Defense Logistics: Better Management and Oversight of Prepositioning Programs Needed to Reduce Risk and Improve Future Programs
Published: 2005-09-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The importance of prepositioned stocks to the U.S. military was highlighted during recent operations in Iraq, as much of the equipment and supplies stored at land sites in the region and aboard prepositioning ships were used to support operations. Long-standing problems in the Department of Defense's (DOD) prepositioning program are systematic of the inventory management issues, and more recently supply chain management issues, that GAO has considered as high-risk areas since 1990. GAO was asked to review the risks facing DOD's prepositioning programs, including an assessment of (1) the near-term operational risk given the continuing use of these stocks, (2) the sufficiency of DOD and service-level oversight of these prepositioning programs, and (3) whether DOD has developed a coordinated plan for the future of the department's prepositioning programs that would meet the goals of the recently published defense strategy.
section_title: What GAO Found
paragraphs: DOD faces some near-term operational risks should another large-scale conflict emerge because it has drawn heavily on its prepositioned stocks to support ongoing operations in Iraq. And, although remaining stocks provide some residual capability, many of the programs face significant inventory shortfalls and in some cases, maintenance problems. For example, the Army has drawn equipment from virtually all of its prepositioned stocks to support operations in Iraq. Some of its storage sites have shortfalls of equipment and sustainment items, like spare parts, and some stocks are in poor condition. Additionally, the Marine Corps has used a significant portion of the stocks downloaded from 5 of its 16 prepositioning ships to support operations in Iraq and it is unclear when this equipment will be refilled. The Air Force is also continuing to use a considerable amount of its prepositioned stocks to support combat operations in Iraq and it is unclear when these stocks will be refilled. The precise operational risk created by these shortfalls is difficult to assess. However, should a new conflict arise in the near term, the combatant commander would likely face difficult operational challenges. The department and the military services have provided insufficient oversight over DOD's prepositioning programs. This inattention has allowed long-standing problems with determining program requirements and managing inventory to persist. DOD has not enforced its directive that could provide centralized oversight over its prepositioning programs. Officials told us they did not enforce this directive because they were able to provide adequate oversight through other mechanisms. Even if the department had enforced its directive, however, the requirements underpinning some of DOD's prepositioning programs are questionable and the services do not have sufficient information on the inventory level and maintenance condition of some prepositioned stocks. Without reliable information on requirements, inventory levels, and maintenance condition, DOD cannot provide sufficient oversight over its programs, which potentially leaves war fighters at risk of not having needed stocks in the future. DOD has not developed a coordinated departmentwide plan or joint doctrine to guide the future of its prepositioning programs, despite the heavy use of prepositioned stocks in recent conflicts and the department's plans to rely on them in the future. DOD's recently published defense strategy indicates that prepositioning programs should be more innovative, flexible, and joint. In the absence of a departmentwide plan or joint doctrine to coordinate the reconstitution and future plans for these programs, the services have been recapitalizing stocks and developing future plans without an understanding of how the programs will fit together to meet the evolving defense strategy. Without a framework that establishes priorities for prepositioning among competing initiatives, DOD cannot provide assurances to Congress that the billions of dollars that will be required to recapitalize the stocks and develop future programs will produce programs that operate jointly, support the needs of the war fighter, and are affordable.

section_title: Letter
paragraphs: With fewer troops permanently stationed overseas, prepositioned stocks  of equipment and supplies have become an integral part of the Department  of Defense’s (DOD) ability to project forces into conflict areas faster. The  importance of prepositioned stocks to the U.S. military was highlighted  during recent operations in Iraq. The military used equipment and supplies  stored at land sites in the region and offloaded much of the stocks from its  prepositioning ships. Perhaps more importantly, the availability of the  sites gave the United States the facilities it needed to assemble forces for  combat. Recognizing the importance of the department’s prepositioning  programs, Congress has made significant investments in these programs.  In recent years, the services have collectively used over $1 billion each  year to operate and maintain their prepositioning programs; by fiscal year  2005 this amount had declined to about $724 million, since a large portion  of these stocks were used to support military operations in Iraq. However,  billions of dollars in future investments will be needed to recapitalize  equipment and develop future programs. The recently published National  Defense Strategy indicates that prepositioning will continue to be an  important aspect of DOD’s defense posture in the future. The strategy  establishes several goals for the future of these programs, including the  need for the programs to be more flexible and increasingly joint in  character.
Each of the military services prepositions combat or support equipment  and supplies in order to speed response times of U.S. forces to operating  locations and reduce the strain on scarce airlift or slower sealift assets.  For example, the Army stores sets of combat brigade equipment and  supporting supplies at land sites in several countries and aboard  prepositioning ships in the Pacific and Indian Oceans. The Marine Corps  stores equipment and supplies for its forces aboard squadrons of maritime  prepositioning ships located around the world and at land sites in Norway.  The Navy stores equipment and supplies to support ship offloading,  deployable hospitals, and construction projects also aboard the maritime  prepositioning ships and at land sites around the world. The Air Force  stores ammunition at land sites and aboard prepositioning ships and  prepositions base support equipment, vehicles, and supporting supplies at  several land sites.
In 1998, we reported on problems ranging from poor inventory visibility to  unreliable requirements-setting processes in the Army and Air Force  prepositioning programs. Similar problems were more recently identified  in numerous after-action assessments of the war in Iraq, and we testified  in March 2004 before the Subcommittee about the performance of the  Army and Marine Corps’ prepositioning programs during Operation Iraqi  Freedom. We found that although the programs performed well in  general, some Army units faced equipment shortfalls and there were  instances where certain types of equipment were outdated or did not  match unit needs. We stated that DOD may need to rethink its  prepositioning programs to ensure that they are compatible with overall  transformation goals and the evolving military strategy. Following our  testimony, Congress directed the Secretary of Defense to submit a report  on its prepositioning plans by October 1, 2005. Inventory management  issues, and more recently supply chain management, have been  considered high-risk areas by GAO since 1990. To further assist the  Subcommittee in its oversight, you asked that we assess the status and  plans for DOD’s prepositioning programs in advance of the department’s  report. Specifically, you asked us to review the risks facing the  department’s prepositioning programs, including an assessment of: (1) the  near-term operational risk given the continuing use of these stocks, (2) the  sufficiency of DOD and service-level oversight of these prepositioning  programs, and (3) whether DOD has developed a coordinated plan for the  future of the department’s prepositioning programs that would meet the  goals of the recently published defense strategy.
To assess the near-term operational risk given the continuing use of  prepositioned stocks, we obtained reports prepared by the military  services on the inventory levels of their prepositioned stocks compared to  program requirements and discussed the potential near-term operational  and long-term program risks associated with inventory shortfalls and  maintenance deficiencies. We visited selected prepositioning sites and  reviewed available maintenance reports or other data used by the services  to measure the condition of the prepositioned stocks. To assess the  sufficiency of DOD and the services’ oversight of these programs, we  discussed the processes used by DOD to oversee its prepositioning  programs with officials from the Office of the Secretary of Defense, the  Joint Staff, and the military services. To assess whether DOD has  developed a coordinated plan for the future of its prepositioning programs  that would meet the goals of the recently published defense strategy, we  reviewed the recently published National Defense Strategy and discussed  the future direction of the department’s prepositioning programs with  officials in the Office of the Secretary of Defense, the Joint Staff, and the  military services. We also collected and analyzed information from the  military services on the future plans for their prepositioning programs. We  also discussed the time frames and costs needed to repair or replace  prepositioned stocks used in recent military operations. We conducted our  work from July 2004 through May 2005 in accordance with generally  accepted government auditing standards. Our assessments of data  reliability revealed significant concerns that are discussed later in the  report. A more detailed discussion of our scope and methodology is  contained in appendix II.
subsections: section_title: Background
paragraphs: Prepositioning is an important part of DOD’s overall strategic mobility  framework. It allows DOD to field combat-ready forces in days rather than  the weeks it would take if the forces and all necessary equipment and  supplies had to be brought from the United States to the location of the  conflict. The U.S. military can deliver equipment and supplies in three  ways: by air, by sea, or by prepositioning. While airlift is fast, it is  expensive to use and impractical for moving all of the material needed for  a large-scale deployment. Although ships can carry large loads, they are  slower than airlift. Prepositioning lessens the strain of using expensive  airlift and reduces the reliance on slower sealift deliveries. Concerned  about the reduction in U.S. forces overseas and their ability to move forces  in the time required to resolve potential conflicts quickly, the services have  expanded prepositioning programs ashore and on ships in potential areas  of conflict.
