United States Government Accountability Office

GAO Testimony 

Before the Subcommittees on Readiness 

and Tactical Air and Land Forces, 

Committee on Armed Services, 

House of Representatives 

DEFENSE LOGISTICS

Preliminary Observations 

on Equipment Reset 

Challenges and Issues for 

the Army and Marine Corps 

Statement of William M. Solis 

Director, Defense Capabilities and Management 

For Release on Delivery

Expected at 1:00 p.m. EST 

Thursday, March 30, 2006

 

GAO-06-604T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 30, 2006

DEFENSE LOGISTICS

Preliminary Observations on Equipment 

Reset Challenges and Issues for the 

Army and Marine Corps 

Highlights of GAO-06-604T, testimony 

before the Subcommittee on Readiness 

and Subcommittee on Tactical Air and 

Land Forces, Committee on Armed 

Services, House of Representatives 

The United States is engaged in an

unconventional war, not a war

against military forces of one

country, but an irregular war 

against terrorist cells with global 

networks. Operations Iraqi 

Freedom and Enduring Freedom 

are sustained military operations, 

which are taking a toll on the 

condition and readiness of military 

equipment that, in some cases, is 

more than 20 years old. The Army

and Marine Corps will likely incur 

large expenditures in the future to 

reset (repair or replace) a 

significant amount of equipment 

when hostilities cease. The Army 

has requested about $13 billion in 

its fiscal year 2006 supplemental

budget request for equipment reset. 

Today’s testimony addresses (1) 

the environment, pace of

operations, and operational 

requirements in Southwest Asia, 

and their affects on the Army’s and 

Marine Corps’s equipping and 

maintenance strategies; (2) 

equipment maintenance 

consequences created by these 

equipping and maintenance 

strategies; and (3) challenges 

affecting the timing and cost of

Army and Marine Corps equipment 

reset. 

GAO’s observations are based on 

equipment-related GAO reports 

issued in fiscal years 2004 through 

2006, as well as ongoing related 

work.

In response to the harsh operating environments in Iraq and Afghanistan, 

and the unanticipated and prolonged length and pace of sustained 

operations, the Army and Marine Corps have developed and implemented 

several initiatives to equip its forces and maintain the extensive amounts of 

equipment in theater. Environmental factors such as heat, sand, and dust 

have taken their toll on sensitive components. In addition, operating 

equipment at a pace well in excess of peacetime operations is generating a 

large operational maintenance and replacement requirement that must be 

addressed when units return to their home stations. To meet ongoing 

operational requirements, the Army and Marine Corps have developed pools 

of equipment in theater to expedite the replacement of equipment damaged 

during operations and directed that equipment necessary for OIF and OEF 

operations remain in theater. In response, the Army and Marine Corps have 

developed several initiatives to increase the maintenance capacity in theater

to be able to provide near-depot level repair capabilities. 

 

Although the Army and Marine Corps are reporting high rates of equipment 

readiness and have developed and implemented plans to increase the 

maintenance capabilities in theater, these actions have a wide range of 

consequences. Many of the equipment items used in Southwest Asia are not 

receiving depot-level repair because equipment items are being retained in 

theater or at home units and the Army has scaled back on the scope of work 

performed at the depots. As a result, the condition of equipment items in 

theater will likely continue to worsen and the equipment items will likely 

require more extensive repair or replacement when they eventually return to 

home stations. 

The Army and Marine Corps will face a number of ongoing and long-term 

challenges that will affect the timing and cost of equipment reset, such as

Army and Marine Corps transformation initiatives, reset of prepositioned 

equipment, efforts to replace equipment left overseas from the active, 

National Guard, and Reserve units, as well as the potential transfer of U.S. 

military equipment and the potential for continuing logistical support to Iraqi 

Security Forces. Also, both the Marine Corps and Army will have to better 

align their funding requests with the related program strategies to sustain, 

modernize, or replace existing legacy equipment systems. Finally, both 

services will have to make difficult choices and trade-offs when it comes to 

their many competing equipment programs. While the services are working 

to refine overall requirements, the total requirements and costs are unclear

and raise a number of questions as to how the services will afford them. 

Until the services are able to firm up these requirements and cost estimates,

neither the Secretary of Defense nor the Congress will be in a sound position 

to weigh the trade offs and risks. www.gao.gov/cgi-bin/getrpt?GAO-06-604T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact William M. Solis

at (202) 512-8365 or solisw@gao.gov. 
Mr. Chairmen and Members of the Subcommittees: 

We welcome the opportunity to appear before you today to discuss a 

number of maintenance and equipment reset challenges facing the Army 

and Marine Corps. The United States is engaged in what the Department of 

Defense has termed the long war. This is not a conventional war against 

military forces of one country but an irregular war against terrorist cells 

with global networks, with operations currently centered in Iraq and 

Afghanistan. These sustained operations are taking a toll on the condition

and readiness of military equipment that, in some cases, is more than 20 

years old. Age, along with the harsh environment in theater and combat 

conditions over long periods of time, magnifies an already growing 

problem of equipment repair, replacement, and procurement that existed 

even before the onset of combat operations in Iraq and Afghanistan. While 

combat units report high readiness rates, these reports reflect only that 

equipment is fully mission capable, meaning that the equipment has no 

critical or safety deficiencies as outlined in technical readiness reporting 

instructions. However, equipment that is considered fully mission capable

may have a number of deficiencies that will need to be addressed in the 

longer term. 

In addition to the billions of dollars already spent to maintain this wellworn equipment for ongoing operations, the Army and Marine Corps will 

likely incur large expenditures in the future to repair or replace (reset) a 

significant amount of equipment when hostilities cease. The services are 

currently funding their reset programs entirely through the use of 

supplemental appropriations, and plan to rely on supplemental 

appropriations for reset funding through at least fiscal year 2007. The 

fiscal year 2006 supplemental budget request includes $10.4 billion for 

equipment maintenance and reset. The Marine Corps has incurred a cost

of more than $12 billion to date to reset equipment. The Army estimates its 

total reset bill for fiscal year 2006 alone to be nearly $13.5 billion. The 

uncertainties of how long ongoing operations will continue make it 

difficult to estimate future equipment reset costs. The overall condition of 

major equipment items at the end of these operations, although difficult to

predict, will also be a significant factor affecting reset costs. Equipment 

used in operations in Iraq and Afghanistan will eventually require more 

intensive repair and overhaul than what is typically expected in peacetime. 

Furthermore, the affordability of these maintenance requirements will be

an issue as the cost of these requirements compete for available funding in 

the future with other Army and Marine Corps programs, as well as the 

overall Department of Defense budget. 

Page 1 GAO-06-604T Defense Logistics 
My statement today reflects our preliminary observations drawn from 

ongoing work as well as recently published reports. As requested, my 

testimony today will focus on the equipment maintenance and reset 

challenges facing the Army and Marine Corps. Specifically, it addresses the 

(1) environment, pace of operations, and operational requirements in 

Southwest Asia, and their effects on the Army’s and Marine Corps’s 

equipping and maintenance strategies; (2) equipment maintenance 

consequences and issues created by these equipping and maintenance 

strategies; and (3) challenges affecting the timing and cost of Army and 

Marine Corps equipment reset. 

