Defense Ammunition: DOD Meeting Small and Medium Caliber Ammunition Needs, but Additional Actions Are Necessary
Published: 2005-07-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Following the end of the Cold War, the Department of Defense (DOD) significantly reduced its purchases of small and medium caliber ammunition and reduced the number of government-owned plants that produce small and medium caliber ammunition. Since 2000, however, DOD's requirements for these types of ammunition have increased notably. Because the success of military operations depends in part on DOD having a sufficient national technology and industrial base to meet its ammunition needs, Congress asked GAO to review DOD's ability to assess if its supplier base can meet small and medium caliber ammunition needs. Specifically, we (1) identified changes over the past several years that have increased the requirement for small and medium caliber ammunition, (2) assessed the actions DOD has taken to address the increased requirement, and (3) determined how DOD plans to ensure that it can meet future small and medium caliber ammunition needs.
section_title: What GAO Found
paragraphs: DOD's increased requirements for small and medium caliber ammunition over the past several years are largely the result of increased weapons training requirements needed to support the Army's transformation to a more self-sustaining and lethal force--an effort accelerated after the terrorist attacks of September 11, 2001--and the deployment of forces to conduct recent U.S. military actions in Afghanistan and Iraq. Between fiscal years 2000 and 2005, total requirements for small caliber ammunitions more than doubled, from about 730 million to nearly 1.8 billion rounds, while total requirements for medium caliber ammunitions increased from 11.7 million rounds to almost 22 million rounds. DOD has initiated several steps to meet the increased demand, including funding about $93.3 million for modernization improvements at the three government-owned ammunition plants producing small and medium caliber ammunition. DOD is currently able to meet its medium caliber requirement through modernization efforts at the government-owned ammunition plants and through contracts with commercial producers. The government-owned plant producing small caliber ammunition cannot meet the increased requirements, even with these modernization efforts. Also, commercial producers within the national technology and industrial base have not had the capacity to meet these requirements. As a result, DOD has had to rely at least in part on foreign commercial producers to meet its small caliber ammunition needs. DOD has taken steps to ensure that the national technology and industrial base can meet future small caliber ammunition needs by building flexibility into the acquisition system to address fluctuations. In addition, a planning process has been put in place to ensure that the base can respond to longer-term DOD ammunition needs, including small and medium caliber ammunition. While the process is ongoing, information to effectively implement the plan and timely performance measures to ensure accountability are lacking.

section_title: Letter
paragraphs: Following the end of the Cold War, the Department of Defense (DOD)  significantly reduced its purchases of small and medium caliber  ammunition. Historically, DOD has procured small and medium caliber  ammunition from government-owned manufacturing plants. As a result of  the reduced ammunition needs, the number of these plants has been  reduced to less than half of what existed during the Cold War. DOD has  three remaining government-owned plants that produce small and medium  caliber ammunition. Since 2000, however, DOD’s small and medium  caliber ammunition requirements have increased notably.
The Army is the single manager for conventional ammunition acquisition,  including small and medium caliber ammunition, for all U.S. forces. In  September 1999, we reported on the need to consolidate the management  of the Army’s conventional ammunition programs. In early 2002, the Army  established the Office of the Program Executive Officer (PEO) for  Ammunition as part of a larger effort to establish greater accountability  and responsibility in the life-cycle management of DOD’s ammunition  programs. A year later, the Army designated this office as the executor for  the single manager for conventional ammunition mission and delegated to  that office limited authority to make determinations on restricting  procurements of conventional ammunition as directed by section 806 of  the Strom Thurmond National Defense Authorization Act for Fiscal Year  1999 (Public Law 105-261). In addition, the PEO for Ammunition was  given responsibility for procuring conventional ammunition to meet  current military requirements.
Because the success of military operations depends in part on DOD having  a sufficient national technology and industrial base to meet its  ammunition needs, you asked us to review DOD’s ability to assess if its  supplier base can meet small and medium caliber ammunition needs.  Specifically, we (1) identified changes over the past several years that have  increased the requirements for small and medium caliber ammunition,  (2) assessed the actions DOD has taken to address the increased  requirement, and (3) determined how DOD plans to ensure that it can  meet future small and medium caliber ammunition needs.
