GAO

United States General Accounting Office

Report to the Chairman, Subcommittee 

on Readiness and Management Support, 

Committee on Armed Services, U.S. 

Senate

September 1999 DEFENSE 

MANAGEMENT

Army Could Achieve 

Efficiencies by 

Consolidating 

Ammunition 

Management

GAO/NSIAD-99-230

Page 1 GAO/NSIAD-99-230 Defense Management

Contents

Letter 3

Appendixes Appendix I: Examples of Fragmented Management and 

Decision-Making 20

Appendix II: Army Ammunition Plants 22

Appendix III: Comments From the Department of Defense 24

Appendix IV: GAO Contacts and Staff Acknowledgments 26

Figures Figure 1: Activities With Responsibilities for Conventional 

Ammunition 6

Figure 2: Management of the Conventional Ammunition Life 

Cycle 7

Figure 3: Conventional Ammunition Procurement Program 

Budgets, Fiscal Year 1985 Through Fiscal Year 1999 9
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Page 3 GAO/NSIAD-99-230 Defense Management

United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-281873 Letr

September 30, 1999

The Honorable James M. Inhofe

Chairman, Subcommittee on Readiness

 and Management Support

Committee on Armed Services

United States Senate

Dear Mr. Chairman:

The National Defense Authorization Act for Fiscal Year 1996 directed that 

the Army review and report on the management of conventional 

ammunition programs within the Department of Defense. In response, the 

Army contracted with Pacific Northwest National Laboratory in June 1996 

to conduct a comprehensive study of the management and configuration of 

the ammunition industrial base.1

 The study, completed in June 1997, 

recommended several actions to address the fragmentation of management 

responsibilities and accountability and the inefficiencies that impact the 

ammunition industrial base. In fiscal year 1999, the budget for conventional 

ammunition procurement programs was about $2 billion.

As you requested, we reviewed the Army’s implementation of the study’s 

recommendations. Specifically, we assessed the Army’s (1) progress 

toward reorganizing the management of conventional ammunition to 

address the fragmentation issues and (2) efforts to improve business 

practices to enhance the operational efficiency of ammunition production 

and procurement. This is the first in a series of reports that will also 

address issues such as demilitarization, capacity utilization, and storage of 

conventional ammunition.

Results in Brief The Army has made limited progress in addressing the problem of 

fragmented management of its conventional ammunition program. Senior 

Army leadership has been considering alternative organizational structures 

identified by a study team as a means of addressing the fragmentation 

1

The industrial base includes both government-owned and private-sector ammunition 

production plants. 
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issue. However, no decisions have been made because of lack of agreement 

on where management of conventional ammunition would fit into the 

Army’s organizational structure, and no milestones have been set for 

resolving the issue. In lieu of an organizational change and recognition of 

the need to integrate ammunition management, the Commanders of the 

three commands that deal with conventional ammunition formed an 

informal coordination group. The Commanders agreed to work together on 

common activities to pursue the most comprehensive and cost-effective 

approach to conventional ammunition management. However, the 

coordination group’s decisions are not binding and are dependent on all 

members agreeing to proposed actions.

Although the Army has not resolved the problem of fragmented 

management of conventional ammunition, it has developed initiatives to 

improve its business practices to enhance the operational efficiency of 

ammunition production and procurement. These initiatives have not yet 

been completed and their outcomes are yet to be determined. Further, the 

long-term success of these initiatives will depend upon the ability of the 

informal coordination group to ensure cooperation among all participants 

and resolve issues of common interest.

This report contains recommendations to the Secretary of Defense and the 

Secretary of the Army intended to address management fragmentation.

Background In March 1975, the Department of Defense established the Single Manager 

for Conventional Ammunition within the Secretary of the Army. The Single 

Manager was expected to be the central procuring and logistics agency for 

conventional ammunition common to all military services. Additionally, the 

Single Manager was to be responsible for managing the Army’s ammunition 

production facilities. The Single Manager concept evolved from a July 1970 

Logistics Management Institute report and one of our reports.2

 These 

reports recommended, among other things, that the Army centrally manage 

all ammunition to avoid duplication among production facilities and 

manufacturing processes.