The military services have prepositioning programs to store combat or  support equipment and supplies near areas with a high potential for  conflict and to speed response times and reduce the strain on other  mobility assets. The Defense Logistics Agency prepositions food and bulk  fuel to support a range of contingency operations and training exercises.  The Special Operations Command relies on the military services to  preposition common support items for its forces, such as base support  items and vehicles.
The Army’s program involves three primary categories of stocks: combat  brigade sets, operational projects, and war reserve sustainment stocks  stored at land sites and aboard prepositioning ships around the world. The  Marine Corps also prepositions equipment and supplies aboard  prepositioning ships and at land sites in Norway. The Navy’s  prepositioning efforts are comparatively small, used mainly to support the  Marine Corps’ prepositioning program and deploying forces. The Navy  prepositions equipment and supplies at land sites and aboard the maritime  prepositioning ships. The Air Force prepositions stocks of war reserve  equipment and supplies to meet initial contingency requirements and to  sustain early deploying forces. The Air Force’s prepositioned war reserve  stocks include bare base sets; vehicles; munitions; and a variety of  consumable supplies, such as rations, fuel, support equipment, aircraft  accessories, and medical supplies. DOD’s prepositioning programs are  briefly described in the table below.
The military services preposition these stocks of equipment and supplies  at several land sites and aboard prepositioning ships around the world.  Most of the military services preposition equipment and supplies in  southwest Asia, the Pacific theater, Europe, and aboard prepositioning  ships. Figure 1 shows the locations of DOD’s prepositioned stocks.
section_title: Inventory Shortfalls and Poor Equipment Condition Leave Many of DOD’s Prepositioning Programs at Risk
paragraphs: DOD faces some near-term operational risks should another large-scale  conflict emerge due to inventory shortfalls and poor maintenance  condition of some of its prepositioned stocks. For example, the  department has drawn heavily on its prepositioned stocks to support  ongoing operations in Iraq and relatively little has been reconstituted. In  addition, while remaining stocks provide some residual capability, many  have significant inventory shortfalls and in some cases, maintenance  problems. Combatant commanders rely on prepositioned stocks being  available and in good maintenance condition; otherwise U.S. forces must  bring needed stocks with them or spend valuable time repairing  equipment. Since these stocks are typically used in the early stages of a  conflict, it is important for DOD to determine the operational risk  associated with any shortfalls. Operation Iraqi Freedom revealed  significant issues with the status of prepositioned stocks, such as  shortages in spare parts and less-than-modern equipment. The same  problems continue to exist today in some programs.
subsections: section_title: The Army Is Reporting Low Inventory Fill and Poor Maintenance Condition for Some Prepositioned Stocks
paragraphs: The Army is currently reporting low inventory fill for the combat brigade  sets, operational project stocks, and sustainment stocks that comprise its  prepositioning program, and some stocks not used in recent operations  are in poor maintenance condition. For example, the Army used much of  the equipment and supplies associated with the combat brigade sets stored  at land sites in Kuwait and Qatar and aboard prepositioning ships afloat  near Diego Garcia to support operations in Iraq. In addition, the Army  used some equipment from its other prepositioned stocks in Europe,  South Korea, and from other prepositioning ships located near  Guam/Saipan.
The Army is also reporting low inventory fill for its operational projects  and sustainment stocks. The Army has a total of 14 operational projects  that contain equipment and supplies needed for unique mission  requirements, such as special operations forces, mortuary operations, and  prisoner handling. Sustainment stocks provide replacement equipment  and supplies, such as repair parts, petroleum items, and tracked vehicles,  until normal resupply channels are established. The Army is reporting  inventory fills for operational projects and sustainment stocks— approximately 26 percent and 20 percent respectively—that are  considerably lower than the program requirements. Some of the Army’s  shortfalls have been long-standing, however, including shortfalls in critical  areas like spare parts, and are not attributable to the war in Iraq. For  example, we reported in 2003 that DOD experienced equipment readiness  problems because of a lack of key spare parts. Table 2 provides an  overview of the inventory levels, maintenance condition, and operations  and maintenance funding of the Army’s prepositioned stocks.
Some stocks that were taken from prepositioned storage locations and  used during operations in Iraq are either still in use, or have experienced  extreme wear and tear. For example, the Army continues to use equipment  taken from prepositioned stocks to support its units in Iraq, delaying the  reconstitution and redistribution of the equipment. According to Army  officials, this equipment may not be returned to the prepositioned stocks  because the Army is giving priority to transforming its forces into more  deployable and expeditionary brigade-based formations and may use  formerly prepositioned equipment to fill additional equipment  requirements associated with the new formations. Importantly, this heavy  stress on equipment is a problem across much of the Army’s equipment  that has been used in Iraq, not just the equipment taken from  prepositioned stocks.
We also found that some other prepositioned stocks in storage were in  poor maintenance condition, even though they had not been used in  Operation Iraqi Freedom. For example, during a March 2005 visit to Camp  Carroll, South Korea, we found that some of the Army’s prepositioned  stocks at this location were in poor maintenance condition and that much  of the equipment was overdue for periodic maintenance. Army officials  confirmed that required cyclic maintenance had not been performed on  the equipment in the brigade set, operational projects, and sustainment  stocks for several years. To address this, the Army has stepped up its  maintenance efforts by bringing in contractor support and setting up  temporary maintenance facilities to assist in repairing the equipment to  standard. Moreover, as shown in figure 2, certain stocks were stored  outside and had been for many years and corrosion was evident on some  pieces of equipment. Corrosion can significantly affect the readiness of  prepositioned equipment: DOD spends an estimated $20 billion each year  to repair the damage to military equipment and infrastructure caused by  this problem. In this regard, we have called for improvements to DOD’s  long-term corrosion strategy, including better planning and establishment  of a long-term funding mechanism. Because of continuing concerns over  corrosion, we are currently conducting a congressionally directed review  of its impact on DOD’s overall prepositioned assets.
The Army also maintains European prepositioning storage sites in  Germany, Italy, Luxembourg, and the Netherlands. However, few stocks  remain there because they have been drawn out to support operations in  other locations, including Bosnia and Iraq. The mission in Europe has  steadily declined since the European drawdown of the early 1990s, and the  remaining sites are the last remnants of the Army’s large-scale  prepositioning program developed during the Cold War. Army officials  told us that they are currently using the local national workforce at these  locations to perform other maintenance workloads, including fixing  equipment from Iraq. In past reports, we have recommended that the Army  align its workforce and facilities to meet the reduced post-Cold War  mission in Europe. Officials told us that they have reduced infrastructure  in response to our recommendations, and are contemplating further  reductions. In Italy, however, the Army has requested about $55 million to  construct new storage and maintenance facilities that it has said will  become the centerpiece of its land prepositioning in the region. This  region still receives considerable funding, as shown in table 2. The Army  spent nearly $290 million during fiscal years 2000-2004, even though the  sites have had an uncertain mission and reduced stocks for much of that  time.
section_title: The Marine Corps Is Reporting Low Inventory Fill for Some Prepositioned Stocks, While the Navy Reports Few Shortfalls
paragraphs: The Marine Corps has offloaded about 75 percent of the major end-items  stored on 5 of its 16 prepositioning ships to support combat operations in  Iraq. The remaining 11 prepositioning ships are reporting inventory fills of  95 percent or greater and good maintenance condition for major end-items  and sustainment stocks. The Marine Corps also used some of its  prepositioned major end-items stored at several land sites in Norway to  support operations in Iraq and Afghanistan and to fill shortfalls at Marine  Corps bases and on some of the prepositioning ships. As a result, these  sites are currently reporting an inventory fill of about 71 percent.
