Defense Logistics: Actions Needed to Improve the Marine Corps' Equipment Reset Strategies and the Reporting of Total Reset Costs
Published: 2011-08-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Marine Corps received approximately $16 billion in appropriated funds between fiscal years 2006 and 2010 for reset of aviation and ground equipment that has been degraded, damaged, and destroyed during oversees contingency operations. Reset encompasses activities for repairing, upgrading, or replacing equipment used in contingency operations. The Marine Corps continues to request funding to reset equipment used in Afghanistan. GAO initiated this review under its authority to address significant issues of broad interest to the Congress. GAO's objectives were to evaluate the extent to which the Marine Corps has made progress toward (1) developing effective reset strategies for both aviation and ground equipment used in Afghanistan and (2) providing accurate estimates of total reset costs.
section_title: What GAO Found
paragraphs: The Marine Corps has developed a strategic plan that addresses the reset of aviation equipment used in operations in Afghanistan and includes the elements of a comprehensive, results-oriented strategic planning framework. However, a reset strategy for ground equipment has not yet been developed. The Marine Corps is taking steps to develop such a strategy; however, the timeline for completing and issuing this strategy is uncertain. Although Marine Corps officials agreed that a reset strategy for ground equipment will be needed, they stated that they do not plan to issue a strategy until there is a better understanding of the dates for drawdown of forces from Afghanistan. While more specific drawdown information is desirable and will be needed to firm up reset plans, the President stated that troops would begin to withdraw in July 2011, working towards a transfer of all security operations to Afghan National Security Forces by 2014. Until the ground equipment reset strategy is issued, establishing firm plans for reset may be difficult for the Marine Corps Logistics Command to effectively manage the rotation of equipment to units to sustain combat operations. It is also uncertain to what extent the Marine Corps plans to align its ground equipment reset strategy with its ground equipment modernization plan. GAO found that the Iraq reset strategy for ground equipment contained no direct reference to the service's equipment modernization plans, leaving unclear the relationship between reset and modernization. A clear alignment of the ground equipment reset strategy for Afghanistan and modernization plans would help to ensure that the identification, development, and integration of warfighting capabilities also factor in equipment reset strategies so that equipment planned for modernization is not unnecessarily repaired. The total costs of reset estimated by the Marine Corps may not be accurate or consistent because of differing definitions of reset that have been used for aviation and ground equipment. These differing definitions exist because Department of Defense (DOD) has not established a single standard definition for use in DOD's budget process. Specifically, the Marine Corps does not include aviation equipment procurement costs when estimating total reset costs. According to Marine Corps officials, procurement costs are excluded because such costs are not consistent with its definition of aviation equipment reset. In contrast, the Marine Corps' definition of reset for ground equipment includes procurement costs to replace theater losses. However, GAO found that the Office of the Secretary of Defense Director of Cost Assessment and Program Evaluation had obtained a procurement cost estimate for Marine Corps aviation equipment as part of its efforts to track reset costs for the department. DOD's Resource Management Decision 700 tasks the Office of the Secretary of Defense Director of Cost Assessment and Program Evaluation to provide annual departmentwide reset updates.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Defense (1) establish a timeline for issuing formal reset planning guidance and a ground equipment reset strategy for equipment used in operations in Afghanistan, (2) provide linkages between the ground equipment reset strategy and the modernization plan, and (3) develop and publish a DOD definition of reset for use in the DOD overseas contingency operations budgeting process. DOD concurred with one and partially concurred with two of the recommendations.

section_title: Letter
paragraphs: The U.S. Marine Corps received approximately $16 billion in appropriated  funds from fiscal year 2006 through fiscal year 2010 for the reset of  aviation and ground equipment that has been degraded, damaged, and  destroyed during overseas contingency operations. The service has  requested a total of $4.6 billion in reset funds for fiscal years 2011 and  2012. Reset encompasses activities for repairing, upgrading, or replacing  equipment used in contingency operations. Developing and implementing  effective reset strategies for its equipment is critical to the Marine Corps’  ability to maintain, restore, and enhance its combat capability. In addition,  providing accurate estimates of total reset costs enables decision makers  to evaluate trade-offs and make the most effective use of defense dollars  in light of the nation’s long-term fiscal challenges. As the Marine Corps  continues to support overseas contingency operations and reset  equipment, it also has efforts under way to rebalance its forces, posture it  for the future, and experiment with and implement new capabilities and  organizations.
This report examines Marine Corp equipment reset issues for operations  in Afghanistan. We performed this review under the authority of the  Comptroller General to conduct evaluations on his own initiative to  address significant issues of broad interest to the Congress. Our specific  objectives were to evaluate the extent to which the Marine Corps has  made progress toward (1) developing effective reset strategies for both  aviation and ground equipment used in Afghanistan, and (2) providing  accurate estimates of total reset costs. We plan to report separately on  Army equipment reset issues.
