Prepositioned Stocks: Inconsistencies in DOD's Annual Report Underscore the Need for Overarching Strategic Guidance and Joint Oversight
Published: 2013-09-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD prepositions stocks such as combat vehicles and repair parts worth billions of dollars at strategic locations around the world. These assets are used to prepare forces quickly for conflicts when needed. Over the years, GAO has made recommendations for DOD to develop overarching strategic guidance and improve joint oversight of the military services' prepositioning programs. Section 2229a of Title10 requires DOD to report annually on the status of its prepositioned stocks and for DOD's report to include 12 specific elements--for example, the material condition of the equipment. The law also mandates that GAO review DOD's report and provide any additional information to Congress that would be informative on issues relating to the status of prepositioned stocks. This is GAO's sixth report, and it assessed the extent to which (1) DOD's fiscal year 2012 prepositioning report addressed the 12 statutory reporting elements and (2) DOD has made progress in addressing GAO's prior recommendations on department-wide strategic guidance and a coordinated joint-military service approach for managing prepositioning. To conduct this work, GAO analyzed DOD's prepositioning report, reviewed DOD's guidance, and interviewed officials.
section_title: What GAO Found
paragraphs: The Department of Defense (DOD) provided information on all 12 required reporting elements in its fiscal year 2012 prepositioning report; however, 3 of these elements were only partially addressed. For example, DOD provided a list of non-standard items slated for inclusion in its prepositioned stocks but did not include a specific plan for funding those items as required by the law. Federal internal control standards state that decision makers need complete and relevant information to manage risks and achieve efficiency and effectiveness goals. However, GAO found that DOD's report contained some inconsistencies in information across the services as well as several inaccuracies and omissions. For example, DOD's report included funding information for 6 or 7 fiscal years for most of the services but only 2 fiscal years for the Navy's stocks. Service information was also presented in different formats in the report, which makes it difficult to compare data. Because the Joint Staff did not provide specific guidance to the services to ensure consistency when requesting data, the services adopted separate approaches to reporting information to the Joint Staff for compilation in the report. In addition, although an agency should monitor the quality of information provided to Congress, GAO found several inaccuracies in the report, such as incorrect calculations and information that had been inadvertently omitted. While officials from the Joint Staff and each of the services stated that they have their own review processes, the errors found in the report indicate weaknesses in DOD's quality assurance procedures. Until DOD addresses these issues and provides complete, consistent, and accurate information on its prepositioned stocks, its report will be of limited use to Congress in making informed decisions about DOD's prepositioning programs.
DOD has not made progress in addressing GAO's prior recommendations to develop department-wide strategic guidance and implement a coordinated joint-service approach for managing its prepositioning programs, nor has it set a timeline for doing so. As far back as 2005, GAO has reported that each of the military services was planning the future of its prepositioning programs without the benefit of an overall plan or joint doctrine to coordinate their efforts, which made it difficult to determine how the services' different programs would fit together to meet the evolving defense strategy. Recently, DOD issued a strategy for materiel response to support the full range of military activities and an implementation plan for directing, coordinating, and prioritizing DOD-wide development plans, initiatives, and activities for the period 2013-2020 to achieve the strategy. However, neither provides guidance for DOD's prepositioning programs, and the plan specifically excludes prepositioning. Hence, the services' individual prepositioning programs are still not linked to overarching strategic guidance. DOD has also not improved joint oversight of its prepositioning programs because a working group that was expected to provide such oversight has not been functioning as intended, and other joint activities do not specifically address prepositioned stocks. An increased emphasis on joint oversight would help unify DOD's prepositioning efforts in support of defense priorities, reduce potential unnecessary duplication, and achieve cost savings and efficiencies. Congress is currently considering legislation that would direct DOD to develop an overarching strategy for its prepositioning programs and establish joint oversight.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD develop guidance to ensure that it reports consistent information across the services and strengthens quality assurance procedures for its report. GAO also suggests that Congress require DOD to develop strategic guidance, including joint oversight, for its prepositioning programs. DOD concurred with the recommendations.

section_title: Letter
paragraphs: The Department of Defense (DOD) prepositions stocks worth billions of  dollars—including items such as combat vehicles, rations, medical  supplies, and repair parts—at strategic locations around the world. Both  afloat and ashore, prepositioning enables DOD to field combat-ready  forces in days, rather than the weeks it would take if stocks had to be  moved from the United States to the locations of conflicts. Prepositioned  stocks have played an important role in supporting operations in Iraq and  Afghanistan and can also be used to support military activities related to  security cooperation, deterrence, multilateral training exercises,  humanitarian assistance, and disaster relief. Sustained operations have  taken a toll on the condition and readiness of military equipment, and  fiscal challenges require DOD to carefully balance its investment in  prepositioned stocks to achieve military objectives and other DOD  priorities. Moreover, DOD’s new defense strategy issued in January 2012  discusses the drawdown in Afghanistan and a future emphasis on the  Asia Pacific region, which are likely to have implications for  prepositioning.