The observations we will discuss today regarding Army and Marine Corps 

equipment maintenance and reset plans is based on reports we issued in 

fiscal years 2004 through 2006, as well as preliminary observations based

on related ongoing work. Several GAO teams conducted audit work 

related to these issues in Iraq and Kuwait from November 2005 through 

January 2006. We conducted our work in accordance with generally 

accepted government auditing standards. 

The harsh operating environment, prolonged length and pace of 

operations, and operational requirements in Iraq and Afghanistan have 

placed tremendous stress on deployed equipment. In response to these 

environmental and operational challenges, the Army and Marine Corps 

have developed and implemented initiatives to keep large amounts of 

equipment in theater and have developed enhanced maintenance capacity 

in theater above the unit level to sustain major equipment items. 

Summary 

While these initiatives and enhanced in-theater maintenance capability 

have reportedly contributed to high equipment readiness rates for combat 

units and improved availability of equipment in theater, they have 

presented the Army and Marine Corps with a wide range of consequences

and issues. The consequences include (1) equipment items not receiving

depot-level maintenance for long periods, (2) depots in the United States 

not operating at full capacity, and (3) reduced scope of depot repair 

packages because of affordability reasons. In addition, Army officials are 

concerned that contractors are not meeting performance expectations, 

and the condition and availability of theater sustainment stocks are not 

sufficient to meet replacement needs. These potential concerns may have

long-term effects such as a decrease in near-term or long-term readiness of 

equipment or an increase in overall repair or replacement costs. 

Page 2 GAO-06-604T Defense Logistics 
In addition, the Army and Marine Corps will likely face a number of 

ongoing and longer-term challenges and issues that will affect the timing 

and cost of equipment reset. These challenges include force structure and 

transformation initiatives; equipment requirements for prepositioned 

equipment sets; future equipment replacement needs for active, guard, and 

reserve forces; potential equipment transfer and logistical support to the 

Iraqi Security Forces; the lack of a comprehensive equipment strategy; and 

issues related to the timing of supplemental funding for depot

maintenance. Lastly, the Army and Marine Corps will need to make 

difficult choices when it comes to their many competing equipment 

programs. While the services are working to refine overall requirements, 

the total requirements and costs are unclear and raise a number of 

questions as to how the services will afford them. Until the services are 

able to firm up these requirements and cost estimates, neither the 

Secretary of Defense nor the Congress will be in a sound position to weigh 

the trade offs and risks. 

The scope of equipment reset efforts that will be required as a result of 

ongoing operations related to Operation Iraqi Freedom (OIF) and 

Operation Enduring Freedom (OEF) is enormous. The services have 

committed a significant amount of equipment to these operations. From 

2003 until April 2005, the Army had deployed more than 40 percent of its 

equipment in support of OIF and OEF. As of March 2005, the Marine Corps 

had about 22 percent of its total fleet assets engaged in Iraq. Recently, the 

Marines estimated that approximately 40 percent of all Marine Corps 

ground equipment, 50 percent to 55 percent of communications 

equipment, and 20 percent of aircraft assets are in use in support of 

current operations. 

Background 

According to the Army, reset comprises a series of repair, recapitalization, 

and replacement actions to restore units’ equipment to a desired level of

combat capability commensurate with mission requirements and 

availability of resources. The purpose of reset is to bring unit equipment to

combat-ready condition, either for the unit’s next rotation in support of 

current operations or for other, unknown future contingencies. 

The Army’s standard level of maintenance is known as 10/20. This 

standard requires that all routine maintenance be executed and all 

deficiencies be repaired. Equipment at less than the 10/20 standard can be

fully mission capable, which means there are no critical maintenance

deficiencies as outlined in the technical manuals and instructions, and no 

safety deficiencies. Unit commanders have the authority to supersede the 

Page 3 GAO-06-604T Defense Logistics 
technical manuals and declare a system fully mission capable even though 

it has a non-mission capable deficiency. The Marine Corps’s equivalent 

term is “mission capable.” 

The Army’s reset strategy for ground vehicles includes an additional set of

maintenance procedures known as Delayed Desert Damage (3D) which 

are designed to address damage that results from these vehicles operating

in a desert environment. These procedures are designed to address 

damage that might otherwise not be visible. These 3D checks are initially

performed at the unit level. Equipment that goes to a depot is subjected to

more extensive 3D maintenance procedures. Army aviation equipment is 

subject to Special Technical Inspection and Repair (STIR). Similar to 3D, 

this maintenance is designed to address damage caused by operation in a 

desert environment. STIR also includes other routine maintenance. 

Although the terms may be slightly different, the Marine Corps equipment 

repair and replacement process and equipment standards parallel the 

Army process and standards for equipment maintenance. The Marine 

Corps equivalent to the Army’s reset process is termed “recovery.” Marine 

Corps equipment returning from combat theaters is evaluated and 

transported to either a maintenance depot or to a Marine Corps unit’s 

home station for repair. The Marine Corps’s equipment recovery process 

entails restoring all equipment used in Global War on Terror (GWOT) 

operations to its pre-GWOT condition. For equipment in the Marine Corps 

prepositioning fleet, this means restoring to a “like new condition,” for all 

other equipment, this means is restoring to a mission capable status. The 

Marine Corps also applies procedures similar to the 3D as appropriate. 

The Department of Defense (DOD) reported in April 2005 that they 

expected a new set of protocols to emerge based on experience with 

equipment used in OIF and OEF.1

 These protocols may be similar to 3D 

and STIR which emerged as maintenance procedures based on experience 

from Operation Desert Storm. DOD, as part of its ongoing effort to assess 

stress on equipment, plans to look for unusual wear patterns and methods 

to address them as well as examining maintenance trends. 

 1

 Department of Defense, Ground Force Equipment Repair, Replacement, and 

Recapitalization Requirements Resulting From Sustained Combat Operations

(Washington, D.C.: Apr. 2005).

Page 4 GAO-06-604T Defense Logistics 
Depot maintenance is defined as the highest level of maintenance activity,

where the most complex maintenance work is done, from overhaul of 

components to complete rebuilds. Military depots and defense contractors 

throughout the United States perform depot-level maintenance. 

In response to the harsh operating environments in Iraq and Afghanistan 

and the unanticipated and prolonged length and pace of sustained 

operations, the Army and Marine Corps have developed and implemented 

several initiatives to equip their forces and maintain extensive amounts of 

equipment in theater. Specifically, the Army and Marine Corps have 

implemented initiatives to keep large amounts of unit equipment in theater 

after the units redeploy to their home stations in the United States for the 

purpose of rapidly equipping follow-on units, and have developed 

additional maintenance capacity in theater above the unit level to sustain 

major equipment items such as high mobility multi-purpose wheeled 

vehicles (HMMWVs), other tracked and wheeled vehicles, and aviation

equipment. 