It is unclear when this equipment will be returned to prepositioned stocks  because, according to a Marine Corps official, a large portion of the  Marine Corps’ equipment offloaded from prepositioning ships to support  the deployment of the I Marine Expeditionary Force to Iraq is currently  being kept in Iraq to support the rotation of the II Marine Expeditionary  Force. In a recent congressional testimony on the status of its military  equipment, a Marine Corps official reported that in addition to higher  usage rates, equipment is being used under extreme conditions which have  increased the maintenance requirements. For example, to date, more than  1,800 equipment items have been destroyed and an additional 2,300  damaged equipment items will require depot maintenance.
For the Norway stocks, the Marine Corps is in the process of updating the  requirements for its program there so that it will be capable of providing a  global response capability to any regional combatant commander. During  our September 2004 visit to the prepositioning sites in Norway, we  discussed this change in the scope of the program and Marine Corps  officials confirmed that the facilities in Norway can support any  combatant commander and the stocks are globally deployable via air, rail,  and sea. This shift in scope is in response to concerns about the continued  relevance of land stocks in Norway. According to Marine Corps officials,  however, these stocks are important to Norway, cost relatively little to  maintain (about $3.9 million in operational costs per year), are stored in  excellent facilities, and can be taken out to respond to crises as needed.
The Navy is reporting high inventory fill for its prepositioned assets.  According to Navy officials, most of its equipment used to offload the  maritime prepositioning ships was not used in direct combat and has not  required extensive reconstitution, and other equipment was available to  backfill the field hospitals and construction forces deployed to support  operations in Iraq.
section_title: The Air Force Is Reporting Low Inventory Fill and Some Stocks in Poor Condition
paragraphs: The Air Force has used a considerable amount of its prepositioned  equipment and supplies to support combat operations in Afghanistan and  Iraq and, as a result, the inventory fill of many of these stocks is low. For  example, it used approximately 43 percent of the total number of its  prepositioned bare base sets to support Operations Enduring Freedom and  Iraqi Freedom, and due to the extreme desert conditions, many of these  sets will have to be replaced. A U.S. Central Command, Air Forces, official  told us that the command is continuing to issue prepositioned base  operating support equipment and vehicles to forces that have been  deployed to the area of responsibility. While the Air Force is working on  refilling its prepositioned equipment and supplies, if a conflict arises in the  near term, these stocks may not be available for use as it is unclear when  these stocks will be refilled.
In addition, the Air Force is experiencing shortfalls in its inventory of fuel  bladders. These bladders are used to store fuel for Air Force aircraft at  austere operating locations. Air Force officials stated that to support  combat operations in Iraq, Central Command, Air Forces, has used a  considerable number of its prepositioned war reserve fuel bladders. As  combat operations continue, the Air Force is depleting its supply of these  bladders, and officials have characterized the impact of potential shortfalls  in these bladders as its “highest operational risk.” At the same time, the Air  Force is undergoing an initiative to modernize its fuel support equipment,  including its fuel bladders. As part of this initiative, the Air Force  requested that Central Command, Air Forces, officials not purchase the  type of fuel bladders that had previously been used. To mitigate the risk,  the Air Force has allowed Central Command, Air Forces, to purchase  some replacement fuel bladders; however, it is unclear when its  modernization initiative will be fully implemented.
During our review, we were also told that some bare base sets that the Air  Force prepositions at Andersen Air Force Base on Guam are in poor  maintenance condition and are unusable. According to a Pacific Air Forces  official, the sets stored at Andersen Air Force Base have deteriorated due  to a lack of required maintenance. Air Force maintenance personnel are  responsible for the war reserve stocks prepositioned at this location as an  additional duty to the maintenance of operating stocks also stored at the  base. The official told us that the quality of maintenance performed by Air  Force personnel on the war reserve bare base sets has been a long- standing problem at this location. Air Force officials told us that bare base  sets stored in Southwest Asia and South Korea did not have these same  maintenance problems because contractors have been hired to maintain  these sets.
When we discussed these issues with Air Force officials, they told us that  they believed they could overcome shortfalls and any maintenance  problems in the event of a conflict by using supplemental funding or cross- leveling equipment from other theaters. Additionally, Pacific Air Forces  officials told us that they would be able to obtain some vehicles from  countries where they will operate by using contracts already in place.
section_title: Shortfalls in Inventory Fill Exist for Stocks Prepositioned to Support Special Operations Forces
paragraphs: The Army, Air Force, and Navy preposition common support equipment  and supplies for use by their special operations forces. However, the  services have traditionally underfunded these stocks and, as a result,  inventory shortfalls exist in most of these stocks. Lessons learned from  recent military operations in Iraq further highlighted the need for special  operations forces to have stocks of prepositioned equipment and supplies  to support these forces in multiple austere environments. Special  Operations Command officials told us that special operations forces are  often among the first units to deploy and, therefore, have a need to draw  prepositioned stocks. The department recognized this and recent guidance  issued by DOD directs the military services to fully fund inventory  shortfalls in these stocks of common items prepositioned to support  special operations forces. The military services have agreed to provide  funding for prepositioned stocks for special operations forces beginning in  fiscal year 2006.
section_title: Shortfalls Create Some Operational Risks
paragraphs: Since prepositioned stocks are integral to the military’s war plans,  shortfalls in these programs create risks that combatant commanders  would have to mitigate in the event of a new conflict. It could cost time or  manpower to fill shortages or fix equipment. Since these stocks are  typically used in the early stages of a conflict, it is important for DOD to  determine the operational risk associated with any shortfalls. The military  planners we spoke to told us that they would find a way to work around  the shortfalls, but offered little in the way of concrete plans.
Operation Iraqi Freedom revealed significant lessons for DOD’s  prepositioning managers, especially in the Army, such as shortages in  spare parts and less-than-modern equipment. Prior to the onset of combat  operations in Iraq, the Army had significant shortages in its prepositioned  stocks, especially in spare parts. The Army overcame these shortfalls by  having the units that were drawing the prepositioned stocks bring their  own spare parts, in addition to obtaining spare parts from nondeploying  units. However, according to the Army’s after-action assessments of the  war, the Army had shortages in these and other items, including food,  water, fuel, construction materials, and ammunition. The available stocks  of these supplies were insufficient to meet sustainment requirements at  the outset of the deployment and it took the supply chain months to  respond. At the time of our work, we found that many of the same  shortfalls that existed in the Army’s program are still evident, and may be  getting worse. For example, as of mid-March 2005, the Army had only 21  percent of its authorized prepositioned repair parts on hand in South  Korea. According to Army officials, if a military conflict should arise there,  their strategy to mitigate these shortfalls would be to cross-level required  parts from available sustainment stocks as needed.
