Defense Logistics: Improved Oversight and Increased Coordination Needed to Ensure Viability of the Army's Prepositioning Strategy
Published: 2007-02-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Prepositioned military equipment and supplies on ships and overseas on land have become an integral part of the U.S. defense strategy. However, the Army's program has faced long-standing management challenges, including equipment excesses and shortfalls, invalid or poorly defined requirements, and maintenance problems. In Public Law 109-163, Congress required the Army to conduct an assessment of its prepositioning programs and required GAO to assess (1) whether the Army's report addressed the areas required by Congress, and (2) the major challenges the Army continues to face in its prepositioning program. GAO analyzed the Army's report and other information it obtained from the Joint Staff, the Army, and its subordinate commands to identify the issues affecting the Army's prepositioning program. GAO also visited prepositioned equipment sites in South Carolina, Europe, South Korea, and Kuwait.
section_title: What GAO Found
paragraphs: The Army's April 2006 report on the status of its prepositioning program addressed the areas required by Congress; for example, it included descriptions of operational capabilities, as well as inventory shortfalls expressed in terms of procurement costs. However, the Army significantly shifted its prepositioning strategy in the latter part of 2006, since that report was issued. According to the Army, this shift was based on insights gained from the 2006 Quadrennial Defense Review, but Army officials told us that budget reprogramming decisions and worsening Army-wide equipment shortfalls also influenced the expedited strategy revision. The Army's revised strategy proposes less reliance on heavy combat equipment afloat and the expansion of heavy equipment in Kuwait and Italy. As a result, the Army's April 2006 report to Congress is outdated, and neither Congress nor DOD should base funding decisions on it. The Army faces several major strategic and management challenges as it revises and implements its prepositioning program. From a strategic perspective, the Army cannot gauge how well its emerging strategy will align with DOD plans currently under development. The Army plans to begin implementing its revised strategy by the end of 2006. DOD has a departmentwide prepositioning study underway intended to set strategy and joint doctrine, but this will not be completed for several months and it anticipates that the Army will have to modify its prepositioning strategy when the DOD-wide strategy is issued. As a result, the Army is at risk of resourcing requirements that may be superseded by the DOD strategy. Moreover, because prepositioning is linked to airlift, sealift, and basing, the Army's decisions will have an as-yet undetermined effect on these areas. In addition to these strategic concerns, the Army faces three key management challenges. First, the Army has yet to determine sound secondary item and operational project stock requirements, and to systematically measure and report readiness. While the Army has been taking steps to address long-standing requirements-determination problems in certain parts of its program, the effort was not finished when GAO completed its work. Without accurate requirements and systematic readiness reporting, Army managers are not able to determine the extent to which the existing inventory reflects what the Army needs. Second, the Army lacks a comprehensive plan for maintenance and storage facilities for prepositioned stocks, resulting in uncertain future facility requirements. In the interim, prepositioned stocks are being stored outside, resulting in higher maintenance costs. Finally, inadequate maintenance oversight of the Army's prepositioning program has raised concerns about the true condition of the equipment at some locations. Until these strategic and management challenges are addressed, the Army will face uncertain risks should new conflicts occur.

section_title: Letter
paragraphs: With fewer troops permanently stationed overseas, the prepositioning of  With fewer troops permanently stationed overseas, the prepositioning of  stocks of equipment and supplies has become integral to the ability of the  stocks of equipment and supplies has become integral to the ability of the  Department of Defense (DOD) to project forces into conflict areas faster.  Department of Defense (DOD) to project forces into conflict areas faster.  DOD has acknowledged the need to reorient its capabilities to respond to  DOD has acknowledged the need to reorient its capabilities to respond to  a wider range of challenges. In the 2005 National Defense Strategy, the  a wider range of challenges. In the 2005 National Defense Strategy, the  department indicated that prepositioning will continue to be an important  department indicated that prepositioning will continue to be an important  aspect of DOD’s force posture in the future. Additionally, a DOD analysis  aspect of DOD’s force posture in the future. As a result of this mobility analysis as well as recommendations  stocks.strategy in the future.
DOD, The National Defense Strategy of the United States of America (March 2005).
This analysis was performed in the Mobility Capabilities Study, released in December  2005.
GAO, Defense Logistics: Better Management and Oversight of Prepositioning Programs  Needed to Reduce Risk and Improve Future Programs, GAO-05-427 (Washington, D.C.:  Sept. 6, 2005).
The Army, the Marine Corps, and the Air Force have drawn heavily from  their prepositioned stocks to support Operations Iraqi Freedom and  Enduring Freedom. As we testified in March 2006, these sustained military  operations are taking a toll on the condition and readiness of military  equipment, and the Army and Marine Corps face a number of ongoing and  long-term challenges that will affect the timing and cost of equipment  repair and replacement. A number of reports in recent years by GAO and  other audit agencies (see app. II) have highlighted numerous long-standing  problems facing DOD’s prepositioning programs, including a lack of  centralized operational direction; unreliable reporting of the readiness of  prepositioned equipment sets; inaccurate reporting of the maintenance  condition of equipment; equipment excesses at some prepositioned  locations; systemic problems with the requirements determination and  inventory management; and some Army prepositioned stocks having a  maintenance condition that was considerably below the goal of 90 percent  mission capability. In our September 2005 report, we recommended that  DOD develop a DOD-wide strategy and that the Army repair equipment in  poor maintenance condition.