In conducting our work, we spoke with officials from appropriate DOD  and Army offices. We also reviewed DOD and Army ammunition  acquisition policies, planning documents, and ammunition budget and  requirements data. For the purposes of this review, we collected data on  5.56mm, 7.62mm, 9mm, and .50-caliber small caliber ammunition, and  20mm, 25mm, 30mm, and 40mm medium caliber ammunition. We  conducted our review from September 2004 to May 2005 in accordance  with generally accepted government auditing standards. For more  information on our scope and methodology, see appendix I.
subsections: section_title: Background
paragraphs: A DOD directive assigns the Secretary of the Army the mission of the  single manager for conventional ammunition within DOD.  The Under  Secretary of Defense for Acquisition, Technology, and Logistics is  responsible for providing policy and guidance for the single manager for  conventional ammunition’s mission, and ensuring compliance with the  single manager’s responsibilities. Section 806 of the Strom Thurmond  National Defense Authorization Act for Fiscal Year 1999 (Public Law 105- 261) vests the single manager with the authority to restrict the  procurement of conventional ammunition to sources within the national  technology and industrial base. The Secretary of the Army was authorized  to delegate, within the Army, this authority. A January 28, 2003,  memorandum from the Secretary of the Army delegated authority to make  section 806 determinations to the Assistant Secretary of the Army for  Acquisition, Logistics, and Technology. In an April 16, 2003, memorandum  that office re-delegated limited section 806 authority to the Program  Executive Officer for Ammunition in his capacity as the single manager’s  executor.
High-level planning guidance establishes general guidelines for the  services to determine how much ammunition is needed to conduct  military operations. As the single manager for conventional ammunition,  the Army is responsible for coordinating with all the military services to  meet conventional ammunition requirements. Through the PEO for  Ammunition, the Army manages small and medium caliber ammunition,  including small arms, mortar, automatic cannon, and ship gun ammunition  (see table 1).
All ammunition cartridges are composed of several components that must  be assembled at different stages of production. See figure 1 for an example  of a 5.56mm cartridge.  It takes, on average, 23-months from the time a  production order is placed until final delivery.
Since World War II, DOD has relied primarily on a government-owned  base to meet its conventional ammunition needs. During the Cold War,  there were as many as 34 government-owned plants producing  conventional ammunition. The end of the Cold War and subsequent  changes to defense missions resulted in declining requirements. At its  peak in 1985, funding for conventional ammunition was $4.3 billion; by  1999, funding had dropped by more than half to about $2 billion. Currently,  there are 14 government-owned ammunition plants, 11 of which are  contractor-operated. Three of these 11 facilities—Lake City (Missouri),  Milan (Tennessee), and Radford (Virginia)—are the government-owned,  contractor-operated producers of DOD’s small and medium caliber  ammunition.
Lake City is the primary producer of small caliber ammunition. Lake City  is operated by a commercial ammunition producer under a contract that  runs from fiscal year 1999 through fiscal year 2008. The contract initially  called for a minimum production capacity amount of 350 million rounds  and a maximum of 800 million rounds of 5.56mm, 7.62mm, and .50-caliber  ammunition. The PEO increased the upper capacity requirement to  1.5 billion rounds per year to be accomplished by early 2006 through  modifications made to the original contract.
The PEO relies on annual contracts with three commercial producers  within the national technology and industrial base for most of DOD’s  supply of 20mm, 25mm, and 30mm medium caliber ammunition. Currently,  one of these producers is manufacturing medium caliber ammunition at  Radford which specializes in the production of propellants and explosives;  the other two commercial producers manufacture medium caliber  ammunition at their own facilities. Radford’s current contract was  awarded in fiscal year 2003 and has been renewed on an annual basis  through fiscal year 2005. Milan is the government’s primary producer of  40mm ammunition. The contract with the commercial operator at Milan  runs from fiscal year 1998 through fiscal year 2006.
section_title: DOD’S Increased Requirements for Small and Medium Caliber Ammunition Primarily Driven by Increased Proficiency Requirements
paragraphs: DOD’s increased requirements for small and medium caliber ammunitions  have largely been driven by increased weapons training requirements,  dictated by the Army’s transformation to a more self-sustaining and lethal  force—which was accelerated after the attacks of September 11, 2001— and by the deployment of forces to conduct recent U.S. military actions in  Afghanistan and Iraq. Since 2000, requirements for small caliber  ammunition have more than doubled, and requirements for medium  caliber ammunition have almost doubled.