Although the precise operational risks created by shortfalls in the Marine  Corps and Air Force’s prepositioned stocks are difficult to assess, officials  from these services told us that these risks can be managed. This is  because the Marine Corps has kept about two-thirds of its prepositioned  combat capability available for potential contingencies and that equipment  is reported to be in good condition. Moreover, Air Force officials stated  that if a conflict arises, they will be able to fill shortfalls and repair  equipment as needed by using supplemental funding and obtaining some  vehicles and other stocks in other countries through contracts already in  place. Air Force officials stated, however, that this presumes that they will  have the time and necessary funding available to address the shortfalls.
Combatant commanders rely on prepositioned stocks being available and  in good maintenance condition. Prior to Operation Iraqi Freedom, the  combatant commander built up the required forces over a period of  months, and had time to overcome any inventory shortages in the  prepositioned stocks or resolve any maintenance issues with  prepositioned equipment. However, should a new conflict arise in the near  term—especially one where U.S. forces did not control the timing—the  combatant commander would likely face even more difficult operational  challenges. During our visit to South Korea, officials told us that their  strategy to mitigate maintenance issues with the Army’s prepositioned  stocks stored there, should a conflict arise, would be to surge maintenance  personnel as needed to fix equipment, use arriving personnel to assist in  maintenance execution, and cross-level required parts from available  sustainment stocks. Officials acknowledged, however, that it could take  longer than planned to get the equipment ready in the event of a conflict.
Another factor making it difficult to assess the potential operational risks  is the lack of sound information available to assess and manage DOD’s  prepositioning programs. Such programs need valid inventory  requirements that meet the needs of the war fighters, and reliable  information about inventory levels and maintenance condition for those  requirements. These long-standing management problems are discussed in  the next section of this report.
section_title: DOD and Some of the Military Services Have Provided Insufficient Oversight Over Their Prepositioning Programs
paragraphs: Oversight over prepositioning programs by DOD and the military services  has been insufficient, despite the importance of prepositioning to the  military. This inattention has allowed long-standing problems to linger.  Management principles, such as those embraced in the Government  Performance and Results Act of 1993, provide federal agencies a  framework for effectively implementing and managing programs.  Management principles include sufficient information to support sound  decision making and enable Congress to provide proper oversight.  However, DOD has not adhered to its directive on war reserve materiel  policy that could provide oversight over its prepositioning programs. In  addition, service oversight has been inadequate, particularly in the Army’s  processes for determining requirements and the Army and Air Force  processes for assessing inventory shortfalls and maintenance condition.  This limited oversight unnecessarily leaves the programs at risk of being  unavailable when required and lacking the right mix of equipment and  supplies to support the war fighter.
subsections: section_title: Oversight Has Been Insufficient
paragraphs: The overarching departmental guidance is contained in DOD directive  3110.6, updated in December 2003, which provides policy guidance on the  department’s war reserve materiel program and assigns oversight and  accountability responsibilities within the department. The secretaries of  the military departments, directors of defense agencies, and the combatant  commands are responsible for setting program requirements and the  Defense Logistics Agency has responsibility for storage and distribution of  the stocks. At the department level, their responsibilities are as follows:    The Undersecretary of Defense for Acquisition, Technology, and Logistics  is required to assess the adequacy of war reserve stocks annually.
The Undersecretary of Defense for Policy is required to provide planning  guidance that includes war reserve requirements.
The Chairman of the Joint Chiefs of Staff is required to validate the  operational requirements of the geographic combatant commands.
A provision of the directive related to oversight states that the department  is to assess the adequacy of its war reserve stocks. In order to assess  adequacy, the directive requires the secretaries of the military departments  and the directors of defense agencies to submit annual reports on war  reserve materiel levels to the Under Secretary of Defense for Acquisition,  Technology, and Logistics within the Office of the Secretary of Defense.  Officials within the Deputy Under Secretary of Defense for Supply Chain  Integration told us that this oversight responsibility had been delegated to  their office. However, the directive has not been implemented and,  therefore, the reporting requirement contained in the directive has not  been enforced. Neither the services nor the Under Secretary’s office could  provide us with copies of these reports. Officials told us that they had  suspended this reporting requirement in 2002; however, the directive had  been updated in late 2003 and the reporting requirement was maintained.  Officials also stated that although they had been given responsibility for  implementing the oversight provisions of the directive, since their office  primarily deals with only sustainment issues, they did not have sufficient  authority or personnel to meet the requirements stated by the directive,  specifically to assess the adequacy of the services’ prepositioning  programs.
Officials further told us they did not believe the reporting requirement in  the directive was necessary because they were able to provide adequate  oversight of the department’s prepositioning programs through other  mechanisms, such as reviewing the services’ budget submissions and  quarterly readiness assessments. Quarterly readiness reviews and  integrated priority list submissions allow the combatant commanders and  others to identify issues that have reached critical thresholds that may  limit war-fighting capabilities. These assessments, some of which have  included issues related to prepositioned stocks, are briefed to DOD’s  senior leadership and may be included in a legislatively mandated  quarterly readiness report to Congress. However, we have previously  reported that these reports provide a vague and broad description of  readiness problems and, therefore, are not effective as an oversight tool.  Furthermore, officials at one combatant command told us that these  assessments do not provide a sufficient mechanism to determine the  inventory readiness of stocks prepositioned in their area of responsibility.  Also, a DOD official told us that they review the budget submissions from  the military services and approve how much the services allocate to their  prepositioning programs. In our view, while such mechanisms provide the  department with important information on gaps in capabilities and  resource allocation, they do not constitute sufficient, sustained program  oversight.
Such oversight problems have existed for years and several prior reports  have cited the lack of centralized oversight and direction in the  department’s prepositioning programs, particularly in the Army. For  example, the Institute for Defense Analyses concluded in a 1997 report  that the military services do not coordinate their war reserve planning  among themselves or with the combatant commanders. The report  specifically called on the Army to reinvent the entire war reserve process,  and work with the unified combatant commands and other Army  commands to build credible requirements and better planning factors. The  Army Materiel Command Inspector General also reported in 2001 that the  Army and the combatant commands had not uncovered, mitigated, or  elevated issues about the readiness of the Army’s prepositioning programs  to the department level. Further, the report stated that the lack of  centralized oversight fostered inefficiencies and impacted the  effectiveness of the Army’s prepositioning program.
section_title: Lack of Valid Requirements and Insufficient Information Makes Oversight Difficult
paragraphs: The Army does not have sound requirements for some of its prepositioning  programs and both the Army and Air Force do not have sufficient  information about inventory levels and maintenance condition, making  oversight difficult. Without valid requirements underpinning the services’  prepositioning programs, it is impossible to reliably assess the impact of  reported shortfalls or equipment in poor maintenance condition. As a  result, the services cannot assess the overall readiness of their  prepositioning programs, which potentially leaves war fighters at risk of  not having needed stocks in the future. In addition, assessing the readiness  of prepositioned stocks requires reliable information about inventory  levels and maintenance condition. Inventory levels are measured against  requirements set by the services, while maintenance condition describes  whether on-hand items work well enough to perform their mission.  Because prepositioned stocks are intended to be used in the early stages  of a conflict, the stocks need to be completely filled and in working order.  Otherwise, the purpose of prepositioning is likely defeated. Such problems  with questionable requirements and insufficient information are long- standing, and make it difficult for the services and the department to  assess readiness, provide oversight, and support sound decision making  about where to make program investments.
subsections: section_title: Questionable Requirements
paragraphs: During our review, we found that the requirements underpinning some of  the Army’s prepositioning programs are questionable, which may make the  impact of shortfalls difficult to assess. Specifically, Army officials told us  that the war reserve information system used to calculate the  requirements for some sustainment stocks had not been successfully  updated since 1999, although Army officials told us that they are required  to compute these requirements on an annual basis. While the Army is  planning on recalculating these requirements by the end of 2005, it is  currently unclear what the requirements for these stocks should be. As a  result, program managers cannot be sure what to buy because they do not  know if inventory shortfalls are valid. We reported on the operational  impacts of this problem in our March 2004 testimony on prepositioned  stocks used during Operation Iraqi Freedom. Additionally, in our April  2005 report, we found that because the process used to determine  requirements for Army war reserve spare parts had not been updated, the  war reserve inventories for some spare parts were inadequate in Operation  Iraqi Freedom and could not meet initial wartime demands. In addition,  inaccurate and inadequately funded Army war reserve requirements  contributed to shortages in other items, such as track shoes for Abrams  tanks and Bradley Fighting Vehicles and lithium batteries.
