. The 2005 National 
Defense Strategy specifically notes the importance of prepositioning in 
the future and indicates that prepositioning programs should be more 
innovative, flexible, and joint in character, but provides few details 
on how DOD plans to accomplish these goals. In addition, the 
independent Overseas Basing Commission recently echoed the continued 
importance of the department's prepositioning programs in the future. 
In the absence of a departmentwide plan or joint doctrine to coordinate 
the reconstitution and future plans for these programs, the military 
services have been recapitalizing some stocks and developing future 
plans for their programs without a clear understanding of how they will 
fit together to meet the evolving defense strategy. Without an 
overarching framework that establishes priorities for prepositioning 
among competing initiatives and identifies the resources required to 
implement the future programs, DOD cannot provide assurances to 
Congress that the billions of dollars that will be required to 
recapitalize the stocks and develop future programs will ultimately 
produce programs that will operate jointly, support the needs of the 
war fighter, and are affordable. 

National Defense Strategy and Overseas Basing Report Indicate a 
Reliance on Prepositioning in the Future: 

The most recent National Defense Strategy published in March 2005 
states that to strengthen DOD's capability for prompt global action and 
flexibility to employ military forces where needed, prepositioned 
stocks "will be better configured and positioned for global 
employment."[Footnote 35] This overarching defense strategy establishes 
key goals for the future of defense capabilities such as the 
prepositioning of support matériel and combat capabilities in critical 
regions of the world and along key transportation routes, and a greater 
reliance on joint prepositioning capabilities that will be in 
accordance with other aspects of transformation. However, while such 
goals confirm that prepositioning will continue to play a key role in 
the evolving military strategy,[Footnote 36] the National Defense 
Strategy provides no specific details on how the department and the 
military services will accomplish them. 

In addition, the recently released report of the Overseas Basing 
Commission states that where DOD puts prepositioned stocks, what they 
are comprised of, and how they are maintained is central to the 
department's operational capability.[Footnote 37] The report states 
that prepositioning is "imperative" for quick response of U.S. forces 
in areas of the world where access may be difficult, and calls for 
tight integration of service concepts, doctrines, and plans as a first 
step in ensuring the sustainability of prepositioning. Importantly, the 
Commission recommends that given the centrality of these stocks to the 
operational capability of U.S. forces, their high costs, and their 
anticipated heavy use over time, Congress should periodically review 
the status of prepositioned stocks. 

DOD Has Not Developed a Plan or Joint Doctrine for Its Prepositioning 
Programs: 

While it seems certain that DOD will continue to rely on prepositioning 
in the future, it is unclear how prepositioning will fit into its 
future plans since DOD currently has no department-level prepositioning 
plan that provides specific details on how the department and the 
military services will work together to plan the future of their 
prepositioning programs or joint doctrine for its prepositioning 
programs. DOD officials told us that the future of its prepositioning 
programs has not yet been determined, in part because the future is 
dependent on the outcome of several interrelated studies ongoing within 
the department. For example, DOD is currently reviewing the mobility 
capabilities required to meet the full range of mobility needs for all 
aspects of the national defense strategy. According to DOD officials, 
the recommendations from this study will likely have a significant 
impact on the services' prepositioning programs since requirements for 
prepositioning are being factored into the mobility deliberations. In 
addition, in March 2003, the Secretary of Defense requested that the 
department develop a comprehensive and integrated presence and basing 
strategy for the next 10 years. This strategy will build upon multiple 
DOD studies and will use information from the combatant commanders to 
determine the appropriate location of the basing and associated 
infrastructure necessary to execute the U.S. defense strategy. DOD 
officials told us that the basing study will also likely have an impact 
on prepositioning as the services will need to determine where to 
preposition their stocks to support the new defense strategy. Although 
some preliminary results have been released, DOD officials stated that 
once these studies are completed, they will have a better understanding 
of how prepositioning will be able to support the war fighter. 

Similarly, DOD has not developed joint doctrine to guide the planning 
and employment of its prepositioning programs. 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. DOD's transformation guidance states that 
part of the department's transformation efforts is developing concepts 
to operate in a joint environment, and placing a continuing emphasis on 
the importance of expeditionary operations.[Footnote 38] DOD has 
published joint doctrine in a number of areas, including deployment and 
redeployment operations, multinational operations, and military 
operations other than war. However, in the absence of a departmentwide 
plan and joint doctrine for prepositioning, the military services 
currently plan and implement separate programs in an independent, 
service-centric manner. A service-centric approach to prepositioning 
potentially misses opportunities to achieve greater efficiencies where 
service programs overlap. In a 2003 Joint Staff-sponsored study on 
strategies for prepositioning, the Logistics Management Institute found 
that the military services continue to program for prepositioning 
matériel to meet individual service rather than joint requirements. As 
a result, the services may overstate operational requirements and put 
unnecessary burdens on limited transportation assets that would be 
required to move these prepositioned assets from their storage 
locations to the operational sites.[Footnote 39] For example, although 
the Army and Air Force have separate bare base programs, there is a 
lack of commonality among the design and components of these programs 
even though basic capabilities are the same.[Footnote 40] Moreover, 
this service-centric approach to prepositioning is out of step with 
DOD's transformation guidance, which states that developing concepts to 
operate in a joint environment and a continuing emphasis on the 
importance of expeditionary operations is key to the department's 
transformation efforts.[Footnote 41] 

Reconstitution Likely to Be Delayed Due to Ongoing Operations, but 
Delay Offers DOD Opportunities to Set Clear Direction for Programs: 

Clearly prepositioning figures prominently in the department's future 
plans, but the services do not have precise estimates of the costs and 
time required to reconstitute their prepositioned stocks since the 
services continue to use these stocks in Afghanistan and Iraq. In a 
recent report to Congress, DOD estimated that the costs to reconstitute 
the Army and Marine Corps' prepositioned equipment will be between $4 
billion and $5 billion.[Footnote 42] The report acknowledges, however, 
that these estimates may change depending on several factors, including 
the length of time the equipment is in use, the number of combat 
losses, and any changes in the future plans for its prepositioning 
programs. However, most of the costs required to reconstitute and 
recapitalize the Army and Marine Corps' prepositioned stocks have not 
been budgeted for in the department's baseline submissions or 
supplemental funding requests. In the absence of a departmentwide plan 
that coordinates the reconstitution of these programs with the future 
plans of the department's prepositioning programs, the services are 
developing plans to reconstitute and recapitalize their prepositioned 
stocks without a clear understanding of how the future of these 
programs will fit together in support of the evolving defense strategy. 

According to Army officials, plans to reconstitute the equipment and 
return it to the combat brigade sets are uncertain because, in some 
cases, Army units are continuing to use prepositioned stocks to support 
operations in Iraq instead of bringing their own equipment. In 
addition, the Army is placing a higher priority for its resources on 
supporting ongoing operations and on its modular conversion initiative-
-restructuring its forces to make them more flexible and rapidly 
deployable. As a result of this initiative, the Army is planning to use 
combat equipment that was part of the prepositioned brigade sets to 
meet the increased equipment requirements. For example, over 11,000 
pieces of prepositioned combat equipment used in Iraq--such as tanks, 
Bradley Fighting Vehicles, and armored personnel carriers--are slated 
to be repaired and turned over to active duty units. Furthermore, Army 
officials told us that decisions have not been made as to whether the 
sustainment and operational project stocks will be reconstituted 
because of the large investments required and the uncertainty of the 
future plans for the Army's prepositioning program. DOD's recent report 
to Congress estimates the costs to reset and reconfigure the Army's 
prepositioned stocks to be more than $4 billion. According to the 
report, however, these costs are not currently captured in DOD's 
baseline submissions or in any of its supplemental funding requests. 