To assess progress toward developing effective reset strategies, we  identified existing reset strategies for equipment used in Afghanistan, and  assessed these strategies against the elements of a comprehensive,  results-oriented strategic planning framework that we have identified in  our prior work. Where strategies had not yet been developed, we  collected information regarding ongoing reset planning efforts from  Marine Corps officials and discussed with them the process used and the  factors considered when developing a reset strategy. As a basis for  assessing current reset planning efforts for Afghanistan, we also reviewed  the reset strategy that the Marine Corps prepared for equipment used in  Iraq. To assess the Marine Corps’ estimates of total reset costs, we  obtained recent cost estimates and compared these with Department of  Defense (DOD) budget formulation guidance, as well as with DOD  guidance provided to the services on preparing annual updates of total  reset costs. We obtained documents detailing the processes the Marine  Corps uses to estimate reset costs for ground and aviation equipment,  and we obtained additional insight and information through interviews with  Marine Corps officials who are involved in developing these estimates.  For details on our scope and methodology, see appendix I.
We conducted this performance audit from November 2010 through  August 2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Marine Corps’ Definitions of Reset for Aviation and Ground Equipment
paragraphs: Reset encompasses activities related to the repair, upgrade, or  replacement of equipment used in contingency operations. Aviation and  ground equipment are managed separately within the Marine Corps, and  different definitions of reset are used for each. Marine Corps officials  defined aviation equipment reset as an aircraft material condition and  readiness sustainment effort that is required due to prolonged combat  operations. Included are actions to maintain, preserve, and enhance the  capability of aircraft. Ground equipment reset is defined by the Marine  Corps as actions taken to restore units to a desired level of combat  capability commensurate with the unit’s future mission. It encompasses  maintenance and supply activities that restore and enhance equipment  that was destroyed, damaged, stressed, rendered obsolete, or worn out  beyond economic repair due to combat operations by repairing,  rebuilding, or procuring replacement equipment. Also included as part of  ground equipment reset is recapitalization (rebuild or upgrade) that  enhances existing equipment through the insertion of new technology or  restores selected equipment to near-original condition.
section_title: Reset Budget for Fiscal Years 2009 through 2012
paragraphs: The Marine Corps’s equipment reset budget totals more than $8 billion for  fiscal years 2009 through 2012. Maintenance-related activities included  as part of reset are funded from operations and maintenance  appropriations, while most recapitalization and all acquisitions of new  equipment as part of reset are funded from procurement appropriations.  Reset funds are requested and budgeted separately for aviation and  ground equipment.    Aviation equipment: The Marine Corps’ aviation equipment reset  budget was approximately $66.7 million in fiscal year 2009 and  approximately $57.8 million in fiscal year 2010. The Marine Corps  requested approximately $56.1 million for fiscal 2011 and has  requested $45.3 million for fiscal year 2012 to reset aviation  equipment. As discussed later in this report, reset funding for aviation  equipment covers only operations and maintenance appropriations  and excludes procurement appropriations.    Ground equipment: The Marine Corps’ ground equipment reset  budget was approximately $2.2 billion in fiscal year 2009 and  approximately $1.3 billion in fiscal year 2010. The Marine Corps  requested approximately $2.6 billion for fiscal year 2011 and has  requested $1.8 billion for fiscal year 2012 to reset ground equipment.  This funding includes funds requested as part of operations and  maintenance appropriations and procurement appropriations. The  fiscal year 2011 request included a $1.1 billion increase in  procurement funding over fiscal year 2010, which the Marine Corps  attributed to increased equipment combat losses and to the  replacement of equipment that is beyond economic repair.
Appendix II provides further detail on reset funding for aviation and  ground equipment.
section_title: Elements of Sound Strategic Management Planning
paragraphs: Our prior work has shown that sound strategic management planning can  enable organizations to identify and achieve long-range goals and  objectives. We have identified six elements that should be incorporated  into strategic plans to establish a comprehensive, results-oriented  framework—an approach whereby program effectiveness is measured in  terms of outcomes or impact. These elements follow:  (1) Mission statement: A statement that concisely summarizes what the  organization does, presenting the main purposes for all its major functions  and operations.  (2) Long-term goals: A specific set of policy, programmatic, and  management goals for the programs and operations covered in the  strategic plan. The long-term goals should correspond to the purposes set  forth in the mission statement and develop with greater specificity how an  organization will carry out its mission.  (3) Strategies to achieve the goals: A description of how the goals  contained in the strategic plan and performance plan are to be achieved,  including the operational processes, skills and technology, and other  resources required to meet these goals.  (4) External factors that could affect goals: Key factors external to the  organization and beyond its control that could significantly affect the  achievement of the long-term goals contained in the strategic plan. These  external factors can include economic, demographic, social,  technological, or environmental factors, as well as conditions or events  that would affect the organization’s ability to achieve its strategic goals.  (5) Use of metrics to gauge progress: A set of metrics that will be applied  to gauge progress toward attainment of the plan’s long-term goals.  (6) Evaluations of the plan to monitor goals and objectives: Assessments,  through objective measurement and systematic analysis, of the manner  and extent to which programs associated with the strategic plan achieve  their intended goals.