Additionally, we identified problems with DOD’s process for establishing  requirements for prepositioned munitions. For example, during our visit to  U.S. Forces Korea, officials told us that the command is not afforded the  opportunity to proactively participate in the determination of either total  munitions requirements or, more specifically, prepositioned munitions  requirements. In October 2002, we reported that DOD’s munitions  requirements determination process did not fully consider the combatant  commander’s preferences for munitions and weapon systems that will be  used against targets identified in projected scenarios. We recommended  that the Secretary of Defense establish a direct link between the munitions  needs of the combatant commands and the munitions requirements  determinations and purchasing decisions made by the military services. In  October 2003, DOD issued instruction 3000.4, which required that the  munitions requirements developed by each of the military services address  the operational objectives of the combatant commanders against potential  threats. In addition, it directed the military services to work directly with  the military service component and the combatant commands to develop  near- and out-year munitions requirements. Finally, it directed combatant  commanders to review the military services’ generated munitions  requirements and report any issues needing resolution during the planning  and programming process. We found that these requirements are not being  met. Only the Air Force visits the command prior to developing total  munitions requirements to support purchasing decisions. The other  services do not coordinate with the command prior to generating  munitions requirements. Further, U.S. Forces, Korea, officials told us that  they do not have the opportunity to review the service-generated  munitions requirements prior to purchasing decisions and have no input to  what munitions will be prepositioned or where those munitions will be  located. While officials in the Office of the Secretary of Defense and Joint  Staff expressed skepticism about the way U.S. Forces, Korea, had  developed their munitions requirements, they agreed that the proper  coordination was not occurring. As a result, the needed linkage between  the combatant command’s needs and the munitions purchases made by  the services continues to be inadequate and raises questions as to whether  combatant commands will have what they need should a conflict arise.
section_title: Unreliable Information
paragraphs: We also found that the Army and Air Force lack reliable information on  the inventory fill and maintenance condition for some prepositioned  stocks. The lack of reliable inventory information may provide program  managers with an unrealistic view on the preparedness of these programs.
Army officials told us that its information management system does not  provide reliable information on the inventory levels and maintenance  condition of its operational projects and sustainment stocks. Army  managers told us that this lack of inventory visibility has persisted for  many years, and sometimes the only way to get reliable information is to  contact the storage site directly.
As recently as February 2005, the Army reported in the unclassified  inventory information that it extracts from its main readiness reporting  system that a high percentage of the combat brigade set prepositioned in  South Korea was fully mission capable. However, in an October 2004 Army  assessment, inspectors had found that a high percentage of the equipment  reviewed was not mission capable.
Air Force officials also told us that they do not have adequate information  available to assess the overall readiness of their prepositioned stocks.  While this information is decentralized and available in some cases to base  and component commanders, information on inventory levels and  maintenance condition is not available to Air Force managers overseeing  the war reserve materiel program. Air Combat Command and Central  Command, Air Forces, officials told us that in order to obtain information  on the readiness of most prepositioned stocks, they had to contact the  storage locations since this information is not readily available to them.  Pacific Air Forces officials told us that they developed their own  automated system to track the inventory levels and maintenance condition  of the war reserve materiel prepositioned in their area of responsibility  because the Air Force lacked a comprehensive system that provides  reliable and timely readiness information on its war reserve program.
section_title: Problems with Requirements and Reliability of Information Have Been Long-standing, but Remain Unresolved
paragraphs: The problems we found during our review with requirements  determination and reliability of inventory information are not new. Our  review of past reports going back to 1995 revealed that similar issues have  been reported repeatedly, but have not been resolved. The findings from  several past studies are described below, and appendix I provides a more  comprehensive summary of the major findings from more than 30 past  reports by us and the department’s own studies.
Inventory management issues, and more recently supply chain  management, have been considered high-risk areas by us since 1990.  Specific to the prepositioning programs, we have previously reported  numerous times on long-standing management problems. For example, we  reported in our last review of prepositioning programs in 1998 that the  Army and Air Force had poorly defined, outdated, and otherwise  questionable requirements in their programs. Our 1998 report also noted  that it was difficult for DOD to assess the readiness of its prepositioned  stocks and the impact of any shortfalls due to the poor information the  services used to manage these programs. We also reported in 2001 that,  among other things, a potential mismatch existed between the Army’s  methodology for determining spare parts requirements and the Army’s  anticipated battlefield needs. And more recently, we reported in January  2005 that DOD does not have the ability to provide timely or accurate  information on the location, movement, status, or identity of its supplies  due to long-standing data accuracy and reliability problems within existing  inventory management systems.
The department’s own auditors and an Army command have also been  sharply critical of program management, especially how program  requirements have been determined. For example, the Army Materiel  Command reported in 2003 that the requirements computation for war  reserve stocks and stockage lists for prepositioned stocks did not  accurately portray what was needed for Operation Iraqi Freedom. These  stockage lists did not contain the most critical items needed to sustain  combat equipment during the operation. In addition, the Army Audit  Agency reported in 2004 that Army program managers had not reviewed  the requirements for many of the operational projects it examined. As a  result, some operational projects contained inaccurate, overstated, or  questionable requirements. Of $1.5 billion in requirements examined,  about $727 million were valid, $472 million were invalid, and about $280  million were questionable. In addition, the Air Force Audit Agency  reported in May 2003 that Air Force personnel did not properly segregate  certain war reserve requirements from peacetime operating spare parts  requirements, resulting in more than $118.8 million of overstated  requirements for peacetime.
Past reports have also revealed problems with the reliability of inventory  information. In 2001, Army auditors reported that the lack of reliable data  on operational projects and sustainment stocks impeded the overall  readiness capability of the Army’s prepositioning program. In addition, the  Army reported that there was a general lack of confidence in the  information management system used to provide information on inventory  levels. More recently, the Army Materiel Command’s 2003 report on  lessons learned in Iraq also found that different automated systems  provided different inventory levels at the same storage location during  operations in Iraq. Similarly, a June 2004 CNA Corporation after-action  report on the Marine Corps’ prepositioning program in Operation Iraqi  Freedom found that the Marine Corps did not have reliable information on  the status of some prepositioned equipment used to support operations in  Iraq. Specifically, due to a lack of automated tracking systems, the Marine  Corps had to use manual methods for tracking equipment with hand  counts and written reports. As a result, Marine Corps commanders did not  have clear and accurate tools for determining where cargo was in the  pipeline, and more importantly, forecasting when equipment would arrive  and when integration would be complete.