The Marine Corps' prepositioning programs are expected to have a 
reduced capability until 2008, at least. The department's April 2005 
report to Congress estimates the cost to reconstitute the Marine Corps' 
prepositioned equipment is approximately $490 million. Of this amount, 
about half ($247 million) was requested in the department's most recent 
supplemental request. In the past year, the Marine Corps considered its 
options to reconstitute the equipment stored aboard the prepositioning 
ships given its continuing commitment to support operations in Iraq. 
The Marine Corps recently decided to partially refill the five ships 
offloaded to support operations in Iraq; however, due to the limited 
availability within the Marine Corps of equipment needed, such as heavy 
cargo trucks and High Mobility Multi-purpose Wheeled Vehicles, the 
Marine Corps forecasts that these ships will have major end-item fill 
rates of less than 50 percent. Additionally, Marine Corps officials 
stated that the reconstitution of the stocks in Norway is scheduled to 
be completed by 2008, at which time the fill rate of these stocks is 
projected to be approximately 88 percent. 

Air Force officials stated that they do not know when they will be able 
to reconstitute prepositioned stocks and return them to storage. As 
part of its reconstitution effort, the Air Force is in the process of 
replacing or converting all of its existing bare base sets into a 
smaller and more modular configuration.[Footnote 43] However, it is 
uncertain when the new sets will be available. For example, the Air 
Force had budgeted approximately $320 million in fiscal year 2005 for 
procurement of the new bare base sets. However, according to an Air 
Force official, Congress reduced the Air Force's budget by $53 million 
because it was concerned about the large increase in the Air Force's 
procurement budget for that year. As a result, the official stated that 
the Air Force will not be able to procure all of the required sets. In 
addition, Air Force officials told us that they do not know when 
reconstitution for other categories of prepositioned stocks will be 
completed since much of this equipment is still in use. 

Without a Plan and Joint Doctrine, the Military Services and Defense 
Logistics Agency's Prepositioning Plans Are Uncoordinated: 

Each of the military services and the Defense Logistics Agency are 
planning the future of their prepositioning programs without the 
benefit of an overall plan or joint doctrine to coordinate their 
efforts. Thus, it is unclear to us how the programs will fit together 
to meet the evolving defense strategy. DOD officials representing the 
Joint Staff and the services shared our assessment and concerns. And, 
according to these officials, the Joint Staff has formed a working 
group that is focused on establishing common definitions for 
prepositioning as a first step in developing joint doctrine and setting 
a future plan for the department's prepositioning programs. 

The future of the Army's prepositioning program, the largest of DOD's 
programs, is still unclear, and the Army acknowledges that it faces 
continuing funding challenges as it attempts to modernize, support 
ongoing combat operations, and reconstitute its prepositioned 
equipment, leaving the future direction of its prepositioning program 
uncertain. The Army has a major effort ongoing to transform its units 
into more flexible, rapidly deployable forces at the same time it is 
supporting ongoing combat operations. The Army's future prepositioning 
strategy was being revised during our review, so we could not assess 
how this overall transformation--commonly called "modularity" by the 
Army--will affect the prepositioning program. In addition, the Army's 
prepositioned stocks will have to be reconstituted due to their heavy 
use in Operation Iraqi Freedom. According to Army officials, however, 
the Army is nearing completion on a new strategy for its prepositioning 
programs. They told us that prepositioning will continue to be 
important in the future and that the prepositioned sets would be 
converted to the "modular" configuration by 2012 or sooner. 

While the Marine Corps and Navy have identified concepts for future 
prepositioning programs, they have not developed firm schedules and 
cost estimates for these programs. For example, the Marine Corps is 
planning on changing the focus of its prepositioned stocks in Norway 
from their Cold War configuration to a more global support capability. 
Additionally, the Marine Corps is considering a fundamental change to 
the future of its prepositioning program that would replace existing 
Maritime Prepositioning Force ships with an undetermined number of new 
ships with a wider range of capabilities. These ships are intended to 
be an integral part of a future Navy sea base. The seabasing concept 
provides maritime platforms capable of supporting at-sea arrival of 
forces, assembly of those forces, rapid movement ashore, and combat 
sustainment without reliance on shore facilities. While such seabasing 
is envisioned by DOD to be a joint service capability, it is not clear 
how this will be accomplished. Furthermore, the affordability of the 
program is in question--this new concept could cost billions of 
dollars.[Footnote 44] 

The Defense Logistics Agency began developing a global stock 
positioning strategy in 2004 to support its overseas customers for the 
items it manages. The strategy involves a combination of fixed-forward 
depots, a floating distribution center, and a deployable distribution 
depot. Fixed-forward stocking depots have been established at the 
following locations: Germersheim, Germany; Yokosuka, Japan; Pearl 
Harbor, Hawaii; Sigonella, Italy; Kuwait; Guam; and South Korea. The 
floating distribution center involves a mobile floating depot which 
will be capable of providing immediate distribution within the first 30 
days of a contingency and could operate as part of the seabasing 
concept. The deployable distribution depot will be able to provide a 
full range of distribution capabilities in a theater of operations 
early in a contingency in developed or remote operating areas. These 
last two capabilities are still being developed and the Defense 
Logistics Agency does not yet have firm estimates for the costs of 
these capabilities. 

The Air Force is also planning changes for its prepositioning programs. 
It is transforming its bare base sets into a smaller, more modular 
configuration and is considering new prepositioning sites to support 
the new defense strategy. However, Air Force officials told us that it 
cannot make some decisions related to new storage sites for its 
prepositioned stocks until DOD's basing study is complete. 

Without a plan or joint doctrine to guide their efforts, the services 
are planning for the future of their programs without an overarching 
framework that establishes priorities for prepositioning among 
competing initiatives, develops performance goals to measure success, 
and identifies resources to implement plans. Until the department 
determines how prepositioning fits into future military plans, it 
cannot provide assurances to Congress that the substantial investments 
required to recapitalize the stocks will be affordable. 

Conclusions: 

Prepositioning seems certain to be a key component of U.S. military 
strategy for years to come, but the department must make it a priority 
for it to overcome past management problems and ensure its future. In 
the near term, operational risks may exist should other military 
contingencies arise given the current inventory shortfalls and poor 
maintenance condition of some prepositioned stocks. However, the 
department has not developed concrete plans to overcome these 
challenges, even though inventory shortfalls and maintenance issues 
exist in the prepositioned stocks in potential trouble spots such as 
South Korea. 

Despite the importance of prepositioning to the military, however, long-
standing management problems persist and the programs seem to have 
received little attention at the department level. Oversight mechanisms 
are in place, but they have been ineffective or ignored. Leadership and 
accountability begin at the top. Until DOD fully implements its own 
directive on war reserve matériel, oversight of its prepositioning 
programs will likely continue to be inadequate and the department will 
be unable to assess risks associated with any shortfalls in the 
programs. Moreover, DOD lacks reliable information in regard to its 
prepositioning programs and will be unable to make reliable assessments 
of the readiness of these programs. This could result in failure to 
obtain the right amount and types of equipment for the designated 
prepositioning locations, which could ultimately jeopardize the ability 
of U.S. forces to accomplish their war-fighting missions and leave them 
at risk. 

Congress is also concerned about these issues and directed the 
Secretary of Defense to submit a report on its prepositioning plans by 
October 1, 2005. Looking toward the future, without a coordinated plan 
and joint doctrine that identifies the role of prepositioning in the 
transformed military, the department cannot plan the future of its 
programs in a comprehensive manner. As a result, DOD cannot provide 
assurance to Congress that its prepositioning programs will be 
coordinated, effective, and affordable. 

Taking all these problems together--and considering them against the 
backdrop of growing operational and fiscal strains on the military--we 
believe the future of the prepositioning programs are at risk. Unless 
the department addresses long-standing management issues and sets a 
clear plan for the future, the department and Congress cannot make 
informed decisions about the significant investments needed to 
reconstitute or recapitalize the stocks. 