section_title: Prior GAO Reviews of Equipment Reset
paragraphs: Over the past several years we have reported on equipment reset issues.  In 2007, for example, we reported that the Marine Corps could not be  certain that its reset strategies would sustain equipment availability for  deployed units as well as units preparing for deployment, while meeting  ongoing operational requirements. We have also made  recommendations aimed at improving DOD’s monthly cost reports for  reset and defining the types of costs that should be included in the base  defense budget rather than funded from supplemental appropriations for  contingency operations. Specifically, we recommended DOD amend its  Financial Management Regulation to require that monthly Supplemental  and Cost of War Execution Reports identify expenditures within the  procurement accounts for equipment reset at more detailed subcost  category levels, similar to reporting of obligations and expenditures in the  operation and maintenance accounts. DOD initially disagreed with this  recommendation but later revised its Financial Management Regulation,  expanding the definition of acceptable maintenance and procurement  costs and directing the military services to begin including “longer war on  terror” costs in their overseas contingency operations funding requests.  We subsequently recommended that DOD issue guidance defining what  constitutes the “longer war on terror,” to identify what costs are related to  that longer war and to build these costs into the base defense budget.  While the department concurred with this recommendation and stated  that it has plans to revise its Financial Management Regulation  accordingly, it has not yet done so.
section_title: Budget Formulation Guidance and Estimating Reset Costs
paragraphs: The Office of Management and Budget (OMB) has issued budget  formulation guidance for DOD that addresses overseas contingency  operations, including reset funding. Guidance issued in February 2009  provided new criteria for DOD to use when preparing its budget request to  assess whether funding, including funding for reset, should be requested  as part of the base budget or as part of the budget for overseas  contingency operations. The criteria identified geographic areas where  overseas contingency operations funding could be used; provided a list of  specific categories of spending that should be included in the overseas  contingency budget, such as major equipment repairs, ground equipment  replacement, equipment modifications, and aircraft replacement; and  identified certain spending that should be excluded from the overseas  contingency operations budget (i.e., should be included in the base  budget) such as funding to support family services at home stations. For  example, funding is excluded for the replacement of equipment losses  already programmed for replacement in the Future Years Defense Plan.  In September 2010, OMB issued updated criteria to, among other things,  clarify language and eliminate areas of confusion.
DOD has also issued its own budget formulation guidance for overseas  contingency operations. In December 2009, DOD issued Resource  Management Decision 700 to regulate the funding of the military services’  readiness accounts and to require that significant resources from the  overseas contingency operations funding be moved into the base defense  budget. Specifically, the services’ 2012 Program Objective Memorandum  submissions for overseas contingency operations funding are restricted to  resource levels appropriate for planned and projected troop levels. To  facilitate the implementation of this guidance within the department,  Resource Management Decision 700 outlines several actions for  organizations to take. For example, it directed the Office of the Under  Secretary of Defense for Acquisition, Technology and Logistics, in  coordination with the Director of Cost Assessment and Program  Evaluation, the military services, the DOD Comptroller, and the Joint  Staff, to conduct periodic reviews of the services’ in-theater maintenance  activities and reset maintenance actions that include an assessment of  the relationship between maintenance-funded base programs and  contingency operations. This assessment was provided to the Deputy  Secretary of Defense in July 2010.
The Director of Cost Assessment and Program Evaluation tracks  estimated total reset costs across the department based on data provided  by the services. The total reset costs are the amount of funding needed to  reset all equipment used in contingency operations if the operations were  to cease. Specifically, the total reset costs equal the sum of the annual  unbudgeted reset liability and the annual budgeted reset. The annual  unbudgeted reset liability is the amount of equipment eligible for reset that  stays in theater and is not reset during the budget year, based on  operational decisions. The annual budgeted reset is the amount of  equipment planned to return from operations that requires funds  budgeted for reset.
section_title: Marine Corps Processes for Estimating Total Reset Costs
paragraphs: As part of its ground equipment reset strategy for Iraq, the Marine Corps  developed the Reset Cost Model to generate cost estimates for the  service’s supplemental budget requests. Additionally, the Reset Cost  Model allows the Marine Corps to estimate reset costs for ground  equipment, including budgeted and unbudgeted reset costs. Since the  Reset Cost Model is focused on ground equipment employed in the U.S.  Central Command area of responsibility, the Marine Corps continues to  use the Reset Cost Model to develop overseas contingency operations  budget requests for ground equipment used in Afghanistan.
The cost estimates generated by the Reset Cost Model are based on the  four possible reset actions:    First, equipment returning from theater is inspected to determine if  depot-level repairs are required. Depot maintenance actions are  conducted if the estimated cost of repair for the equipment is 65  percent or less than the latest acquisition cost.    Second, ground equipment used in operations is evaluated at various  locations throughout the logistics chain to determine if the equipment  requires field-level maintenance. These maintenance actions are  conducted by operating forces.    Third, upon return to the continental United States, equipment  identified as obsolete or uneconomical to repair is replaced through  procurement as its reset action.    Fourth, if equipment acquired for combat operations does not have a  long-term requirement within the Marine Corps, no reset maintenance  actions are taken unless there is an immediate requirement in another  campaign or theater of operations.