2

Effective Central Control Could Improve DOD’s Ammunition Logistics (B-176139, Dec. 6, 

1973).
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Management of 

Conventional Ammunition

While the Secretary of the Army is officially recognized as the Single 

Manager, the Army’s Industrial Operations Command, a subordinate 

command of the Army Materiel Command, is responsible for the day-to-day 

execution of the Single Manager role. However, in actual practice, 

ammunition management responsibility is fragmented among three major 

Army commands. Specifically, in addition to the Industrial Operations 

Command, the Tank-automotive and Armaments Command, also a 

subordinate command of the Army Materiel Command, and the Program 

Executive Office for Ground Combat Support Systems,3

 which reports to 

the Assistant Secretary of the Army for Acquisition, Logistics, and 

Technology (Acquisition Executive), have significant ammunition 

management responsibilities as well as other responsibilities. Figure 1 

shows the commands that have Program, Project, or Product Managers 

who are responsible for procuring conventional ammunition for their 

programs.

3

The Program Executive Office for Ground Combat Support Systems provides program 

oversight and direction to the Program or Project Managers under its command.
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Figure 1: Activities With Responsibilities for Conventional Ammunition

Source: Office of the Executive Director for Conventional Ammunition.
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As illustrated in figure 1, the Army’s Acquisition Executive is not in the 

Single Manager’s chain of command. However, as shown by the dotted line 

in figure 1, there is a coordinating function within the Deputy Chief of Staff, 

Ammunition, (Army Materiel Command), which supports both the 

Industrial Operations Command and the Acquisition Executive. The 

Acquisition Executive is responsible for making policies that impact the 

government-owned industrial base, and the Industrial Operations 

Command is responsible for executing that policy. However, the 

Acquisition Executive has no direct authority over decisions made by the 

Single Manager and can only influence how policies are executed.

The Program Executive Office and the Tank-automotive and Armaments 

Command differ from the Single Manager in that they are responsible for 

research and development, initial production and fielding, and product 

improvement, but they are not responsible for logistics activities such as 

production base management and wholesale depot operations. Figure 2 

shows the responsibilities of the Single Manager and the Program, Project, 

or Product Managers in the ammunition life cycle.

Figure 2: Management of the Conventional Ammunition Life Cycle

Source: Industrial Operations Command.
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The Department of Defense directive for the Single Manager, signed by the 

Deputy Secretary of Defense and revised in 1995, states that once 

ammunition items reach stable production, they are to be assigned to the 

Single Manager responsible for follow-on production, logistics functions, 

and demilitarization. However, the Program, Project, or Product Managers 

operate under a separate Department of Defense directive, also signed by 

the Deputy Secretary of Defense and issued in 1996, which charges these 

managers with full life-cycle responsibility for their programs. Information 

from various Army officials indicates that the differences in responsibility 

are the genesis of the fragmentation among these commands. Appendix I 

illustrates problems caused by fragmented management.

Declining Budgets and 

Requirements

The end of the Cold War and subsequent changes to defense missions 

resulted in declining budgets and requirements for conventional 

ammunition. As shown in figure 3, ammunition procurement funding for all 

services has declined significantly, falling from a peak level of about 

$4.3 billion in fiscal year 1985 to about $2 billion in fiscal year 1999, with 

about one-half of the total going to the procurement of Army ammunition.
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Figure 3: Conventional Ammunition Procurement Program Budgets, Fiscal Year 

1985 Through Fiscal Year 1999

Source: Office of the Secretary of Defense, Office of Munitions.