Recommendations for Executive Action: 

To address the risks and management challenges facing the department's 
prepositioning programs and improve oversight, we recommend that the 
Secretary of Defense take the following five actions: 

* Direct the Chairman, Joint Chiefs of Staff, to assess the near-term 
operational risks associated with current inventory shortfalls and 
equipment in poor condition should a conflict arise. 

* Direct the Under Secretary of Defense for Acquisition, Technology, 
and Logistics to provide oversight over the department's prepositioning 
programs by fully implementing the department's directive on war 
reserve matériel and, if necessary, revise the directive to clarify the 
lines of accountability for this oversight. 

* Direct the Secretary of the Army to improve the processes used to 
determine requirements and direct the Secretary of the Army and Air 
Force to improve the processes used to determine the reliability of 
inventory data so that the readiness of their prepositioning programs 
can be reliably assessed and proper oversight over the programs can be 
accomplished. 

* Develop a coordinated departmentwide plan and joint doctrine for the 
department's prepositioning programs that identifies the role of 
prepositioning in the transformed military and ensures these programs 
will operate jointly, support the needs of the war fighter, and are 
affordable. 

* Report to Congress, possibly as part of the mandated October 2005 
report, how the department plans to manage the near-term operational 
risks created by inventory shortfalls and management and oversight 
issues described in this report. 

Agency Comments and Our Evaluation: 

DOD provided written comments on a draft of this report. These comments 
are reprinted in appendix III. DOD partially or fully concurred with 
our recommendations. However, in its response, DOD disagreed with the 
implementation of two of our recommendations because it had already 
taken actions to address them. In subsequent discussions with DOD, 
officials indicated that this disagreement was not related to the 
substance of our recommendations. In fact, the department has already 
initiated several actions to address our recommendations including 
conducting an assessment of risk, improving requirements and inventory 
visibility, and conducting a departmental assessment on future 
prepositioning. Further, DOD agreed that oversight policy as discussed 
in its directive does not reflect appropriate oversight roles and 
responsibilities. To address this issue, DOD plans to clarify policy 
and roles and responsibilities for oversight. With respect to our 
recommendation to improve requirements determination and the 
reliability of inventory data, the initial efforts taken by the Army 
and Air Force represent progress, but the planned actions should 
address all categories of the Army and Air Force's prepositioned 
stocks, as discussed in our report, and not just a portion of these 
programs. For example, the planned actions should also include the 
Army's operational project stocks and the Air Force's vehicle stocks, 
among others. Overall, we acknowledge the actions already taken by the 
department to address these issues, but DOD will need sustained 
management focus to resolve these deeply rooted and long-standing 
problems. 

As arranged with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from the date of this report. At that time, we will send copies of this 
report to the Secretary of Defense, the Secretary of the Army, the 
Secretary of the Air Force, the Secretary of the Navy, and the 
Commandant of the Marine Corps. We will also make copies available to 
others upon request. In addition, this report will be available at no 
charge on the GAO Web site at http://www.gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. 

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

Signed by: 

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

[End of section] 

Appendix I: Past Products Identifying DOD Inventory Management and 
Prepositioning Challenges: 

The Department of Defense's (DOD) prepositioning programs have faced 
long-standing challenges including poor asset visibility; equipment 
excesses and shortfalls; and invalid, inaccurate, poorly defined, and 
otherwise questionable requirements. GAO, military service auditors, 
DOD's Inspector General, and others have called attention to these 
problems in products issued over the years. In 1990, we identified 
DOD's inventory management as high risk because inventory levels were 
too high and the supply system was not responsive to the needs of the 
war fighters.[Footnote 45] With the onset of Operation Iraqi Freedom, 
other supply chain issues related to inventory management have been 
reported as impediments. In a January 2005 update, we expanded this 
high-risk area to include DOD's management of its entire supply chain, 
which includes distribution, inventory management, and asset 
visibility. 

Table 3 provides summaries of challenges identified in select GAO 
reports and testimonies issued between January 1995 and March 2005. 
Table 4 provides summaries of issues identified in select products 
released by other organizations during the same time period. 

Table 3: GAO Products: 

Title: Defense Inventory: Actions Needed to Improve the Availability of 
Critical Items during Future Military Operations (GAO-05-275, March 
2005); 
Key challenges identified: In March 2005, we reported on DOD's supply-
chain management during Operation Iraqi Freedom. We developed detailed 
case studies of nine supply items that were reported to be in short 
supply and could have had operational impacts, and found that U.S. 
troops experienced shortages of seven of the nine items that led, in 
some cases, to a decline in the operational capability of equipment and 
increased risk to troops. We identified five systemic deficiencies that 
contributed to shortages of the selected items, including (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. 

Title: High-Risk Series: An Update, GAO-05-207 (January 2005); 
Key challenges identified: In January 2005, we reported that DOD's 
supply- chain management had experienced significant weaknesses in its 
ability to provide efficient and effective supply support to war 
fighters. While DOD reports showed the department owning about $67 
billion of inventory, shortages of certain critical spare parts were 
adversely affecting equipment readiness and contributing to maintenance 
delays. DOD also lacked visibility and control over the supplies and 
spare parts it owned and did not have the ability to provide timely or 
accurate information on the location, movement, status, or identity of 
its supplies. 

Title: Military Prepositioning: Observations on Army and Marine Corps 
Programs During Iraqi Freedom and Beyond, GAO-04-562T (March 2004); 
Key challenges identified: In March 2004, we testified that during 
Operation Iraqi Freedom, the Army's prepositioning program had some 
equipment that was outdated or did not match unit needs. The program 
also faced shortfalls, such as trucks, spare parts, and other items. We 
noted that shortages in Army prepositioned and war reserve spare parts 
had been a long-standing systemic problem. We likewise reported that 
the theater supply-and-distribution system became overwhelmed and was 
worsened by the inability to track assets available in theater, which 
meant that war fighters did not know what was available. 

Title: Defense Logistics: Preliminary Observations on the Effectiveness 
of Logistics Activities During Operation Iraqi Freedom, GAO-04-305R 
(December 2003); 
Key challenges identified: In December 2003, we reported that during 
Operation Iraqi Freedom poor asset visibility and insufficient and 
ineffective theater distribution capabilities contributed to 
substantial logistics support problems. DOD and military service 
officials raised a number of issues that may have contributed to the 
logistics problems, including (1) shortages of some spares or repair 
parts needed by deployed forces, (2) a reported mismatch between Army 
prepositioned equipment and unit needs, (3) DOD contractors used for 
logistics support during Operation Iraqi Freedom were not always 
effective, and (4) physical security at ports and other distribution 
points in the theater was not always adequate to protect assets. 

Title: Military Readiness: New Reporting System Is Intended to Address 
Long-Standing Problems, but Better Planning Is Needed, GAO-03-456 
(March 2003); 
Key challenges identified: In March 2003, we reported that DOD used 
readiness measures that varied 10 percentage points or more to 
determine readiness ratings and often did not report the precise 
measurements outside DOD. We additionally reported that DOD had 
complied with most, but not all, of the legislative readiness-reporting 
requirements and, as a result, Congress was not receiving all the 
information mandated by law. DOD issued a directive in June 2002 to 
establish a new comprehensive readiness-reporting system. However, as 
of January 2003, DOD had not developed an implementation plan 
containing measurable performance goals, identification of resources, 
performance indicators, and an evaluation plan to assess progress in 
developing the new reporting system. 

Title: Major Management Challenges and Program Risks: Department of 
Defense, GAO-03-98 (January 2003); 
Key challenges identified: In January 2003, we reported that 
inefficient inventory management practices represented one of the most 
serious weaknesses in DOD's logistics operations. While DOD's inventory 
value had been declining for the previous 10 years, GAO's past and 
current work in the area indicated that DOD (1) continued to store 
unnecessarily large amounts of material, with about half of its 
secondary inventory exceeding then- war reserve or current operating 
requirements; (2) purchased material for which there was no valid 
requirement; (3) experienced equipment readiness problems because of a 
lack of key spare parts; and (4) maintained inadequate visibility over 
material being shipped to and from military activities. 