The National Defense Authorization Act for Fiscal Year 2006 directed the  Army to conduct an assessment of its prepositioning programs, and the  Army did so. The Army’s report, submitted in April 2006, focused on  specific items required by the law including how such programs were  configured to support the evolving goals of the Army, including key  operational capabilities; whether there were any shortfalls, and if so, how  the Army planned to mitigate them; the maintenance condition of  prepositioned equipment and supplies, including the procedures used to  ensure that maintenance was performed; the adequacy of storage and  maintenance facilities; and the adequacy of oversight mechanisms and  internal management reports. The Army’s report was based on the Army  Prepositioned Stocks Strategy 2012, the Army’s underlying strategy at that  time, which laid out a strategic roadmap for the Army’s prepositioning  program through 2012. Strategy 2012 called for the prepositioning of five  heavy brigade combat team sets, multiple support units, and associated  sustainment stocks to provide the strategic responsiveness required to  attain the DOD joint swiftness objectives. These stocks are prepositioned  around the world, primarily at land sites in Europe, Northeast Asia, and  Southwest Asia, and aboard prepositioning ships afloat near Guam and  Diego Garcia. During the course of our review and subsequent to the  Army’s issuance of its April 2006 report to Congress, however, the Army  began revising its prepositioning program and drafting a revised strategy,  the Army Prepositioned Stocks Strategy 2013. These changes were still  under way as we completed our work.
The 2006 Authorization Act also required GAO to assess the Army’s report  and identify any issues facing the program for the future. We provided a  briefing to your staff on our preliminary assessment of the Army’s report  and issues facing the program. The present report expands and updates  that information by assessing (1) whether the Army’s report addressed the  areas required by Congress, and (2) major challenges the Army continues  to face in its prepositioning program.
Our work is based on our analysis of the Army’s report and other key  documents identifying equipment shortfalls and maintenance condition,  facility shortfalls, and contractor oversight; discussions with senior Army  officials and commanders; and site visits to Army prepositioning sites in  Charleston, South Carolina; Europe; South Korea; and Kuwait. We  determined that the data we used were sufficiently reliable for the purpose  of this report. We performed our work from February 2006 through  October 2006 in accordance with generally accepted government auditing  standards. A more detailed discussion of our scope and methodology is  contained in appendix I.
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. The value of  prepositioned stocks was demonstrated during 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. Having the  equipment prepositioned allowed troops to fly in, deploy rapidly, and train  with prepositioned equipment before beginning combat operations in Iraq.  As the ongoing war has depleted those items, the Army is in the process of  reconstituting its prepositioned equipment and supplies.
The Department of the Army provides strategic-level guidance for the  Army’s prepositioned stock program and allocates funding for  prepositioned stock requirements. The Army Materiel Command provides  the overall management of the Army’s prepositioned stocks program.  Within Army Materiel Command, the Army Sustainment Command  manages the operations and maintenance of the program, and issues the  stocks in theater in support of contingency operations or exercises. At  each prepositioned stock location, the Army Sustainment Command also  provides an Army Field Support brigade and battalion for day-to-day  maintenance and operational management of the program.
The Army’s prepositioning program involves three primary categories of  stocks stored at land sites and aboard prepositioning ships: combat  brigade sets, war reserve sustainment stocks, and operational projects as  described below.
Are designed to support 3,000 to 5,000 soldiers.
Include heavy weaponry such as tanks and Bradley fighting vehicles.  Include support equipment such as trucks and High Mobility Multi- purpose Wheeled Vehicles.  Include spare parts and other sustainment stocks to support the early  stages of a conflict.
War reserve sustainment stocks include  Items to sustain the battle unit until resupply can be ramped up to  wartime levels and arrive in theater.
War Reserve Secondary Items include rations, clothing and textiles,  construction and barrier materiel, medical supplies, repair parts, and  major assemblies (reparables and consumables).
Authorized material above unit authorizations designed to support  Army operations or contingencies.
Equipment and supplies for special operations forces, bare base sets,  petroleum and water distribution, mortuary operations, and prisoner- of-war operations, among others.
section_title: The Army’s April 2006 Report to Congress Addressed the Areas Required, But the Army’s Strategy is Evolving
paragraphs: The Army’s April 2006 report to Congress on the status of its prepositioned  program addressed the areas required by Congress, but the Army has  significantly shifted its prepositioning strategy since then. The Army’s  report included descriptions of operational capabilities as outlined in the  Army Prepositioned Stocks Strategy 2012; addressed the maintenance  condition of prepositioned equipment; and noted recent efforts to improve  management and maintenance oversight of the program, including forming  an independent inspection team. However, since the report’s publication,  the Army has begun a reexamination of its overall prepositioning strategy.  According to the Army, this shift was based on insights gained from the  2006 Quadrennial Defense Review, but Army officials told us that recent  budget reprogramming decisions and worsening Army-wide equipment  shortfalls also influenced the reexamination. The Army concluded that its  Prepositioned Stocks Strategy 2012 was no longer viable and began work  on a revised strategy that was approved by Army leaders in late August  2006 and is expected to be completed by the end of 2006.
subsections: section_title: Army Report Addresses Areas Required by Congress
paragraphs: The Army’s report to Congress addressed the required areas included in  the National Defense Authorization Act for Fiscal Year 2006. The Army  determined that over $4 billion would be needed to fill equipment,  secondary item, and facility shortfalls. The Army reported that additional  covered storage and maintenance space was needed at prepositioning  sites in Southeast and Northeast Asia as well as at the Charleston, South  Carolina, facilities used to maintain afloat stocks envisioned under the  2012 strategy. Further, it indicated that the facilities in Europe would be  sufficient to meet the prepositioned requirements once the construction  project in Italy was completed. The equipment sets at each location were  at a high percentage of mission capability, it reported, with the exception  of Kuwait. The equipment sets in Kuwait had been issued in support of  Operation Iraqi Freedom and Operation Enduring Freedom, and by 2006  had a low mission-capability rate. It did stipulate, however, that the  equipment set was undergoing repair, recapitalization, and replacement.