Requirements for conventional ammunition also changed as the services 

decreased their dependence on traditional ammunition items and increased 

their reliance on highly technical, precision munitions.4

 In 1997, the 

Department of Defense issued a new policy on requirements determination 

in an attempt to generate consistent conventional ammunition 

requirements Department-wide and address changes in mission 

requirements. The new policy states that military departments should 

establish ammunition requirements and associated acquisition programs to 

properly perform their military mission. The Army is conducting a study to 

determine whether the increased investment in more modern precision 

munitions would have a significant impact on reducing the total life-cycle 

4

Precision Munitions cover both guided and smart munitions. Guided munitions are one-onone munitions-one munition for one target-that are guided to their target through a target 

acquisition sensor or laser designation system. Smart Munitions are “fire and forget” and 

have an autonomous capability to search, detect, classify, select, and engage targets with a 

lethal mechanism.

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Fiscal year

Current dollars in millions
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cost of ammunition. According to the study director, the study should be 

completed in November 1999.

Decreasing requirements for conventional ammunition have resulted in a 

reduction in both government-owned and private-sector production plants. 

The number of government-owned ammunition plants decreased from 32 in 

1978 to 22 in 1999. Of these 22 plants, 8 are currently producing 

ammunition, 6 are contractor operated, and 2 are government operated. Of 

the 14 remaining plants, 4 are inactive5

 and 10 are no longer required for 

current or future production and are in the process of being disposed of. 

Additionally, the number of contractor-owned plants declined from 286 in 

1978 to 72 in 1999. A list of the 22 plants is included in appendix II.

Congressional Concerns 

Over Program Management

To comply with Section 1082 of the National Defense Authorization Act for 

Fiscal Year 1996, the Army contracted with Pacific Northwest National 

Laboratory to conduct a comprehensive review of the ammunition 

industrial base. The key objectives of the study were to assess the 

capability and capacity of the industrial base for conventional ammunition 

and recommend a strategy for configuring and managing the base to 

effectively meet Department of Defense planning guidance.

In June 1997, the contractor issued its report: Recommended Strategy for 

Configuring and Managing the U.S. Munitions Industrial Base. The study 

found that, among other things, the ammunition management system was 

fragmented and the business environment needed to be stabilized. The 

report stated that different organizations, specifically the Industrial 

Operations Command, the Tank-automotive and Armaments Command, 

and the Program Executive Office for Ground Combat Support Systems, 

were responsible for different stages of the ammunition life cycle. 

Consequently, much time was being spent trying to coordinate activities. 

Additionally, the study found that the government-owned industrial base 

was becoming less efficient as the volume of work continued to shrink. On 

the basis of its assessment, Pacific Northwest National Laboratory 

recommended the following strategy to improve the management of 

conventional ammunition:

5

Inactive plants no longer have work directed to them, but their capacity is retained for 

replenishment or technological reasons.
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• manage ammunition as a major program using Department of Defense 

life-cycle acquisition processes;

• consolidate management responsibilities and financial resources for 

ammunition into a Program Executive Office for Ammunition;6

• convert government-owned production assets to private-sector 

ownership and acquire ammunition from the private sector; and 

• apply acquisition reform initiatives already underway in the Department 

of Defense to the ammunition acquisition process to stabilize the 

business environment and encourage industry to invest in the industrial 

base.

To accomplish this strategy, the study listed the following critical actions:

• establish ammunition program managers with full life-cycle 

responsibility for developing and producing items they manage;

• establish full and open competition among qualified suppliers as the 

standard acquisition approach;

• establish an integrated requirements process that includes 

representatives from all services and the industrial base; and

• establish and implement an equitable process for transitioning 

government-owned assets to private ownership.

The report further stated that with an acquisitions-based management 

approach, the government could move away from direct ownership and 

management of production assets and could instead focus its activities on 

the acquisition function, buying end items and replenishment capacity 

rather than production facilities and equipment.

The Army agreed with most of these recommendations, and they were 

included in a June 1998 Industry Base Policy Letter, 98-1-Ammunition, 

which established the Army’s strategy for achieving efficiency in the 

ammunition industrial base. There was no agreement on the 

recommendation to create a Program Executive Office for Ammunition. 