Section 2229a of Title10 of the United States Code requires the Secretary  of Defense to report annually to the congressional defense committees on  the status of prepositioned stocks and requires DOD’s report to include  the following 12 elements:  1.  The level of fill for major end items of equipment and spare parts in  each prepositioned set as of the end of the fiscal year covered by the  report.  2.  The material condition of equipment in the prepositioned stocks as of  the end of such fiscal year, grouped by category or major end item.  3.  A list of major end items of equipment drawn from the prepositioned  stocks during such fiscal year and a description of how that equipment  was used and whether it was returned to the stocks after being used.  4.  A timeline for completely reconstituting any shortfall in the  prepositioned stocks.  5.  An estimate of the amount of funds required to completely reconstitute  any shortfall in the prepositioned stocks and a description of the  Secretary’s plan for carrying out such complete reconstitution.  6.  A list of any operations plan affected by any shortfall in the  prepositioned stocks and a description of any action taken to mitigate  any risk that such a shortfall may create.  7.  A list of any non-standard items slated for inclusion in the  prepositioned stocks and a plan for funding the inclusion and  sustainment of such items.  8.  A list of any equipment used in support of Operation Iraqi Freedom,  Operation New Dawn, or Operation Enduring Freedom slated for  retrograde and subsequent inclusion in the prepositioned stocks.  9.  An efficiency strategy for limited shelf-life medical stock replacement.  10. The status of efforts to develop a joint strategy, integrate service  requirements, and eliminate redundancies.  11. The operational planning assumptions used in the formulation of  prepositioned stock levels and composition.  12. A list of any strategic plans affected by changes to the levels,  composition, or locations of the prepositioned stocks and a description  of any action taken to mitigate any risk that such changes may create.
On March 7, 2013, DOD submitted its fiscal year 2012 report on the  status of its prepositioned stocks from October 2011 through September  2012. DOD’s report includes an unclassified section that addresses  reporting elements one through five, as well as seven through ten, and a  classified annex to address reporting elements six, eleven, and twelve.  Section 2229a of Title 10 of the United States Code requires us to review  DOD’s report and, as appropriate, to submit to the congressional defense  committees any additional information that will further inform the  committees on issues relating to the status of the materiel in the  prepositioned stocks. We have issued several reports since 2005  addressing DOD’s reporting and management of prepositioning, and this  report is GAO’s sixth report in response to our annual reporting  requirement. In our prior reports, we have identified a number of ongoing  and long-term challenges to DOD’s prepositioned stocks related to  strategic planning, joint service coordination, requirements determination,  inventory management, and other issues. In particular, we have  recommended that DOD develop a department-wide strategy on  prepositioned materiel and equipment and strengthen joint oversight of its  prepositioning programs to integrate and synchronize at a DOD-wide  level the services’ prepositioning programs to maximize efficiency in  managing prepositioning across the department and reduce potential  unnecessary duplication. DOD has generally agreed with these past  recommendations. The objectives of this report are to assess: (1) the  extent to which DOD has addressed the 12 statutory elements and (2) the  progress DOD has made in addressing our prior recommendations to  develop department-wide strategic guidance and a coordinated joint- military service approach for managing its prepositioning programs.
To evaluate the extent to which DOD’s annual report addressed the 12  reporting elements set out in 10 U.S.C. § 2229a, regarding prepositioned  stocks, we analyzed DOD’s report on the status of prepositioned materiel  and equipment for fiscal year 2012. We performed a detailed content  analysis in which we compared the prepositioned stocks information in  DOD’s fiscal year 2012 report with the 12 reporting requirements and  assessed the extent to which DOD had addressed each required  element. We assessed an element as addressed if DOD’s report explicitly  addressed all parts of the element. We assessed an element as partially  addressed if at least one or more—but not all—parts of the required  element were explicitly addressed. Finally, we assessed an element as  not addressed if it did not explicitly address any part of the required  element. We also included in our review analyses of DOD policies,  prepositioning guidance from the services, and the prior year’s (fiscal year  2011) annual report to Congress on prepositioned materiel and  equipment to understand the variations of information reported by the  services on the status of prepositioned stocks and the quality assurance  processes used during the development of the fiscal year 2012 report. To  obtain additional information for our review, we met with officials from the  Office of the Secretary of Defense, the Joint Chiefs of Staff, the military  service headquarters, and U.S. Pacific Command.
To determine the extent to which DOD has made progress in addressing  our prior recommendations to develop department-wide strategic  guidance and a coordinated joint-service approach for managing its  prepositioned stocks, we reviewed prior GAO reports, DOD and service  guidance, and DOD’s Comprehensive Materiel Response Strategy and  associated plan. This strategy and plan focus on integrating and  synchronizing DOD’s global materiel response to support the full range of  military activities. We discussed the extent to which department-wide  guidance specific to prepositioned stocks and joint oversight have been  developed with officials from the Office of the Secretary of Defense, the  Joint Chiefs of Staff, U.S. Pacific Command, and all four of the military  services. We also examined DOD guidance and actions on the Global  Prepositioned Materiel Capabilities Working Group to review DOD’s  progress in developing a coordinated approach for prepositioning. We  did not independently assess the data DOD provided to Congress, but we  assessed the reliability of the systems used to develop the data and  determined that the data were sufficiently reliable to meet the objectives  of this engagement. A more detailed discussion of our scope and  methodology is included in appendix I.
We conducted this performance audit from October 2012 through  September 2013 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The military services preposition stocks ashore and afloat to provide DOD  the ability to respond to multiple scenarios by providing assets to support  U.S. forces during the initial phases of an operation until follow-on  capabilities are available through strategic lift and the supply chain has  been established. Each military service maintains different configurations  and types of equipment and materiel to support its own prepositioning  program. The Army stores equipment sets in its Army Prepositioned  Stocks, which consist of sets of combat brigade equipment, supporting  supplies, and other stocks located both ashore and afloat. The Marine  Corps forward deploys and prepositions sets of materiel and equipment to  support a Marine Expeditionary Brigade. These capability sets are stored  aboard ships in two Maritime Prepositioning Squadrons and ashore in  Norway. The Navy maintains materiel in the Maritime Prepositioning  Squadrons in support of the Marine Corps. Its prepositioning program  provides construction support, equipment for off-loading and transferring  cargo from ships to shore, and expeditionary medical facilities.  Prepositioned assets in the Air Force’s war reserve materiel program are  located at 43 sites worldwide as well as in munitions storage afloat. The  war reserve materiel includes assets such as direct mission support  equipment for fighter and strategic aircraft as well as base operating  support equipment to provide force, infrastructure, and flight line support  during wartime and contingency operations.