Estimating aviation equipment reset costs follows a separate process. For  aviation equipment reset, the Marine Corps has a process for  requirements determination, budgeting, and execution, all of which are  included in the annual budget process. According to Navy and Marine  Corps officials, a clearly defined process is used to determine reset costs  for aviation equipment that includes requirements generated from the  fleet while working closely with the Chief of Naval Operation Fleet  Readiness Division and each of the program offices to determine current  and future reset requirements. Overseas contingency costs—including  reset costs—are generated using issue sheets that record information on  each item such as the categorization of funding, the amount of funding  requested for a specific item, the number of items requested, and the cost  per unit. Once the issue sheets are generated, Headquarters, Marine  Corps, and the Commander of Naval Air Forces prioritize the issue sheets  and provide a finalized list of the funding priorities according to current  needs for which future funding is allocated.
section_title: The Marine Corps Has a Reset Strategy for Aviation Equipment Used in Afghanistan and Plans to Develop a Reset Strategy for Ground Equipment
subsections: section_title: Aviation Equipment Reset Strategy Incorporates Elements Needed for a Comprehensive, Results- Oriented Framework
paragraphs: The Marine Corps has developed an annual aviation plan and an  aviation reset program policy that together constitute its reset strategy  for aviation equipment used in Afghanistan. Although separate  documents, the annual aviation plan and aviation reset program policy  are linked through the aviation plans’ reference to the aviation reset  policy. Our evaluation of this reset strategy shows that it incorporates the  six elements of a comprehensive, results-oriented strategic planning  framework. For example, the reset strategy establishes goals and  associated time frames for completing detailed reviews of aircraft and  aircraft components and transitioning to future aircraft. It also provides  strategies for accomplishing key tasks such as scheduling inspections, as  well as performance measures and targets. (See table 1.)
The Marine Corps is taking steps to develop a strategy addressing the  reset of ground equipment used in Afghanistan; however, the timeline for  completing and issuing this strategy is uncertain. Although Marine Corps  officials agreed that a reset strategy for ground equipment will be needed,  they stated that they do not plan to issue a strategy until there is a better  understanding of the dates for initial and final drawdown of forces from  Afghanistan. While more specific and certain drawdown information is  desirable and will be needed to firm-up reset plans, the President stated  that troops would begin to withdraw in July 2011, working towards a  complete transfer of all security operations to Afghan National Security  Forces by 2014. The current dates announced by the President are the  best available for the purposes of contingency planning and provide a  reasonable basis for developing a timeline to complete its reset strategy.  In the meantime, Marine Corps officials are taking the following steps  toward developing a reset strategy:    First, the Marine Corps completed a force structure review in early  2011 that is aimed at ensuring the service is properly configured. The  force structure review included a determination of equipment reset  requirements to support the post-Afghanistan Marine Corps force  structure.    Second, the Marine Corps is currently developing an implementation  plan based on the results of the force structure review. A goal of the  force structure implementation plan is to ensure that the Marine Corps  achieves a restructured force by the time the reset of equipment used  in Afghanistan is complete. The focus of this implementation plan is  the establishment of the mission-essential tasks and the development  of refined tables of equipment in support of those tasks. These refined  tables of equipment will determine what equipment the Marine Corps  will reset and how the equipment will be reintegrated into  nondeployed Marine Corps forces. The Marine Corps plans to issue  this force structure implementation plan in summer 2011.    Third, following issuance of the force structure implementation plan,  the Marine Corps plans to develop and issue formal reset planning  guidance that informs operating force units and the Marine Corps  Logistics Command what equipment they will receive and be  responsible for resetting. Specifically, Marine Corps officials stated  that the planning guidance is intended to allow Marine Forces  Commands, Marine Expeditionary Forces, and Marine Corps Logistics  Command to assess their reset maintenance capacity requirements  and identify additional support requirements beyond the maintenance  centers’ capacity. The officials indicated that the planning guidance  would serve as a precursor to a comprehensive reset strategy.
Although the Marine Corps has laid out several steps toward developing  its ground equipment reset strategy, it has not specified timelines for  completing and issuing either the formal reset planning guidance or its  reset strategy or indicated how it plans to take into consideration the  current dates announced by the President for withdrawal in its reset  strategy for Afghanistan. The reset strategy is necessary to help ensure  that life-cycle management governance is provided to key organizations  responsible for executing reset, such as the Marine Corps Logistics  Command. Until the reset strategy is issued, establishing firm plans for  reset may be difficult for the Marine Corps Logistics Command to  effectively manage the rotation of equipment to units to sustain combat  operations or meet the equipment needs of a newly defined post- Afghanistan Marine Corps force structure. In the absence of a reset  strategy, Marine Corps Logistics Command officials told us they cannot  issue its supporting order which enables its maintenance centers to  effectively begin planning for and phasing in a new maintenance  workload.
It is also uncertain to what extent the Marine Corps plans to align its  ground equipment reset strategy with its ground equipment modernization  plan. The ground equipment modernization plan is used annually to  develop future warfighting capabilities to meet national security  objectives. Following the plan guides the Marine Corps in the  identification, development, and integration of warfighting and associated  support and infrastructure capabilities. Marine Corps officials have  stated that they plan to establish a link between the reset strategy for  Afghanistan and the ground modernization plan. As a basis for evaluating  current reset planning for ground equipment used in Afghanistan, we also  reviewed both the aviation reset strategy for Afghanistan and the ground  equipment reset strategy that the Marine Corps developed for Iraq. We  found that the aviation reset strategy was directly linked to the aviation  equipment modernization plan. For example, the aviation equipment  modernization plan outlines the transition for the UH-1N Marine Light  Attack Helicopter to the UH-1Y, which should be fully phased in by fiscal  year 2015. As part of the reset strategy for the UH-1Y, reset requirements  for the maintenance centers associated with this transition have been  identified.