section_title: DOD Lacks A Plan To Coordinate Future Prepositioning Programs
paragraphs: DOD has not developed a coordinated departmentwide plan or joint  doctrine to guide the future of its prepositioning programs, despite the  heavy use of prepositioned stocks in recent conflicts and the department’s  plans to rely on them in the future. The 2005 National Defense Strategy  specifically notes the importance of prepositioning in the future and  indicates that prepositioning programs should be more innovative,  flexible, and joint in character, but provides few details on how DOD plans  to accomplish these goals. In addition, the independent Overseas Basing  Commission recently echoed the continued importance of the  department’s prepositioning programs in the future. In the absence of a  departmentwide plan or joint doctrine to coordinate the reconstitution and  future plans for these programs, the military services have been  recapitalizing some stocks and developing future plans for their programs  without a clear understanding of how they will fit together to meet the  evolving defense strategy. Without an overarching framework that  establishes priorities for prepositioning among competing initiatives and  identifies the resources required to implement the future programs, DOD  cannot provide assurances to Congress that the billions of dollars that will  be required to recapitalize the stocks and develop future programs will  ultimately produce programs that will operate jointly, support the needs of  the war fighter, and are affordable.
subsections: section_title: National Defense Strategy and Overseas Basing Report Indicate a Reliance on Prepositioning in the Future
paragraphs: The most recent National Defense Strategy published in March 2005 states  that to strengthen DOD’s capability for prompt global action and flexibility  to employ military forces where needed, prepositioned stocks “will be  better configured and positioned for global employment.” This  overarching defense strategy establishes key goals for the future of  defense capabilities such as the prepositioning of support materiel and  combat capabilities in critical regions of the world and along key  transportation routes, and a greater reliance on joint prepositioning  capabilities that will be in accordance with other aspects of  transformation. However, while such goals confirm that prepositioning  will continue to play a key role in the evolving military strategy, the  National Defense Strategy provides no specific details on how the  department and the military services will accomplish them.
In addition, the recently released report of the Overseas Basing  Commission states that where DOD puts prepositioned stocks, what they  are comprised of, and how they are maintained is central to the  department’s operational capability. The report states that prepositioning  is “imperative” for quick response of U.S. forces in areas of the world  where access may be difficult, and calls for tight integration of service  concepts, doctrines, and plans as a first step in ensuring the sustainability  of prepositioning. Importantly, the Commission recommends that given  the centrality of these stocks to the operational capability of U.S. forces,  their high costs, and their anticipated heavy use over time, Congress  should periodically review the status of prepositioned stocks.
section_title: DOD Has Not Developed a Plan or Joint Doctrine for Its Prepositioning Programs
paragraphs: While it seems certain that DOD will continue to rely on prepositioning in  the future, it is unclear how prepositioning will fit into its future plans  since DOD currently has no department-level prepositioning plan that  provides specific details on how the department and the military services  will work together to plan the future of their prepositioning programs or  joint doctrine for its prepositioning programs. DOD officials told us that  the future of its prepositioning programs has not yet been determined, in  part because the future is dependent on the outcome of several  interrelated studies ongoing within the department. For example, DOD is  currently reviewing the mobility capabilities required to meet the full  range of mobility needs for all aspects of the national defense strategy.  According to DOD officials, the recommendations from this study will  likely have a significant impact on the services’ prepositioning programs  since requirements for prepositioning are being factored into the mobility  deliberations. In addition, in March 2003, the Secretary of Defense  requested that the department develop a comprehensive and integrated  presence and basing strategy for the next 10 years. This strategy will build  upon multiple DOD studies and will use information from the combatant  commanders to determine the appropriate location of the basing and  associated infrastructure necessary to execute the U.S. defense strategy.  DOD officials told us that the basing study will also likely have an impact  on prepositioning as the services will need to determine where to  preposition their stocks to support the new defense strategy. Although  some preliminary results have been released, DOD officials stated that  once these studies are completed, they will have a better understanding of  how prepositioning will be able to support the war fighter.
Similarly, DOD has not developed joint doctrine to guide the planning and  employment of its prepositioning programs. DOD defines joint doctrine as  the fundamental military principles that guide the employment of forces of  two or more services in coordinated action toward a common objective.  DOD’s transformation guidance states that part of the department’s  transformation efforts is developing concepts to operate in a joint  environment, and placing a continuing emphasis on the importance of  expeditionary operations. DOD has published joint doctrine in a number  of areas, including deployment and redeployment operations,  multinational operations, and military operations other than war.  However, in the absence of a departmentwide plan and joint doctrine for  prepositioning, the military services currently plan and implement  separate programs in an independent, service-centric manner. A service- centric approach to prepositioning potentially misses opportunities to  achieve greater efficiencies where service programs overlap. In a 2003  Joint Staff-sponsored study on strategies for prepositioning, the Logistics  Management Institute found that the military services continue to program  for prepositioning materiel to meet individual service rather than joint  requirements. As a result, the services may overstate operational  requirements and put unnecessary burdens on limited transportation  assets that would be required to move these prepositioned assets from  their storage locations to the operational sites. For example, although the  Army and Air Force have separate bare base programs, there is a lack of  commonality among the design and components of these programs even  though basic capabilities are the same. Moreover, this service-centric  approach to prepositioning is out of step with DOD’s transformation  guidance, which states that developing concepts to operate in a joint  environment and a continuing emphasis on the importance of  expeditionary operations is key to the department’s transformation  efforts.
section_title: Reconstitution Likely to Be Delayed Due to Ongoing Operations, but Delay Offers DOD Opportunities to Set Clear Direction for Programs
paragraphs: Clearly prepositioning figures prominently in the department’s future  plans, but the services do not have precise estimates of the costs and time  required to reconstitute their prepositioned stocks since the services  continue to use these stocks in Afghanistan and Iraq. In a recent report to  Congress, DOD estimated that the costs to reconstitute the Army and  Marine Corps’ prepositioned equipment will be between $4 billion and $5  billion. The report acknowledges, however, that these estimates may  change depending on several factors, including the length of time the  equipment is in use, the number of combat losses, and any changes in the  future plans for its prepositioning programs. However, most of the costs  required to reconstitute and recapitalize the Army and Marine Corps’  prepositioned stocks have not been budgeted for in the department’s  baseline submissions or supplemental funding requests. In the absence of  a departmentwide plan that coordinates the reconstitution of these  programs with the future plans of the department’s prepositioning  programs, the services are developing plans to reconstitute and  recapitalize their prepositioned stocks without a clear understanding of  how the future of these programs will fit together in support of the  evolving defense strategy.
According to Army officials, plans to reconstitute the equipment and  return it to the combat brigade sets are uncertain because, in some cases,  Army units are continuing to use prepositioned stocks to support  operations in Iraq instead of bringing their own equipment. In addition, the  Army is placing a higher priority for its resources on supporting ongoing  operations and on its modular conversion initiative—restructuring its  forces to make them more flexible and rapidly deployable. As a result of  this initiative, the Army is planning to use combat equipment that was part  of the prepositioned brigade sets to meet the increased equipment  requirements. For example, over 11,000 pieces of prepositioned combat  equipment used in Iraq—such as tanks, Bradley Fighting Vehicles, and  armored personnel carriers—are slated to be repaired and turned over to  active duty units. Furthermore, Army officials told us that decisions have  not been made as to whether the sustainment and operational project  stocks will be reconstituted because of the large investments required and  the uncertainty of the future plans for the Army’s prepositioning program.  DOD’s recent report to Congress estimates the costs to reset and  reconfigure the Army’s prepositioned stocks to be more than $4 billion.  According to the report, however, these costs are not currently captured in  DOD’s baseline submissions or in any of its supplemental funding  requests.