Environment, Pace of 

Operations, and 

Operational 

Requirements Have 

Shaped Current Army 

and Marine Corps 

Equipping and 

Maintenance 

Strategies 

Environment and High 

Operational Tempo Have 

Increased Wear and Tear 

on Equipment Above What 

Would Normally Be 

Expected 

Environmental factors such as heat, sand, and dust have taken their tolls 

on major equipment items. In addition, as we have previously reported, the 

Army and Marine Corps are operating equipment at a pace well in excess 

of their normal peacetime levels, which is generating a large operational 

maintenance and replacement requirement that must be addressed when 

the units return to their home stations.2

 Continued operations have 

increased the operational tempo for a great deal of Army and Marine 

Corps equipment. In April 2005, the Department of Defense (DOD) 

reported Army equipment usage rates averaged two to eight times that of 

peacetime rates. Senior Marine Corps officials recently testified that the

Marine Corps usage rates for ground equipment in ongoing operations 

were four to nine times that of peacetime rates. Despite these high usage

rates, the deployed Army units have generally reported high levels of 

overall readiness and relatively high levels of equipment readiness. 

Deployed Marine Corps units, however, report more degraded levels of 

overall and equipment readiness. Unit commanders in both services are 

able to subjectively upgrade their overall readiness ratings, although this 

 2

 GAO, Defense Management: Processes to Estimate and Track Equipment Reconstitution

Costs Can Be Improved, GAO-05-293 (Washington, D.C.: May 5, 2005). 

Page 5 GAO-06-604T Defense Logistics 
has been done to a lesser extent by the Marine Corps. Absent such 

upgrades, overall readiness levels (particularly for the Army) would be 

significantly lower as a result of units’ low levels of equipment and 

supplies on hand. 

Army and Marine Corps 

Hold Large Amounts of 

Unit Equipment in Theater 

To meet ongoing operational requirements, the Army and Marine Corps 

have developed and implemented initiatives to concentrate equipment in 

theater. When the Army initially developed its strategy of retaining 

equipment from redeploying units in theater, it did not envision this to be a 

long-term mechanism for managing equipment needs, but rather a shortterm measure to conserve transportation assets and, more importantly, 

ensure that units were rapidly equipped. The Marine Corps, like the Army, 

developed a similar equipment management initiative. Additionally, the 

Army has developed a pool of equipment in theater to expedite the 

replacement of equipment damaged during these operations, referred to as

theater sustainment stocks (TSS), which includes, for example, tanks, 

HMMWVs, Bradley Fighting Vehicles, and support vehicles. As of January 

2006, TSS included an estimated 400 different types of vehicles and other 

equipment. The Marine Corps recently testified that they have developed a

similar pool of ground equipment known as Forward In-Stores to replace 

damaged major equipment items. 

To ensure that deployed units receive required amounts of equipment 

critical for their missions, the Army has designated certain major 

equipment items, such as add-on-armor vehicles, up-armored HMMWVs, 

selected communications and intelligence equipment, and other items 

deemed critical for OIF and OEF missions as “theater provided equipment” 

(TPE). According to Army officials, based on operational decisions, these 

theater-specific items are being left in theater because these are force 

protection items. This equipment is taken from active, Guard, and Reserve 

forces when they return to the United States and is retained in theater to 

hand off to follow-on units. TPE includes equipment such as armored 

vehicles, individual soldier body armor, and equipment used to counter 

improvised explosive devices. As of November 2005, the Coalition Forces 

Land Component Commander estimated that there were approximately 

300,000 equipment items in the TPE inventory in Iraq, including more than 

26,000 vehicles. The Army’s TPE initiative began in late 2003, when the 

first Army units were directed to leave equipment in theater, then known 

as “stay behind equipment.” The Army, in November 2005, replaced the 

term “stay behind equipment” with the term TPE to better manage 

equipment accountability and also reflect items that were procured 

directly for the theater. Unlike other less intensely managed equipment 

items, TPE is transferred directly from units leaving the theater to 

Page 6 GAO-06-604T Defense Logistics 
deploying units taking their place. In most cases, these transfers take place 

at the unit’s forward station in Iraq. As a result, most of this equipment has 

been in heavy use in harsh desert and combat conditions since it was first 

left in theater by the units that originally deployed with the equipment. 

Because TPE is maintained at the unit level, this strategy has not provided 

the Army with an opportunity to periodically rotate TPE back to the 

United States for depot level maintenance. As discussed in a later section,

keeping large amounts of equipment in theater for long periods of time 

without the opportunity for depot-level repair has created a number of 

related consequences. 

The Marine Corps, like the Army, has directed that equipment necessary 

for OIF and OEF operations remain in theater. Because many Marine 

Corps mission requirements have been exceeding the unit’s typical combat 

equipment allowances, Marine Corps commanders in theater have 

developed expanded equipment packages for deploying units that are 

designed to ensure that units have the required equipment for their 

missions. Deploying Marine Corps units fall in on and assume custody of 

equipment left by other units departing the theater. According to recent

Marine Corps testimony, this initiative allows it to provide the best 

equipment possible to forces in theater while also reducing equipment 

rotation costs. Marine Corps officials estimated they had deployed about 

30 percent of its ground equipment, and 20 percent of aviation assets in 

support of ongoing operations. However, the percentage of ground 

equipment deployed in support of operations has been as high as 40 

percent according to recent Marine Corps testimony. While this initiative 

has met equipment needs to date, it has caused some major equipment 

items to remain in constant operation, often in harsh desert conditions. 

Initiatives to Develop More 

Extensive Maintenance 

Capacity in Theater

To address the effects of the harsh operating environments and the 

maintenance needs of rapidly deteriorating equipment that is being held in 

theater for extensive periods, the Army and Marine Corps have developed 

initiatives to increase the maintenance capacity in theater to be able to

provide near-depot level repair capabilities. For example, the Army has 

developed a refurbishment facility for HMMWVs in Kuwait and a Stryker 

maintenance facility in Qatar to limit the repair time and resupply time of 

these assets. The HMMWV refurbishment facility in Kuwait began 

operations in July 2005 and is operated by a defense contractor. The 

primary objective of this refurbishment facility is to mitigate the effects of 

high mileage, heavy weights, high temperatures, and lack of sustained 

maintenance programs. The HMMWV refurbishment facility workload 

includes refurbishment maintenance, as well as modernization and 

Page 7 GAO-06-604T Defense Logistics 
upgrades. As of December 2005, this facility had refurbished a total of 264 

HMMWVs. Similarly, the Marine Corps created a limited aircraft depot 

maintenance capability in theater. 

Additionally, both the Army and Marine Corps have taken other steps to 

increase maintenance capacity and the availability of spare parts in 

theater. For example, at the time of our visit to Kuwait in January 2006, the 

Army was developing plans to increase the maintenance capacity at 

contractor maintenance facilities in Iraq. In addition, according to recent 

Army testimony, the Army Materiel Command (AMC) and the Defense 

Logistics Agency have taken steps to allow the rapid delivery of critical, 

low-density parts to the theater to maximize their availability and minimize

transportation costs. The Marine Corps has also recently testified on 

efforts to leverage Army ground depot maintenance capabilities in the 

theater, and developed a rotation plan for major equipment items. 