In contrast, we found that the Iraq reset strategy for ground equipment  contained no direct reference to the service’s equipment modernization  plans. Marine Corps officials stated that it was unnecessary to include a  direct reference to the equipment modernization plan in its Iraq reset  strategy because they are indirectly linked through the roles and  responsibilities for the Deputy Commandant, Combat Development and  Integration. Specifically, the officials noted that the Iraq reset strategy  contains a section outlining these roles and responsibilities and that these  same roles and responsibilities are included in the Expeditionary Force  Development System instruction. However, this indirect linkage does not  provide a clear relationship between reset and modernization. A clear  alignment of the ground equipment reset strategy for Afghanistan and  modernization plan would help to ensure that the identification,  development, and integration of warfighting capabilities also factor in  equipment reset strategies so that equipment planned for modernization  is not unnecessarily repaired. Without a Marine Corps reset strategy for  ground equipment used in operations in Afghanistan that includes clear  linkages to the modernization plan, the Marine Corps may not be able to  effectively plan and execute ground equipment reset in the most efficient  manner.
section_title: Differing Definitions for Reset May Result in Inaccurate or Inconsistent Estimates of Total Reset Costs
paragraphs: The total costs of reset estimated by the Marine Corps may not be  accurate or consistent because of differing definitions of reset that have  been used for aviation and ground equipment. These differing definitions  exist because DOD has not established a single standard definition for  use in DOD’s budget process. Specifically, the Marine Corps does not  include aviation equipment procurement costs when estimating total reset  costs. According to Marine Corps officials, procurement costs are  excluded because such costs are not consistent with its definition of  aviation equipment reset. Additionally, Marine Corps officials stated that  the definition of reset for aviation equipment is to maintain, preserve, and  enhance the capability of aircraft through maintenance activities. This  definition, according to Marine Corps officials, does not include  procurement funding for the replacement of aviation equipment losses in  theater. In contrast, the Marine Corps’ definition of reset for ground  equipment includes procurement costs to replace theater losses. Reset  for all types of equipment as defined by other services (e.g., the Army)  also includes procurement costs.
Although the Marine Corps excludes procurement costs when estimating  aviation equipment reset costs, we found that the Director of Cost  Assessment and Program Evaluation had obtained a procurement cost  estimate for Marine Corps aviation equipment as part of its efforts to track  reset costs for the department. DOD’s Resource Management Decision  700 tasks the Director of Cost Assessment and Program Evaluation with  providing annual departmentwide reset updates that (1) outline current- year reset funding needs, (2) assess the multiyear reset liability based on  plans for equipment redeployment, and (3) detail deferred reset funding  actions. Based on this tasking, the Marine Corps provided total reset  costs that included procurement costs for equipment replacement, as well  as maintenance costs, for both ground and aviation equipment. The  update showed that total reset costs for Marine Corps aviation equipment  was approximately $1.8 billion for fiscal years 2010 through 2012, which  includes $1.4 billion for procurement costs. These reported costs were  included in the 2010 DOD Reset Planning Projections annual update  prepared by the Director of Cost Assessment and Program Evaluation.  We were not able to determine the reasons for this apparent  inconsistency between what the Marine Corps considers to be valid  aviation equipment reset costs (i.e., excludes procurement costs) and  what was reported in the 2010 DOD Reset Planning Projections annual  update (i.e., includes procurement costs). Navy and Marine Corps  officials stated that they were unable to identify any official from the Navy  or Marine Corps as the source for providing or producing this total reset  cost data for Marine Corp aviation equipment. Therefore, we could not  assess the basis for the reported aviation equipment reset costs to  determine their accuracy.
DOD’s Resource Management Decision 700 also directed the DOD  Comptroller to publish a DOD definition of reset for use in the DOD  overseas contingency operations budgeting process. DOD’s definition of  reset was to be submitted by the Comptroller to the Deputy Secretary of  Defense for approval by January 15, 2010, well ahead of the Marine  Corps’ initial submission of its total reset liability, which was due by June  1, 2010. However, a single standard definition of reset for budget  purposes has not yet been issued to the services.
We also found that the Marine Corps’ definition of aviation reset differs  from the definition of reset provided for use in congressional testimony in  a January 2007 memorandum from the Deputy Under Secretary of  Defense for Logistics and Materiel Readiness to the under secretaries of  the military departments. That memorandum states that reset  encompasses maintenance and supply activities that restore and  enhance combat capability to units and prepositioned equipment that was  destroyed, damaged, stressed, or worn-out beyond economic repair due  to combat operations by repairing, rebuilding, or procuring replacement  equipment. According to the memorandum, the Office of the Secretary of  Defense and the services agreed to this definition of reset; the  memorandum emphasizes that it is important that all DOD military  departments are consistent in the definition of the terms during  congressional testimony.