Over the last decade, the Army began transforming its warfighting  capabilities to respond more effectively to the growing number of  peacekeeping operations, small-scale contingencies, and nontraditional  threats, such as terrorism. According to Army officials, the transformation  is the most comprehensive change in the Army in over a century and will  affect all aspects of its organizations, training, doctrine, leadership, and  strategic plans as well as its acquisitions. As part of its transformation, the  Army is planning for its forces to be self-sustaining and capable of  generating combat power and contributing decisively to combat  operations. Following the September 11, 2001, attacks, the Army  accelerated its force transformation to mobilize and deploy soldiers in  support of various missions, most notably war-fighting operations in  Afghanistan and Iraq.
To meet its force transformation objectives, the Army began requiring all  soldiers to gain additional weapons qualifications training after they  complete initial basic training. The Army also began requiring that  personnel in all deployed elements, including combat support and combat  service support units, achieve and maintain greater proficiency in the use  of specified weapons. For example, beginning in late 2001, the Army  established a policy requiring each soldier to qualify twice a year on small  caliber firearms instead of once a year as previously required. According  to Army officials, in addition to the increased annual training  requirements, small caliber ammunition needs have increased by an  additional 66 percent due to a combination of the mobilization of units and  contingency training, for example, training to react to defend against  attacks on truck convoys; and, to a lesser extent, due to operations in Iraq  and Afghanistan. The increased requirements are likely to continue to a  significant extent beyond current operational deployments due to the  increased training requirements.
Between fiscal years 2000 and 2005, total requirements for small caliber  ammunition increased from about 730 million to nearly 1.8 billion rounds  (see figure 2).
The 5.56mm rounds—used in the M16 rifle, the standard weapon used by  soldiers—accounted for much of the small caliber increase (see table 2).
Medium caliber requirements have also increased over the past few years.  Between fiscal years 2000 and 2005, medium caliber requirements almost  doubled, from 11.7 million rounds to almost 22 million rounds (see figure  3).
The 40mm rounds represent the bulk of the increases between fiscal years  2000 and 2005 (see table 3).
section_title: PEO Is Meeting Increased Requirements through Modernization Efforts Supplemented by Commercial Buys
paragraphs: In an effort to help meet the increased need for small and medium caliber  ammunition in the near term, the PEO upgraded the equipment at the Lake  City, Milan, and Radford Army Ammunition plants. While these upgrades  enabled Milan and Radford—the government-owned, contractor-operated  producers of medium caliber ammunition—to meet DOD’s requirements,  Lake City—the small caliber ammunition producer—was unable to meet  DOD’s fiscal year 2004 requirement of about 1.6 billion rounds of  ammunition. As a result, the PEO made additional procurements from the  commercial market to make up for fiscal year 2004 shortfalls.
The three government-owned, contractor-operated plants that produce  small and medium caliber ammunition were built in 1941. Between fiscal  years 2001 and 2005, DOD funded a total of about $93.3 million to upgrade  these facilities. This included replacement or refurbishment of  ammunition cartridge production equipment and other facility  improvements. According to a PEO official, ongoing modernization is  needed for the Army ammunition plants to continue to operate into the  future, and in the case of the Lake City Army Ammunition Plant, additional  equipment and facility upgrades will be needed to increase capacity to  address future needs. According to a PEO official, the Army plans to  replace and refurbish ammunition production equipment through fiscal  year 2011. See table 4 for examples of funded modifications.
According to PEO officials, the national technology and industrial base has  been able to meet the increased requirements for medium caliber  ammunition. In an effort to meet DOD’s small ammunition requirements,  the PEO initiated additional modernization efforts at Lake City to increase  production from a maximum capacity of 800 million rounds in fiscal year  2001 to approximately 1.2 billion rounds per year in July 2004. Despite this  increased production capacity, Lake City was unable to meet fiscal year  2004 requirements for small caliber ammunition.