DOD’s prepositioned stocks are intended to support national military  objectives, which are described in strategic and operational documents.  High-level military strategic guidance includes the National Defense  Strategy and the National Military Strategy, which the Office of the  Secretary of Defense and the Joint Staff use to develop guidance that  instructs the geographic combatant commanders on what operation  plans they must develop to meet operational objectives that address  certain scenarios. Joint operation planning is a coordinated process  used by commanders, including the geographic combatant commanders,  to determine the best method of accomplishing a mission. Combatant  commands develop plans with varying levels of detail, and the most  detailed plans contain, among other things, time-phased force and  deployment data, which include the specific units to be deployed in  support of the plan and the timeline for when those forces are needed.  The services then determine how best to meet the needs of the  combatant commanders, which may include the use of prepositioned  stocks or other types of equipment to support the commanders’ goals and  ensure timely support of deployed forces during the initial phases of an  operation until follow-on capabilities have been established. Combatant  commanders periodically review their plans, assess the risk to those  plans, and report the results to the Chairman of the Joint Chiefs of Staff.
By providing needed prepositioned materiel and equipment, the military  services can reduce the risks associated with a plan.
Prepositioned stocks are employed by the geographic combatant  commanders, who have the authority to, among other things, organize  commands and forces and employ forces as they consider necessary to  accomplish assigned missions. DOD apportions the services’  prepositioned materiel among the geographic combatant commands  according to the joint guidance, and the afloat prepositioned stocks may  be apportioned to more than one geographic combatant command.  Requirements for prepositioning are developed based on an approved  operation plan. The approval of the Secretary of Defense is generally  required to use the prepositioned capabilities.
The Global Prepositioned Materiel Capabilities Working Group, including  representatives from the Office of the Under Secretary of Defense for  Acquisition, Technology, and Logistics and the Joint Staff, has  responsibility for, among other things, addressing joint issues concerning  prepositioned stocks. The Chairman of the Joint Chiefs of Staff has  provided the annual report on prepositioned stocks on behalf of the  Secretary of Defense since the report’s inception.
section_title: DOD Provided Information on All 12 Required Elements, but Some Shortcomings Limit the Report’s Usefulness
paragraphs: DOD’s fiscal year 2012 report on prepositioned stocks provided  information on all 12 statutorily required elements; however, it only  partially addressed three of those elements. Also, the report contains  some inconsistencies among the services’ prepositioning data as well as  some inaccuracies and omissions, which limit its usefulness to  congressional decision makers.
subsections: section_title: DOD’s Report Included Information on Each Required Element but Only Partially Addressed Some Elements
paragraphs: DOD provided some information on the each of the 12 reporting elements  enumerated in section 2229a in its fiscal year 2012 annual report on  prepositioned stocks. Specifically, we assessed that DOD addressed nine  of the elements because the information provided in the report was  responsive to the reporting requirements. However, we assessed that  DOD partially addressed three of the elements—elements seven, ten,  and twelve— because it did not provide all of the required information.  Table 1 summarizes our assessment of the extent to which DOD’s report  included the required elements.
We assessed three of the elements as being partially addressed because  DOD’s report did not provide all of the required information:
Element seven requires DOD to provide a list of non-standard items  slated for inclusion in the prepositioned stocks as well as a plan for  funding the inclusion and sustainment of those items. DOD’s report  contained a table with Marine Corps non-standard equipment slated  for inclusion in that service’s prepositioned stocks that included the  quantities and purpose of each item, but it did not identify a specific  plan for funding the inclusion and sustainment of those items as  required. Further, in this section of the report, the Army, Air Force,  and Navy stated that they had not identified any non-standard  equipment for inclusion in prepositioned stocks as of the time of the  report. However, in responding to element one of DOD’s report, the  Army had provided a table with the level of fill of non-standard items,  in which it provided data on some non-standard equipment that it  would be placing in its Army Prepositioned Stocks operational  projects. DOD’s report also did not fully describe how those additional  Army assets would be funded and sustained, instead indicating that  the Army will assess enduring requirements for non-standard items  being retrograded from Southwest Asia and program required funding  for storage and maintenance in future budget submissions. Because  the information provided did not address both required parts of  element seven, we assessed that DOD’s report only partially  addressed the element.
Element ten requires DOD to report on the status of efforts to develop  a joint strategy, integrate service requirements, and eliminate  redundancies. While the report contains a paragraph describing  DOD’s strategic guidance process and framework in response to this  element, it does not identify specific efforts that are under way to  develop a joint strategy for its prepositioning programs and to  integrate service requirements and eliminate redundancies to produce  greater efficiency and effectiveness in those programs. Because the  information provided did not address all of the required parts of  element ten, we assessed that DOD’s report only partially addressed  the element.
