Warfighter Support:

Improved Cost Analysis and Better Oversight Needed over Army Nonstandard Equipment

GAO-11-766: Published: Sep 29, 2011. Publicly Released: Sep 29, 2011.

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As of March 2011, the Army had over $4 billion worth of nonstandard equipment in Iraq--that is equipment not included on units' standard list of authorized equipment. Concurrently, the Department of Defense (DOD) has acquired over $44 billion worth of Mine Resistant Ambush Protected vehicles (MRAP), most of which have been allocated to the Army. This equipment must be withdrawn from Iraq by December 31, 2011. GAO examined the extent to which the Army has plans and processes for the disposition of (1) nontactical nonstandard equipment; (2) tactical nonstandard equipment; and (3) MRAPs that are no longer needed in Iraq. In performing this review, GAO analyzed relevant documents, interviewed Army officials, and visited Sierra Army Depot, where most nontactical nonstandard equipment is shipped once it leaves Iraq.

The Army has plans and processes for the disposition of nontactical nonstandard equipment (e.g., durable goods that are used to provide services for soldiers), and recently created a policy regarding the length of storage time. Excess nontactical nonstandard equipment is either redistributed in the U.S Central Command theater, disposed of, provided to other nations through foreign military sales or other means, or shipped to depots in the United States. In April 2011, the Army issued two messages that updated its procedures for requisitioning excess nonstandard equipment stored at Sierra Army Depot and created a forum to determine its final disposition instructions. The intent was also to extend use of this equipment by making it available to Army units; when an item is deemed not operational, to dispose of it in theater; and to enter these instructions in a disposition database so they will no longer be shipped back to the United States. The Army would then avoid unnecessary transportation costs. The Army has not made disposition decisions for most of its tactical nonstandard equipment (i.e., commercially acquired or non-developmental equipment rapidly acquired and fielded outside the normal budgeting and acquisition process), and its disposition process is impaired by a lack of visibility over this equipment and the absence of a focal point to manage this equipment. The Capabilities Development for Rapid Transition process enables the Army to assess tactical nonstandard equipment already in use in the U.S. Central Command theater and determine whether it should be retained for the Army's current and future force and subsequently funded in the Army's base budget. However, the decision about most of the equipment considered by the process is to continue to fund it with overseas contingency operations funds. In addition, the Army has no system to track, monitor, and manage its inventory of tactical nonstandard equipment and has no single focal point to oversee this equipment. Best practices as cited in GAO's Standards for Internal Control in the Federal Government call for effective stewardship of resources by developing detailed policies, procedures, and practices. Although the Army has plans for the disposition of its MRAP fleet, its cost estimates are incomplete and do not follow cost-estimating best practices. The Army conducted a study to effectively guide its integration of MRAPs into its force structure. The selected option placed the majority of MRAPs in prepositioned stocks. However, this study did not incorporate analyses of future costs based on Department of Defense, Office of Management and Budget, and GAO cost-estimating guidance providing best practices; nor did it delineate total costs for sustainment of its MRAP fleet or when those costs would be incurred. Without such information, decision makers lack the perspective necessary to make asset-management and budgetary decisions. Although Army officials stated that they are working toward providing an estimate of future MRAP costs, this has not yet been completed. GAO recommends that the Secretary of Defense direct Army authorities to (1) finalize decisions about the future status of tactical nonstandard equipment; (2) designate a focal point to oversee this equipment; and (3) undertake a thorough life-cycle cost estimate for its MRAPs. DOD concurred with our third recommendation, partially concurred with our first, and did not concur with the second. Given DOD's lack of visibility over tactical nonstandard equipment, GAO continues to believe a focal point is needed.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD partially concurred with this recommendation. DOD has taken actions to identify which pieces of tactical non-standard equipment it will retain for its current and future force and fund those items in its FY15-19 base budget. On May 31, 2012, the Army issued a report identifying equipment it wants to sustain in the CENTCOM Theater after its drawdown from Iraq. As of December 12, 2012, the Army identified 14 Acquisition Program Candidates or enduring capabilities through the Capabilities Development for Rapid Transition (CDRT) process. These items had performed well in theater and the Army designated them to become eligible to compete in its base budget. The Army stated that these 14 capabilities are now competing for funding in its FY 2015-2019 base budget. Furthermore, on June 27, 2013, the Vice Chief of Staff of the Army approved the Nonstandard Equipment Army Requirements Oversight Council (AROC) process, which has taken the place of the CDRT process. The intent of this process is to provide cost-informed recommendations for selected tactical non-standard equipment that are transitioning from Overseas Contingency Operations (OCO) funding to the Army's base budget. As of June 2014, the AROC has identified 57 enduring capabilities which will compete for Program Objective Memorandum (POM) funding in the Army's FY 2017 and future base budgets. Taken together, these actions address the intent of the recommendation.