Consequently, the PEO was forced to rely on other ammunition sources.  While many commercial ammunition producers responded to the PEO’s  sources sought announcements, few were able to satisfy DOD’s  ammunition specifications. For example, seven of nine commercial  producers responding to the PEO’s announcement for a specific type of  5.56mm ammunition were unable to meet the specifications, such as  producing metal cartridge cases. For an announcement for different types  of .50-caliber ammunition, none of the 10 respondents were able to meet  all of the specifications. Several respondents were foreign ammunition  producers. According to officials from U.S. commercial ammunition  producers, the recent surge in DOD’s small caliber ammunition  requirements could only be met by accessing available worldwide  capacity.
The PEO was eventually able to find commercial producers qualified to fill  DOD’s small caliber ammunition shortfall in fiscal year 2004. These  included Israel Military Industries and Olin-Winchester—a U.S.  ammunition producer. According to data provided by the PEO, almost  313 million rounds of 5.56mm, 7.62mm, and .50-caliber ammunition were  purchased from commercial ammunition producers in fiscal year 2004.  According to a PEO official, DOD paid about $10 million more than a  similar amount of small caliber ammunition would cost from Lake City.  However, Lake City could not meet the 2004 requirement. Although DOD  paid a premium as a result of the need to procure ammunition outside the  government-owned base, we did not analyze whether maintaining a more  robust base would have been cost-effective.
According to DOD officials, the increased buys for small caliber  ammunition are being funded through supplemental appropriations.
Tables 5 and 6 illustrate how much funding for small and medium caliber  ammunition acquisitions has been proposed by the President’s Budget,  and the final funding including supplemental funds for fiscal years 2001 to  2005.
section_title: PEO Is Taking Steps to Meet Future Small and Medium Caliber Needs, but Implementation Problems Exist
paragraphs: The PEO has taken certain steps to ensure that the national technology  and industrial base can meet future small and medium caliber ammunition  needs. As part of these efforts, the PEO is attempting to build flexibility  into its acquisition system to address near-term fluctuations in the  requirement for small caliber ammunition. In addition, the PEO has  initiated a longer-term planning process to better manage the national  technology and industrial base for conventional ammunition. However, the  PEO lacks access to some information needed to effectively implement  certain planning initiatives, and other initiatives require actions that are  beyond the purview of the PEO. Furthermore, the PEO has not established  sufficient performance metrics necessary to ensure accountability.
subsections: section_title: PEO Is Attempting to Build Flexibility into Procurement Process for Small Caliber Ammunition
paragraphs: The PEO is taking several steps to increase flexibility in the small caliber  ammunition procurement process. First, the PEO plans to increase Lake  City’s production capacity to 1.5 billion rounds per year by March 2006  through additional modernization. Moreover, the PEO is in the process of  selecting a commercial contractor that will provide an additional  300 million small caliber ammunition rounds per year. This commercial  producer will serve as a second source in addition to Lake City, to meet  small caliber ammunition needs. The contract is to be awarded in mid  2005, with initial deliveries to start in January 2007. Also, the PEO is  requiring that this commercial source be able to supply an additional  200 million rounds of small caliber ammunition, if requirements continue  to increase.
In the event that future small caliber ammunition requirements were to  decrease, which would likely happen if war fighting operations were  scaled back, the PEO plans to reduce the amount of ammunition produced  at Lake City, while maintaining the 300 million rounds of ammunition  production provided by the commercial producer. According to a PEO  official, the reduction at Lake City will be accomplished by reducing the  number of work shifts rather than by storing or mothballing equipment.  Therefore, a future need for increased production could be met by adding  shifts. By building this flexibility into the production at Lake City, whose  production the PEO can expand or contract under a new contract starting  in fiscal year 2008, the PEO hopes to avoid the need for future additional  buys, while retaining the capacity to expand production at Lake City.
section_title: A Planning Process for Ammunition Has Been Initiated, but Information Needed for Effective Implementation and Measuring Performance Is Lacking
paragraphs: The PEO has initiated a planning process to ensure that the national  technology and industrial base for conventional ammunition’s capacity  can effectively and efficiently respond to future DOD ammunition needs,  including small and medium caliber ammunition requirements. While the  process is ongoing, information needed to effectively implement all  aspects of the process and performance metrics needed to annually  measure progress and ensure accountability are lacking.