Regarding the program’s management and maintenance oversight, the  report acknowledged that weaknesses in the quality control program had  been revealed by both internal and external audits, including GAO’s  September 2005 report. The Army Sustainment Command created the  Logistics Support and Evaluation Team to address identified quality  control problems. According to the Army report, the team provides an  additional layer of review to ensure that the Army Prepositioned Stock  readiness levels reported are accurate and that sufficient quality assurance  measures are in place.
section_title: Army Prepositioning Stocks Strategy 2012 Is No Longer Viable
paragraphs: Since the release of its report to Congress in April 2006, several decisions  led the Army to conclude that its existing strategy was no longer viable. In  particular, an internal DOD reprogramming action required the Army to  offload a Heavy Brigade Combat Team equipment set stored on a  prepositioned ship and redistribute it to meet existing equipment shortfalls  and reduce costs. The Army had two equipment sets already aboard  prepositioned ships and planned to upload a third set in 2013. The  reprogramming action directed the Army to offload the third equipment  set. However, because the third equipment set had not yet been created,  the Army decided to offload one of the existing equipment sets instead to  meet the reprogramming guidance. This decision effectively reduced the  Army’s program in the near term from two to one heavy brigade combat  team afloat, with implications for the operational plans of the regional  combatant commanders.
Several factors combined to create a ripple effect that impacted the  viability of the Army Prepositioned Stocks 2012 Strategy. First, the  department told us the Army changed its strategy based on insights gained  from the 2006 Quadrennial Defense Review. Also, Army officials told us  that equipment shortfalls made it difficult for the Army to meet the  requirements in the strategy at least partly because Army prepositioned  stock equipment was continuing to be drawn to support ongoing  operations. Also, the Army transformation to modularity exacerbated  shortfalls in certain types of equipment and created excesses in others. In  addition, the Army eliminated most of the remaining facilities and  prepositioned stocks from Western Europe but was completing a new  maintenance and storage facility in Italy which needed a mission. As a  result, the Army’s 2006 report was outdated soon after its publication and  should not be used by Congress or DOD for funding decisions.
section_title: The Army Faces Major Strategic and Management Challenges As It Revises and Implements Its Prepositioning Program
paragraphs: The future success of the Army’s prepositioning program depends not only  on how well the Army aligns its efforts with those of the department as a  whole, but also on how well long-standing management issues are  addressed as the new strategic plan is implemented. The Army expects to  finalize its implementation plan for the revised Prepositioned Stocks  Strategy 2013 by December 31, 2006, but DOD will not complete its  departmentwide strategy before mid-April 2007. Further, problems persist  with the Army’s management of its secondary item and operational project  stocks programs, including lingering questions about the overall  requirements and the lack of reliable readiness measures for these  programs. In addition, the lack of a comprehensive prepositioning storage  and maintenance facilities plan contributes to increased maintenance  costs and uncertain future facility requirements. Finally, the Army has not  demonstrated adequate oversight to ensure the proper maintenance  condition of prepositioned stocks.
subsections: section_title: Alignment between Army’s Prepositioning Strategy and Anticipated DOD Strategy Remains Uncertain
paragraphs: The Army is developing a new prepositioning strategy to address recent  decisions that have affected the viability of its existing plan. According to  Army officials, the new strategy is intended to promote greater flexibility  in the use of prepositioned stocks while concurrently increasing the  Army’s access to unstable areas. While continuing to rely on stocks in  South Korea, the proposed strategy includes significant changes to the  program—among them, less reliance on heavy combat equipment afloat  and expanded reliance on heavy equipment in Kuwait, Qatar, and Italy.  The Army’s draft revisions to its prepositioning strategy were approved by  the Army Vice-Chief of Staff in late August 2006. The Army established an  Integrated Process Team to develop a comprehensive implementation plan  for the new strategy and to provide direction to working groups that  would assess the areas of strategy, capabilities, equipping, facilities, and  funding. The Army plans to have this task completed by late December  2006. However, since the Army’s Integrated Process Teams were still  performing their work, we could not evaluate progress at the time we  completed our review.
DOD has efforts underway that will address gaps identified in GAO’s  September 2005 report but have implications for the Army’s efforts. First,  to address gaps in departmentwide oversight, DOD convened a working  group that includes representatives from the Office of the Secretary of  Defense, Joint Staff, Defense Logistics Agency, the Army, Joint Forces  Command, and the other services to develop joint doctrine for the  prepositioning programs. This group was also working to update the  departmental-level directive that describes responsibilities and provides  broad guidance to the services during our review. While the efforts begun  by this group represent progress, DOD had not yet developed joint  doctrine for the program at the time we completed our work. Second,  DOD also initiated a study in the spring of 2006 to address the need for a  departmentwide prepositioning strategy to guide the department’s future  prepositioning efforts. This study was a follow-on to the 2005 Mobility  Capabilities Study that, while identifying the importance of prepositioning  in meeting mobility objectives, along with interrelated airlift, sealift, and  basing decisions, recognized the need for further analysis of  prepositioning. Thus, the DOD-wide prepositioning study will determine  how and what prepositioned equipment should be used and whether the  prepositioned assets are in the best locations to support the department’s  priorities and posture plans. According to DOD officials, this DOD-wide  prepositioning study was not scheduled to be finished until the spring of  2007 at the earliest. However, on October 17, 2006, Public Law 109-369 was  enacted directing the Secretary of Defense to complete its DOD-wide  prepositioning strategy by mid-April 2007.