Title: Defense Management: Munitions Requirements and Combatant 
Commanders' Needs Require Linkage, GAO-03-17 (October 2002); 
Key challenges identified: In October 2002, we reported that a 
fundamental problem in DOD's munitions requirements process remained 
unaddressed-- inadequate linkage between the near-term munitions needs 
of the combatant commands and the purchases made by the military 
services based on computations derived from the department's munitions 
requirements-determination process. This disjunction had resulted in 
the combatant commands and the services identifying different munitions 
needs and, ultimately, in the combatant commanders reporting shortages. 
A more fundamental reason for the disconnect, however, was because 
DOD's munitions requirements-determination process did not fully 
consider the combatant commanders' preferences for munitions and weapon 
systems that would be used against targets identified in projected 
scenarios. 

Title: Defense Inventory: Improved Industrial Base Assessments for Army 
War Reserve Spares Could Save Money, GAO-02-650 (July 2002); 
Key challenges identified: In July 2002, we reported that the Army's 
approach to industrial-base capability assessments lacked key 
attributes that included the collection of current industry data, the 
analysis of that data, and the creation of management strategies for 
improving wartime spare parts availability. We noted that out-of-date 
data could result in reduced readiness and inflated or understated war 
reserve spare parts funding requests within budget submissions to 
Congress, and the Army's ability to identify long lead times and create 
management strategies to reduce lead times and thus the amount of 
inventory needed. 

Title: Defense Inventory: Army War Reserve Spare Parts Requirements Are 
Uncertain, GAO-01-425 (May 2001); 
Key challenges identified: In May 2001, we reported that 
notwithstanding the apparent shortfall in funding for war reserve spare 
parts, our review showed uncertainties about the accuracy of the Army's 
requirements and funding needs in that area. Specifically, we found 
that (1) the best available data regarding the rate at which spare 
parts would be consumed during wartime had generally not been used in 
determining war reserve requirements for spare parts, (2) a potential 
mismatch existed between the Army's methodology for determining spare 
parts requirements and the Army's planned battlefield maintenance 
practices, (3) the capacity of the industrial base to support the parts 
requirements of the two major theaters of war scenario was not well 
defined or based on industry data, and (4) emerging issues, such as 
force restructuring actions, could significantly affect future war 
reserve requirements. 

Title: Defense Inventory: Improvements Needed to Prevent Excess 
Purchases by the Air Force, GAO/NSIAD-00-5 (November 1999); 
Key challenges identified: In November 1999, we reported that the Air 
Force requirements model included prestocked requirements in computing 
the amount of inventory that needed to be purchased, but this inventory 
was not considered important enough to be funded. However, when the 
model identified contract quantities to be canceled, these items were 
counted as valid. Thus, the model decreased the quantity to be 
canceled by the amount of these requirements. 

Title: Military Prepositioning: Army and Air Force Programs Need to Be 
Reassessed, GAO/NSIAD-99-6 (November 1998); 
Key challenges identified: In November 1998, we reported that the Army 
and Air Force had poorly defined, outdated, or otherwise questionable 
requirements in the major programs that GAO reviewed. The Army and the 
Air Force had reported significant shortages and poor maintenance 
conditions in their prepositioning programs. In some cases, however, 
reliable data to assess inventory fill and maintenance condition were 
unavailable. Thus, the precise readiness of the prepositioned stocks--
and the impact of any shortfalls--was difficult to determine because of 
the questionable requirements that underpinned the programs and the 
poor information that the services used to manage the programs. 

Title: Afloat Prepositioning: Not All Equipment Meets the Army's 
Readiness Goal, GAO/NSIAD-97-169 (July 1997); 
Key challenges identified: In July 1997, we reported that of the Army's 
unit sets considered when reporting the readiness of the brigade set of 
war reserve equipment, about 25 percent did not meet the Army's 
readiness goal for full-mission capability. According to Army 
maintenance records, some equipment aboard prepositioning ships had 
been reported as nonmission capable since September 1995. These records 
also erroneously identified some nonmission-capable equipment as 
repairable aboard ship, although Army officials said that many repairs 
could not be made until the equipment was downloaded. One factor that 
contributed to lower readiness rates was that some equipment was not 
fully mission capable when it was originally loaded on prepositioning 
ships. Other factors include the deterioration of the equipment while 
in storage aboard ships and the limited ability to conduct maintenance 
on the equipment while in storage. 

Title: Army War Reserves: DOD Could Save Millions by Aligning Resources 
With the Reduced European Mission,GAO/NSIAD-97-158 (July 1997); 
Key challenges identified: In July 1997, we reported that DOD could 
have saved about $54 million per year in personnel costs once the Army 
removed unneeded war reserve equipment from central Europe and aligned 
its resources with the reduced mission. Army data showed that of 
128,000 items in central Europe identified as available for 
redistribution outside of Europe, the Army had firm plans for about 
54,000 items, had proposed--but had not funded or implemented--the 
plans for about 27,000 items, and had no plans for about 46,000 items 
because it found no known requirement for them in the war reserve 
program. 

Title: Defense Inventory Management: Problems, Progress, and Additional 
Actions Needed, GAO/T-NSIAD-97-109 (March 1997); 
Key challenges identified: In March 1997, we testified that inventory 
management problems had plagued DOD for decades. We had recently 
reported that about half of DOD's secondary inventory was not needed to 
support war reserve or current operating requirements. Most of the 
problems that contributed to the accumulation of this unneeded 
inventory still existed, such as outdated and inefficient inventory 
management practices that frequently did not meet customer demands, 
inadequate inventory oversight, weak financial accountability, and 
overstated requirements. We noted that while we continued to see 
pockets of improvement, DOD had made little overall progress in 
correcting systemic problems that had traditionally resulted in large 
unneeded inventories. 

Title: Defense Logistics: Much of the Inventory Exceeds Current Needs, 
GAO/NSIAD-97-71 (February 1997); 
Key challenges identified: In February 1997, we reported that $34 
billion of DOD's $69.6 billion secondary inventory on hand as of 
September 30, 1995, exceeded then-current operating and war reserve 
requirements. Although DOD had reduced its inventory from $77.5 billion 
since September 30, 1993, about half of the inventory continued to 
exceed current operating and war reserve requirements. Further analysis 
showed that inventory valued at $1.1 billion represented 100 or more 
years of supply. 

Title: Defense Inventory: Spare and Repair Parts Inventory Costs Can Be 
Reduced, GAO/NSIAD-97-47 (January 1997); 
Key challenges identified: In January 1997, we reported that $2.7 
billion of DOD's $8.3 billion in inventory at nonmajor locations was 
not needed to meet the services' then-current operating and war reserve 
requirements. We estimated the services could save about $382 million 
annually in inventory-holding costs by eliminating the excess 
inventory. 

Title: Defense Programs and Spending: Need for Reforms, GAO/T-NSIAD-95- 
149 (April 1995); 
Key challenges identified: In April 1995, we testified that inventory 
management was an area where DOD had experienced long-standing problems 
in managing its resources. While we had seen some improvements over the 
previous several years, DOD continued to waste billions of dollars 
buying, maintaining, and storing supplies that became excess. For 
example, as of September 1993, about $1.7 billion of the $9 billion of 
inventory that DOD was buying at that time was not needed to meet war 
reserve or operational requirements. 

Source: GAO. 