Instead, Army officials chartered a study team, known as the 

Organizational Integrated Process Team, to develop other organizational 

alternatives to address fragmentation issues. It also established a Business 

Case Integrated Process Team to determine how to implement the Pacific 

6

The Program Executive Office for Ammunition would be responsible for integrating 

budgets, acquisition strategies, research and development, and life-cycle management 

across all ammunition categories that the Army refers to as families.
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Northwest National Laboratory’s recommendations for improving 

operational efficiencies. Subsequently, the Army formed ammunition teams 

to develop competition and ammunition life-cycle strategies for all 

categories of ammunition, including Artillery, Fuzes, Mines/Countermines, 

Mortars, Small Arms, and Tank/Medium Caliber.

Fragmentation Issues 

Remain Unresolved

The Army has made limited progress towards addressing the fragmentation 

of ammunition management because of lack of agreement on where 

management of conventional ammunition would fit into the Army’s 

organization. Although the Army is considering recommendations from 

both an external and an internal group for improving the management 

structure of conventional ammunition, to date the Army has taken no 

action. In the interim, the principal Army commands responsible for 

management of conventional ammunition have formed an informal 

coordinating group known as the Armament Triad to deal with common 

issues that impact conventional ammunition. Because the Triad is an 

informal group, its prospects for long-term success are uncertain.

Team Recommendations 

Are Being Considered

The Organizational Integrated Process Team focused on the lack of 

integration in ammunition management. Specifically, the team addressed 

three problems: (1) fragmented ammunition management, (2) problems 

with the industrial base, and (3) outdated physical and organizational 

structures and processes, all of which have resulted in inefficiencies in the 

production and procurement of conventional ammunition. The team 

developed four proposals:

• Creation of an Ammunition Command. This proposal would centralize 

decision-making authority under a Major General with responsibility 

and accountability for integrated life-cycle management of ammunition 

while maintaining the mission of the Single Manager.

• Creation of a Program Manager/Program Executive Office and Merged 

Major Subordinate Command. This proposal would establish a joint 

Program Manager at the Brigadier General level for ammunition within 

the Ground Combat Support Systems Command. This concept would 

totally integrate ammunition under a single command and provide one 

voice for the Army’s conventional ammunition. The logistics mission of 

the Single Manager would be retained.

• Creation of a management structure that would integrate industrial base 

management with weapon systems management under the same 
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command. The concept is predicated on fully utilizing the private sector 

for all aspects of the ammunition life cycle.

• Creation of a Single Service. This proposal is based on the premise that 

the Department of Defense would merge into one service and that the 

requirement for the Single Manager would be eliminated.

The team recommended that the Army adopt the second proposal, which 

would provide a structure similar to that recommended by the Pacific 

Northwest National Laboratory study. The team found that the Program 

Manager/Program Executive Office concept scored the highest in attributes 

such as a clearly defined mission that focuses on total life-cycle 

management of ammunition.

The team briefed Army leadership in July 1998, and its recommendations 

were taken into consideration by a three-member team representing the 

Army Materiel Command, the Army’s Office of the Deputy Chief of Staff for 

Logistics, and the Secretary of the Army for Acquisition, Logistics, and 

Technology. The Army has not made any decision to reorganize the 

management of conventional ammunition and has not set milestones to do 

so. As a result, the three commands that report to the Secretary of the Army 

through different chains of command can still make independent decisions 

that impact the industrial base.

Uncertainty Regarding the 

Triad’s Effectiveness

Recognizing the need to integrate ammunition management, in October 

1998 the Commanding Generals of the three commands (Industrial 

Operations Command, Tank-automotive and Armaments Command, and 

Program Executive Office for Ground Combat Support Systems) that deal 

with conventional ammunition formed an informal coordination group 

referred to as the Armament Triad. The Commanders signed a 

memorandum of understanding to work together to coordinate common 

activities by pursuing a comprehensive and cost-effective approach to the 

life-cycle management of ammunition.