In November 2003, the PEO issued a plan with the following five goals:  (1) balance industrial base and acquisition management risk; (2) transform  to meet current and future requirements; (3) incentivize industry to  reinvest in capital equipment and processes; (4) modernize required  manufacturing and logistics capacity; and (5) operate effectively and  efficiently. In addition to these five goals, the plan establishes 30 initiatives  that are intended to help meet the goals. (See appendix II for a list of the   30 initiatives by goal.)
The PEO has begun taking actions to implement several of the 30  initiatives to achieve the plan’s goals. For example, the PEO has begun  implementing initiatives that address determining whether procurements  of conventional ammunition should be restricted to sources within the  national technology and industrial base, as provided by section 806 of   Public Law 105-261. The PEO, the Joint Munitions Command, and the  Defense Contract Management Agency have worked together to begin the  development of a risk assessment tool that will include industrial base  data such as requirements, suppliers, capacities, deficiencies, production  schedules, and inventories. The tool also will be capable of developing  reports with “what-if” scenarios to anticipate production problems. To  date, the Joint Munitions Command and the Defense Contract  Management Agency have identified hundreds of conventional  ammunitions items that could not be produced if only one supplier of the  necessary components needed to build the item would suddenly become  unavailable. As part of its efforts to implement its section 806  responsibilities, the PEO is encouraging all ammunition program managers  to provide acquisition plans for their conventional ammunition needs, as  required by regulation. This process is intended to help the PEO ensure  that other Army and DOD components are developing procurement  strategies that adhere to section 806.
Despite these actions, the implementation of the planning process has two  major weaknesses. First, the PEO lacks the information needed to  effectively implement several initiatives. For example, conducting a  business case analysis to determine the future size and scope of the  government-owned base to preserve critical capabilities and reduce costs  is key to meeting the PEO goals. However, implementing the business case  analysis is outside the PEO’s scope of responsibility. Further, who will  need to take action and what needs to be done to develop the business  case have not yet been specified. Further, in the case of the acquisition  plans, the PEO has encouraged ammunition program managers to submit  acquisition plans so that determinations can be made as to what should be  procured within the national technology and industrial base, as called for  in section 806. Some services program managers (other than Army) have  not been forthcoming with all the information needed to make these  determinations.  The authority to require program managers to submit  these plans rests with the Under Secretary of Defense for Acquisition,  Technology and Logistics.
Second, the performance measures in place are not sufficient to monitor  progress made in meeting the plan’s goals and objectives and ensure  accountability. The Government Performance and Results Act of 1993  (Public Law 103-62) provides guiding principles that agencies should use  to gauge progress towards long-term goals. These principles include  identifying required resources such as staff, schedules, and costs.  Additionally, the act requires agencies to report actual performance  against performance goals, the reasons certain goals were not met, and  future planned actions to meet stated goals. The 30 initiatives included in  the PEO’s plan establish some accountability for implementation because  they identify the objectives for each goal and general performance  measures. Further, the PEO is developing plans for each of the   30 initiatives—14 of which have been developed. These plans contain  information on major activities or actions that must be taken to complete  an initiative and identify the PEO staff responsible for managing each  initiative. However, the PEO has not yet completed the development of  implementation plans. Furthermore, the initiatives in the strategic plan do  not include key results-oriented principles such as identifying key  resources needed to meet the plan’s goals and objectives including costs,  schedules, and responsible DOD components for individual initiatives. In  addition the plan does not include an annual review process to compare  the actions taken to the desired performance. Such evaluations could be  useful in achieving the plan’s goals.