The Marine Corps’ prepositioning programs are expected to have a  reduced capability until 2008, at least. The department’s April 2005 report  to Congress estimates the cost to reconstitute the Marine Corps’  prepositioned equipment is approximately $490 million. Of this amount,  about half ($247 million) was requested in the department’s most recent  supplemental request. In the past year, the Marine Corps considered its  options to reconstitute the equipment stored aboard the prepositioning  ships given its continuing commitment to support operations in Iraq. The  Marine Corps recently decided to partially refill the five ships offloaded to  support operations in Iraq; however, due to the limited availability within  the Marine Corps of equipment needed, such as heavy cargo trucks and  High Mobility Multi-purpose Wheeled Vehicles, the Marine Corps forecasts  that these ships will have major end-item fill rates of less than 50 percent.  Additionally, Marine Corps officials stated that the reconstitution of the  stocks in Norway is scheduled to be completed by 2008, at which time the  fill rate of these stocks is projected to be approximately 88 percent.
Air Force officials stated that they do not know when they will be able to  reconstitute prepositioned stocks and return them to storage. As part of its  reconstitution effort, the Air Force is in the process of replacing or  converting all of its existing bare base sets into a smaller and more  modular configuration. However, it is uncertain when the new sets will  be available. For example, the Air Force had budgeted approximately $320  million in fiscal year 2005 for procurement of the new bare base sets.  However, according to an Air Force official, Congress reduced the Air  Force’s budget by $53 million because it was concerned about the large  increase in the Air Force’s procurement budget for that year. As a result,  the official stated that the Air Force will not be able to procure all of the  required sets. In addition, Air Force officials told us that they do not know  when reconstitution for other categories of prepositioned stocks will be  completed since much of this equipment is still in use.
section_title: Without a Plan and Joint Doctrine, the Military Services and Defense Logistics Agency’s Prepositioning Plans Are Uncoordinated
paragraphs: Each of the military services and the Defense Logistics Agency are  planning the future of their prepositioning programs without the benefit of  an overall plan or joint doctrine to coordinate their efforts. Thus, it is  unclear to us how the programs will fit together to meet the evolving  defense strategy. DOD officials representing the Joint Staff and the  services shared our assessment and concerns. And, according to these  officials, the Joint Staff has formed a working group that is focused on  establishing common definitions for prepositioning as a first step in  developing joint doctrine and setting a future plan for the department’s  prepositioning programs.
The future of the Army’s prepositioning program, the largest of DOD’s  programs, is still unclear, and the Army acknowledges that it faces  continuing funding challenges as it attempts to modernize, support  ongoing combat operations, and reconstitute its prepositioned equipment,  leaving the future direction of its prepositioning program uncertain. The  Army has a major effort ongoing to transform its units into more flexible,  rapidly deployable forces at the same time it is supporting ongoing combat  operations. The Army’s future prepositioning strategy was being revised  during our review, so we could not assess how this overall  transformation—commonly called “modularity” by the Army—will affect  the prepositioning program. In addition, the Army’s prepositioned stocks  will have to be reconstituted due to their heavy use in Operation Iraqi  Freedom. According to Army officials, however, the Army is nearing  completion on a new strategy for its prepositioning programs. They told us  that prepositioning will continue to be important in the future and that the  prepositioned sets would be converted to the “modular” configuration by  2012 or sooner.
While the Marine Corps and Navy have identified concepts for future  prepositioning programs, they have not developed firm schedules and cost  estimates for these programs. For example, the Marine Corps is planning  on changing the focus of its prepositioned stocks in Norway from their  Cold War configuration to a more global support capability. Additionally,  the Marine Corps is considering a fundamental change to the future of its  prepositioning program that would replace existing Maritime  Prepositioning Force ships with an undetermined number of new ships  with a wider range of capabilities. These ships are intended to be an  integral part of a future Navy sea base. The seabasing concept provides  maritime platforms capable of supporting at-sea arrival of forces, assembly  of those forces, rapid movement ashore, and combat sustainment without  reliance on shore facilities. While such seabasing is envisioned by DOD to  be a joint service capability, it is not clear how this will be accomplished.  Furthermore, the affordability of the program is in question—this new  concept could cost billions of dollars.
The Defense Logistics Agency began developing a global stock positioning  strategy in 2004 to support its overseas customers for the items it  manages. The strategy involves a combination of fixed-forward depots, a  floating distribution center, and a deployable distribution depot. Fixed- forward stocking depots have been established at the following locations:  Germersheim, Germany; Yokosuka, Japan; Pearl Harbor, Hawaii;  Sigonella, Italy; Kuwait; Guam; and South Korea. The floating distribution  center involves a mobile floating depot which will be capable of providing  immediate distribution within the first 30 days of a contingency and could  operate as part of the seabasing concept. The deployable distribution  depot will be able to provide a full range of distribution capabilities in a  theater of operations early in a contingency in developed or remote  operating areas. These last two capabilities are still being developed and  the Defense Logistics Agency does not yet have firm estimates for the  costs of these capabilities.
The Air Force is also planning changes for its prepositioning programs. It  is transforming its bare base sets into a smaller, more modular  configuration and is considering new prepositioning sites to support the  new defense strategy. However, Air Force officials told us that it cannot  make some decisions related to new storage sites for its prepositioned  stocks until DOD’s basing study is complete.
Without a plan or joint doctrine to guide their efforts, the services are  planning for the future of their programs without an overarching  framework that establishes priorities for prepositioning among competing  initiatives, develops performance goals to measure success, and identifies  resources to implement plans. Until the department determines how  prepositioning fits into future military plans, it cannot provide assurances  to Congress that the substantial investments required to recapitalize the  stocks will be affordable.
section_title: Conclusions
paragraphs: Prepositioning seems certain to be a key component of U.S. military  strategy for years to come, but the department must make it a priority for  it to overcome past management problems and ensure its future. In the  near term, operational risks may exist should other military contingencies  arise given the current inventory shortfalls and poor maintenance  condition of some prepositioned stocks. However, the department has not  developed concrete plans to overcome these challenges, even though  inventory shortfalls and maintenance issues exist in the prepositioned  stocks in potential trouble spots such as South Korea.
Despite the importance of prepositioning to the military, however, long- standing management problems persist and the programs seem to have  received little attention at the department level. Oversight mechanisms are  in place, but they have been ineffective or ignored. Leadership and  accountability begin at the top. Until DOD fully implements its own  directive on war reserve materiel, oversight of its prepositioning programs  will likely continue to be inadequate and the department will be unable to  assess risks associated with any shortfalls in the programs. Moreover,  DOD lacks reliable information in regard to its prepositioning programs  and will be unable to make reliable assessments of the readiness of these  programs. This could result in failure to obtain the right amount and types  of equipment for the designated prepositioning locations, which could  ultimately jeopardize the ability of U.S. forces to accomplish their war- fighting missions and leave them at risk.
Congress is also concerned about these issues and directed the Secretary  of Defense to submit a report on its prepositioning plans by October 1,  2005. Looking toward the future, without a coordinated plan and joint  doctrine that identifies the role of prepositioning in the transformed  military, the department cannot plan the future of its programs in a  comprehensive manner. As a result, DOD cannot provide assurance to  Congress that its prepositioning programs will be coordinated, effective,  and affordable.
Taking all these problems together—and considering them against the  backdrop of growing operational and fiscal strains on the military—we  believe the future of the prepositioning programs are at risk. Unless the  department addresses long-standing management issues and sets a clear  plan for the future, the department and Congress cannot make informed  decisions about the significant investments needed to reconstitute or  recapitalize the stocks.
section_title: Recommendations for Executive Action
paragraphs: To address the risks and management challenges facing the department’s  prepositioning programs and improve oversight, we recommend that the  Secretary of Defense take the following five actions:    Direct the Chairman, Joint Chiefs of Staff, to assess the near-term  operational risks associated with current inventory shortfalls and  equipment in poor condition should a conflict arise.
Direct the Under Secretary of Defense for Acquisition, Technology, and  Logistics to provide oversight over the department’s prepositioning  programs by fully implementing the department’s directive on war reserve  materiel and, if necessary, revise the directive to clarify the lines of  accountability for this oversight.