Element twelve requires DOD to list any strategic plans affected by  changes to the levels, composition, or locations of the prepositioned  stocks and to describe any action taken to mitigate any risks resulting  from those changes. In addressing this element, DOD’s report  provided a list of strategic plans from the combatant commands that  have prepositioning requirements. However, the report did not  provide, along with the list of plans, a description of any action taken  to mitigate risks resulting from any changes to the prepositioned  stocks. The Joint Staff official overseeing the development and  submission of DOD’s prepositioning report said that the information  describing actions to mitigate risks could be found elsewhere in other  sections of the report. However, that information pertained to  mitigating shortfalls affecting operation plans, as required by element  six, and did not fully address actions taken to mitigate changes to the  levels, composition, or locations of prepositioned stocks affecting  strategic plans, as required by element twelve. While some of those  mitigation actions relate to the operation plans identified as part of  DOD’s response to element twelve, it is unclear the extent to which  those actions will mitigate the risks to some of the other strategic  plans identified in the list provided as part of element twelve. Because  DOD’s report did not fully address the second part of the required  element regarding changes to prepositioned stocks and actions taken  to mitigate any resulting risks, we assessed this element as being only  partially addressed.
section_title: Inconsistent Information Among the Military Services Limits Usefulness of DOD’s Report
paragraphs: Inconsistencies in some of the information provided by the military  services limit the usefulness of the data presented in DOD’s report.  Federal internal control standards state that decision makers need  complete and relevant information to manage risks and achieve efficiency  and effectiveness goals. Such information can be used to compare and  assess different sets of data so that agencies can analyze relationships  and take appropriate actions. However, we found inconsistencies in the  amount and types of data presented on each of the services in DOD’s  report.
In particular, DOD’s report inconsistently reported information on the  services’ future funding requirements, providing decision makers with an  incomplete picture of DOD’s future funding needs for prepositioning (see  table 2). First, the Marine Corps reported its procurement requirements as  “to be determined” rather than giving projected funding amounts, whereas  that information was provided for the other services in DOD’s report.  Second, the Marine Corps and the Air Force provided information that  could be used to identify funding shortfalls in their prepositioning  programs for each fiscal year across the five year defense plan whereas  the Army and Navy did not provide this information. Third, three of the  services reported working capital funds requirements or indicated that  they had no working capital funds requirements. The Navy, however, did  not report whether or not it had working capital funding requirements.  Lastly, each of the services reported its current funding requirements, as  of fiscal year 2012, and its projected funding requirements, but they did  not all use the same time frame for these estimates. The Navy, as shown  in table 2, reported its actual operation and maintenance and  procurement funding for fiscal year 2012 and its estimated funding  requirements for fiscal year 2013. In contrast, the other services provided  funding requirements information for fiscal years 2012 to 2018: a  difference of five fiscal years. As a result, it is not possible for users of  DOD’s report to compare procurement requirements, funding  requirements, actual funding, or anticipated shortfalls across the services  and assess trends over time.
Furthermore, DOD’s report presented the services’ funding requirements  in different formats (see figure 1). Three of the services provided  numerical tables to display their funding information, but the Navy used  text to report its funding requirements. The lack of a standard reporting  format makes it difficult for users of DOD’s report to accurately combine  and assess the data from the services to identify funding trends across  DOD’s prepositioning programs and perform other analyses.
Moreover, we found inconsistent reporting among the services  concerning the levels of fill and material condition of their prepositioned  stocks. DOD’s report included information on the overall status of each  service’s prepositioned stocks, but the amount of detail for specific items  or categories of items within the prepositioned stocks varied among the  services. For example, the Army reported the levels of fill and material  condition of individual major end items and categories of prepositioned  stocks, but it also provided information on the levels of fill for its  prepositioned equipment sets, which are located in selected sites across  the world. However, the Marine Corps and Navy did not provide similar  information on the levels of fill for on-hand prepositioned equipment sets  for their respective locations in the fiscal year 2012 report. Decision  makers could find this information useful in monitoring the fill levels of  prepositioned stocks in various parts of the world for oversight and  funding purposes, such as assessing the prepositioning needs in a given  combatant commander’s area of responsibility and having greater  assurance that required assets would be available when and where they  are needed to meet combatant command requirements.
According to service officials, the reason for the inconsistent reporting in  funding requirements and major end items was that without specific  guidance from the Joint Staff, each of the services had adopted its own  reporting approach, independent of each other. The Joint Staff did  provide the services with a tasking document instructing them to update  their fiscal year 2011 prepositioning data and take into account  recommendations from our prior report when submitting their data. This  tasking document to the services also included a copy of the 12 reporting  elements. However, the Joint Staff did not direct the services to  coordinate their information with each other or provide more consistent  reporting instructions. In the absence of detailed guidance to provide data  in specific formats, the services reported their funding requirements and  major end item information for the fiscal year 2012 report based on the  previous year’s submission and their own reporting preferences. Each of  the services did make some changes in its reporting based on changes  within its respective programs and added new information per GAO’s  prior recommendations, but the type of information and formatting were  consistent with how the services had provided the information in the  previous fiscal year, thus yielding inconsistencies in DOD’s final report.
section_title: Inaccuracies and Omissions in Data Reporting Affect Report’s Quality
paragraphs: According to GAO’s internal control management and evaluation tool,  which is based on federal internal control standards, to effectively  communicate information to the Congress, an agency should monitor the  quality of the information being captured, maintained, and communicated  as measured by accuracy, among other things. However, we found  some inaccuracies and omissions in DOD’s prepositioning report, which  affect the quality of the information provided to Congress by DOD. We  reviewed the information in DOD’s report on each service and found  examples of inaccurate information, such as incorrect calculations within  data tables and reporting that seemed to conflict with data presented  elsewhere in the report. For instance, the Air Force, in one table, reported  the level of fill of equipment, such as fuel pumps and storage bladders,  that it uses for fuel operations at austere forward locations; however, the  Air Force had incorrectly calculated the change in operationally available  levels of equipment from fiscal years 2011 to 2012 for many of the items  in the table. Furthermore, we found some discrepancies between fiscal  year 2011 data that were reported in both the fiscal year 2011 and the  2012 reports and instances where information provided in the tables did  not match the report’s text. Air Force officials provided us updated tables  addressing these inaccuracies as well as explanations for the  discrepancies we found, but this information was not available in DOD’s  report itself.