The Triad deals with concerns forwarded by the ammunition teams through 

an Executive Council. The Triad meets quarterly to discuss and attempt to 

resolve issues that impact the production and procurement of conventional 

ammunition. The teams are responsible for developing life-cycle 

management plans for their individual categories of conventional 

ammunition. This is to be accomplished through three plans: a business 

plan, an acquisition plan, and an industrial base plan, which are discussed 

in detail later in this report. Additionally, the Triad has assumed 
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responsibility for ensuring total integration of plans being formulated by 

the various teams.

Although the Triad provides overall coordination to the ammunition teams, 

Triad members have expressed concern about the group’s long-term ability 

to affect change. For example, members are concerned they will not be 

able to resolve Army-wide ammunition issues if decisions to do so 

adversely impact any one individual command. This situation is 

exacerbated by the fact that the individual Triad members do not report to 

the Secretary of the Army through the same chain of command. According 

to senior Army officials, in order for the Triad to be successful, huge 

cultural, if not organizational, changes would have to take place. They 

added that Program Managers are more concerned with cost, schedule, and 

performance than with how their decisions impact government-owned 

ammunition production facilities. Various officials also suggested that 

unless the Triad is given permanent status, its future would become less 

certain as command changes affecting the Triad members occur.

Initial Efforts 

Underway to Improve 

Management 

Efficiencies

While the Army has not addressed the fragmentation issues as they relate 

to ammunition management, it has made efforts to improve the efficiency 

of the industrial base as well as the life-cycle management of ammunition. 

The Army initially focused on two initiatives: (1) development of a 

competition strategy for ammunition acquisition, and (2) development of 

life-cycle management plans for individual ammunition categories. The 

first initiative was developed to facilitate the transfer of government-owned 

ammunition plants to private-sector ownership. Although two competitions 

have been carried out, the Army recently decided to base future 

competitions on the life-cycle management plans that are being developed 

by ammunition teams.

Competition Strategy The Business Case Integrated Process Team developed competition 

strategies for each government-owned plant by assessing the plant’s 

capabilities, determining the best method of transitioning it to privatesector ownership, and establishing a timeline for completion. A 

competition for explosive materials was completed in June 1998, and 

another for small caliber ammunition was completed in July 1999. 

However, Army officials have recently voiced concerns about the 

competitions being carried out prior to completion of the life-cycle 

management plans, which they think should help determine future facility 

requirements. The Commander, Industrial Operations Command, and the 
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Deputy Chief of Staff for the Single Manager, both stated they have 

recognized the value of the family team plans in helping to determine which 

competitions would be needed. As a result, future competition plans will 

take into account information contained in life-cycle management plans.

Integration of Life-Cycle 

Management Plans

Ammunition teams were formed between November 1998 and January 1999 

to integrate the entire ammunition life cycle by including representatives 

from each of the three commands, as well as from other services and units 

such as requirements planning and budgeting. These teams are responsible 

for developing life-cycle management plans for their ammunition items. 

They expect to do so by developing the following plans:

• A business plan is to be developed to include all life-cycle requirements 

such as environmental technology, maintenance, and demilitarization. 

This plan must ensure that the necessary industrial capacities, including 

peacetime production, replenishment capacity, and storage are obtained 

and maintained in a cost-effective manner.

• An acquisition plan is to be developed to document all acquisitions for 

the ammunition category and determine the cost at each phase of the 

life cycle. Examples of acquisitions are peacetime production, storage, 

maintenance, and transportation.

• Based on an assessment of the current ammunition production base, an 

industrial base plan is to be developed to determine what capacity is 

needed to meet requirements.

The plans were due to be completed and submitted to an Integration 

Planning Team in June 1999. However, according to an Army official, the 

plans are taking longer to complete than was anticipated because of 

difficulties in achieving agreement among the team members. The business 

plans were completed in July 1999, and the remaining plans are to be 

completed by October 1999.