Without a single standard definition for reset for the services to use, the  Marine Corps may continue to report its total reset costs for aviation  equipment inconsistently. Furthermore, data integrity issues will make it  challenging to identify program funding trends within the Marine Corps  and among the services for equipment reset. Without accurate reporting  of total reset costs for aviation equipment, the level of reset funding the  Marine Corps needs to sustain future operations may not be properly  communicated to Congress beyond what has been requested for  overseas contingency operations. Furthermore, the Office of the Under  Secretary of Defense Comptroller, Director of Cost Assessment and  Program Evaluation, and OMB may not have the most reliable aviation  equipment reset data for their review and oversight of the Marine Corps’  overseas contingency operations budget requests.
section_title: Conclusions
paragraphs: With the increased demands current operations have placed on Marine  Corps equipment, and at a time when the federal government is facing  long-term fiscal challenges, it is important for the Marine Corps to have a  reset strategy in place for both ground and aviation equipment used in  operations in Afghanistan as well as a standard DOD definition for reset.  Reset strategies provide a framework that allows Marine Corps officials to  adequately plan, budget, and execute the reset of equipment used in  operations in Afghanistan. The reset strategy, and the timing thereof,  could be modified if U.S. drawdown plans subsequently change or should  the Marine Corps receive more specific and certain drawdown  information. However, without specified timelines for completing and  issuing either formal reset planning guidance or its reset strategy that also  take into consideration the current dates announced by the President for  withdrawal—which are the best available for the purposes of contingency  planning—the Marine Corps may be unable to effectively manage the  rotation of equipment to units to sustain combat operations, or meet the  equipment needs of a newly defined post-Afghanistan Marine Corps force  structure. Additionally, without a Marine Corps reset strategy for ground  equipment used in operations in Afghanistan that includes clear linkages  to the modernization plan, the Marine Corps may not be able to effectively  plan and execute ground equipment reset in the most efficient manner.  Furthermore, the total reset costs provide information that allows the  Marine Corps to more efficiently plan and make informed budget  decisions and allows Office of the Under Secretary of Defense  (Comptroller) and OMB to have oversight. Until DOD establishes a single  standard definition for reset for the services to use, DOD and Congress  may have limited visibility over the total reset costs for the services.  Accurate reporting of total reset costs for aviation equipment would  provide Congress with the level of funding the Marine Corps needs to  reset all equipment used in operations in Afghanistan at the conclusion of  operations. Furthermore, the Office of the Under Secretary of Defense for  the Comptroller and for Cost Assessment and Program Evaluation and  OMB may lack the visibility needed over the aviation reset funds in their  review and oversight of the Marine Corps overseas contingency  operations budget requests.
section_title: Recommendations for Executive Action
paragraphs: To improve the Marine Corps’ ability to plan, budget for, and execute the  reset of ground equipment used in Afghanistan, we recommend that the  Secretary of Defense direct the Commandant of the Marine Corps to take  the following two actions:    Establish a timeline for completing and issuing formal reset planning  guidance and a ground equipment reset strategy for equipment used  in Afghanistan that allows operating force units and the Marine Corps  Logistics Command to effectively manage equipment reset.    Provide linkages between the ground equipment reset strategy for  equipment used in Afghanistan and equipment modernization plans,  including the Expeditionary Force Development System and the  annual Program Objective Memorandum Marine Air-Ground Task  Force Requirements List.
To improve oversight and ensure consistency in the reporting of total  reset costs, we recommend that the Secretary of Defense direct the  Office of the Under Secretary of Defense (Comptroller), in coordination  with the Office of the Under Secretary of Defense for Cost Assessment  and Program Evaluation, the Office of the Under Secretary of Defense for  Acquisitions, Technology and Logistics, the services, and the Joint Staff  to act on the tasking in the Resource Management Decision 700 to  develop and publish a DOD definition of reset for use in the DOD  overseas contingency operations budgeting process.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD concurred with one of  our recommendations and partially concurred with the other two  recommendations and provided information on the steps it is taking or  plans to take to address them. DOD partially concurred with our  recommendation that the Secretary of Defense direct the Commandant of  the Marine Corps to establish a timeline for completing and issuing formal  reset planning guidance and a ground equipment reset strategy for  equipment used in Afghanistan that allows operating force units and the  Marine Corps Logistics Command to effectively manage equipment reset.  DOD commented that guidance for resetting the force is being developed  in its Operation Enduring Freedom Reset Plan, the Operation Enduring  Freedom Reset Playbook, and the Marine Air Ground Task Force  Integration Plan. However, during the course of our review, the  development of a strategy for ground equipment in Afghanistan was in the  beginning stages and the Marine Corps did not discuss or provide details  regarding the three documents now cited as its guidance for resetting the  force. DOD added that the Marine Corps has established a  timeline/estimated date of April 30, 2012, for completing and issuing  format reset planning guidance and a ground equipment reset strategy for  equipment used in Afghanistan. While the Marine Corps has provided  DOD with a date for completing and issuing this guidance, the Marine  Corps does not appear to have established a sequenced timeline, as we  recommended. Specifically, DOD’s response has both the formal reset  planning guidance and the ground equipment reset strategy being issued  at the same time. Marine Corps officials stated that the formal reset  planning guidance is intended to serve as a precursor to a  comprehensive reset strategy that will allow Marine Forces Commands,  Marine Expeditionary Forces, and Marine Corps Logistics Command to  assess their reset maintenance capacity requirements and identify  additional support requirements beyond the maintenance centers’  capacity. We believe this guidance will not be useful if it is not issued  sufficiently ahead of time to guide the development of the ground  equipment reset strategy. Consequently, we disagree with DOD’s  statement that the Marine Corps does not need further direction to  establish a timeline for completing and issuing formal reset planning  guidance and a ground equipment reset strategy for equipment used in  Afghanistan.