In addition, we found examples of information that had been inadvertently  omitted from DOD’s report; in some cases, this information could have  shed light on reporting that appeared to be inaccurate. For example, in  the Marine Corps’ table on the level of fill and material condition of its  major end items and repair parts, we found that the change in on-hand  totals from fiscal year 2011 to fiscal year 2012 seemed to be inaccurate  for nearly two-thirds of the listed items. For those items, the Marine Corps  provided on-hand totals for fiscal years 2011 and 2012, but reported no  change between the two fiscal years even though the data seemed to  indicate changes had occurred. According to Marine Corps officials, they  reported “no change” for the items because those items were newly  added to the fiscal year 2012 report. Since these items were not reported  in fiscal year 2011, there would be no changes to report in the fiscal year  2012 report, according to Marine Corps officials. However, the fiscal year  2012 report did not provide an explanation for the differences in the data  or why the Marine Corps considered there to be no change. Table 3  highlights some examples of inaccuracies and omissions that we found in  DOD’s fiscal year 2012 prepositioning report.
While officials from each of the services and the Joint Staff stated that  they employed their own internal controls to review their respective  reporting for quality assurance, the inaccuracies and omissions we found  in the services’ reporting indicate weaknesses in DOD’s overall quality  assurance procedures for its annual prepositioning report. In 2011, we  reported that it was important for DOD to provide context in its annual  prepositioning reports to enable decision makers to determine whether  there have been significant changes in DOD’s prepositioning programs  from the prior year and the reasons for those changes. Although DOD  provided additional information in fiscal year 2012 in response to our  2011 report, without more consistency and accuracy in reporting from the  services, DOD’s annual prepositioning report will continue to present  incomplete information to decision makers on the status of DOD’s  prepositioning programs. Also, greater consistency would improve the  usefulness of the report by facilitating analyses of data across the  services and across reports from different fiscal years, making it easier for  decision makers to assess DOD’s progress in meeting prepositioning  goals and track changes in DOD’s prepositioning programs over time.  Until DOD provides complete, consistent, and accurate information on its  prepositioned stocks, its report will be of limited use to Congress’s ability  to oversee and make informed decisions about DOD’s use of its  equipment and resources in this constrained fiscal environment.
section_title: DOD Has Not Developed Strategic Guidance or a Coordinated Joint- Service Approach for Managing Prepositioning Programs
paragraphs: Since we last reported on this issue in September 2012, DOD has not  made progress in addressing our prior recommendations to develop  department-wide strategic guidance and implement a coordinated joint- service approach for managing its prepositioning programs, nor has it set  a timeline for doing so. Without department-wide guidance and joint  oversight, DOD may not be able to fully recognize potential efficiencies  that could be gained by synchronizing the services’ prepositioning  programs with each other and the new defense strategy.
subsections: section_title: DOD Has Not Made Progress in Developing Overarching Strategic Guidance for Prepositioning Programs
paragraphs: In response to recommendations we have made in reports on DOD’s  annual prepositioning programs, DOD has stated that it planned to  develop department-wide strategic guidance for its prepositioning  programs; however, DOD has made no progress in developing such  guidance, nor has it set a timeline for doing so. Key principles of results- oriented management emphasize the importance of strategic planning as  the starting point and foundation for defining what an agency seeks to  accomplish, identifying the strategies it will use to achieve desired results,  and then determining how well it succeeds in reaching results-oriented  goals and achieving objectives. Strategic planning can help clarify  priorities and unify an agency in pursuit of shared goals.
As far back as 2005, we have reported that each of the military services  and the Defense Logistics Agency were planning the future of their  prepositioning programs without the benefit of an overall plan or joint  doctrine to coordinate their efforts, which made it difficult to determine  how the services’ different programs would fit together to meet the  evolving defense strategy. DOD officials from the Joint Staff and the  services agreed with our assessment and said that they shared our  concerns. In June 2008, DOD issued an instruction directing the Under  Secretary of Defense for Policy to develop and coordinate for approval by  the Secretary of Defense guidance that identifies an overall war reserve  materiel strategy, which includes prepositioned stocks, to achieve desired  capabilities and responsiveness in support of the National Defense  Strategy.
We reported in May 2011 that at that time DOD still had limited  department-wide guidance that would help ensure that its prepositioning  programs accurately reflect national military objectives such as those  included in the National Defense Strategy and the National Military  Strategy. We recommended that DOD develop appropriately detailed  authoritative strategic guidance for prepositioned stocks and that the  guidance include planning and resource priorities linking the department’s  current and future needs for prepositioned stocks to evolving national  defense objectives. Our report stated that such strategic guidance would  provide the services with information on the medium- and long-term  department-wide priorities they need to effectively plan and apply their  resources to meet future contingencies, thus linking DOD’s prepositioning  programs with its overall national defense strategies.
In response to our May 2011 report, DOD stated that it would develop  strategic direction concerning prepositioned stocks. In the fall of 2011,  DOD program officials stated that the department was in the process of  conducting a department-wide review, which would result in enhanced  joint oversight, increased program efficiencies, and expanded guidance to  link prepositioning programs with national military objectives. The result of  that review was DOD’s Comprehensive Materiel Response Strategy,  issued in May 2012, which describes DOD’s strategy for integrating and  synchronizing materiel response to support a full range of military  activities globally in an increasingly constrained resource environment.  Also, in January 2013, DOD issued a Comprehensive Materiel Response  Plan, which provides guidance for directing, coordinating, and prioritizing  DOD-wide development plans, initiatives, and activities for the period  2013-2020 in order to achieve the Comprehensive Materiel Response  Strategy end state.