An Integration Planning Team was formed at the same time as the 

ammunition teams. It is responsible for reviewing teams’ plans to assess 

their overall impact on the ammunition industrial base. The plans are 

expected to be reviewed concurrently to eliminate conflicts or negative 

impacts on the industrial base. According to the Integration Planning Team 

leader, the team’s goal is to optimize the Army’s procurement and 

production of conventional ammunition. One way to achieve this, 

according to the Team leader, is to consolidate ammunition procurement 

efforts across ammunition categories whenever possible. For example, the 
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Team and ultimately the Triad may decide that mortar bodies and artillery 

shells could be included in a single contract to save money and stabilize the 

industrial base, and the Team could work with the individual teams to 

achieve that goal. This strategy differs from the current one, in which each 

of the three commands can make decisions considering only its own 

individual programs.

Additionally, according to various Army officials, the plans would be 

included in the competition strategies for government-owned plants as well 

as in future budgetary and requirements plans. This initial effort is 

scheduled to be presented to the Triad in October 1999. Thereafter, 

according to the Integration Planning Team leader, these plans are 

expected to be reviewed annually and modified as conditions change.

Conclusions Management of the Army’s conventional ammunition program continues to 

be fragmented despite internal recognition of the problem and efforts to 

identify alternative solutions. The Army is continuing to review the 

recommendations of the group that studied the issue; however, no 

timeframe has been established for taking any formal action. In the interim, 

the three commands that deal with various aspects of conventional 

ammunition have established an informal structure and a set of procedures 

for addressing issues of common interest. While this is a constructive step, 

it is only an informal process that depends on all parties voluntarily 

cooperating to improve business practices for the purpose of enhancing 

operational efficiencies for ammunition production and procurement. The 

ability to resolve differences caused by competing program goals is 

exacerbated by the lack of a single chain of command with the ability to 

force reconciliation among competing interests. Likewise, unless the Triad 

is given permanent status, its future will become less certain as command 

changes affecting the Triad members occur. Until actions are taken to 

address the fragmentation of ammunition management, the area remains 

vulnerable to inefficiency.

Recommendations Since management fragmentation can only be resolved through changes in 

the current organizational structure and reporting relationships, and 

because of the Defense-wide nature of the issue, we recommend that the 

Secretary of Defense direct the Secretary of the Army to establish a 

timeframe for implementing an Army-wide reorganization to integrate the 

management of conventional ammunition. In considering organizational 
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alternatives, we recommend that the Secretary of the Army consider a 

permanent Triad structure as well as other recommended organizational 

structures. To facilitate efficient operations, until organizational changes 

occur, we further recommend that the Secretary of Defense direct the 

Secretary of the Army to put in place a mechanism to address issues the 

informal Triad is unable to resolve.

Agency Comments and 

Our Evaluation

The Director of Strategic and Tactical Systems in the Office of the Under 

Secretary of Defense for Acquisition and Technology provided written 

comments on a draft of this report. They are included in appendix III. While 

concurring with the report’s assessment of issues and recommendations, 

the Director stated that the recommendation should be directed to the 

Secretary of the Army rather than the Secretary of Defense. Ultimately, the 

Secretary of Defense is responsible for ensuring the economy and 

efficiency of Defense organizations and operations, and the Secretary of 

the Army reports to the Secretary of Defense. In this instance, although 

significant time has passed, the Army has not resolved the long-standing 

issues identified in this report. Consequently, we continue to believe that 

action is needed by the Secretary of Defense to achieve a timely resolution 

of these issues.

Scope and 

Methodology

To identify the Army’s plans for reorganizing the management of 

conventional ammunition and to determine how this should be 

accomplished, we reviewed the Pacific Northwest National Laboratory 

recommendations, Industrial Base Policy Letter, 98-1-Ammunition, and 

proposals made by the Organizational Integrated Process Team. We 

reviewed how the Industrial Operations Command, the Tank-automotive 

and Armaments Command, and the Program Executive Office for Ground 

Combat Support Systems were established and Department of Defense 

directives that set out their roles and responsibilities. We interviewed 

senior officials at the Office of the Secretary of Defense, Washington, D.C; 

the Office of the Secretary of the Army for Acquisition, Logistics and 

Technology, Washington, D.C; the Army Materiel Command, Alexandria, 

Virginia; the Industrial Operations Command, Rock Island, Illinois; the 

Program Executive Office for Ground Combat Support Systems, Picatinny 

Arsenal, New Jersey; and the Tank-automotive and Armaments Command, 

Warren, Michigan. We also discussed ammunition management with 

representatives of the Munitions Industrial Base Task Force, Arlington, 

Virginia; the Program Manager for Ammunition, U.S. Marine Corps Systems 
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Command, Arlington, Virginia; the Office of Munitions Requirements and 