DOD partially concurred with our recommendation that the Secretary of  Defense direct the Commandant of the Marine Corps to provide linkages  between the ground equipment reset strategy for equipment used in  Afghanistan and equipment modernization plans, including the  Expeditionary Force Development System and the annual Program  Objective Memorandum Marine Air-Ground Task Force Requirements  List. DOD commented that it recognizes the importance of providing a  linkage between ground equipment reset strategies and equipment  modernization plans. Specifically, DOD commented that the Marine Corps  plans to outline these linkages in their Operation Enduring Freedom  Reset Plan, the Operation Enduring Freedom Reset Playbook, and the  Marine Air Ground Task Force Integration Plan, which are currently being  developed. While, as previously mentioned, the Marine Corps did not  provide specific details regarding the three documents cited above during  the course of our review, we believe that including this linkage in these  documents would be responsive to our recommendation and will allow the  Marine Corps to more effectively and efficiently plan and execute ground  equipment reset.
DOD concurred with our recommendation that the Secretary of Defense  direct the Office of the Under Secretary of Defense (Comptroller), in  coordination with the Office of the Under Secretary of Defense for Cost  Assessment and Program Evaluation, the Office of the Under Secretary  of Defense for Acquisitions, Technology and Logistics, the services, and  the Joint Staff to act on the tasking in the Resource Management  Decision 700 to develop and publish a DOD definition of reset for use in  the DOD overseas contingency operations budgeting process. DOD  commented that it is developing a definition of reset for use in the  overseas contingencies operations budgeting process that will be  incorporated into the DOD Financial Management Regulation. However,  during the course of our review DOD had not yet taken action to develop  a reset definition, which was to have been submitted by the Comptroller  to the Deputy Secretary of Defense for approval by January 15, 2010. In  addition, DOD commented that in the interim the department is using  specific criteria provided by OMB guidance for determining the reset  requirements that are overseas contingency operations or base. While  OMB has provided guidance for overseas contingency operations budget  requests, this guidance does not provide specific direction concerning  what constitutes reset. Consequently, DOD recognizes the need for a  common definition of equipment reset for budget purposes, but has not  met its goal of establishing one. Resource Management Decision 700  established a January 2010 date for approving a common reset definition,  and that definition could have been used in developing the department’s  fiscal year 2012 budget submission. DOD is now developing its fiscal year  2013 budget submission without the benefit of a common definition.  Therefore, we disagree with DOD’s statement that additional and  separate guidance from the Secretary of Defense is not necessary, and  believe that additional direction is needed to emphasize that the Under  Secretary of Defense (Comptroller), in coordination with the Office of the  Under Secretary of Defense for Cost Assessment and Program  Evaluation, the Office of the Under Secretary of Defense for Acquisitions,  Technology and Logistics, the services, and the Joint Staff should  expedite the development and publication of a DOD definition of reset for  use in the DOD overseas contingency operations budgeting process. The  department’s comments are reprinted in appendix III.
We are sending copies of this report to appropriate congressional  committees, the Secretary of Defense, and appropriate DOD  organizations. In addition, this report will be available at no charge on our  website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-8365 or solisw@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which the Marine Corps has a strategy in  place to manage the reset of ground and aviation equipment used in  operations in Afghanistan, we obtained and reviewed the Marine Corps  reset strategies for ground and aviation equipment used in operations in  Afghanistan. Where strategies had not yet been developed, we collected  information regarding ongoing reset planning efforts from Marine Corps  officials and discussed with them the process used and the factors  considered when developing a reset strategy. As a basis for assessing  current reset planning efforts for Afghanistan, we also reviewed the reset  strategy that the Marine Corps prepared for equipment used in Iraq. We  collected written responses and supporting documentation to our inquiries  and data requests from Marine Corps officials related to ground and  aviation equipment reset strategies. We also discussed with Marine  Corps officials the process used and the factors considered when  developing these reset strategies. Additionally, we discussed the reset  strategies with Marine Corps officials to determine the roles and  responsibilities of the maintenance and fleet readiness centers in  preparing for equipment requiring reset and determining the appropriate  reset strategy.
To determine the extent to which the Marine Corps has developed  effective reset strategies for the reset of equipment used in operations in  Afghanistan that address the key elements of a comprehensive, results- oriented strategic planning framework, we reviewed and analyzed the  ground and aviation equipment reset strategies and supporting guidance  documents. Specifically, we analyzed the reset strategies and supporting  guidance documents to determine if they included the six key elements of  a strategic planning framework. In performing our analysis, we reviewed  the strategies to determine if they included, partially included, or did not  include each of the six key elements. Through our assessment we  determined the guidance documents in addition to the aviation equipment  reset strategy that comprises the Marine Corps strategic plan for reset. In  addition, to understand the extent to which the Marine Corps aligns its  modernization plans with its reset strategies, we interviewed Marine  Corps officials to discuss the plans used for modernization and discussed  the process for how these plans are incorporated with the strategies for  equipment reset.