Although the Army and Marine Corps are reporting high rates of 

equipment readiness for combat units and have developed and 

implemented plans to increase the maintenance capabilities in theater, 

these actions have a wide range of consequences and issues. The services

have made a risk-based decision to keep equipment in theater, to forego 

depot repairs, and to rely almost exclusively on in-theater repair 

capabilities to keep equipment mission capable. As a result, much of the 

equipment has not undergone higher level depot maintenance since the 

start of operations in March 2003. While Army officials noted that not all

equipment would undergo full depot-level maintenance, much of this 

equipment has incurred usage rates ranging from two to nine times the 

annual peacetime rate meaning that, in some cases, some equipment may 

have added as much as 27 years of use in the past three years. Continued 

usage at these rates without higher levels of maintenance could result in 

the possibility that more equipment will require more extensive and 

expensive repairs in the future or may require replacement rather than 

repair. Because most equipment is staying in Iraq, there are other 

ramifications that have implications for the depots in the United States 

such as the fact that depots are not operating at full capacity and that the

scope of depot repair work is being reduced to meet operational needs. In

addition, other maintenance issues are beginning to surface, which could

have a variety of consequences such as a decrease in near-term and longterm readiness of equipment or an increase in repair or replacement costs. 

These additional issues include questions regarding contractor

Equipment 

Maintenance 

Consequences and 

Issues Created By 

Army and Marine 

Corps Equipping and 

Maintenance 

Strategies 

Page 8 GAO-06-604T Defense Logistics 
performance for in-theater maintenance and the condition and availability 

of the Army’s TSS in Kuwait. 

Most Equipment Not 

Receiving Depot-Level 

Repair 

Many of the equipment items used in Southwest Asia are not receiving

depot-level repair because they are being retained in theater or at home 

units and the Army has scaled back on the scope of work performed at the 

depots. As a result, the condition of equipment items in theater will likely 

continue to worsen and the equipment items will likely require more 

extensive repair or replacement when it eventually returns to home 

stations. The Army retains equipment in theater to support ongoing 

operations. For example, as of November 2005, the Army had about 

300,000 pieces of equipment retained in theater to support troop 

deployment rotations. Very little of this equipment is being returned from 

theater to depots in the United States for repair. Instead, redeploying units 

are expected to maintain their assigned equipment to a fully mission 

capable condition to facilitate the transfer of equipment to deploying units. 

Since TPE is transferred directly from units leaving the theater to 

deploying units taking their place, usually at the units’ forward station in 

Iraq, the strategy has not allowed the equipment to receive periodic depotlevel maintenance. Further, some units have commented that the TPE 

they received, while operable, requires higher levels of maintenance. The

fully mission capable definition is to some extent a broad and malleable 

term. Unit commanders have reported concerns with downtimes, 

availability of spare parts, repair and replacement of damage or combat 

losses, and the need for additional contractor support. The Army is also 

reconfiguring its prepositioned equipment set and consequently is 

retaining some deploying units’ equipment in theater to support this Army 

Prepositioned Set, Kuwait (APS-5) reconstruction. For example, according

to officials at the U.S. Army Forces Command, approximately 13,000 

pieces of equipment from a redeploying unit were transferred to 

prepositioned stocks in Kuwait instead of returning to the United States 

with the unit. This included about 7,000 tactical wheeled vehicles. While 

this equipment is supposed to be reset to a 10/20 standard before being 

transferred to prepositioned equipment stocks, it is not being returned for 

depot overhaul. According to Army officials, this equipment was not 

returned for depot overhaul because of short timeframe requirements. 

This equipment was reset to a fully mission capable standard.

In some instances, Army units retain equipment to reconstitute their unit 

quickly rather than send this equipment to depot for overhaul. According 

to officials in the Office of the Secretary of Defense, warfighters are not 

readily willing to give up equipment, which contributes to fewer 

Page 9 GAO-06-604T Defense Logistics 
equipment items being returned to the depots for repair. Officials at the 

U.S. Army Forces Command and at army depots echoed this concern, 

stating that availability of assets to induct into the depot repair program is 

limited by units’ need and desire to have equipment available for training. 

These officials added that the units fear that they will have to wait for 

replacement equipment because their unit priority is not high enough 

within the Army to ensure immediate replacement of the equipment items. 

To increase the number of equipment items going to depots from units, the 

Army created a list of equipment that it will now require units to 

automatically send to the Army depots for reset. The list is based on 

lessons learned from earlier experiences that damage and wear to certain

types of equipment items used in Southwest Asia require more extensive 

depot level repairs. For example, some equipment reset at the units’ home 

station was failing at higher than expected rates in theater during followon deployments. The list contains about 200 equipment items and has been

updated several times, most recently in October 2005, to include items 

such as the Bradley Fighting Vehicle and the Abrams Tank. According to

the implementing memorandum, unit commanders are required to 

nominate a minimum of 25 percent of the listed equipment for return to 

depots for reset. According to the memorandum, the intent is to provide 

units the flexibility to maintain equipment for training while placing the 

maximum possible into reset programs, and items retained for training are 

to be maintained in fully mission capable condition. 

Depots Are Not Operating 

At Full Capacity Due to 

Fewer Equipment Returns 

and Enhanced In-Theater 

Maintenance Capability 

Because the services are retaining most equipment in theater, depots in 

the United States, tasked with complex maintenance work above and

beyond in-theater maintenance reset, are not operating at full capacity. 

For example, DOD has estimated that Army depots can produce about 19 

million direct labor hours of production on a single shift basis—8 hours a 

day, 5 days a week. Based on this measure, the Army depots are currently

utilized at about 110 percent of capacity. However, according to depot 

officials, the Army could double or triple depot capacity by adding more 

work shifts at the depots. Using this multiple shift approach the Army 

could produce up to approximately 57 million direct labor hours of 

production or 170 percent more than the current workload at Army 

depots. Army depots are currently using some second shifts; however, 

second shifts are primarily limited to manufacturing process shops such as 

cleaning, machining, sand-blasting and painting, which depot officials say

could easily be contracted out to increase throughput. According to depot 

officials, the factors that impact their decision to add more shifts and 

increase throughput are a stable commitment of funding throughout the 

Page 10 GAO-06-604T Defense Logistics 
year, the availability of retrograde equipment to repair, and the right mix 

of spare parts inventory to support production. 

Scope of Depot Repair 

Work Is Being Reduced to 

Meet Operational Needs 

In addition, the Army has reduced the scope of work performed on some 

equipment items to less than a full overhaul. According to U.S. Army Tank 

and Automotive Command (TACOM) officials, the Army cannot afford to 

do a full overhaul of its ground equipment and has therefore made a riskbased decision to perform a reduced scope of work for equipment at the 

depots. To determine what the repair scope should be, the Army focused 

on major readiness components on the vehicles. For example, the engine

on the Abrams tank is the component that fails the most often and is the 

most expensive to replace. Consequently this was the number one 

component included in the reduced scope of depot repair work. The less 

robust depot level repair being performed speeds repair time and reduces 

expenditures on depot repair. For example, the reduced scope of work on 

the Abrams costs approximately $880,000 versus $1.4 million for a 

complete overhaul. This scope does not include complete disassembly of

the vehicle and identifies 33 items to be inspected and repaired only if 

necessary. During a full overhaul these items would be reconditioned to 

like new condition, and consequently would be less likely to fail after the 

depot visit although it is unclear what actual failure rates might be. 

According to TACOM officials, the reduced overhaul represents what the 

Army can afford to do. 

The Marine Corps recently instituted an annual equipment rotation plan to

begin returning equipment from Southwest Asia to the United States for 

reset. The first of this returning equipment was received in the first quarter 

of fiscal year 2006. Previously, Marine Corps reset strategy was to 

overhaul equipment located in the United States, then provide the 

equipment to deploying units to fill requirements that could not be 

satisfied with the pool of mission capable equipment in theater. According 

to depot officials, the Marine Corps found it necessary to begin returning 

equipment from the theater because it is running short of available 

equipment in the United States for depot overhaul. However, depot 

officials told us that the equipment returning from theater is in much 

worse condition than they anticipated so they may not be able to reset as 

many vehicles as planned with available reset funds. 

Page 11 GAO-06-604T Defense Logistics 
While we did not review copies of the contracts, our review of other Army

documents and discussions with Army officials identified two examples to 

indicate that maintenance contractors are not meeting performance 

expectations. Army officials estimated that about 70 percent of equipment 

maintenance in theater above the unit level is being done by contractors. 

Some of these contractors have experienced a number of problems in the 

past few years, such as not being able to quickly acquire skilled 

maintenance personnel. Specifically, we identified a number of 

maintenance issues regarding the HMMWV refurbishment facility in 

Kuwait and the reset of equipment in the prepositioned set of equipment in

Kuwait. 

Army Concerned That 

Maintenance Contractors 

Are Not Meeting 

Performance Expectations 

As of January 2006, according to Army maintenance officials in Kuwait, 

the contractor operating the HMMWV refurbishment facility in Kuwait had 

not been able to meet original production goals. In some cases, for 

example, the contractor’s actual labor requirements for some vehicles 

exceeded the original estimates by almost 200 percent. This contributed to 

the facility falling over 200 vehicles short of its output goal of refurbishing 

300 vehicles per month since the facility became operational in July 2005.3

Also cited as contributing to the facility’s poor performance were 

difficulties the contractor experienced in obtaining the required number of 

third country national workers, mostly due to difficulties meeting host 

country visa requirements. Furthermore, according to Army maintenance 

officials in Kuwait, during the first 6 months the facility was operational, 

the contractor repeatedly failed to gather data on resources expended on

vehicle refurbishments. Without accurate information on the actual level 

of resources required to refurbish these vehicles, it will be more difficult 

for the contractor to estimate and plan for future requirements. Since the 

original contract was issued in April 2005, it has been modified multiple 

times, increasing the total funding requirement from slightly more than $36 

million over the contract’s first year of performance, an increase of over 

100 percent.

In addition to concerns about the contractor management of the HMMWV 

refurbishment facility, theater commanders have also expressed concerns 

about contractor performance in support of efforts to reset equipment for 

reconfiguring Army prepositioned stocks. The Army has contracted for the 

maintenance and management of Army prepositioned equipment in 

Kuwait. The Army has recently noted several concerns about contractor 

 3

 Based on production data from July 2005 through December 2006. 

Page 12 GAO-06-604T Defense Logistics 
performance in the areas of personnel and maintenance. For example, 

there is a shortage of contractor personnel which contributes significantly 

to a decline in production. The contractor also attributed the shortages to 

difficulties obtaining the required number of third country national 

workers due to problems with host country visa requirements. The Army 

had to resort to acquiring additional vehicle mechanics and supply 

personnel from another contractor and an active duty Army unit and an 

Army maintenance company. The Army also reports that the contractor 

does not conduct thorough technical inspections. If thorough inspections 

were conducted it would significantly reduce the amount of time the 

equipment spends in maintenance shops. According to officials at the U.S. 

Army Field Support Command, equipment is often rejected because of the 

contractor’s lack of attention to detail and inadequate maintenance 

inspection procedures. 

Condition of Theater 

Sustainment Stocks Is Not 

Sufficient to Rapidly Meet 

Replacement Needs 

The condition of TSS is not sufficient to replace battle damaged equipment

without additional maintenance, which may delay the equipment’s 

availability and strain in-theater maintenance providers. The purpose of 

TSS is to ensure that equipment is on hand to quickly fill unit requirements 

that may arise due to battle damage or other losses. The Army created this

stockpile of equipment in Kuwait as a quick source to provide replacement 

equipment, as needed. As of January 2006, an AMC official responsible for 

TSS estimated that there were approximately 174,000 pieces of equipment

in Kuwait and Qatar, representing 400 different types of equipment. TSS 

includes, for example, tanks, HMMWVs, Bradley Fighting Vehicles, and 

support vehicles. Expected loss rates are taken into consideration in 

setting TSS equipment levels. When a requirement arises in Iraq, 

equipment items are taken from TSS, maintenance is performed in theater

to ensure the equipment is in suitable condition, and it is sent to units. 

Much of TSS requires additional maintenance before it can be reissued to 

operational units in Iraq and, in some cases, to restore it to fully mission 

capable. For example, as of January 2006, for a cross-section of several 

types of ground vehicles in TSS, less than 7 percent were fully mission 

capable. As such, TSS that requires additional maintenance before it can

be reissued as replacement equipment increases requirements on the intheater maintenance capability, which may affect other efforts to refurbish 

equipment in theater for prepositioned stocks. The Army Field Support 

Battalion at Camp Arifjan, Kuwait, is responsible for the management and 

reconstitution of prepositioned stocks, the management and repair of TSS 

in support of ongoing requirements, as well as a number of other logistics 

missions. The same contract workforce the Army Field Support Battalion 

employs for maintenance on prepositioned stocks is responsible for 

Page 13 GAO-06-604T Defense Logistics 
maintenance of TSS. The capacity of the Army Field Support Battalion to 

conduct reset of equipment being used to reconstitute prepositioned 

stocks in Kuwait is directly affected by ongoing requirements to manage 

TSS and is affected by other missions in support of deployed units in Iraq. 

The Army and Marine Corps will face a number of ongoing and longerterm challenges that will affect the timing and cost of equipment reset. As 

previously mentioned, current military operations are taking a toll on 

equipment, which will affect the cost of repairing equipment as well as the 

amount and cost of equipment that will need to be replaced. In addition, 

other issues such as the Army and Marine Corps efforts to modularize and 

transform their forces, respectively, the reconstitution and reset of 

prepositioned equipment, and the ongoing and longer-term efforts to 

replace equipment from the active, National Guard, and Reserve units, as 

well as the potential transfer of U.S. military equipment and potential for 

continuing logistical support to Iraqi Security Forces will also affect the 

timing and cost of reset. Furthermore, both the Army and Marine Corps 

will have to better align their funding and program strategies to sustain, 

modernize, or replace existing legacy equipment systems. Similarly, both 

services will need to face difficult choices for the many competing 

equipment programs. Finally, working with the Congress, both services 

will have to determine the best approaches for dealing with the issues 

created by the timing of depot maintenance supplemental appropriations. 

A Number of 

Challenges Will Affect 

the Timing and Cost 

of Army and Marine 

Corps Equipment 

Reset 

Army Modularity and 

Marine Corps 

Transformation 

The Army’s and Marine Corps’s equipment reset programs will also have to

compete with ongoing and planned force structure changes designed to 

provide more flexibility in deploying forces for ongoing and future 

operations. The Army began its modular force transformation in 2004 to 

restructure itself from a division-based force to a modular brigade-based 

force. The modular forces are designed to be stand-alone, self-sufficient 

units that are more rapidly deployable and better able to conduct joint and

expeditionary operations than their larger division-based predecessors. 

Modular restructuring will require the Army to spend billions of dollars for 

new equipment over the next several years while continuing to reset and 

maintain equipment needed for ongoing operations. The Army estimates 

that the equipment costs alone will be about $41 billion. In addition to 

creating modular units, the Army plans to continue to develop and fund 

the Future Combat System, which the Army recognizes is one of the 

greatest technology and integration challenges it has ever undertaken. 

Page 14 GAO-06-604T Defense Logistics 
The Marine Corps has also initiated force structure changes to provide 

flexibility in deploying troops, which will also likely affect the Marine 

Corps’s equipment reset strategies. Its force structure initiative is designed

to reduce the effects of operational tempo on the force and reshape the 

Marine Corps to best support current and future operations. In 2004, the 

Marine Corps conducted a comprehensive force structure review to 

determine how to restructure itself to augment high demand, low density 

capabilities, reduce deployed tempo stress on the force, and shape the 

Marine Corps to best support the current and future warfighting 

environments. 

Requirements to 

Reconstitute and Reset 

Army and Marine Corps 

Prepositioned Equipment 

Both the Army and Marine Corps drew heavily upon prepositioned stocks 

for operations in Iraq and Afghanistan. 4 As we reported in September 2005, 

DOD faces some near term operational risks should another large scale 

conflict emerge, because it has drawn heavily on prepositioned stocks to 

support ongoing operations in Iraq. 5 And although remaining stocks 

provide some residual capability, many of the programs face significant 

inventory shortfalls and, in some cases, maintenance problems. 

The focus of the Army’s current prepositioned equipment reset program is 

building two brigade-sized equipment sets in Kuwait, as well as battalionsized sets in Qatar and Afghanistan. Prepositioned stocks in Kuwait are 

not designated to serve as a pool of equipment available to support current 

missions. Equipment to form these sets is coming from a combination of 

equipment left in theater, as well as equipment being transferred from U.S. 

depots and from units around the world. While a sizeable portion of the 

needed equipment is now in place, much of this equipment needs 

substantial repair. Maintenance facilities are limited as are covered storage 

facilities. Lack of covered storage facilities presents yet another challenge. 

Prepositioned stock, like TSS, is stored in the open desert environment, 

which in some cases may lead to further degradation. Harsh 

environmental conditions such as sand and high humidity levels accelerate

equipment corrosion, which may not be apparent until extensive depot

 4

 Prepositioned stocks are protected, go-to-war assets which reduce the demand on scarce 

mobility assets required to project forces from the United States and to sustain early 

arriving forces until the sea lines of communication are established. 

5

 GAO, Defense Logistics: Better Management and Oversight of Prepositioning Programs

Needed to Reduce Risk and Improve Future Programs, GAO-05-427 (Washington, D.C.: 

Sept. 6, 2005). 

Page 15 GAO-06-604T Defense Logistics 
maintenance is performed. We have previously reported that outdoor 

storage aggravates corrosion and the use of temporary shelters with 

climate-controlled facilities is cost effective, has a high return on 

investment, reduces maintenance and inspections and, as a result, 

increases equipment availability. The Marine Corps has also drawn on a 

significant portion of its prepositioned stocks from five ships to support 

current operations. 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. 

Our September 2005 report also raised serious concerns about the future

of the department’s prepositioning programs, and we believe these 

concerns are still valid. No department-wide strategy exists to guide the 

programs, despite their importance to operational plans as evidenced in

OIF. Without an overarching strategy, the services have been making 

decisions that affect the future of the programs without an understanding 

of how the prepositioning programs will fit into an evolving defense 

strategy. The Army’s decision to accelerate the creation of substantial 

combat capabilities in Southwest Asia is understandable because it could 

speed buildup in the future, especially if large numbers of troops are 

withdrawn. However, the Army’s decisions in other parts of its 

prepositioning programs are questionable. For example, the Army recently 

decided to cut its afloat combat capability in half (from two brigade sets to 

one) by the end of fiscal year 2006 as a result of a budget cut from the 

Office of Secretary of Defense. However, internal planning documents that 

we reviewed indicated that the Office of Secretary of Defense directed 

terminating a planned third set afloat, cutting an existing capability that 

would likely be critical to responding to another crisis should it occur. In 

the meantime, the Army is making plans to reduce its contractor 

workforce in Charleston, South Carolina, where it performs the 

maintenance on its afloat stocks. At the same time, in Europe, the Army 

has a $55 million military construction project well underway at a site in 

Italy, but the Army’s draft prepositioning strategy identifies no significant 

prepositioning mission in Europe. In our discussions with Army managers, 

they told us they are planning to use the Italian workforce to perform 

maintenance on equipment that ultimately will be placed afloat in 2013 or 

later. 

Army and Marine Corps 

Will Need to Replace 

Active, Guard, and Reserve 

Equipment Left in Theater 

The Army and Marine Corps must also plan for replacement of active, 

National Guard, and Reserve equipment left in theater to support ongoing

operations. In late 2003, the Army began to direct redeploying Guard and 

Reserve units to leave their equipment in theater for use by deploying 

forces. As we have previously testified, DOD policy requires the Army to 

Page 16 GAO-06-604T Defense Logistics 
replace equipment transferred to it from the reserve component including 

temporary withdrawals or loans in excess of 90 days, 6 yet the Army had 

neither created a mechanism in the early phases of the war to track Guard 

equipment left in theater nor prepared replacement plans for this 

equipment, because the practice of leaving equipment behind was 

intended to be a short-term measure.7

 As of March 2006, only three 

replacement plans have been endorsed by the Secretary of Defense, all to

replace Guard equipment, while 33 plans are in various stages of approval.

Lack of equipment for the active, Guard, and Reserve forces at home 

stations affects the ability of the forces to conduct unit training, and 

adversely affects the ability of the Guard and Reserve forces to be 

compatible with active component units. As operations have continued, 

the amount of Guard equipment retained in theater has increased, which 

has further exacerbated the shortages in nondeployed Guard units. For 

example, when the North Carolina 30th Brigade Combat Team returned 

from its deployment to Iraq in 2005, it left behind 229 HMMWVs, about 73 

percent of its pre-deployment inventory of those vehicles, for other units 

to use. Similarly, according to Guard officials, three Illinois Army National 

Guard units were required to leave almost all of their HMMWVs, about 130, 

in Iraq when they returned from deployment. As a result, the units could 

not conduct training to maintain the proficiency they acquired while 

overseas or train new recruits. In all, the Guard reports that 14 military 

police companies left over 600 HMMWVs and other armored trucks, which 

are expected to remain in theater for the duration of operations, which 

according to Army officials, would be required regardless of Guard, 

Reserve, or active unit. Lack of equipment for training also adversely 

affects Marine Corps units. For example, in the interest of supporting units

in theater by leaving certain pieces of equipment in theater and drawing on 

equipment from elsewhere to meet theater needs, the Marine Corps has 

experienced home station equipment shortfalls, among both active and 

reserve components. According to a senior Marine Corps official, these 

shortfalls may have detrimental effects on the ability of the Marine Corps 

to train and to respond to any contingencies. In addition, the Army has 

acknowledged that the benefits of prepositioned stocks are diminished 

when units are not trained on equipment that matches that present in the 

stocks. 

 6

 Department of Defense Directive 1225.6, Equipping the Reserve Forces, April 7, 2005. 

7

 GAO, Reserve Forces: Army National Guard’s Role, Organization, and Equipment Need

to be Reexamined, GAO-06-170T (Washington D.C.: Oct. 20, 2005).

Page 17 GAO-06-604T Defense Logistics 
The Army and Marine Corps strategy for retaining and maintaining 

significant numbers of low density, high demand equipment items in 

theater will affect plans to replace equipment left in theater by the Guard 

and Reserve. We have previously reported that to meet the demand for 

certain types of equipment for continuing operations, the Army has 

required Army National Guard units returning from overseas deployments 

to leave behind many items for use by follow-on forces.8

 According to the 

National Guard and Reserve Equipment Report for Fiscal Year 2007, the 

Army National Guard has been directed to transfer more than 75,000 

pieces of equipment valued at $1.76 billion, to the Army to support OIF 

and OEF. 9 However, the Army does not have a complete accounting of 

these items or a plan to replace the equipment, as DOD policy requires. 

The Army expects that these items will eventually be returned to the 

Guard, although the Guard does not know whether or when the items will 

be returned. We have also previously reported that like the Army National 

Guard, Army Reserve units have been required to leave certain equipment

items, such as vehicles that have armor added, in theater for continuing 

use by other forces. 10 This further reduces the equipment available for 

training and limits the Army Reserve’s ability to prepare units for 

mobilizations in the near term. The Army is working with both the Army 

National Guard and the Army Reserve to develop memoranda of 

agreement on how equipment left in Iraq will be replaced. Until these 

plans are completed and replacement equipment provided, the Army 

Reserve and Army National Guard will face continuing equipment 

shortages while challenged to train and prepare for future missions. 

According to Marine Corps testimony, the policy of retaining equipment in

theater to meet the needs of deployed forces has led to some home station 

equipment shortfalls, among both active and reserve units, which if 

allowed to continue could have a direct impact on the ability of Marine 

Forces to train for known and contingent deployments. Furthermore, 

according to the National Guard and Reserve Equipment Report for fiscal 

year 2007, more than 1,800 major Marine Corps equipment items, valued at

 8

 GAO, Reserve Forces: Plans Needed to Improve Army National Guard Equipment 

Readiness and Better Integrate Guard into Army Force Transformation Initiatives, 

GAO-06-111 (Washington, D.C.: Oct. 4, 2005). 

9

 Department of Defense, National Guard and Reserve Equipment Report for Fiscal Year 

2007 (Washington, D.C.: Feb. 2006). 

10 GAO, Reserve Forces: An Integrated Plan Is Needed to Address Army Reserve Personnel 

and Equipment Shortages, GAO-05-660 (Washington, D.C.: July 12, 2005). 

Page 18 GAO-06-604T Defense Logistics 
$94.3 million have been destroyed, and an additional 2,300 require depot 

maintenance. 

Future requirements to transfer equipment and provide logistical support 

to the Iraqi Security Forces and the extent of required U.S. support are 

unclear. In its report to Congress in April 2005, DOD stated that the 

primary constraint on future maintenance processes is the lack of 

equipment that is available for reset and recovery activities. DOD noted 

that a large amount of equipment is being held in the theater as a 

rotational pool for deploying units, and will remain in theater for the long 

term. DOD noted that when hostilities cease, some of the equipment being 

held in theater may be turned over to Iraqi Security Forces, if authorized 

by law. In addition, some equipment will be scrapped and the rest would 

be assessed for maintenance. Military service officials have recently 

testified that some types of equipment may be left for Iraqi Security 

Forces, and cited concerns with supporting that equipment in the future. 

Until the determination of what equipment will be given to the Iraqi 

Security Forces is made, it will be difficult to determine what will be 

available for reset. As the United States military draws down its combat 

forces, any continued logistical support using equipment such as wheeled 

vehicles and helicopters will have to come from the Army or Marine Corps 

and will have to be factored into plans for reset and reconstitution. 

Potential Requirements for 

Transferring Equipment 

and Providing Logistical 

Support to the Iraqi 

Security Forces Are 

Unclear 

Lack of Comprehensive 

Sustainment, 

Modernization, and 

Replacement Strategies for 

Certain Army and Marine 

Corps Equipment Items 

We have previously reported that, for certain equipment items, the Army 

and Marine Corps have not developed complete sustainment, 

modernization, and replacement strategies or identified funding needs for 

all priority equipment items such as the Army Bradley Fighting Vehicle and 

Marine Corps CH-46E Sea Knight Helicopter.11 Given that funding for the 

next several years to sustain, modernize, and replace aging equipment will 

compete for funding with other DOD priorities, such as current 

operations, force structure changes, and replacement system acquisitions, 

the lack of comprehensive equipment strategies may limit the Army’s and 

Marine Corps’s abilities to secure required funds. Furthermore, until the 

services develop these plans, Congress will be unable to ensure that DOD’s 

budget decisions address deficiencies related to key military equipment. 

 11 GAO, Military Readiness: DOD Needs to Reassess Program Strategy, Funding 

Priorities, and Risks for Selected Equipment, GAO-04-112 (Washington, D.C.: Dec. 19, 

2003). 

Page 19 GAO-06-604T Defense Logistics 
We first reported in 2003 that the condition of 25 selected military 

equipment items varied from very good to very poor and that, although the 

services had program strategies for sustaining, modernizing, or replacing 

most of the items reviewed, there were gaps in some of those strategies. 

Since this report, DOD’s continued operations in Iraq and Afghanistan 

have resulted in additional wear and tear on military equipment. Given 

continued congressional interest in the wear and tear being placed on

military equipment and the funding needed to reconstitute the equipment, 

we issued a follow up report in October 2005 in which we assessed the 

condition, program strategies, and funding plans for 30 military equipment 

items, including 18 items from our December 2003 report. With respect to 

these 30 selected equipment items, we identified that the military services 

had not fully identified near- and long-term program strategies and funding

plans to ensure that all of these items can meet requirements. For many of 

the equipment items included in our assessment, average fleet wide 

readiness rates had declined, generally due to the high pace of recent 

operations or the advanced age or complexity of the systems. Although 

selected equipment items have been able to meet wartime requirements, 

the high pace of recent operations appears to be taking a toll on selected 

items and fleet wide mission capable rates have been below service 

targets, particularly in the Army and Marine Corps. For example, the 

Army’s Bradley Fighting Vehicle, Abrams Tank, and AH-64A/D Apache 

Helicopter, and the Marine Corps’s Light Armored Vehicle and Sea Knight

Helicopter were assessed as warranting additional attention by DOD or the 

military services due to the high pace of operations increasing utilization 

beyond planned usage. Furthermore, according to officials, the full extent 

of the equipment items’ degradation will not be known until a complete 

inspection of the deployed equipment is performed. 

Marine Corps legacy aviation equipment in use faces special readiness 

challenges due to the increased usage rates coupled with the absence of 

new production of that equipment. Existing equipment must be 

maintained and managed to provide the warfighter with needed equipment 

until next generation equipment is constructed. We have recently reported 

severe problems or issues that warrant immediate attention by DOD or the 

military services with the near term program strategies and funding plans 

for the Marine Corps CH-46E Sea Knight Helicopter program due to 

anticipated parts shortages and maintenance issues, as well as potential 

problems with the readiness of Marine Corps M1A1 tanks, Light Armored

Vehicles, and CH-53E helicopters stemming from the high pace of 

operations and increased utilization beyond planned usage. In recent 

Congressional testimony, Marine Corps officials discussed problems with 

a lack of active production lines for the CH-46 and CH-53 helicopters. 

Page 20 GAO-06-604T Defense Logistics 
Given that no replacement aircraft is available, as these platforms are lost 

in combat they cannot be replaced. The Marine Corps has requested funds 

in the fiscal year 2006 supplemental to bring CH-53E helicopters out of 

desert storage and refurbish them to replace those destroyed during 

current operations. 

Army and Marine Corps 

Face Difficult Choices For 

Competing Equipment 

Programs 

The Army and Marine Corps will need to make difficult choices for 

competing equipment programs, such as Army modularity and equipment

reset, when considering future equipment budget requests. While the 

services are working to refine overall requirements, the total requirements 

and costs are unclear and raise a number of questions as to how the 

services will afford them. The growing requirement for future equipment 

repair, replacement, and reset will only serve to exacerbate the problem. 

For example, based on our preliminary observations, the Army’s cost 

estimate, to create modular units has increased from $28 billion in 2004 to

its current estimate of $52.5 billion. Of that $52.5 billion, $41 billion or 78 

percent has been allocated to equipment. However, our preliminary 

observations also indicate that it is not clear how the Army distinguishes 

between costs associated with modularity and costs for resetting 

equipment used during operations. According to recent Army information, 

the Army’s requirement for equipment reset is more than $13 billion for 

fiscal year 2006. This includes funds to repair equipment in theater or at 

the depots, replace battle losses, and recapitalize equipment. In fiscal year 

2006 alone, the Army estimated it would need to reset about 6,000 combat 

vehicles, 30,000 wheeled vehicles, 615 aircraft, and 85,000 ground support 

items. In addition, according to recent Marine Corps testimony, accurately 

forecasting the total cost to reset the force is dependent upon calculations 

of what percentage of current inventory in theater will be repairable or 

will need to be replaced, how much equipment may be left behind for Iraqi 

forces, and other determinations dependent on circumstances and 

conditions that cannot be easily predicted. The Army has also indicated

that additional supplemental funding will be required for equipment reset 

for at least two years after hostilities cease. The Army and Marine Corps 

must consider these affordability challenges in the context of future fiscal 

constraints. 

Page 21 GAO-06-604T Defense Logistics 
Depots Experience 

Difficulties With Executing 

Supplemental 

Appropriations Received 

Late in the Fiscal Year 

The Army depots received their fiscal year 2005 supplemental in the 

June/July 2005 timeframe, at which time they began executing their reset 

workload. Subsequently, some of these funds were later pulled back by the 

AMC. According to AMC officials, the funds were pulled back from the 

depots for three reasons: (1) the depots could not complete the reset 

workload until several months after the end of fiscal year 2005, (2) the 

funds were needed to meet other Army-wide requirements, and (3) the 

Army wanted to avoid potential Congressional cuts to its fiscal year 2006 

budget for depot carry over workload. In total, AMC pulled back $193 

million, or about 10 percent of reset funds for fiscal year 2005 for Army 

depot maintenance. According to AMC officials, the command did not use 

these funds for contract depot maintenance, but rather gave them back to

Army headquarters to meet other unfunded fiscal year 2005 operation and

maintenance requirements. According to Army and Marine Corps depot 

officials, receipt of funds too late in the fiscal year does not allow timely 

execution of major item workload within the current fiscal year. Given the 

time it takes to preposition parts and materials (at best 60 days), plus the 

repair cycle time to complete repairs (approximately another 60 to 90 days

for major items) there is basically little end item production to be achieved 

at the depot within the fiscal year the funding is received. Receiving the 

supplemental late in the year of execution reduced the amount of planned 

depot maintenance work for 2005. Depot officials anticipate that the 

condition may repeat itself in fiscal year 2006. For example, one Army 

depot reported that its planned fiscal year 2006 workload of 27 million 

direct labor hours will likely be reduced to 21 million hours, a reduction of 

6 million, or 22 percent, of planned direct labor hours. 

Depot officials commented that the timing of the supplemental 

appropriations compounds problems depots have in efficiently managing 

their maintenance workload. The depots face the challenge of managing

changes in funded requirements during the year of execution, obtaining 

the equipment they have programmed for overhaul, and ensuring that the 

right spare parts are purchased in advance of equipment overhauls. For 

example, in preparing its fiscal year 2006 supplemental budget request, 

AMC included the repair of HMMWVs at its depots. The depots planned 

accordingly to support this requirement. However, since the supplemental

was submitted to Congress, the Army has requested that Congress shift 

$480 million in HMMWV reset funds to new procurement. This change has 

reduced the planned depot workload by almost 6,000 HMMWVs creating 

disruptions in depots’ workforce structure plans. Until the reduction, Red 

River depot anticipated hiring additional employees to perform the 

HMMWV and Bradley workloads, and Letterkenny Army Depot recently

Page 22 GAO-06-604T Defense Logistics 
reduced its contract workforce by 150 employees due to declining work on 

the HMMWV and the Patriot missile system. 

Prior to the Global War on Terror, the Department of Defense, the Army, 

and the Marine Corps faced significant challenges in sustaining and 

modernizing legacy equipment as well as funding the procurements of 

replacement weapons systems. With the advent and continuation of 

military operations over the past several years in Afghanistan and Iraq, the 

challenges of sustainment and modernization of legacy weapons systems, 

and procurement of new and replacement weapons systems has been 

significantly exacerbated. The harsh operating environment and high

operational tempo, coupled with the operational requirement to keep 

equipment in theater without significant depot repair, could lead to higher 

than anticipated reset costs and more replacements than repair of 

equipment. 

Although the precise dollar estimate for the reset of Army and Marine 

Corps equipment will not be known until operations in Iraq and 

Afghanistan cease, it will likely cost billions of dollars to repair and 

replace the equipment used. As the funding requirements increase over 

time, the Army and Marine Corps will be forced to make difficult choices 

and trade-offs for the many competing equipment programs. While the 

services are working to refine overall requirements, the total requirements 

and costs are unclear and raise a number of questions as to how the 

services will afford them. Until the services are able to firm up these 

requirements and cost estimates, neither the Secretary of Defense nor the

Congress will be in a sound position to weigh the trade offs and risks. 

Mr. Chairman, this concludes my statement. I would be happy to answer 

any questions. 

Page 23 GAO-06-604T Defense Logistics 

Concluding 

Observations 

(350837) 
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