Allocations, U.S. Air Force, Washington, D.C; and the Program Executive 

Office for Theater Surface Support, Naval Sea Systems Command, 

Arlington, Virginia. To develop the examples of fragmented management 

and decision-making, we interviewed the Program Manager, Crusader 

Munitions, at the Program Executive Office, Ground Combat Support 

Systems, and the Commanding General and Deputy Product Manager, 

Mortars, at the Tank−automotive and Armaments Command. We also 

interviewed senior officials at the Industrial Operations Command.

To determine how the Army is addressing its business practices to improve 

operational efficiencies related to ammunition production and 

procurement, we reviewed the proposals of the Business Case Integrated 

Process Team and discussed its recommendations with the above officials.

We conducted our review from December 1998 through June 1999 in 

accordance with generally accepted government auditing standards.

We are sending copies of this report to the Honorable William Cohen, 

Secretary of Defense; the Honorable Louis Caldera, Secretary of the Army; 

the Honorable Jacob Lew, Director, Office of Management and Budget; and 

Senator Charles Robb, Ranking Minority Member, Subcommittee on 

Readiness and Management Support, Senate Committee on Armed 

Services, Representative Floyd D. Spence, Chairman, and Representative 

Ike Skelton, Ranking Minority Member, House Committee on Armed 

Services. Copies will also be made available to others upon request.

GAO points of contact and other key contributors are listed in appendix IV.

Sincerely yours,

David R. Warren, Director

Defense Management Issues
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Page 20 GAO/NSIAD-99-230 Defense Management

Appendix I

Examples of Fragmented Management and Apendxies

Decision-Making ApendxiI

Fragmentation in ammunition program management has led to less than 

optimum communications, coordination, and decision-making, affecting 

requirements determination and production. Two programs where some of 

these problems have been encountered involve Crusader munitions and 

mortar production.

Crusader Munitions This example illustrates how lack of communication between two 

commands led to an industrial base decision based on incomplete 

information. In 1993, the Army began a program, known as the Crusader, to 

upgrade its self-propelled howitzer. The munitions for this system use a 

propellant charge that requires nitroguanidine. According to the Deputy 

Program Manager for Crusader Munitions, the program will need 14 million 

more pounds of nitroguanidine than is currently available in the stockpile. 

However, the Army’s ability to acquire the needed nitroguanidine could be 

adversely affected by an industrial base decision made by the Industrial 

Operations Command.

In 1997, the Industrial Operations Command requested that the Office of 

the Secretary of the Army inform Congress that it intended to divest the 

Sunflower Army Ammunition Plant, the only plant in North America with 

the production equipment and skills to make nitroguanidine. The Industrial 

Operations Command based its decision on what it believed were no 

known future requirements for nitroguanidine and is in the process of 

transferring the plant to Kansas. Industrial Operations Command officials 

concede they did not do a very good job of communicating their decision 

throughout the Army ammunition community; if they had, they would have 

seen a significant increase in nitroguanidine requirements. As a result, the 

Army must either locate an alternative supply source for nitroguanidine 

outside North America or build another plant.

Mortar Production This example demonstrates how a split in program responsibilities 

between two commands resulted in years of production delays. 