To assess the Marine Corps’ estimates of total reset costs, we obtained  and reviewed the Department of Defense’s (DOD) Resource  Management Decision 700—separate from the budget formulation  guidance—tasking the services to provide annual reset cost updates, and  the Marine Corps processes for determining total reset costs for ground  and aviation equipment. We collected written responses to our inquiries  and data requests from Marine Corps officials about the system they use  to determine total reset costs for ground and aviation equipment used in  operations in Afghanistan. In addition, we interviewed Marine Corps  officials to obtain any information relevant to the system they use to  determine total reset costs for equipment used in operations in  Afghanistan.
To better understand the Marine Corps reset funding needs for ground  and aviation equipment, we requested reset budget data for fiscal year  2009 through fiscal year 2012. We reviewed the budget data obtained  and met with Marine Corps officials to discuss the data to ensure that we  had a correct understanding of the different budget categories, such as  procurement and operations and maintenance. We then analyzed the  Marine Corps’ reset budgets from fiscal year 2009 through fiscal year  2010 for the reset of ground and aviation equipment to identify any trends  in the operations and maintenance and procurement funding categories.  We discussed the results of our analysis with Marine Corps officials to  determine the rationale for any trends in the funding. We interviewed  Office of the Secretary of Defense, Department of the Navy, and Marine  Corps officials to obtain information and any guidance documents  pertaining to the process used for budget development and budget review  and approval. To gain a better understanding of how the Marine Corps is  using procurement funding, we reviewed the Marine Corps procurement  reset funding appropriated for ground equipment in fiscal year 2010 for  the 10 items that had the highest amount of funding.
To determine the reliability of the reset budget data provided for ground  equipment from the Global War on Terror Resources Information  Database by Marine Corps officials, we assessed the data reliability of the  budget data by obtaining and reviewing agency officials’ responses on the  data reliability questionnaires provided. Based on our review of the Office  of the Secretary of Defense and Marine Corps officials’ responses to our  data reliability questionnaire, we identified any possible limitations and  determined the effect, if any, those limitations would have on our findings.  We also spoke with agency officials to clarify how the budget data were  used and to ensure that we had a good understanding of how to interpret  the data for our purposes. We also reviewed the fiscal year 2009 through  fiscal year 2012 reset budget data provided to make sure that the  formulas in the database were accurate for the data we planned to use.  Based on all of these actions, we did not find any areas of concern with  the data and we determined that the data used from the Global War on  Terror Resources Information Database were sufficiently reliable for our  purposes.
To determine the reliability of the reset budget data provided for aviation  equipment from the Program Budget Information System, Navy  Enterprise Resource Planning system, and the Justification Management  System by Navy and Marine Corps officials, we assessed the data  reliability of the budget data by obtaining and reviewing agency officials’  responses on the data reliability questionnaires provided. Based on our  review of Navy and Marine Corps officials’ responses to our data  reliability questionnaire, we identified any possible limitations and  determined the effect, if any, those limitations would have on our findings.  We also spoke with agency officials to clarify how the budget data were  used and to ensure that we had a good understanding of how to interpret  the data for our purposes. Based on all of these actions, we did not find  any areas of concern with the data and we determined that the data used  from the Program Budget Information System, Navy Enterprise Resource  Planning system, and the Justification Management System were  sufficiently reliable for our purposes.
To address each of our objectives, we also spoke with officials, and  obtained documentation when applicable, at the following locations:    Office of the Under Secretary of Defense for Acquisitions, Technology  and Logistics, Assistant Director of Defense for Material Readiness    Office of the Secretary of Defense for Cost Assessment and Program    Office of the Under Secretary of Defense (Comptroller)    Assistant Secretary of the Navy, Financial Management and  Comptroller; Navy Financial Management Branch    Naval Air Systems Command Reset Project Office    Naval Air Systems Command Comptroller Office    Naval Air Systems Command Naval Aviation Enterprise War Council    Headquarters Marine Corps Deputy Commandant for Installations and    Headquarters Marine Corps Deputy Commandant for Plans, Policies,    Headquarters Marine Corps Deputy Commandant for Marine Corps    Headquarters Marine Corps Deputy Commandant for Programs and    Headquarters Marine Corps Deputy Commandant, Aviation    Marine Corps Systems Command    Marine Corps Logistics Command  We conducted this performance audit from November 2010 through  August 2011 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Funding for Marine Corps Equipment Reset
paragraphs: This appendix provides further details on funding for Marine Corps  equipment reset for fiscal years (FY) 2009 to 2012. Tables 2 and 3  provide a summary of funds that were budgeted or requested to reset  ground and aviation equipment.
The Marine Corps’ top 10 ground equipment reset procurement items  totaled approximately $365 million and accounted for approximately 90  percent of their total reset procurement funding in fiscal year 2010.    Table 4 provides a summary of the procurement reset funding budgeted  for these ground equipment items.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Larry Junek, Assistant Director;  Tamiya Lunsford; Stephanie Moriarty; Cynthia Saunders; John Van  Schaik; Michael Willems; Monique Williams; and Erik Wilkins-McKee;  Tom Gosling; William Graveline; Asif Khan; Thomas McCool; Charles  Perdue; Gregory Pugnetti; and William Woods made key contributions to  this report.