section_title: Conclusions
paragraphs: Ensuring the industrial base can meet DOD’s fluctuating small and  medium caliber requirements is a significant challenge. Unforeseen events,  such as the terrorist attacks of September 11, 2001, and subsequent  military deployments, make predicting future requirements difficult.  However, it is imperative that the warfighter be provided with sufficient  ammunition to carry out missions to counter ongoing and emerging  threats without amassing wasteful unused stockpiles. While DOD has been  able to meet its near-term ammunition requirements, it has had to rely on  foreign suppliers to make up for some shortfalls. Implementing a strategy  for DOD’s long-term ammunition needs should include steps to ensure that  future ammunition acquisitions are both cost-effective and timely. The  likelihood that the current strategy will achieve its goals and objectives  could be enhanced by (1) ensuring that the information needed to  effectively implement initiatives is provided to those responsible for  implementation, and by (2) ensuring that the plan identifies key resources  needed to achieve the plan’s goals and objectives, and developing an  annual review process to compare the actions taken to the desired  performance.
section_title: Recommendations for Executive Action
paragraphs: To improve DOD’s ability to manage the national technology and industrial  base for small and medium caliber ammunition and to address risks to that  base, we recommend that the Secretary of Defense direct the
Under Secretary of Defense for Acquisition, Technology, and  Logistics to ensure that needed information on planned  ammunition procurements is provided to the Program Executive  Officer for Ammunition; and
Assistant Secretary of the Army for Acquisition, Logistics, and  Technology to ensure that the Program Executive Officer for  Ammunition identifies and provides key resources and develops  metrics for measuring annual progress in meeting planned goals  and objectives.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, DOD concurred with both  recommendations. In response to our recommendation that DOD ensure  that needed information on planned ammunition procurements be  provided to the Program Executive Officer for Ammunition, the Under  Secretary of Defense for Acquisition, Technology, and Logistics plans to  issue direction to the services emphasizing the need to submit small and  medium caliber ammunition plans to the Single Manager for Conventional  Ammunition. In response to our recommendation that the Program  Executive Officer for Ammunition identify and provide key resources and  develop metrics for measuring annual progress in meeting planned goals  and objectives, the Under Secretary of Defense for Acquisition,  Technology, and Logistics plans to provide direction to the Assistant  Secretary of the Army for Acquisition, Logistics, and Technology and the  Program Executive Officer for Ammunition to identify and provide key  resources and develop/refine metrics for measuring annual progress in  meeting planned goals and objectives. (See appendix III for agency  comments.) In addition, DOD provided technical comments that we have  incorporated as appropriate.
Copies of this report will be sent to interested congressional committees  and the Secretary of Defense. We will also make copies available to others  upon request. In addition, the report will be available at no charge on the  GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-4841 if you have any questions regarding  this report. Contact points for our Offices of Congressional Relations and  Public Affairs may be found on the last page of this report. Major  contributors to this report were Thomas Denomme, Marie Ahearn,   Tony Beckham, Michael Gorin, Arturo Holguín, and Karen Sloan.
section_title: Appendix I: Scope and Methodology
paragraphs: To identify changes over the past several years that have increased the  requirement for small and medium caliber ammunition and assess the  actions DOD has taken to address the increased requirement, we reviewed  documentation and data, and interviewed DOD officials from the Office of  the Under Secretary of Defense for Acquisition, Technology and Logistics;  the Office of the Assistant Secretary of the Army for Acquisition, Logistics  and Technology; the Office of the Army Deputy Chief of Staff for  Operations and Plans; the Office of the PEO for Ammunition; and the  Training and Doctrine Command. Specifically, we reviewed policy  documents governing (1) DOD’s Transformational Planning Guidance,  (2) Army training requirements, (3) small and medium caliber ammunition  production requirements, and (4) other major operational requirements  related to small and medium caliber ammunition needs. We also  interviewed DOD and Army officials and obtained inventory data to  determine small and medium caliber ammunition trends and to understand  how selected policies have impacted the industrial base for ammunition.  For the purposes of this review, we collected data on 5.56mm, 7.62mm,  9mm, and .50-caliber small caliber ammunition; as well as 20mm, 25mm,  30mm, and 40mm medium caliber ammunition. We also spoke to two  commercial ammunition producers to obtain a better understanding of the  supplier base. Finally, we examined budget data provided by officials from  the Office of the Assistant Secretary of the Army for Financial  Management and Comptroller to determine the funding for small and  medium caliber ammunition between fiscal years 2001 to 2005.