However, neither the Comprehensive Materiel Response Strategy nor the  Comprehensive Materiel Response Plan provides guidance for DOD’s  prepositioning programs, and the plan specifically states that the services’  prepositioned programs are outside the scope of the plan. During our  review for our September 2012 report, Joint Staff officials developing the  strategy told us that prepositioning programs were excluded because the  planners received new direction for this effort in spring 2012, re-focusing  the strategy and plan on integrating and synchronizing materiel response  to support the full range of military activities, which is much broader than  prepositioned materiel and equipment. Accordingly, in September 2012,  we reported that DOD still had not made progress in implementing  overarching DOD-wide strategic guidance for its prepositioning programs.  Because DOD had planned to develop department-wide strategic  guidance for its prepositioning programs and these efforts had not  materialized because of other departmental priorities, our September  2012 report recommended that DOD set a timeline for implementing our  prior recommendation. In commenting on a draft of that report, DOD  concurred with the recommendation but said the department will continue  to focus on ensuring that combatant commanders’ equipment  requirements identified in operation and contingency plans are satisfied  by the services.
In conducting our current review, we found that DOD had still not made  progress in developing an overarching strategy for its prepositioning  programs. Hence, the services’ individual prepositioning programs are still  not linked to overarching strategic guidance, which could lead to  inconsistencies and potential overlap and duplication among the services’  prepositioning strategies and between the service strategies and the new  national defense strategy. Further, without a set timeline for the  development and implementation of department-wide strategic guidance  that aligns DOD’s prepositioning programs with national defense strategic  guidance and new departmental priorities, DOD could face difficulties in  effectively planning and implementing its prepositioning programs and  risks the potential for duplicative or unaligned efforts among the services.
section_title: DOD Has Not Improved Joint Oversight of its Prepositioning Programs
paragraphs: DOD has also not improved its joint oversight of its prepositioning  programs because a working group that was expected to provide joint  oversight has not been functioning as intended and other joint activities  do not specifically address prepositioned stocks. We have previously  reported that an increased emphasis on joint program management and  oversight of prepositioned stocks is needed to reduce potential  unnecessary duplication and achieve cost savings and efficiencies. We  also identified the need to strengthen joint oversight and synchronize  prepositioning programs at a department-wide level in our first annual  report to Congress on potential duplication, overlap, and fragmentation in  the federal government. Without joint-service oversight, DOD may not  be able to fully recognize potential efficiencies among prepositioned  stocks across the department.
DOD’s instruction on war reserve materiel directed establishment of the  Global Prepositioned Materiel Capabilities Working Group, which is to  comprise officials from the services, the Defense Logistics Agency, joint  organizations, and entities within the Office of the Secretary of Defense.  In particular, according to DOD officials involved with the group since its  inception, the intent of the working group is to provide an overall view of  DOD’s prepositioning programs and ensure that the services’ programs  are synchronized. Based on its charter, the working group’s joint  prepositioning activities are to include, among other things, providing  oversight of DOD’s prepositioning programs through reviewing risk  assessments, addressing joint issues concerning requirements and  positioning of prepositioned stocks, and making recommendations that  balance limited resources against operational risk for use during budget  and program reviews. However, the working group has not carried out all  of the responsibilities specified in the instruction or the objectives in its  own charter related to prepositioned stocks. Rather, officials said that the  main function of the working group has been to consolidate the services’  individual submissions on their prepositioning programs into DOD’s  annual report for Congress. According to DOD officials, the working group  has met only sporadically and has not yet addressed many of the duties  specified in its charter. Further, officials from the Office of the Under  Secretary of Defense for Acquisition, Technology, and Logistics and the  Joint Staff told us that they are considering revising the DOD instruction  on war reserve materiel policy to eliminate the working group. Without  strategic guidance from the Secretary of Defense that emphasizes the  importance of joint oversight of prepositioned stocks, the working group  may in fact be abolished, or it may continue to operate as it has been,  with little impact on enhancing jointness or efficiency across the services’  prepositioning programs.
DOD has developed some joint activities related to the supply chain, but  many of these efforts are either in very early stages or do not specifically  address prepositioned stocks and focus instead on more broadly  supporting the full range of military activities. For example, DOD’s  Comprehensive Materiel Response Plan calls for increasing sharing,  standardization, and synchronized planning across the services.  However, this plan does not contain details on where to position or how to  manage prepositioned stocks.
An example of where joint oversight could highlight areas for potential  efficiencies is in the services’ prepositioned medical stocks. Currently,  each service determines its requirements for prepositioned stocks in  support of a geographic combatant commander’s operation plan. For  instance, each service has determined its requirements for the number of  prepositioned field hospitals—the Army has 8; the Navy, in support of the  Marine Corps, has 10; and the Air Force has 3. Also, the size of these  hospitals varies across the services, with costs ranging from about $10  million for the smaller ones to about $33 million for the larger ones.  According to Joint Staff medical logistics officials, DOD has not conducted  a coordinated department-wide analysis of the services’ requirements and  the preferred options for meeting those requirements and supporting each  other. Further, they said coordinating this type of analysis is difficult  because of the individual ways the services identify requirements,  configure hospitals, and package medical equipment. The officials  pointed out, for example, that while the services are providing essentially  similar medical services in their field hospitals, they individually identify  requirements and develop capabilities and design processes to address  them. Prepositioned hospitals are the end results of such processes;  therefore, the officials said opportunities exist to assess theater  hospitalization as a joint-service capability and still recognize potentially  minimal unique aspects of requirements that each service has. According  to the Joint Staff medical logistics officials, DOD has recognized that  there are challenges associated with the coordination of medical logistics  among the services, including prepositioned stocks to support theater  hospitalization. To address these challenges, the officials said that they  are taking a number of actions. For example, DOD plans to establish a  new agency—the Defense Health Agency—in October 2013. This agency  will interface with the combatant commanders and focus on improved  coordination between the services and shared services, including medical  logistics. However, until these challenges are met, the military services’  fragmented approach to planning and prioritizing the need for  prepositioned resources, such as medical equipment, absent specific  strategic guidance, increases the potential for overlap and duplication at a  time when the services are seeking ways to reduce budgets and achieve  efficiencies in virtually all areas.