Management of the mortar program is divided between the Product 

Manager, Mortars, at the Tank-automotive and Armaments Command and 

the Industrial Operations Command. The Product Manager, Mortars, has 

responsibility for items in the research and development, initial production 

and fielding, and product improvement phases, and the Industrial 

Operations Command is responsible for items in later phases of the life 

cycle such as follow-on production, maintenance, and demilitarization.
Appendix I

Examples of Fragmented Management and 

Decision-Making

Page 21 GAO/NSIAD-99-230 Defense Management

In the early 1990s, the Industrial Operations Command, concerned about 

lack of production in the government-owned industrial base, developed a 

strategy to preserve critical government-owned capability. Using this 

strategy, mortar production was assigned to Milan Army Ammunition Plant. 

However, according to Industrial Operations Command personnel and the 

Deputy Product Manager, Mortars, Milan had a variety of process problems 

and was not able to produce to the Product Manager’s required high quality 

levels. Because of these problems, the Deputy Product Manager, Mortars, 

tried for several years to convince the Industrial Operation Command not 

to direct their work to Milan but rather allow the Product Manager to 

identify, through a competitive process, other production sources.

Unable to resolve production issues, the Industrial Operations Command 

agreed in June 1997 to allow the Product Manager to seek out other 

production sources. This issue took years to resolve because of the split in 

program responsibilities and lack of communication between the two 

commands.
Page 22 GAO/NSIAD-99-230 Defense Management

Appendix II

Army Ammunition Plants ApendxiI

Government-owned, government-operated plants

• Active Plants

Crane, Crane, Indiana

McAlester, McAlester, Oklahoma

Government-owned, contractor-operated plants

• Active Plants

Holston, Kingsport, Tennessee

Iowa, Middletown, Iowa

Lake City, Independence, Missouri

Lone Star, Texarkana, Texas

Milan, Milan, Tennessee

Radford, Radford, Virginia

• Inactive1

Louisiana, Doyline, Louisiana

Mississippi, Stennis Space Center, Mississippi

Riverbank, Riverbank, California

Scranton, Scranton, Pennsylvania

• Excess2

Badger, Baraboo, Wisconsin

Cornhusker, Grand Island, Nebraska

Indiana, Charlestown, Indiana

Joliet, Wilmington, Illinois

Kansas, Parsons, Kansas

Longhorn, Marshall, Texas

Ravenna, Ravenna, Ohio

Sunflower, DeSoto, Kansas

1

Inactive plants are no longer assigned production but are retained to meet replenishment 

requirements. The Army is using the Armament, Retooling, and Support Initiative, which 

allows tenants to lease space at these plants, to reduce operation and maintenance cost. For 

a full discussion of the Armament, Retooling, and Support Initiative see Military Bases: 

Cost to Maintain Inactive Ammunition Plants and Closed Bases Could be Reduced 

(GAO/NSIAD-97-56, Feb. 1997).

2

Excess plants are no longer required for assigned mission and are in the process of being 

disposed of. The Army is negotiating the transfer of Sunflower to Kansas. The General 

Services Administration is disposing of Badger, Cornhusker, Joliet, and Longhorn. The Army 

Corps of Engineers is disposing of Indiana under an agreement with the General Services 

Administration. Revenna and Twin Cities are being turned over to the National Guard. The 

Kansas plant will not begin the disposal process until the operating contractor’s commercial 

production contracts expire in 2006.
Appendix II

Army Ammunition Plants

Page 23 GAO/NSIAD-99-230 Defense Management

Twin Cities, Arden Hills, Minnesota

Volunteer, Chattanooga, Tennessee
Page 24 GAO/NSIAD-99-230 Defense Management

Appendix III

Comments From the Department of Defense ApendxiI
Appendix III

Comments From the Department of Defense

Page 25 GAO/NSIAD-99-230 Defense Management

Now on p. 16.

Now on p. 17.
Page 26 GAO/NSIAD-99-230 Defense Management

Appendix IV

GAO Contacts and Staff Acknowledgments ApendxiIV

GAO Contacts David R. Warren (202) 512-8412

Ronald L. Berteotti (214) 777-5702

Acknowledgments In addition to those names above, Patricia J. Nichol, Kimberly C. Seay, and 

Frederick T. Lyles, Jr. made key contributions to this report.

(709389) Letr
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