    Recommendation: To facilitate the Army's ability to efficiently evaluate, integrate, and provide for the disposition of its nonstandard equipment being retrograded from Iraq, and supply DOD decision makers and Congress with accurate estimates of the future costs of these systems, the Secretary of Defense should direct the Secretary of the Army to finalize decisions about the future status of tactical nonstandard equipment, fund those items deemed as enduring capabilities in the Army base budget if applicable, and provide Congress with its plans for and estimates on future funding for or costs associated with any equipment the Army will continue to use in theater that will not become enduring capabilities.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Not Implemented

    Comments: The Army did not concur with this recommendation. According to the Deputy Chief of Staff, Army G-3/5/7, the Army plans no future effort to improve the oversight of disposition actions for tactical nonstandard equipment.

    Recommendation: To facilitate the Army's ability to efficiently evaluate, integrate, and provide for the disposition of its nonstandard equipment being retrograded from Iraq, and supply DOD decision makers and Congress with accurate estimates of the future costs of these systems, the Secretary of Defense should direct the Secretary of the Army to designate a senior-level focal point within the Department of the Army with the appropriate authority and resources to manage the service's effort in overseeing the disposition of its tactical nonstandard equipment to include the implementation of a servicewide means to track, monitor, and manage this equipment.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Open

    Comments: DOD concurred with this recommendation. In response, DOD has taken actions to reduce the number of MRAP variants and to determine how many MRAPs it will retain for its future force. However, other actions regarding developing cost estimates are dependent upon further Army review. The management of the MRAP program has transitioned from a joint office to each of the services so that the services can develop plans for repairing, storing, and developing life cycle cost-analyses to sustain these vehicles. On October 3, 2012, the Army Training and Doctrine Command was tasked to conduct the MRAP Study III to recommend the number of MRAP variants the Army wishes to keep for its future force. On March 14, 2013, The MRAP Study III was approved and stated that the Army will retain 8,585 MRAPs, and reduce the number of variants from nine to three. In December 2013, the Army conducted an initial Configuration Steering Board to determine total MRAP life cycle costs, which will inform future Army budgetary decisions regarding the MRAP fleet. Eight MRAP configurations were approved and are pending a July 2014 Cost Review Board to determine affordability. We will continue to monitor the results of the Cost Review Board.

    Recommendation: To facilitate the Army's ability to efficiently evaluate, integrate, and provide for the disposition of its nonstandard equipment being retrograded from Iraq, and supply DOD decision makers and Congress with accurate estimates of the future costs of these systems, the Secretary of Defense should direct the Secretary of the Army to undertake a thorough total life-cycle cost estimate for integrating MRAPs into its ground vehicle fleet in accordance with DOD, OMB, and GAO guidance and include costs for training, upgrades, standardization, and military construction and (1) use this estimate to assess the affordability of its current plans and make adjustments to those plans if warranted; and (2) provide the total life-cycle cost for integrating MRAPs into its ground vehicle fleet to Congress.

    Agency Affected: Department of Defense: Department of the Army

 

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