Congress has expressed concerns that DOD has not implemented an  overarching strategy and joint-service oversight framework for its  prepositioning programs. In a proposed bill for the National Defense  Authorization Act for Fiscal Year 2014, the Senate Armed Services  Committee recommended a provision that would require the Secretary of  Defense to develop an overarching strategic policy, along with an  implementation plan, to integrate and synchronize at a department-wide  level, the services’ prepositioning programs, among other things. In the  committee report accompanying the bill, the committee said that  developing such a strategy and implementation plan would help ensure  that DOD’s prepositioning programs, both ground and afloat, align with  national defense strategies and DOD priorities and emphasize joint  oversight to maximize effectiveness and efficiencies in prepositioned  materiel and equipment across DOD. The legislation is currently  pending. The House also passed a bill for the National Defense  Authorization Act for Fiscal Year 2014, which does not include a similar  provision, thus it is unclear whether the final National Defense  Authorization Act, when passed, will address these issues.
section_title: Conclusions
paragraphs: DOD’s annual report on prepositioning programs—with three partially- addressed elements, data inconsistencies among the services,  inaccuracies, and omissions—is illustrative of long-standing problems  stemming from the lack of overarching DOD strategic guidance and  oversight. The resulting product is, for the most part, a separate report by  each of the services on its prepositioning efforts, rather than a  coordinated joint-service picture of DOD’s prepositioning programs.  Strategic guidance and enhanced joint departmental oversight could  strengthen the coordination and quality assurance procedures that DOD  uses to compile its annual prepositioning reports for Congress.  Importantly, a more complete, consistent, and accurate report would aid  Congress in its ability to oversee and make informed decisions about  DOD’s prepositioning programs. Further, an increased emphasis on joint  program management and oversight of prepositioned materiel and  equipment would serve to unify DOD’s prepositioning efforts in support of  defense priorities, identify and reduce any unnecessary overlap or  duplication, and achieve cost savings and efficiencies. Because we have  made recommendations for strategic guidance and oversight for several  years without meaningful actions by DOD, and in response to continued  congressional concern and proposed legislation related to this issue, we  are elevating this issue as a matter for congressional consideration.
section_title: Recommendations for Executive Action
paragraphs: To improve DOD’s annual prepositioning report and more fully inform the  congressional defense committees on the status of prepositioned materiel  and equipment, we recommend that the Secretary of Defense direct the  Under Secretary of Defense for Acquisition, Technology, and Logistics, in  coordination with the Chairman of the Joint Chiefs of Staff, to  1.  develop guidance that clearly articulates the type and format of  information the services should provide for the report to ensure  consistency across DOD’s prepositioning programs, and  2.  identify and correct weaknesses in DOD’s quality assurance  procedures to minimize inaccuracies and omissions in the report.
section_title: Matter for Congressional Consideration
paragraphs: Congress may wish to require the Secretary of Defense to develop  overarching strategic guidance, along with an implementation plan, to  integrate and synchronize the services’ prepositioning programs  department-wide. The strategic guidance and implementation plan, which  should be developed within a specified time frame, should ensure that  DOD’s prepositioning programs align with national defense strategies and  new departmental priorities and emphasize joint oversight to maximize  efficiencies and reduce the potential for unnecessary overlap or  duplication in prepositioned materiel and equipment across the  department.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD for comment. In its written  comments, reproduced in appendix II, DOD concurred with our  recommendations. Regarding our first recommendation that DOD develop  guidance that clearly articulates the type and format of information the  services should provide for the report to ensure consistency across  DOD’s prepositioning programs, DOD said it will review previous annual  reports and related reference material and develop a reporting template  to solicit service information and standardize respondent data format. The  agency said this standardized format will be implemented in the next  report cycle. Regarding our second recommendation that DOD identify  and correct weaknesses in its quality assurance procedures to minimize  inaccuracies and omissions in the report, DOD said it will insert a review  step in the process to validate components’ inputs for data accuracy and  completeness. If implemented, these actions will help improve the  consistency and quality of information contained in DOD’s annual report,  which will better assist Congress in overseeing and making informed  decisions about DOD’s prepositioning programs.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Under Secretary of Defense  for Acquisition, Technology, and Logistics; the Chairman of the Joint  Chiefs of Staff; the Secretaries of the Army, the Navy, and the Air Force;  and the Commandant of the Marine Corps. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-5431 or russellc@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff members who made key contributions to  this report are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To evaluate the extent to which the Department of Defense’s (DOD)  annual report addressed the 12 reporting elements set out in 10 U.S.C. §  2229a, regarding prepositioned stocks, we analyzed DOD’s report on the  status of prepositioned materiel and equipment for fiscal year 2012. We  performed a content analysis in which we compared the prepositioned  stocks information in DOD’s fiscal year 2012 report with the 12 reporting  elements and assessed the extent to which DOD had addressed each  required element. One GAO analyst conducted this analysis, coding the  information and entering it into a spreadsheet, and a different GAO  analyst checked the information for accuracy. Any initial disagreements in  the coding were discussed and reconciled by the analysts. The analysts  then tallied the responses to determine the extent to which the reporting  elements were addressed. We assessed an element as addressed if  DOD’s report explicitly addressed all parts of the element. We assessed  an element as partially addressed if at least one—but not all—parts of the  required element were explicitly addressed. Finally, we assessed an  element as not addressed if it did not explicitly address any part of the  required element. We also analyzed each of the tables in the fiscal year  2012 report to identify any inconsistencies in the reporting of data among  the services, as well as any inaccuracies or omissions in the data.  