DOD and Army officials told us during the course of our review that they  discuss such strategy issues during their joint working group meetings and  felt that they have coordinated their prepositioning plans. However, if the  two strategies are not synchronized, DOD could be limited in developing  an optimal DOD-wide strategy because the Army strategy already exists.  Alternatively, the Army could be at risk of filling requirements that will be  superseded when the DOD-wide strategy is ultimately issued. In fact, DOD  anticipates that when the DOD-wide strategy is issued the Army will have  to modify its service-specific prepositioning strategy to align with the new  requirements. Finally, since prepositioning is interconnected with airlift,  sealift, and overseas basing, the Army’s decisions will have an as-yet  undetermined effect on lift requirements and basing.
section_title: Despite Recent Efforts to Improve Requirements Setting for Secondary Item and Operational Project Programs, the Army Does Not Have Reliable Requirements or Readiness Information
paragraphs: Despite recent efforts to improve requirements setting, the Army has not  yet determined reliable secondary item and operational project  requirements. In its efforts to reassess secondary item requirements, the  Army ran its requirements-determination model, called the Army War  Reserve Automated Process, in 2005. It had not previously run the model  since 1999, even though Army guidance at that time called for  requirements to be updated every 2 years. Because the model yielded  questionable outputs, Army officials told us they were conducting a  management review to scrub the requirements and help to determine  investment priorities. Army officials said they expect requirements to be  significantly adjusted as a result of their reviews. For example, the Army  has already lowered the U.S. Army Europe meals-ready-to-eat stockage  levels to match the smaller force structure there. This action resulted in  over 1 million meals being made available to fill other high-priority  requirements. In addition, the Army War Reserve Automated Process that  is used for computing secondary item requirements will now be updated  annually instead of biennially.
Addressing these problems is critical for ensuring Army readiness in future  conflicts. Experiences in Iraq showed that prepositioned secondary item  stocks did not adequately support the troops in combat operations.  Secondary items encompass a wide range of inventory, including critical  readiness-enabling spare parts. In 2005, we reported that inaccurate  requirements and insufficient funding led to shortages in critical items  during Operation Iraqi Freedom. For example, demand for  nonrechargeable lithium batteries and track shoes for armored vehicles  were more than three times greater than the stated requirements for those  items. We concluded that these shortfalls were directly traceable to  problems in requirements computation.
In addition to critical shortfalls, lessons learned also show considerable  mismatches between what was available in prepositioned stocks and what  units actually needed. In retrospect, the Army did a poor job in forecasting  what it would need. As a result, it had to use scarce and expensive airlift to  get needed stocks to the troops in the field, essentially defeating the  purpose of prepositioning such items in the first place. Subsequent  analyses have detailed the extent of the mismatches between stock levels,  requirements, and actual usage. For example, most of the 16,000 different  spare parts that were actually positioned in Kuwait were ultimately  shipped back from the theater because they were not needed by the forces  there, according to a RAND study commissioned by the Army. Most spare  parts had to be airlifted to the theater, according to RAND. In addition,  RAND compared the Army’s requirements for prepositioned spare parts to  the actual demands during 2003 in Kuwait and found considerable  mismatches. Only about half of the spare parts the Army thought would be  required for prepositioned stocks were actually demanded in theater by  Army units during 2003.
According to Army officials, secondary items have historically not been  fully funded at least partially because of concerns over the accuracy of the  requirements. As shown in Operation Iraqi Freedom, inaccurate  requirements resulted in limited demand for some items and excessive  demand for others, greatly surpassing the on-hand inventory. The Army  had to employ high-cost air transportation to bring needed items to the  warfighter.
As with secondary item requirements, long-standing issues exist within the  operational project program—which includes important items like  chemical defense equipment, pipeline systems, mortuary units, and bare  base sets for housing soldiers in austere environments, among other items  not typically part of unit equipment. These sets are typically kept to meet  the specific needs of regional combatant commanders, and Army  regulations require that they be revalidated every 5 years to ensure that the  sets are still needed for an operational plan. Despite this requirement, the  most recent revalidation for many of the projects was conducted in 1998.  However, in response to our recommendation in 2005 that this long- standing problem be addressed, the Army initiated a revalidation of its  Operational Project Stocks in April 2006.
By October 2006, when we completed our work, the Army had queried  Army commands worldwide to revalidate the needs for the various sets  and had obtained validations for most of the sets. However, Army officials  told us that they have already taken actions to eliminate projects that are  no longer needed and are planning to conduct a management review of  this program to further refine the requirements. To date, the Army has  consolidated some projects and has cancelled other projects that were no  longer needed. For example, three projects to support aerial delivery  operations were cancelled because they were no longer required to  support current operational plans. In addition, United States Army, Europe  has cancelled two projects for bridging and aircraft matting because they  no longer meet current operational requirements.
One of the most significant consequences of having questionable  requirements underpinning the programs is that it makes it difficult to  assess their overall readiness, and the risk associated with shortfalls.  Typically, the Army measures readiness of prepositioned equipment  programs by assessing the inventory levels against requirements as well as  the maintenance condition of on-hand equipment. However, the Army  does not routinely measure or report readiness for the secondary item and  operational project programs. According to Army and DOD officials,  shortfalls in secondary items and some operational projects are identified  in combatant command priority lists and through joint quarterly readiness  reports to the Joint Staff, but not as part of the Army’s readiness reporting  system. This situation is largely unchanged since 1998, when we  recommended that the Army fix requirements problems and develop  readiness-reporting mechanisms for these programs.
Despite their lower priority relative to combat equipment programs,  secondary item and operational project programs can be critical during a  war. They contain items such as spare parts that are essential to keep the  combat equipment operational, as well as chemical defense equipment and  other items likely to be needed during the early stages of a conflict. The  budgetary stakes are high: according to the April 2006 report to Congress,  the Army estimated that it had a shortfall of about $1.7 billion in secondary  items alone. Without sound requirements, the Army cannot reliably assess  the readiness of its programs. Once sound requirements are set, the Army  will need reporting mechanisms to assess their readiness and the impact  of any shortfalls. In the absence of such mechanisms, the Army cannot  make sound risk-based decisions about what investments it should make  in the programs in the future.
section_title: Army Lacks a Comprehensive Prepositioning Storage and Maintenance Facilities Plan
paragraphs: Although the Army reported maintenance and storage facility shortages to  Congress, it lacks a comprehensive plan for maintenance and storage  facilities for prepositioned stocks. According to Army officials, facility  shortfalls are a concern in Kuwait and Korea, while facility excesses were  an issue in Italy. Army policy recommends storing prepositioned  equipment in controlled-humidity storage facilities, since outdoor storage  results in increased maintenance costs. However, requirements for these  facilities are currently uncertain. Until the Army develops a  comprehensive plan that identifies how prepositioned equipment will be  utilized and where it will be located for the long term, the existing  facilities problems can not be addressed.
subsections: section_title: Outdoor Storage of Equipment Results in Millions of Dollars of Increased Maintenance Costs
paragraphs: The Army’s lack of adequate storage facilities for prepositioned equipment  has led to equipment being stored outdoors, leaving it relatively  unprotected from moisture, sand, and other elements and thus  contributing to a number of maintenance problems, including corrosion.