[End of table] 

Table 4: Other Products: 

Title: Bare Base Assets Study, Science Applications International 
Corporation (August 2004); 
Key challenges identified: In August 2004, the Science Applications 
International Corporation completed a comprehensive review and 
assessment of DOD bare base capabilities across the services, and 
identified a number of problems. The study, prepared for the Joint 
Staff Director of Logistics, found that the primary deficiency was the 
lack of a common understanding of doctrine that should provide the 
foundation for the services' bare base programs. This lack of 
understanding of doctrine (1) impacted all aspects of bare base 
support, to include its relationship to other basing operations, the 
methods of providing bare base support, and the responsibilities 
associated with bare base support; and (2) inhibited the ability of 
combatant commanders to articulate requirements, and the ability of the 
services to develop the appropriate capabilities. The study also found 
no simple solutions to the challenge of bare base, that the procurement 
of additional or new bare base assets was not the key, and those 
material solutions that were not linked to doctrinal requirements and 
not part of a coordinated solution would result in inefficient and less 
effective support. 

Title: Operation Iraqi Freedom (OIF) Maritime Prepositioning Force 
(MPF) Reconstitution, Regeneration, and Reembarkation (R3) Operations: 
Summary Findings, Center for Naval Analyses, CAB D0009974.A2/Final 
(June 2004); 
Key challenges identified: In June 2004, the Center for Naval Analyses 
reported that although Marine Corps Maritime Prepositioning Force 
operations in Iraq could be characterized as a success, the execution 
of reconstitution, regeneration, and reembarkation was neither simple 
nor easy. Challenges and issues included (1) a lack of detailed 
published policies and guidance, and servicewide knowledge and 
experience, in planning and executing operations; (2) simultaneous 
conduct of combat and operations; and (3) a lack of effective systems, 
organizations, and procedures for tracking and accounting for 
prepositioned equipment after it was downloaded. 

Title: Operational Project Stocks - Phase II, Headquarters, Department 
of the Army, U. S. Army Audit Agency, A-2004-0108-AML (February 2004); 
Key challenges identified: In February 2004, the Army Audit Agency 
reported that some operational projects--one of four categories of Army 
prepositioned stocks--had (1) invalid intended purposes; (2) 
inaccurate, overstated, outdated, or questionable requirements; (3) 
insufficient quantities of equipment on hand; or (4) a lack of 
requirements for essential equipment. Consequently, about $472 million 
of the roughly $1.5 billion in requirements reviewed were invalid and 
$280 million were questionable. 

Title: The Norway Air-Landed Marine Expeditionary Brigade 
Prepositioning Program, Naval Audit Service, N2003-0079 (September 
2003); 
Key challenges identified: In September 2003, the Naval Audit Service 
reported that the Marine Corps continued to store and maintain 
prepositioned stocks in Norway despite the program's original strategic 
purpose having ended with the fall of the Soviet Union. The Naval Audit 
Service further reported that none of the inventory was sourced to an 
approved or planned Joint Chiefs of Staff war scenario and that the 
stocks were in excess of Marine Corps-wide requirements. 

Title: U.S. Army Matériel Command (USAMC) Operation Iraqi Freedom (OIF) 
Lessons Learned Conference, 10-11 September 2003, Redstone Arsenal, 
Alabama; 
Key challenges identified: In September 2003, the U.S. Army Matériel 
Command sponsored an Operation Iraqi Freedom lessons learned conference 
during which 27 major issues were identified in such areas as 
personnel, supply, maintenance, and distribution. For example (1) 
supply-related lessons learned included the need to relook at 
requirements determinations, asset management and visibility, 
prepositioned stocks, and ammunition warfighter support; (2) 
maintenance-related lessons learned included the need to improve 
prepositioning maintenance, readiness and other reporting, 
accountability, and forward repair activity; and (3) distribution- 
related lessons learned included the need to modify force structure and 
doctrine to support the distribution system, appoint a single DOD 
distribution manager, and develop and implement a business system. 

Title: Other War Reserve Matériel, Air Force Audit Agency, F2003-0010- 
FC4000 (May 2003); 
Key challenges identified: In May 2003, the Air Force Audit Agency 
reported that Air Force personnel did not properly segregate Other War 
Reserve Matériel requirements from peacetime operating spares 
requirements for about 16 percent of items, resulting in more than 
$118.8 million of overstated peacetime operating spares requirements. 
The audit agency likewise reported that Air Force supply personnel 
inappropriately applied $4.3 million of excess war reserve matériel 
assets to offset unfunded requirements rather than using the excesses 
to offset funded peacetime operating spares requirements. 

Title: Systematic Inspection of the Material Condition of Army War 
Reserve Stocks, U.S. Army Matériel Command Inspector General (August 
2001); 
Key challenges identified: In August 2001, the Army Matériel Command 
Inspector General reported the following problems with Army war reserve 
sustainment stocks related to the Army Prepositioned Stock program: (1) 
a lack of centralized strategic operational direction; (2) insufficient 
funding for program requirements; (3) a lack of data integrity in 
automated systems; (4) adverse mission impact caused by readiness 
reporting procedures and overall operational practices; (5) mismatches 
between recorded condition codes of matériel and true conditions; (6) 
no established procedures for test, measurement, and diagnostic 
equipment support; (7) an inability of the command to effectively 
support the Army's wartime mortuary affairs mission; (8) matériel 
excess to requirements stored at prepositioned sites; (9) ineffective 
government oversight of a contractor allowing decreased readiness and 
increased costs; and (10) bulk fuel, potable water, and other assets to 
support forces during deployment were not part of the package. 

Title: Medical Unit Readiness Reporting, Air Force Audit Agency, 
00058007 (December 2000); 
Key challenges identified: In December 2000, the Air Force Audit Agency 
reported that medical unit personnel inconsistently apportioned Air 
Force resources among the Aerospace Expeditionary Forces and improperly 
(1) reported war reserve matériel condition status, (2) accomplished 
readiness training, (3) monitored expiration-dated war reserve matériel 
items, and (4) controlled sensitive readiness data. 

Title: Inventory Management of Navy Fleet Hospitals by the Fleet 
Hospital Support Office, Cheatham Annex, Virginia, Department of 
Defense Inspector General, D-2000-191 (September 2000); 
Key challenges identified: In September 2000, the DOD Inspector General 
assessed the Navy's prepositioned fleet hospitals. It found that the 
Naval Fleet Hospital Support Office (1) improperly managed its 
approximate $108 million inventory warehoused at Cheatham Annex, 
Virginia; (2) fielded two fleet hospitals without key pieces of 
equipment; and (3) did not properly manage unliquidated obligations. 

Title: Prepositioned Aircraft Fuel Drop Tanks, Air Force Audit Agency, 
00062006 (July 2000); 
Key challenges identified: In July 2000, the Air Force Audit Agency 
reported that Air Force managers did not validate, quantify, and 
correct suspected parts shortages in more than 9,000 prepositioned, 
unassembled drop tanks resulting in a possible inability to meet 
wartime tank requirements and consequent delays in critical wartime 
fighter sorties. 

Title: Selected War and Mobilization Planning Factors, Air Force Audit 
Agency, 99058006 (September 1999); 
Key challenges identified: In September 1999, the Air Force Audit 
Agency reported that the Central and Pacific Air Forces planning 
personnel did not always correctly prepare War and Mobilization Plan, 
Volume 4 data or consistently and correctly use program planning 
factors to determine war reserve matériel requirements. 

Title: Civil Engineer Support Equipment Assigned to Naval Mobile 
Construction Battalions, Naval Audit Service, 036-99 (May 1999); 
Key challenges identified: In May 1999, the Naval Audit Service 
reported that (1) 1,587 of 5,289 assets assigned to fulfill the table 
of allowances for 20 naval mobile construction battalions could not 
satisfy the requirements, and (2) 37 civil engineering support 
equipment assets not assigned to a table of allowances but kept as 
backup in case of a contingency could possibly satisfy up to $1.1 
million in planned procurements for other Navy activities. 