Additionally, we compared the data in the fiscal year 2012 report with  data presented in the fiscal year 2011 report, where applicable, to identify  discrepancies between the two reports. We did not independently assess  the data in the fiscal year 2012 report, but we assessed the reliability of  the systems used to generate the data and concluded that the data were  sufficiently reliable to meet the objectives of this engagement. To assess  reliability, we developed and administered a survey to appropriate service  officials to collect information on data system management, data quality  assurance processes, potential sources of errors, and mitigations of those  errors. We also interviewed service officials to collect information on their  experiences working with these data systems and the data validation  process. Furthermore, we reviewed DOD policies, prepositioning  guidance from the services, and the prior year’s (fiscal year 2011) annual  report to Congress on prepositioned materiel and equipment to  understand the variations of information reported by the services on the  status of prepositioned stocks and the quality control processes used  during the development of the fiscal year 2012 report. To obtain additional  information for our review, we met with officials from the:
Office of the Under Secretary of Defense for Acquisition, Technology,
Office of the Deputy Assistant Secretary of Defense for Supply Chain  Integration;  Joint Chiefs of Staff, Operations, Logistics, and Force Structure,  Resources, and Assessment Directorates;
U.S. Army, Headquarters, Deputy Chiefs of Staff for Operations and  Plans, Logistics, and Programs;
U.S. Army Materiel Command;
U.S. Army Medical Materiel Agency;
U.S. Army, Office of the Surgeon General;
U.S. Air Force, Headquarters, Logistics, Installations and Mission
U.S. Air Force, Air Combat Command, Logistics Readiness and
U.S. Air Force Medical Operations Agency;
U.S. Navy, Chief of Naval Operations, Expeditionary Warfare Division;
U.S. Naval Medical Logistics Command;
U.S. Naval Facilities Engineering Command, Expeditionary Programs
U.S. Marine Corps, Headquarters, Installations and Logistics;
U.S. Marine Corps, Headquarters, Plans, Policies and Operations;
U.S. Pacific Command.
To determine the extent to which DOD has made progress in addressing  our prior recommendations to develop department-wide strategic  guidance and a coordinated joint-service approach for managing its  prepositioned stocks, we reviewed prior GAO reports, DOD and service  guidance, and DOD’s Comprehensive Materiel Response Strategy and  associated plan. This strategy and plan focus on integrating and  synchronizing DOD’s global materiel response to support the full range of  military activities. We discussed the extent to which department-wide  guidance specific to prepositioned stocks and joint oversight have been  developed with officials from the Office of the Secretary of Defense, the  Joint Chiefs of Staff, U.S. Pacific Command, and all four of the military  services. To review DOD’s progress in developing a coordinated joint- service approach for prepositioning, we examined DOD guidance,  including DOD Instruction 3110.06, War Reserve Materiel (WRM) Policy  (2008) and the Global Prepositioned Materiel Capabilities Working  Group’s charter, and identified activities the working group had  performed.
We conducted this performance audit from October 2012 through  September 2013 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Cary B. Russell, (202) 512-5431 or russellc@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, individuals who made key  contributions to this report include: Alissa H. Czyz and Larry Junek,  Assistant Directors; Karyn Angulo; Lionel C. Cooper; Susan Ditto; Gilbert  H. Kim; Greg Pugnetti; Michael D. Silver; Maria Storts; and Michael  Willems.
section_title: Related GAO Products
paragraphs: Prepositioned Materiel and Equipment: DOD Would Benefit from  Developing Strategic Guidance and Improving Joint Oversight.  GAO-12-916R. Washington, D.C.: September 20, 2012.
Follow-up on 2011 Report: Status of Actions Taken to Reduce  Duplication, Overlap, and Fragmentation, Save Tax Dollars, and Enhance  Revenue. GAO-12-453SP. Washington, D.C.: February 28, 2012.  2012 Annual Report: Opportunities to Reduce Duplication, Overlap and  Fragmentation, Achieve Savings, and Enhance Revenue. GAO-12- 342SP. Washington, D.C.: February 28, 2012.
Defense Logistics: Department of Defense Has Enhanced Prepositioned  Stock Management but Should Provide More Detailed Status Reports.  GAO-11-852R. Washington, D.C.; September 30, 2011.
Warfighter Support: Improved Joint Oversight and Reporting on DOD’s  Prepositioning Programs May Increase Efficiencies. GAO-11-647.  Washington, D.C.: May 16, 2011.
Opportunities to Reduce Potential Duplication in Government Programs,  Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington,  D.C.: March 1, 2011.
Defense Logistics: Department of Defense’s Annual Report on the Status  of Prepositioned Materiel and Equipment Can Be Further Enhanced to  Better Inform Congress. GAO-10-172R. Washington, D.C.: November 4,  2009.
Defense Logistics: Department of Defense’s Annual Report on the Status  of Prepositioned Materiel and Equipment Can Be Enhanced to Better  Inform Congress. GAO-09-147R. Washington, D.C.: December 15, 2008.
Defense Logistics: Improved Oversight and Increased Coordination  Needed to Ensure Viability of the Army’s Prepositioning Strategy.  GAO-07-144. Washington, D.C.: February 15, 2007.
Defense Logistics: Better Management and Oversight of Prepositioning  Programs Needed to Reduce Risk and Improve Future Programs.  GAO-05-427. Washington, D.C.: September 6, 2005.