Army Regulation 740-1 stipulates that prepositioned equipment should be  stored in controlled-humidity storage facilities. If controlled-humidity  storage is not available, then covered storage space is preferred. More  frequent inspections are required for equipment stored outside.
Inadequate storage facilities in both South Korea and Kuwait have resulted  in outdoor storage of prepositioned equipment. Figure 1 shows the storage  situation in Kuwait, with prepositioned equipment stored at outside  locations.
Outdoor storage accelerates equipment deterioration and increases costs  due to additional maintenance requirements. For example, if tanks are  stored outside, preventive maintenance inspections must be performed  every 30 days. If they are stored in controlled-humidity warehouses,  inspections are only performed every 6 months. According to Army  officials, maintenance inspections and repairs for equipment stored  outdoors cost about four times that of equipment being stored in  controlled-humidity warehouses. Army officials estimate that it costs an  additional $24 million per year per heavy brigade combat team to maintain  the equipment in outdoor storage.
section_title: Future Facility Requirements for the Army Prepositioning Program Remain Uncertain
paragraphs: Facility requirements for the Army’s prepositioning program depend on  equipment requirements, and as was discussed above, these have not yet  been established. Consequently, facility requirements are uncertain.  Prepositioned equipment can be used as rotational—that is, equipment  provided to units arriving in theater for deployment; training—that is,  equipment provided to units for training exercises but then returned to the  storage location; or simply as stored prepositioned—equipment that is  stored for undetermined future use. According to Army officials, there will  be increased maintenance and maintenance facilities requirements if  prepositioned equipment is to be used for training or to support a  rotational presence in the region. Concurrently, there may be a decreased  requirement for humidity-controlled storage space, depending on how the  rotation is scheduled. Rotational unit equipment will have more repair  requirements than stored units, due to damage and wear. If the  prepositioned equipment is maintained solely for future use, more storage  facilities and less maintenance capability will be needed. In Kuwait, the  Army has not determined whether the prepositioned equipment will be  used for units rotating in and out of theater, used as a combat brigade  team training set, or stored.
Storage facilities in Kuwait will likely be needed, but until Army officials  decide how the equipment in Kuwait will be used, they will not be able to  determine the type and amount of facilities needed. Storage facilities  intended for prepositioned equipment at Camp Arifjan are currently being  used as headquarters buildings for Army Central Command, and it is not  clear when these buildings will revert to their storage function. While the  Army is exploring numerous options for providing covered storage of the  equipment in Kuwait, ranging in cost from $20 million to $37 million, none  are currently funded.
Additional maintenance and storage facilities are needed in South Korea to  support the prepositioned equipment at Camp Carroll. The Army has  already broken ground on a new maintenance facility that is expected to  be operational in November 2007. The Army has plans to build an  additional 200,000 square feet of storage space at a cost of $18.6 million.  This project is currently unfunded, yet it has a target completion date of  2012. However, while the Army is addressing the prepositioning facility  shortfalls at Camp Carroll, it is considering relocation of the set to another  site near a port further south. Army officials believe it would provide for  more flexible use of the prepositioned assets. If the Army decides to move  the equipment set, the additional covered storage at Camp Carroll may be  unnecessary.
The Army’s new strategy also includes a plan to store heavy equipment at  a newly constructed Italian site, to make use of a facility that previously  had no mission. When initially approved, the construction project was  intended to support the storage of a prepositioned combat brigade team  equipment set, but this plan was eliminated in the 2012 strategy. However,  since the contract for this project had already been awarded and  construction was underway, the Army decided to complete the  construction. Army officials stated that it would be more costly to cancel  the project than to finish it. The cost for the initial phases of the  construction project is approximately $48 million. A $5 million  ammunition maintenance and storage facility is also planned as part of this  construction project.
Figure 2 shows the new facility, including seven controlled-humidity  warehouses, a maintenance facility, an administration building, and a  brake test facility and wash rack.
The new Army strategy includes a prepositioned combat brigade team  equipment set at Livorno with the intention of using the port to upload the  prepositioned equipment onto ships as needed. The Army has also been  discussing using the equipment in Livorno for rotational training exercises  in Eastern Europe in locations like Bulgaria and Romania. However,  specific plans for this had not been developed.
Afloat stocks are reduced in the Army’s new 2013 prepositioning strategy,  but the Army plans to continue to utilize the Charleston, South Carolina,  prepositioning facility to unload, repair, and reload prepositioned  equipment from afloat prepositioning ships. The facility was originally  used to maintain Polaris missiles and was converted by the Army to  provide maintenance support of the prepositioned afloat fleet. According  to Army officials, upgraded maintenance and storage facilities will be  required to support the facility’s prepositioning mission but the  implications of the new strategy on facilities have not yet been  determined.
Table 1 shows the current status of maintenance and storage facilities at  selected Army prepositioning locations.
section_title: Maintenance Oversight of Prepositioned Stocks Has Improved in South Korea, but Needs Improvement in Kuwait
paragraphs: Management oversight of the maintenance of equipment in Korea has  improved since we published our report in 2005. Previously, significant  issues and problems were found with the mission capability of stocks in  South Korea. We stated that despite reports of high mission capability, the  majority of the stocks in South Korea were not mission capable. During  our May 2006 visit to South Korea, we observed that the Army had hired  additional personnel to bring the equipment up to full mission capability  and ensure that the equipment was properly maintained. A new  organizational structure was established that created clear lines of  responsibility and standard operational procedures for each aspect of the  cyclic maintenance program. A training program for production control  was established for both U.S. and South Korean employees, and there was  a continued emphasis on the need for oversight.