Direct the Secretary of the Army to improve the processes used to  determine requirements and direct the Secretary of the Army and Air  Force to improve the processes used to determine the reliability of  inventory data so that the readiness of their prepositioning programs can  be reliably assessed and proper oversight over the programs can be  accomplished.
Develop a coordinated departmentwide plan and joint doctrine for the  department’s prepositioning programs that identifies the role of  prepositioning in the transformed military and ensures these programs will  operate jointly, support the needs of the war fighter, and are affordable.
Report to Congress, possibly as part of the mandated October 2005 report,  how the department plans to manage the near-term operational risks  created by inventory shortfalls and management and oversight issues  described in this report.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD provided written comments on a draft of this report. These  comments are reprinted in appendix III. DOD partially or fully concurred  with our recommendations. However, in its response, DOD disagreed with  the implementation of two of our recommendations because it had already  taken actions to address them. In subsequent discussions with DOD,  officials indicated that this disagreement was not related to the substance  of our recommendations. In fact, the department has already initiated  several actions to address our recommendations including conducting an  assessment of risk, improving requirements and inventory visibility, and  conducting a departmental assessment on future prepositioning. Further,  DOD agreed that oversight policy as discussed in its directive does not  reflect appropriate oversight roles and responsibilities. To address this  issue, DOD plans to clarify policy and roles and responsibilities for  oversight. With respect to our recommendation to improve requirements  determination and the reliability of inventory data, the initial efforts taken  by the Army and Air Force represent progress, but the planned actions  should address all categories of the Army and Air Force’s prepositioned  stocks, as discussed in our report, and not just a portion of these  programs. For example, the planned actions should also include the  Army’s operational project stocks and the Air Force’s vehicle stocks,  among others. Overall, we acknowledge the actions already taken by the  department to address these issues, but DOD will need sustained  management focus to resolve these deeply rooted and long-standing  problems.
As arranged with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from the  date of this report. At that time, we will send copies of this report to the  Secretary of Defense, the Secretary of the Army, the Secretary of the Air  Force, the Secretary of the Navy, and the Commandant of the Marine  Corps. We will also make copies available to others upon request. In  addition, this report will be available at no charge on the GAO Web site at  http://www.gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.
If you or your staffs have any questions, please contact me at (202) 512- 8365. Key contributors to this report are listed in appendix IV.
section_title: Appendix I: Past Products Identifying DOD Inventory Management and Prepositioning Challenges
paragraphs: The Department of Defense’s (DOD) prepositioning programs have faced  long-standing challenges including poor asset visibility; equipment  excesses and shortfalls; and invalid, inaccurate, poorly defined, and  otherwise questionable requirements. GAO, military service auditors,  DOD’s Inspector General, and others have called attention to these  problems in products issued over the years. In 1990, we identified DOD’s  inventory management as high risk because inventory levels were too high  and the supply system was not responsive to the needs of the war fighters.  With the onset of Operation Iraqi Freedom, other supply chain issues  related to inventory management have been reported as impediments. In a  January 2005 update, we expanded this high-risk area to include DOD’s  management of its entire supply chain, which includes distribution,  inventory management, and asset visibility.
Table 3 provides summaries of challenges identified in select GAO reports  and testimonies issued between January 1995 and March 2005. Table 4  provides summaries of issues identified in select products released by  other organizations during the same time period.
section_title: Appendix II: Scope and Methodology
paragraphs: To assess the near-term operational risk given the continuing use of  prepositioned stocks, we obtained reports prepared by the military  services on the inventory levels of their prepositioned stocks compared to  program requirements. We also reviewed available maintenance reports or  other data used by the services to measure the maintenance condition of  the prepositioned stocks. We also observed the physical condition of  materiel stored by the Marine Corps at its prepositioning locations in  Norway and aboard a prepositioning ship at its maintenance facility  located at Blount Island, Florida; and observed the maintenance condition  of the Army’s prepositioned stocks at Camp Carroll, South Korea and  Sagami Army Depot, Japan. We interviewed program managers at each of  the military services to determine the impact of reported shortfalls and  poor maintenance condition in the prepositioned stocks and discussed the  time frames and costs needed to repair or replace prepositioned stocks  used in recent military operations.
To assess the sufficiency of the Department of Defense’s (DOD) and  service-level oversight of these prepositioning programs, we discussed the  processes used by DOD and the services to oversee their prepositioning  programs with officials from the Office of the Secretary of Defense, the  Joint Staff, and the military services. We reviewed relevant DOD directives  and readiness reports prepared by the services and the Joint Staff to  determine the extent to which the information contained in these reports  could be used by DOD or the services to provide oversight. We also  reviewed past reports prepared by GAO, the Army Audit Agency, the Air  Force Audit Agency, the Army Materiel Command Inspector General, and  the CNA Corporation that identified problems with the reliability of data  regarding the preparedness of the services’ prepositioned stocks and  problems with the requirements determination processes for some of  these stocks. We discussed issues regarding the sufficiency of data on the  preparedness of DOD’s prepositioned stocks with program managers from  each of the services.
To assess whether DOD has developed a coordinated plan for the future of  its prepositioning programs that would meet the goals of the recently  published defense strategy, we collected and analyzed information from  the military services and the Defense Logistics Agency on the future plans  for their prepositioning programs. We also reviewed the recently  published National Defense Strategy and discussed the future direction of  the department’s prepositioning programs with officials in the Office of the  Secretary of Defense, the Joint Staff, and the military services.
We conducted our review from July 2004 through May 2005 in accordance  with generally accepted government auditing standards. We reviewed  available data for inconsistencies and discussed the data with DOD  officials. Our assessments of data reliability revealed significant concerns  that are discussed in the report.
We interviewed officials and obtained documentation at the following  locations:    U.S. Army Headquarters, Washington, D.C.    U.S. Army Materiel Command, Ft. Belvoir, Virginia    U.S. Army Field Support Command, Rock Island, Illinois    U.S. Army Forces Command, Ft. McPherson, Georgia    U.S. Army Special Operations Command, Ft. Bragg, North Carolina    Eighth U.S. Army, Yongsan Garrison, South Korea    Combat Equipment Battalion-Northeast Asia, Camp Carroll, South Korea    Materiel Support Center-Korea, Camp Carroll, South Korea    Sagami Army Depot, Camp Zama, Japan    U.S. Marine Corps Headquarters, Arlington, Virginia    Marine Corps Combat Development Command, Quantico, Virginia    Blount Island Command, Jacksonville, Florida    Frigaard Storage Facility, Norway    Hammerkammen Storage Facility, Norway    Vaernes Aviation Storage Facility, Norway    Marine Corps Logistics Command, Albany, Georgia    Chief of Naval Operations, Washington, D.C.    CNA Corporation, Alexandria, Virginia    Naval Facilities Engineering Command, Washington, D.C.    Naval Special Warfare Command, San Diego, California    Naval Audit Service, Falls Church, Virginia    Naval Medical Logistics Command, Fort Detrick, Maryland    Military Sealift Command, Washington, D.C.
U.S. Air Force Headquarters, Washington, D.C.
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: Acknowledgments
paragraphs: In addition to the contact named above, John Pendleton, Assistant  Director, Harold Reich, Assistant Director, Aisha Cabrer, Katherine  Chenault, Lee Cooper, Jeff Kans, Renee McElveen, John Nelson, Emmy  Rhine, Enemencio Sanchez, Patricia Sari-Spear, Kimberly Seay, Robyn  Trotter, Matthew Ullengren, Eddie Uyekawa, Hector Wong, and Ignacio  Yanes also made key contributions to this report.