Title: Accountability and Inventory Levels of Air Force Medical War 
Reserve Material at Fort Worth, Texas, Department of Defense Inspector 
General, 98-163 (June 1998); 
Key challenges identified: In June 1998, the DOD Inspector General 
reported that while the Air Force maintained adequate accountability 
over medical war reserve material warehoused at Fort Worth, about $33 
million of the medical war reserve material was not needed to satisfy 
its deployable medical systems requirements. 

Title: Army Prepositioned Stock Program, Combat Equipment Group - 
Europe, U.S. Army Audit Agency, AA 98-138 (March 1998); 
Key challenges identified: In March 1998, the Army Audit Agency 
reported that while the Army Combat Equipment Group properly accounted 
for its war reserve stocks stored in Europe, improved accounting 
procedures were needed for its war reserve stocks loaned in support of 
Operation Joint Endeavor in Bosnia. The audit agency additionally 
reported that repair parts had been identified during the audit that 
were not needed to support the deployable unit sets authorized for the 
war reserve program. Moreover, while war reserve equipment was 
generally maintained and stored properly, some of the combat equipment 
companies retained too many line items, maintained excess stockage 
levels, and didn't establish an effective method to monitor maintenance 
operations. 

Title: Sustainment Requirements for the Army Prepositioned Stock 
Program, U.S. Army Audit Agency, AA 98-99 (February 1998); 
Key challenges identified: In February 1998, the Army Audit Agency 
reported that a substantial number of undesignated war reserve assets 
were stored in Europe that could have been used to satisfy new 
sustainment stock requirements. 

Title: Total Asset Visibility-Operational Projects, U.S. Army Audit 
Agency, AA 98-31 (November 1997); 
Key challenges identified: In November 1997, the Army Audit Agency 
reported problems in the Total Asset Visibility capability for Army 
operational projects, including (1) incomplete or unreliable onhand 
asset balances, (2) a lack of visibility over loaned assets, (3) 
inadequate identification of key management controls in Army policy 
regulations, (4) weaknesses in data integrity, and (5) failure of Army 
managers at both the wholesale and retail levels to redistribute assets 
to improve readiness and reduce requirements. 

Title: Equipment Pre-positioned Afloat, Department of Defense Inspector 
General, 97-054 (December 1996); 
Key challenges identified: In December 1996, the DOD Inspector General 
reported that the Army had rapidly expanded its afloat prepositioning 
program without first publishing criteria, policy, plans, and doctrine 
resulting in a possible inability to ensure effective equipment 
management in support of the combatant commanders. 

Source: GAO. 

[End of table] 

[End of section] 

Appendix II: Scope and Methodology: 

To assess the near-term operational risk given the continuing use of 
prepositioned stocks, we obtained reports prepared by the military 
services on the inventory levels of their prepositioned stocks compared 
to program requirements. We also reviewed available maintenance reports 
or other data used by the services to measure the maintenance condition 
of the prepositioned stocks. We also observed the physical condition of 
matériel stored by the Marine Corps at its prepositioning locations in 
Norway and aboard a prepositioning ship at its maintenance facility 
located at Blount Island, Florida; and observed the maintenance 
condition of the Army's prepositioned stocks at Camp Carroll, South 
Korea and Sagami Army Depot, Japan. We interviewed program managers at 
each of the military services to determine the impact of reported 
shortfalls and poor maintenance condition in the prepositioned stocks 
and discussed the time frames and costs needed to repair or replace 
prepositioned stocks used in recent military operations. 

To assess the sufficiency of the Department of Defense's (DOD) and 
service-level oversight of these prepositioning programs, we discussed 
the processes used by DOD and the services to oversee their 
prepositioning programs with officials from the Office of the Secretary 
of Defense, the Joint Staff, and the military services. We reviewed 
relevant DOD directives and readiness reports prepared by the services 
and the Joint Staff to determine the extent to which the information 
contained in these reports could be used by DOD or the services to 
provide oversight. We also reviewed past reports prepared by GAO, the 
Army Audit Agency, the Air Force Audit Agency, the Army Matériel 
Command Inspector General, and the CNA Corporation that identified 
problems with the reliability of data regarding the preparedness of the 
services' prepositioned stocks and problems with the requirements 
determination processes for some of these stocks. We discussed issues 
regarding the sufficiency of data on the preparedness of DOD's 
prepositioned stocks with program managers from each of the services. 

To assess whether DOD has developed a coordinated plan for the future 
of its prepositioning programs that would meet the goals of the 
recently published defense strategy, we collected and analyzed 
information from the military services and the Defense Logistics Agency 
on the future plans for their prepositioning programs. We also reviewed 
the recently published National Defense Strategy and discussed the 
future direction of the department's prepositioning programs with 
officials in the Office of the Secretary of Defense, the Joint Staff, 
and the military services. 

We conducted our review from July 2004 through May 2005 in accordance 
with generally accepted government auditing standards. We reviewed 
available data for inconsistencies and discussed the data with DOD 
officials. Our assessments of data reliability revealed significant 
concerns that are discussed in the report. 

We interviewed officials and obtained documentation at the following 
locations: 

Army: 

* U.S. Army Headquarters, Washington, D.C. 

* U.S. Army Matériel Command, Ft. Belvoir, Virginia: 

* U.S. Army Field Support Command, Rock Island, Illinois: 

* U.S. Army Forces Command, Ft. McPherson, Georgia: 

* U.S. Army Special Operations Command, Ft. Bragg, North Carolina: 

* Eighth U.S. Army, Yongsan Garrison, South Korea: 

* Combat Equipment Battalion-Northeast Asia, Camp Carroll, South Korea: 

* Matériel Support Center-Korea, Camp Carroll, South Korea: 

* Sagami Army Depot, Camp Zama, Japan: 

Marine Corps: 

* U.S. Marine Corps Headquarters, Arlington, Virginia: 

* Marine Corps Combat Development Command, Quantico, Virginia: 

* Blount Island Command, Jacksonville, Florida: 

* Frigaard Storage Facility, Norway: 

* Hammerkammen Storage Facility, Norway: 

* Vaernes Aviation Storage Facility, Norway: 

* Marine Corps Logistics Command, Albany, Georgia: 

Navy: 

* Chief of Naval Operations, Washington, D.C. 

* CNA Corporation, Alexandria, Virginia: 

* Naval Facilities Engineering Command, Washington, D.C. 

* Naval Special Warfare Command, San Diego, California: 

* Naval Audit Service, Falls Church, Virginia: 

* Naval Medical Logistics Command, Fort Detrick, Maryland: 

* Military Sealift Command, Washington, D.C. 

Air Force: 

* U.S. Air Force Headquarters, Washington, D.C. 

* Air Combat Command, Langley Air Force Base, Virginia: 

* Headquarters, Central Command, Air Forces, Shaw Air Force Base, South 
Carolina: 

* Headquarters, Pacific Air Forces, Hickam Air Force Base, Hawaii: 

* U.S. Air Forces in Europe, Ramstein Air Base, Germany: 

* 49th Matériel Maintenance Group, Holloman Air Force Base, New Mexico: 

* Air Force Special Operations Command, Hurlburt Field, Florida: 

Unified Commands: 

* U.S. Pacific Command, Camp H.M. Smith, Hawaii: 

* U.S. Special Operations Command, MacDill Air Force Base, Florida: 

* U.S. Forces Korea, Yongsan Garrison, South Korea: 

[End of section] 

Appendix III: Comments from the Department of Defense: 

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

JUL 20 2005: 

Mr. William Solis:
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office:
441 G Street, N. W.: 
Washington, DC 20548: 

Dear Mr. Solis: 