While the problems we identified in 2005 in South Korea have been  corrected, recent inspections of contractor-maintained equipment in  Kuwait revealed a high percentage of equipment failure, indicating that  maintenance oversight is a continuing problem. Analyzing data available at  the site, we found that 28 percent of the prepositioned equipment in  Kuwait submitted for government acceptance had failed quality assurance  testing between June 2005 and June 2006. However, the maintenance  battalion had not routinely tracked this information or monitored this  important performance measure.
Additionally, much of the equipment recently certified by the contractor  during preventative maintenance inspections failed random governmental  checks. Beginning in May 2006, the quality assurance team began  performing random preventative maintenance checks on equipment items  inspected and certified by the contractor within the previous 10 to 14 days.  Nearly half of the 49 pieces of equipment sampled during May and June  2006 by the quality assurance inspectors had nonmission-capable faults  needing repair. We accompanied inspectors on three random inspections.  The nonmission-capable faults we observed included inoperable lights,  fluid leaks, lack of battery power, and an inoperable rear door on a  Bradley Fighting Vehicle. Army officials told us this failure rate was not  acceptable and that they had informed the contractor it needed to improve  performance. Yet Army officials recently reported successful issuance in  August 2006 of some of the prepositioned equipment for units heading to  Iraq. This inspection failure rate raises questions about the true mission  capability of the prepositioned equipment, and it demonstrates the need  for rigorous management oversight of the maintenance contractor in  Kuwait. Without improved oversight of maintenance, prepositioned  equipment and supplies could be less than mission capable when needed.
section_title: Conclusions
paragraphs: While prepositioning is considered critical to DOD’s ability to meet its  mobility needs, the department does not yet have a clear strategy laid out  that identifies the role that prepositioning will play in the 21st century. The  Army took steps to revise its prepositioning strategy in the latter part of  2006; however, its efforts are not fully synchronized with the evolving  DOD-wide strategy. The Army’s decisions today have profound future  implications for the entire department and potentially affect our ability to  respond to conflict. The primary risk of having the Army develop its  strategy in advance of a DOD-wide strategy is that the Army could develop  plans without an understanding of how the Army and other services’  programs will fit together or, alternatively, limit the options of the  department because it must incorporate the Army’s plans into the overall  strategy. The importance that prepositioned stocks are envisioned to have  in the future underscores the need for DOD-wide consensus on the  direction and priority for the programs, and the necessity of strong  leadership and direction from the top levels of DOD. The choices may well  be difficult. Unlike the period following the end of the Cold War, the Army  no longer has an excess of relatively modern combat and support  equipment. Depending on the strategy that is eventually chosen, billions of  investment dollars could be required to recapitalize prepositioning  programs and build an infrastructure to support them. Alternatively,  should the Army and DOD decide to focus less on prepositioned stocks,  this decision will likely have a ripple effect on airlift and sealift needs. A  DOD-wide strategy would become the foundation for an investment plan  that balances costs and risks and would guide the department as it  chooses where it will invest in an environment that is increasingly  becoming resource constrained.
Setting and aligning broad strategies, however, will not be enough to  ensure success in the Army’s program over the longer term. Once the  DOD-wide strategy is set and the Army’s efforts are aligned with it, the  Army must turn its attention to the fundamentals of program management.  Dozens of reports from GAO and other organizations point to pervasive  management problems in determining requirements and ensuring program  readiness, as well as in providing adequate storage and maintenance for  prepositioned equipment. To its credit, the Army recognizes this and has  taken critical first steps toward redefining its prepositioning program and  building a plan for its implementation. However, focused and sustained  attention will be required to overcome these long-standing issues.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Defense direct the Secretary of the  Army to take steps to synchronize the Army’s prepositioning strategy with  the DOD-wide strategy to ensure that future investments made for the  Army’s prepositioning program align with the anticipated DOD-wide  prepositioning strategy.
Once the strategic direction is aligned with the DOD strategy, we  recommend that the Secretary of the Army develop an implementation  plan that    completes ongoing reevaluation of the secondary item and operational  project stock requirements as well as establishes systematic readiness  measurement and reporting of secondary items and operational project  stock programs,  identifies the optimal mix of storage and maintenance facilities at each  location to support the emerging strategy, and    prescribes oversight requirements for the maintenance of prepositioned  equipment to ensure that equipment is ready for combat.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD generally concurred  with our recommendations but stated that it had already taken steps to  address the recommendations and that further actions are not needed. We  acknowledge that the Army and the department have taken some initial  steps; however, we continue to believe that our recommendations have  merit and that additional actions and sustained management attention will  be needed to ensure the viability of the Army’s prepositioning program as  part of the overall departmentwide effort to meet mobility needs. DOD  also commented that our report contained misleading information and  provided technical comments to improve the accuracy and clarity of the  report. We disagree that the facts in our report are misleading and have  addressed each of the department’s technical comments in appendix III.