To determine how DOD plans to ensure that it can meet future small and  medium caliber ammunition needs, we interviewed officials from  previously mentioned DOD offices, including the Office of the PEO for  Ammunition, to determine the status of their planning efforts.
section_title: Appendix II: Overview of Strategic Plan for Conventional Ammunition Industrial Base, by Goal
subsections: section_title: Strategic Goal 1: Balance industrial base & acquisition management risk
paragraphs: Synchronize ammunition procurements to maintain  the required manufacturing capabilities and  capacities. Define structured decision process to  facilitate synchronizing. (Keep lines warm.)
1.  Munitions Readiness Ratings. competencies and capabilities  are available to meet  requirements.
2.  Utilized capacity and footprint.
Balance cost, schedule, and  performance with the need to  have capability. contractor-operated/  government-owned,  government-operated  operating costs. industrial base.
4.  Strategic outload capabilities  (facilitization, staffing, and  skills).
Effectively implement section 806 of Public Law  105-261 (Strom Thurmond National Defense  Authorization Act for Fiscal Year 1999).
Use science base production and prototyping as  principal means for attaining surge capabilities and  emergency requirements.
Partner with industry and academia to assist in  advancing the state of manufacturing readiness.
Define and require an industrial base readiness  assessment into all acquisition plans and strategies.
Pursue feasibility and overall business case for  government-owned, contractor-operated Army  ammunition plants for sell, long-term lease, and/or  consolidation options focusing on preserving critical  capabilities and reducing costs. (Pending fiscal year  2005 Base Realignment and Closure Process  outcome and Army industrial base transformation  guidance.)
Strategic Goal 2: Transform to meet current and future requirements  Develop a replenishment definition to increase  planning and industrial base sizing consistencies.
1.  Existence and clarity of  replenishment requirements  definition and strategy. replenishment definition.  2.  Percentage of acquisition  strategies/plans utilizing  industrial base assessment tool  for planning.  3.  Munitions readiness ratings.  4.  Trend of single point failure  condition.
Establish an integrated data environment process  and centralized industrial base assessment tool.  Assessment tool will include requirements,  suppliers, capacities, deficiencies, production  schedules, stockpile, metrics, and “what-if” report  generation.
5.  Logistics Modernization Program  and industrial base  preparedness. Increase  manufacturing capability and  readiness. deployment schedule.  6.  Meet combatant command  operations planning  requirements.  7.  Correct positioning of ammunition  stocks to meet peacetime and  wartime requirements.
Pursue feasibility and overall business case for  government-owned, contractor-operated Army  ammunition plants for sell, long-term lease,  and/or consolidation options focusing on  preserving critical capabilities and reducing costs.  (Pending fiscal year 2005 Base Realignment and  Closure Process outcome and Army industrial  base transformation guidance.)
8.  Government-owned, contractor-  contractor-operated Army  ammunition plant operating  costs/footprint and dispose of  excess Army ammunition plant  capacity. operated/government-owned,  government-operated operating  costs.  9.  Utilized capacity and footprint.  10. Unit cost trends for critical  ammunition end items.
Sell non-value added, unutilized production  equipment and utilize revenue for advancing  manufacturing technology capability,  environmental remediation, and reducing Army  ammunition plant operating costs.
Utilize science-based production methodologies  and knowledge transfer/access to Industry for  ramp-up capability and/or capacity. Alternative  strategy to laying away facilities/equipment. manufacturing/logistics  capability and readiness. modernization investments.  12. Munitions readiness ratings.
Establish robust manufacturing modernization  funding lines.
13. Logistics critical skills and  capability sustainment  assessments.  14. Strategic outload capabilities  (facilitization, staffing, and skills).
Strategic Goal 3: Incentivize industry to reinvest in capital equipment and processes  Establish multi-year contracting  strategies by ammo family (14  categories).
1.  Number of suppliers in high-risk  industrial base. financial condition.  2.  Financial viability of suppliers of  critical core capabilities.