This is the Department of Defense (DoD) response to the GAO draft 
report GAO-05-427, DEFENSE LOGISTICS: Better Management and Oversight 
of Prepositioning Programs Needed to Reduce Risk and Improve Future 
Programs, dated June 6, 2005 (GAO Code 350568). The GAO draft report 
highlights that the DoD faces some near-term operational risks should 
another large-scale conflict emerge because it has drawn heavily on its 
prepositioned stocks to support ongoing operations in Iraq. The GAO 
made 5 recommendations to address the risks of inventory shortfalls and 
to improve DoD's management and oversight of its prepositioning 
programs. The DoD partially concurs with the recommendations in the 
report and is already taking action 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 DRAFT REPORT - DATED JUNE 6, 2005 GAO CODE 350568/GAO-05-427 
"DEFENSE LOGISTICS: Better Management and Oversight of Prepositioning 
Programs Needed to Reduce Risk and Improve Future Programs" 

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS: 

RECOMMENDATION 1: The GAO recommended that the Secretary of the Defense 
direct the Chairman, Joint Chiefs of Staff, to assess the near-term 
operational risks associated with current inventory shortfalls and 
equipment in poor condition should a conflict arise. (Page 39/GAO Draft 
Report): 

DOD RESPONSE: Partially concur. While we concur in substance with the 
GAO's recommendations, we disagree with the implementation. The Joint 
Staff has conducted a mission analysis on several Operation Plans 
(OPLANs), based on the readiness of prepositioned assets in order to 
determine near-term operational risks. This mission analysis resulted 
in a risk assessment that was briefed to the Joint Chief of Staff 
Senior Leadership on June 3, 2005. Results of this assessment, which 
are classified as Secret//No Foreign Nationals, are being addressed 
through coordinated efforts of the Services and Combatant Commands. 

RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 
direct the Under Secretary of Defense for Acquisition, Technology, and 
Logistics to provide oversight over the Department's prepositioning 
programs by fully implementing the Department's directive on war 
reserve matériel and, if necessary, revise the directive to clarify the 
lines of accountability for this oversight. (Page 39/GAO Draft Report): 

DOD RESPONSE: Partially Concur. Oversight policy as discussed in the 
DoD Directive does not reflect appropriate oversight roles and 
responsibilities. To address this issue, representatives of the Joint 
Staff and the Office of the Deputy Under Secretary of Defense 
(Logistics & Matériel Readiness) co-chair a War Reserve/Prepo Working 
Group established in February 2005, to assess the adequacy of the 
current war reserve matériel policy, including appropriate oversight 
roles and responsibilities. This group will recommend changes to the 
Department's directive where appropriate. Estimated completion date is 
December 2005. 

RECOMMENDATION 3: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to improve the processes used to 
determine requirements and direct the Secretaries of the Army and Air 
Force to improve the processes used to determine the reliability of 
inventory data so that the readiness of their prepositioning programs 
can be reliably assessed and proper oversight over the programs can be 
accomplished. (Page 39/GAO Draft Report): 

DOD RESPONSE: Partially Concur. While we concur in substance with the 
GAO's recommendations, we disagree with the implementation. 

The Army is taking steps to better compute Army Prepositioned Stocks 
(APS) War Reserve Secondary Items (WRSI) requirements. In January 2005, 
HQDA G-4 published the Army War Reserve Sustainment Secondary Items 
Computation Guidance which enables the Army to calculate new secondary 
items sustainment stock requirements based on the new warfighting 
scenarios. Updated consumption rates and planning factors from 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. The new 
requirements will have far greater level of fidelity and validity in 
supporting the warfighter's contingency and wartime requirements. The 
Army War Reserve Automated Process (AWRAP) used to compute APS WRSI 
requirements is scheduled to be completed by November 15, 2005. 

Air Force oversight of Basic Expeditionary Airfield Resources (BEAR) 
assets has increased significantly. Monthly reviews of BEAR status are 
provided to senior Air Force leadership and Combatant Commanders to 
facilitate ,accountability and supply readiness of critical assets. 
Additionally, the Air Force is refining its solution to this problem 
via the BEAR-Base Reconstitution and Management System (BBRAMS). This 
system is being designed to improve the operational efficiency in Air 
Force BEAR-base systems operations. It uses Automatic Identification 
Technology (AIT)) to automate asset tracking, replenishment of assets, 
maintenance and logistics efforts. BBRAMS is essential for the beddown 
and sustainment phases of establishing expeditionary airfields. BBRAMS 
can account for receipt of assets throughout the maintenance process 
and track assets through the packaging and reconstitution processes. 
The system allows for total asset visibility as items move through the 
warehouse, through maintenance and deployment. Initial testing of 
BBRAMS was conducted at Holloman AFB in September 2004 and, with 
complete funding, full fielding is expected to begin approximately 
January 2006. 

RECOMMENDATION 4: The GAO recommended that the Secretary of Defense 
develop a coordinated Department wide plan and joint doctrine for the 
Department's prepositioning programs that identifies the role of 
prepositioning in the transformed military and ensures these programs 
will operate jointly, support the needs of the warfighter, and are 
affordable. (Page 39/GAO Draft Report) 

DOD RESPONSE: Partially Concur. DoD is providing a coordinated response 
to the National Defense Authorization Act of FY 2005 Section 1046 that 
will assess programs of the Military Services for prepositioning of 
matériel and equipment with a focus on how these programs will support 
the goal of the Secretary to have the capability, from the onset of a 
contingency situation, to deploy forces to a distant theater within 10 
days, defeat an enemy within 30 days, and be ready for an additional 
conflict within another 30 days. This assessment will include a review 
of prepositioned matériel and equipment used in Operation Iraqi Freedom 
and Operation Enduring Freedom, a description of changes to doctrine, 
strategy, and transportation plans needed, a description of 
modifications to prepositioned programs that could be required, and a 
discussion of joint operations and training that support force 
projection requirements. This assessment addresses this recommendation 
and is to be submitted to Congress not later than October 1, 2005. Upon 
completion of the assessment, we will determine if any additional 
changes are required to DoD directive(s) or joint doctrine. 

RECOMMENDATION 5: The GAO recommended that the Secretary of Defense 
report to Congress, possibly as part of the mandated October 2005 
report, how the Department plans to manage the near-term operational 
risks created by inventory shortfalls and management and oversight 
issues described in this report. (Page 39/GAO Draft Report): 

DOD RESPONSE: Concur. The DoD will provide this assessment as part of 
the report to Congress outlined in the DoD response to recommendation 
4, which is to be provided not later than October 1, 2005. 
Additionally, the Department will continue to report the status of 
prepositioning programs through the Secretary's Annual Defense Report 
to the President and Congress. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

William M. Solis, (202) 512-8365: 

Acknowledgments: 

In addition to the contact named above, John Pendleton, Assistant 
Director, Harold Reich, Assistant Director, Aisha Cabrer, Katherine 
Chenault, Lee Cooper, Jeff Kans, Renee McElveen, John Nelson, Emmy 
Rhine, Enemencio Sanchez, Patricia Sari-Spear, Kimberly Seay, Robyn 
Trotter, Matthew Ullengren, Eddie Uyekawa, Hector Wong, and Ignacio 
Yanes also made key contributions to this report. 

FOOTNOTES 

[1] The Department of Defense, The National Defense Strategy of the 
United States of America (March 2005). 

[2] GAO: Military Prepositioning: Army and Air Force Programs Need to 
Be Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998). 

[3] GAO, Military Prepositioning: Observations on Army and Marine Corps 
Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T 
(Washington, D.C.: Mar. 24, 2004). 

[4] Pub. L. No. 108-375, § 1046, (2004). 

[5] We will refer to stocks on hand as compared against required levels 
as "inventory fill" in this report. 

[6] As discussed later in this report, reliable data needed to assess 
inventory fill and maintenance condition were unavailable in many 
cases. Therefore, the precise readiness of prepositioned stocks and the 
impact of any shortfalls are difficult to determine. 

[7] The term "bare base sets" refers to tents for troops, latrines, 
kitchens, aircraft hangers, maintenance shops, generators, and 
environmental controls. The sets support early-arriving combat forces 
and are especially critical in austere environments. 

