**GAO-10-167R**                      Published: Nov 05, 2009. Publicly Released: Nov 05, 2009.                  

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## Highlights

The Army has three government-owned and operated manufacturing arsenals that it considers vital to the Department of Defense's (DOD) industrial base because they provide products or services that are either unavailable from private industry or ensure a ready and controlled source of technical competence and resources in case of national defense contingencies or other emergencies. These three arsenals are Pine Bluff Arsenal, Arkansas; Rock Island Arsenal, Illinois; and Watervliet Arsenal, New York. Pine Bluff's core mission is the production of conventional ammunition and other types of munitions. Rock Island's core mission is weapons manufacturing, and the arsenal is home to the Army's only remaining foundry. Watervliet is the Army's only cannon maker and also produces other armaments and mortars. Historically, the Army's arsenals have generally had vacant or underutilized space. For many years the Army has not provided the capital investment needed to keep pace with modern manufacturing requirements and retain core skills in the arsenal workforce. Additionally, the arsenals have generally had lower workloads during peacetime, but since the onset of the wars in Iraq and Afghanistan they have experienced a surge in workloads to provide vital manufacturing capabilities, such as producing armor kits to harden Army personnel vehicles after it was found that the Army's existing vehicles were susceptible to improvised explosive devices. During the defense drawdown of the 1990s, the manufacturing arsenals were struggling from a diminishing and fluctuating workload, high product costs, significant reductions in force, and a fear that their core skills were being lost. The National Defense Authorization Act for Fiscal Year 2001 authorized the Arsenal Support Program Initiative (ASPI), as a demonstration program designed to help maintain the viability of the Army's manufacturing arsenals. The ASPI authority sets forth 11 purposes for the program, including utilizing and employing the arsenals' skilled manufacturing workforce by commercial firms; encouraging private commercial use of underutilized government facilities; reducing the government's cost of ownership and the cost of products produced at the arsenals; and fostering cooperation between the Army, state and local governments, and private companies in the development and joint use of the Army's arsenals. The conference report accompanying the National Defense Authorization Act for Fiscal Year 2008 directed us to review the ASPI program and report to the defense authorization committees. Our objective for this review was to determine the extent to which the Army has addressed the intended purposes set forth in the ASPI authorizing legislation. Additionally, in response to congressional interest, we have provided information that discusses other available authorities that the Army uses or could use to improve the viability of its manufacturing arsenals. In response to direction by the conferees to conduct a business case analysis that examines the cost, return on investment, and economic impact of the ASPI program, the Congressional Budget Office expects to submit its report later this year. Accordingly, our review did not address those aspects of the ASPI program.

Although the Army's three manufacturing arsenals have secured tenants that collectively address all but one of the purposes of the ASPI authority, the arsenals have had limited success in attracting ASPI tenants that enhance their core manufacturing missions and related workforce skills. According to the Army, 44 tenants had been secured under the ASPI program through the end of July 2009 (27 at Rock Island, 16 at Watervliet, and 1 at Pine Bluff), and each tenant addressed at least 1 of the 11 ASPI purposes. However, the Army has determined that, of the 44 tenants, only 4 are engaged in activities that have helped to strengthen the arsenals' core manufacturing capabilities or related workforce skills. ASPI site managers are generating operating revenue in the form of rent paid by ASPI tenants and have been more successful in securing commercial tenants needing administrative office space, which tends to be more profitable than leasing manufacturing space. Nonetheless, while ASPI tenants are generating revenue for the arsenals, program and site managers have generally been free to implement the program using a variety of approaches that may not be significantly contributing to the core manufacturing missions of the arsenals because the Army Materiel Command has provided them with only limited guidance. Given the discretion afforded by the ASPI authority--which does not prioritize its 11 purposes or require that all 11 purposes be addressed--the Army has missed an opportunity to ensure that program execution is aligned with its own priorities because Army guidance does not specify which of the authority's 11 purposes the Army considers to be its highest priorities. Further, the guidance does not incorporate the priorities identified in the conference report accompanying the National Defense Authorization Act for Fiscal Year 2008, which encouraged the Army to recruit more tenants that enhance the arsenals' core missions and workforce skills. Additionally, the Army has not developed a strategy that describes the methods it plans to use to achieve its highest priorities and has not established performance goals and measures for the ASPI program. Our prior work has emphasized that performance goals should be measurable and results-oriented. Although the Army has adopted the 11 ASPI purposes as its broad goals for the program, these goals can not be easily quantified. Similarly, while the Army has developed some metrics to assess the program, existing metrics measure only the number of ASPI contracts secured and cost savings or cost avoidance to the Army, rather than the extent to which the program is making progress toward achieving the broad goals represented by the purposes established in the ASPI authority. Without clearly defined priorities, performance goals, and measures, the Army may be unable to respond to congressional direction or ensure that its own interests are being addressed. Further, the arsenals could be at risk of diminished core manufacturing capabilities that are considered vital to the national defense, and thus these skills and capabilities may not be readily available when needed. We are making three recommendations to improve the Army's execution of the ASPI program to help ensure that it addresses the broad goals of both congressional conferees and the Army by distinguishing its highest priorities among the ASPI purposes and establishing a strategy that includes measurable goals and performance measures to monitor progress the Army has made toward addressing the ASPI purposes.

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## Topics

National Defense

AmmunitionArmy facilitiesArmy procurementDefense capabilitiesIndustrial facilitiesMilitary facilitiesMunitionsPerformance measuresPrioritizingStrategic planningWeapons systemsArsenalsProgram goals or objectives