Selectively promote initiatives from  the Armament Retooling and  Manufacturing Support Act of 1992  authorizing the Army to permit  commercial firms to use facilities  located at government-owned,  contractor-operated ammunition  plants for commercial purposes, and  identify projects for production  modernization and transformation.
Explore and implement  indemnification on a selected basis.
Promote long-term  relationships/partnerships with  Industry.
Increase industry investment in  equipment and facilities.
3.  Industry investment applied to  modernizing manufacturing  processes, equipment, and  facilities.
Offer government-owned equipment  and personnel for supplier use.
Initiate a manufacturing  modernization loan program to  provide low-interest rates to the  ammo supply chain.
Facilitate use of science based  production modeling and process  controls.
Award incentive production contracts  that match government funds for  contractor investment in capital  equipment and processes.
Strategic Goal 4: Modernize required manufacturing and logistics capacity  Establish robust manufacturing  modernization funding lines.
Increase manufacturing and  logistics readiness to meet current  and future requirements.
1.  Munitions readiness ratings.  2.  Manufacturing readiness levels for  future munitions.  3.  Army and industry’s  manufacturing modernization  investments.  4.  Number of single point failures  adopting science based  production methodologies.
Identify, consolidate, and prioritize  production deficiencies in the  organic and commercial sector,  aligning priorities with the program  managers’ needs.
Integrate into ammunition contracts  a percentage required for capital  improvement initiatives with  contractor matching.
Establish science-based production  methodologies at critical single point  failure locations and transfer  prototyping knowledge/capabilities to  Industry.
Leverage and coordinate Mantech  and research, development,  technology, and engineering from all  services.
Strategic Goal 5: Operate effectively and efficiently  Ensure that military services and  industry participate in strategic  planning activities.
1.  Number of annual meetings with  all services and industry. industry and services.
Actively participate in industry  organizations and events; e.g.,  National Defense Industrial  Association, Munitions Industrial  Base Task Force, etc.
2.  Customer satisfaction survey.
Level and consolidate procurement  buys to the maximum extent  practicable.
Reduce ammunition life-cycle costs.
Maximize customer satisfaction.
Reduce response time in providing  inefficiencies that have been  corrected. ammunition to the joint warfighter.
4.  Utilized capacity and footprint.
Identify operating inefficiencies and  formulate corrective actions. (This  initiative was deleted in the  November 2004 update of the plan.)
5.  Customer satisfaction survey  ratings.  6.  Munitions readiness ratings.
Incentivize the implementation of  best business practices in single  manager for conventional  ammunition processes and at key  government and commercial  suppliers.
7. Number of self-help projects  implemented by ammunition  suppliers and associated value- engineering savings.
Pursue feasibility and overall  business case for government- owned, contractor-operated Army  ammunition plants for sale, long-  term lease, and/or consolidation  options focusing on preserving  critical capabilities and reducing  costs. (Pending fiscal year 2005  Base Realignment and Closure  Process outcome and Army  industrial base transformation  guidance.)
8.  Meet combatant command  operations planning  requirements.  9.  Correct positioning of ammunition  stocks to meet peacetime and  wartime requirements.
Promote/incentivize contractors to  pursue state-based, self-help  programs among ammo suppliers.
Promote commonality of  components across/within ammo  families.
Develop and implement an industrial  base integrated data environment  using a web-based assessment tool  and report generating system that  captures production data, stockpile  condition, requirements and specific  industrial base metrics.
10. Percentage of production base  and processes. plan converted to integrated data  environment.  11. Establishment and completion of  a logistics industrial base plan.
Identify and benchmark best  practices in production and facility  management.
Understand condition and posture of  12. Percentage of baseline metrics  the ammunition and logistics base. collected.  13. Munitions readiness ratings.
Baseline, characterize, and monitor  the state of the industrial base  supply chain. Utilize Joint Munitions  Command production base  readiness measurement scheme to  characterize risk of industrial base to  meet requirements.
14. Strategic outload capabilities  (facilitization, staffing, and skills).
section_title: Appendix III: Comments from the Department of Defense