DOD partially concurred with our first recommendation that the Secretary  of Defense take steps to synchronize the Army’s prepositioning strategy  with the emerging DOD-wide strategy, and stated that the Army had  developed a service-specific strategy that is being incorporated into  ongoing mobility studies and the emerging DOD-wide effort. The  department stated that, since the Army is participating in ongoing studies,  further direction is not required. Some of the technical comments DOD  provided also addressed the strategy-setting issue, but seemed to  contradict the overall response. For example, DOD stated that the timing  of the two strategies could cause “disconnects” and that the Army will  have to modify its strategy when the DOD-wide strategy is issued. Since  DOD’s comments lack internal consistency, it is not clear to us what the  department intends to do to address the recommendation. As our report  points out, successful management practices dictate that strategy setting  should begin at the top, and that strong leadership will be needed from the  department to ensure that the programs of the Army—as well as other  military services—are aligned with the overall departmentwide strategy,  not the reverse. Moreover, taking a service-centric approach to  prepositioning may preclude opportunities for innovation, or lead to  duplication across the department. Prepositioning should be viewed in a  joint context, as part of broader mobility objectives. The ultimate  departmentwide strategy should not just cobble together the plans of the  individual services into a departmentwide strategy. In our view, as it  develops the DOD-wide strategy, the department should take advantage of  the opportunity to reexamine its approach to prepositioning as part of  broader mobility considerations including its interrelationship with airlift  and sealift.
In the technical comments, the department also stated that the Army  should not be criticized for its timing and lack of synchronization with a  DOD strategy that had not yet been issued. The Army did expedite its  strategy revision during the course of our review, completing it from start  to finish in the latter half of 2006. The Army completed this revision while  a broader strategy effort—specifically, a follow-on to the Mobility  Capabilities Study focused on the future of prepositioning—was ongoing  but had an unclear completion date. In a September 2005 report, we  recommended that DOD develop a departmentwide strategy to set  direction for and underpin the prepositioning programs of the services but  this has still not been completed. Underscoring its interest in  prepositioning—and consistent with our previous recommendation—the  John Warner National Defense Authorization Act for Fiscal Year 2007  required the department to finalize a departmentwide prepositioning  strategy by April 2007. Had the department implemented our  recommendation in a more timely fashion, this synchronization concern  would be moot and DOD may not have been called upon to establish a  strategy for the department’s prepositioning programs.
The department concurred with our second recommendation that, once  the Army’s strategy is aligned with the DOD-wide strategy, the Secretary of  the Army should develop an implementation plan to address the  requirements, readiness reporting, facilities, and maintenance oversight  issues that we identified in our report. The department stated that the  Army had included an implementation plan in its revised prepositioning  strategy that addressed these issues and that the implementation plan had  been aligned with a joint staff instruction published in November 2006 that  provides logistics planning guidance for prepositioning and a department  directive dated December 2003 that provides war reserve materiel policy.  As a result, the department stated that no additional direction is required.  We disagree. The Army’s implementation plan was to have been completed  in December 2006, but was still unavailable as of the end of January 2007.  As a result, GAO could not determine whether the elements of our  recommendation have been addressed. However, we reviewed the recent  logistics planning guidance and while the instruction provides general  logistics planning guidance for prepositioned stocks, there are few  specifics about requirements setting and readiness reporting for secondary  items and operational project stocks, facilities, or maintenance oversight.  We also reviewed the identified department guidance. While it does  require the determination of war reserve materiel requirements, and  annual reports of the existing levels of these items, we do not believe this  is a systematic reporting of readiness. In fact, our 2005 report found that  the department was not enforcing the readiness-reporting provision, and  planned to rescind it. Neither Instruction addresses the optimum mix of  storage and maintenance facilities or prescribes oversight requirements  for the maintenance of prepositioned equipment to ensure that it is  combat ready. Moreover, since these issues have been long-standing,  recognized both in prior GAO reports and assessments made by the  Army’s own audit organizations, we continue to believe that additional  direction is needed.
We will send copies of this report to the Secretary of Defense and the  Secretary of the Army. 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 staff has any questions, please contact me at (202) 512-8365.  Key contributors to this report are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess whether the Army’s report comprehensively addressed the  required reporting areas in Public Law 109-163, we reviewed the Army’s  prepositioned stocks program. We obtained the Army’s report and  reviewed and compared it to the legislative mandate as well as other  documents including Department of Defense (DOD) regulations, Army  regulations that govern storage and maintenance of prepositioned stocks,  and the Army Prepositioned Stocks Strategy 2012. We also reviewed  Inspector General and Army Audit Agency reports on prepositioning  issues as well as any relevant GAO reports. We interviewed officials in the  Department of Defense Joint Staff, Department of the Army, Army  Materiel Command, and the Army Sustainment Command and its  subordinate units at each prepositioning location. We also collected and  analyzed internal Army reports on inventory and readiness to verify the  reported inventory levels and readiness rates of prepositioned stocks.
To assess the major challenges facing the Army as it revises and  implements its prepositioning program, we reviewed the Army  Prepositioned Stocks Strategy 2012 and DOD regulations and documents  pertaining to a joint prepositioning strategy, along with relevant past GAO,  Inspector General, and Army Audit Agency reports. We interviewed  officials from the Department of the Army, the Office of the Secretary of  Defense for Policy, the Department of Defense Joint Staff, the Army  Materiel Command, and the Army Sustainment Command and its  subordinate units at prepositioning locations in Europe, South Korea,  South Carolina, and Kuwait. We conducted site visits to Army  prepositioned stock facilities at each location to observe firsthand the  current status of their storage and maintenance facilities and also  reviewed existing maintenance and storage procedures and oversight  processes. We also examined the Army’s planned revisions to its existing  Army Prepositioned Stocks Strategy 2012 and the efforts on behalf of DOD  to develop an overarching prepositioning strategy. We examined the level  of coordination between the Army and DOD with regard to the new  prepositioning strategies currently under development. We could not fully  assess these strategies, as they are still in the process of being developed.  We also documented current inventory levels, funding for the program,  and equipment readiness rates by collecting and analyzing internal Army  reports on inventory, funding, and readiness. We reviewed past reports  prepared by GAO, the Army Audit Agency, the Army Materiel Command  Inspector General, and the Army Logistics Support and Evaluation Team  that identified problems with the prepositioning program.
We conducted our review from February 2006 through October 2006 in  accordance with generally accepted government auditing standards. We  reviewed available data for inconsistencies and also verified with the  Army information technology contractor in Kuwait that they review and  validate the input data we used in the report. We determined that the data  we used were sufficiently reliable for the purpose of this report.
We interviewed officials, and obtained documentation when applicable, at  the following locations:    U.S. Army Headquarters, Washington, D.C.    U.S. Army Material Command, Ft. Belvoir, Virginia.    U.S. Army Forces Command, Ft. McPherson, Georgia.    U.S. Army Central Command, Ft. McPherson, Georgia.    U.S. Army Sustainment Command, Rock Island, Illinois.    U.S. Army Europe, Campbell Barracks, Germany.    8th U.S. Army, Yongsan Garrison, South Korea.    U.S. Army Field Support Brigade, Seckenheim, Germany.    Material Support Center – Korea, Camp Carroll, South Korea.    U.S. Army Field Support Battalion – Livorno, Camp Livorno, Italy.    U.S. Army Field Support Battalion – Northeast Asia, Camp Carroll, Korea.    U.S. Army Field Support Battalion – Southwest Asia, Camp Arifjan,  Kuwait.
U.S. Army Field Support Battalion- Afloat – Charleston, South Carolina.
U.S. Forces Europe, Patch Barracks, Germany.    U.S. Forces Korea, Yongsan Garrison, South Korea.    Joint Chiefs of Staff, J-4, Washington, D.C.
section_title: Appendix II: Past Products Identifying Challenges Facing the Army and DOD Regarding Prepositioning Programs
paragraphs: The Army’s prepositioning program has faced a number of long-standing  challenges including inadequate oversight and management; equipment  and facility excesses and shortfalls; and invalid, inaccurate, poorly  defined, and otherwise questionable requirements. In addition to problems  with the prepositioning program, the Army has also had difficulty  associated with the successful implementation of strategic plans and  programs. GAO, the Army Audit Agency, Army’s and the Department of  Defense’s (DOD) Inspector Generals along with others have called  attention to these problems in products issued over the years.
Table 2 provides summaries of the challenges to the Army and DOD’s  prepositioning programs along with program implementation concerns  identified in past GAO reports and testimonies issued between January  1996 and September 2006. Table 3 provides summaries of similar issues  identified in select products released by other organizations during the  same time period.
section_title: Appendix III: Comments from the Department of Defense
subsections: section_title: GAO’s Responses to DOD’s Technical Comments:
paragraphs: 1.  DOD comments indicate that the reason the Army shifted its  prepositioning strategy in 2006 was not due to budget reprogramming  decisions; instead it was due to the 2006 Quadrennial Defense Review.  We interviewed Army officials during the summer of 2006 who told us  that the budget reprogramming decision and equipment shortfalls  throughout the Army were the main impetus of the strategy review. We  have added the Army’s assertion that the quadrennial review  influenced the decision to the text.  2.  DOD indicates that the DOD policy under development “will result in  the Army creating/modifying its strategy in accordance with the  guidance in the DOD policy” when issued. We have added the  department’s assertion to the text. We agree that having an Army  implementation plan in place before the DOD policy is issued will  result in the need to modify the Army’s strategy. However this is an  apparent inconsistency with the main text of the department’s  comments stipulating that the Army’s completed strategy will be  incorporated into the DOD-wide strategy. As a result, we continue to  believe that additional department-level direction is needed to ensure  that future investments made by the Army are aligned with DOD  policy.  3.  We believe that strategy is a better description as it provides linkage to  the recommendation in our 2005 report calling for a DOD-wide  prepositioning strategy.  4.  The department stated that the Army should not be criticized for  creating an implementation strategy before the DOD policy is issued.  Our intent was not to criticize but to demonstrate the potential risks  associated with individual service strategies being implemented before  the department’s strategy is issued. In a September 2005 report GAO  recommended that DOD develop a departmentwide strategy to set  direction for and underpin the prepositioning programs of the services  but this has still not been completed. The Army can ill afford to invest  scarce resources to meet requirements that will not be aligned with the  DOD policy when issued.  5.  The department disagreed with several aspects of our description of  the operational project and secondary item programs. We have  included additional information to the report that, in response to a past  GAO recommendation, the Army has conducted revalidations of most  operational project stocks. Further, the Army asserted that it tracks  the funding of the prepositioned secondary items and operational  project stocks as part of the Army’s Strategic Management System and  that this constitutes readiness reporting. We disagree. The  requirements underpinning these programs are questionable, and  funding information is inadequate for determining readiness.  6.  We have changed the text to reflect the department’s definition of war  reserve sustainment stocks.  7.  Since the Army strategy evolved during our review, we continue to  believe our caption better reflects the substance.  8.  See comment 1.  9.  We have changed the text to delete “reset”.  10. We have changed the text to insert “DOD”.  11. We have made changes to the text to reflect the role of Combatant  Commanders in operational planning.  12. The department’s suggested language indicated that the shift in  strategy was the result of the 2006 Quadrennial Review. We have  reflected this throughout the report. The department also suggested  deleting language in the draft report concerning the lack of mission in  Italy in the previous Army strategy but offered no reason why this  information should be deleted. When initially approved, the $55 million  construction project in Italy was intended to support the storage of a  prepositioned combat brigade team equipment set there, but this  requirement had been eliminated in the 2012 strategy leaving the  facility with no mission. The Army decided to complete the  construction as it was more costly to cancel than complete, and the  Army’s 2013 strategy indicates placing a combat brigade team  equipment set at that location even though existing operational and  contingency plans for the area do not require this type of equipment.  We have retained this information in the report because we believe this  information illustrates the need for better facilities planning by the  Army.  13. We have made changes to the text to include the Joint Forces  Command in DOD’s working group.  14. We added information to reflect the facilities in Qatar.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, John Pendleton, Assistant  Director, Jeff Kans, Travis Thomson, Jennifer Jebo, Erika Prochaska, and  Cheryl Weissman also made key contributions to this report.