[8] Pub. L. No. 103-62. 

[9] DOD Directive 3110.6, War Reserve Matériel Policy (Nov. 9, 2000-- 
certified current as of Dec. 1, 2003). 

[10] Reconstitution includes the costs to clean, inspect, maintain, 
replace, and restore equipment to the required condition at the 
conclusion of a contingency operation or unit deployment. 

[11] GAO, Defense Inventory: The Army Needs a Plan to Overcome Critical 
Spare Parts Shortages, GAO-03-705 (Washington, D.C.: June 27, 2003). 

[12] See GAO, Defense Management: Opportunities to Reduce Corrosion 
Costs and Increase Readiness, GAO-03-753 (Washington, D.C.: July 7, 
2003), and Defense Management: Opportunities Exist to Improve 
Implementation of DOD's Long-Term Corrosion Strategy, GAO-04-640 
(Washington, D.C.: June 23, 2004). 

[13] GAO, Army War Reserves: DOD Could Save Millions by Aligning 
Resources With the Reduced European Mission, GAO/NSIAD-97-158 
(Washington, D.C.: July 11, 1997) and Military Prepositioning: Army and 
Air Force Programs Need to Be Reassessed, GAO/NSIAD-99-6 (Washington, 
D.C.: Nov. 16, 1998). 

[14] Statement of the Deputy Commandant for Plans, Policies, and 
Operations, United States Marine Corps, before the Subcommittee on 
Readiness, House Armed Services Committee, Concerning Requirements to 
Reconstitute Military Equipment, April 6, 2005. 

[15] Naval Audit Service: The Norway Air-Landed Marine Expeditionary 
Brigade Prepositioning Program, N2003-0079 (September 2003) and Final 
Report of the Commission on Review of Overseas Military Facility 
Structure of the United States (Arlington, Va.: Aug. 15, 2005). 

[16] Common support equipment and supplies include items adopted by a 
military service for use by its own forces and their activities, 
including standard issue military items, base support items, and the 
supplies and services provided by the military service to support and 
sustain its own forces. 

[17] Department of Defense, (U) Joint Programming Guidance for Fiscal 
Years 2006-2011, June 2004. 

[18] GAO, Military Prepositioning: Observations on Army and Marine 
Corps Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T 
(Washington, D.C.: Mar. 24, 2004). 

[19] Pub. L. No. 103-62. 

[20] GAO, Military Readiness: Reports to Congress Provide Few Details 
on Deficiencies and Solutions, GAO/NSIAD-98-68 (Washington, D.C.: Mar. 
30, 1998) and Military Readiness: New Reporting System Is Intended to 
Address Longstanding Problems, but Better Planning is Needed, GAO-03-
456 (Washington, D.C.: Mar. 28, 2003). 

[21] The Army uses the Army War Reserve Automated Process to determine 
its requirements for spare parts in the war reserve. 

[22] GAO, Military Prepositioning: Observations on Army and Marine 
Corps Programs During Operation Iraqi Freedom and Beyond, GAO-04-562T 
(Washington, D.C.: Mar. 24, 2004). 

[23] GAO, Defense Logistics: Actions Needed to Improve the Availability 
of Critical Items during Current and Future Operations, GAO-05-275 
(Washington, D.C.: Apr. 8, 2005). 

[24] GAO, Defense Management: Munitions Requirements and Combatant 
Commander's Needs Require Linkage, GAO-03-17 (Washington, D.C.: Oct. 
15, 2002). 

[25] The Army's Status of Resources and Training System is the 
counterpart to the Global Status of Resources and Training System, 
which is an automated system that assesses the extent to which military 
units possess the required resources and training to undertake their 
wartime missions. 

[26] GAO, Military Prepositioning: Army and Air Force Programs Need to 
Be Reassessed, GAO/NSIAD-99-6 (Washington, D.C.: Nov. 16, 1998). 

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

[28] GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005). 

[29] U.S. Army Matériel Command, Iraq Lessons Learned Conference 
(Redstone Arsenal, Ala.: Sept. 10-11, 2003). 

[30] Army Audit Agency, Operational Project Stocks Phase II, Report A- 
2004-0108-AML (Alexandria, Va.: Feb. 12, 2004). 

[31] Air Force Audit Agency, Other War Reserve Matériel, F2003-0010- 
FC4000 (Washington, D.C.: May 2003). 

[32] U.S. Army Matériel Command Inspector General, Systematic 
Inspection of the Material Condition of Army War Reserve Sustainment 
Stocks (Ft. Belvoir, Va.: August 2001). 

[33] U.S. Army Matériel Command, Iraq Lessons Learned Conference 
(Redstone Arsenal, Ala.: Sept. 10-11, 2003). 

[34] CNA Corporation, Operation Iraqi Freedom (OIF) Maritime 
Prepositioning Force (MPF) Reconstitution, Regeneration, and 
Reembarkation Operations: Summary Findings (Alexandria, Va.: June 
2004). 

[35] DOD, The National Defense Strategy of the United States of America 
(March 2005). 

[36] Recent changes in DOD's defense posture have shifted the 
department's focus from being capable of winning two major theater wars 
to including having the capabilities needed to (1) defend the United 
States, (2) deter aggression and coercion in four critical regions, (3) 
swiftly defeat aggression in overlapping major conflicts, and (4) 
preserve the option to win decisively in one conflict. 

[37] Final report of the Commission on Review of Overseas Military 
Facility Structure of the United States (Arlington, Va.: August 15, 
2005). 

[38] DOD, DOD Transformation Planning Guidance (Washington, D.C.: April 
2003). 

[39] Logistics Management Institute, Strategies for Worldwide 
Prepositioning (McLean, Va.: August 2003). 

[40] Science Applications International Corporation, Bare Base Assets 
Study (McLean, Va.: Aug. 31, 2004). 

[41] DOD Transformation Planning Guidance, April 2003; Air Force 
Transformation Flight Plan, November 2003. 

[42] DOD, Ground Force Equipment Repair, Replacement, and 
Recapitalization Requirements Resulting From Sustained Combat 
Operations (Washington, D.C.: April 2005). 

[43] Formerly known as Harvest Eagle and Harvest Falcon, the new bare 
base sets are called Basic Expeditionary Airfield Resources (BEAR). 
Rather than deploying all of the assets that are part of the larger 
Harvest Eagle and Harvest Falcon sets, the Air Force established a more 
tailored basing capability. This tiered approach establishes a new 150- 
person set and replaces the Harvest Eagle/Falcon sets with 550-person 
initial and 550-person follow-on sets. The plan for deployment is for 
the 150-person set to support the forces that open the airbase, 
followed by a 550-person initial set to establish the airbase. The 550- 
person follow-on sets would then be set up as the base capability 
expands, on an as-needed basis. 

[44] Issues of joint service participation and affordability are 
discussed in more detail in two reports: Congressional Budget Office, 
The Future of the Navy's Amphibious and Maritime Prepositioning Forces 
(Washington, D.C.: November 2004) and Congressional Research Service 
Report for Congress, Navy-Marine Corps Amphibious and Maritime 
Prepositioning Ship Programs: Background and Oversight Issues for 
Congress (Washington, D.C.: Nov. 15, 2004). 

[45] In 1990, we began a special effort to review and report on the 
federal program areas we considered high risk because they were 
especially vulnerable to waste, fraud, abuse, and mismanagement. In 
December 1992, we issued a series of reports on the fundamental causes 
of problems in designated high-risk areas, including one entitled: High-
Risk Series: Defense Inventory Management, GAO/HR-93-12 (Washington, 
D.C.: December 1992). 

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Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, 

NelliganJ@gao.gov 

(202) 512-4800 

U.S. Government Accountability Office, 

441 G Street NW, Room 7149 

Washington, D.C. 20548: