Warfighter Support: Army Has Taken Steps to Improve Reset Process, but More Complete Reporting of Equipment and Future Costs Is Needed
Published: 2012-05-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: From 2007 to 2012, the Army received about $42 billion to fund its expenses for the reset of equipmentincluding more than $21 billion for depot maintenancein support of continuing overseas contingency operations in Southwest Asia. Reset is intended to mitigate the effects of combat stress on equipment by repairing, rebuilding, upgrading, or procuring replacement equipment. Reset equipment is used to supply non-deployed units and units preparing for deployment while meeting ongoing operational requirements. In 2007, GAO reported that the Armys reset strategy did not target equipment shortages for units deploying to theater. For this report, GAO (1) examined steps the Army has taken to improve its equipment reset strategy since 2007, and (2) determined the extent to which the Armys reset reports to Congress provide visibility over reset costs and execution. To conduct this review, GAO reviewed and analyzed DOD and Army documentation on equipment reset strategies and monthly Army reports to Congress, and interviewed DOD and Army officials.
section_title: What GAO Found
paragraphs: Since GAOs 2007 review, the Army has taken steps to improve its use of reset in targeting equipment shortages. In 2007, GAO noted that the Armys reset implementation strategy did not specifically target shortages of equipment on hand among units preparing for deployment to Iraq and Afghanistan in order to mitigate operational risk. GAO recommended that the Army act to ensure that its reset priorities address equipment shortages in the near term to ensure that the needs of deploying units could be met. The Department of Defense (DOD) did not concur, and stated that there was no need to reassess its approaches to equipment reset. However, in 2008, the Army issued its Depot Maintenance Enterprise Strategic Plan, noted that filling materiel shortages within warfighting units is a key challenge facing the depot maintenance enterprise, and called for changes in programs and policies to address materiel shortages within warfighting units. Further, recognizing that retrograde operationsthe return of equipment from theater to the United Statesare essential to facilitating depot level reset and redistribution of equipment, the Army in 2010 developed the retrograde, reset, and redistribution (R3) initiative to synchronize retrograde, national depot-level reset efforts, and redistribution efforts. In March 2011, the Army issued an R3 equipment priority list, and revised and reissued an updated list at the end of fiscal year 2011 with full endorsement from all Army commands. The R3 initiative has only begun to be fully implemented this year, and thus it is too early to tell whether it will provide a consistent and transparent process for addressing the Armys current or future equipping needs.
GAO found that the Armys monthly reports to Congress do not include expected future reset costs or distinguish between planned and unplanned reset of equipment. GAO has reported that agencies and decision makers need visibility into the accuracy of program execution in order to ensure basic accountability and to anticipate future costs. However, the Army does not include its future reset liability in its reports to Congress, which DOD most recently estimated in 2010 to be $24 billion. Also, the Army reports to Congress include the number of items that it has repaired in a given month using broad categories, such as Tactical Wheeled Vehicles, which may obscure progress on equipment planned for reset. For example, GAOs analysis of Army data showed that 4,144 tactical wheeled vehicles were planned for reset in fiscal year 2010, while 3,563 vehicles were executed. According to the Armys current reporting method, this would result in a reported completion rate of 86 percent, but GAOs analysis showed that only approximately 40 percent of the equipment that was reset had been planned and programmed. This reporting method may also restrict visibility over the Armys multiyear reset liability. For example, both the M1200 Knight and the M1151 HMMWV are categorized as Tactical Wheeled Vehicles, but anticipated reset costs for the M1200 are significantly higher. In 2010 more M1200s were repaired than planned, thus accounting for a larger share of the budgeted reset funds. With fewer funds remaining, some equipment planned and budgeted for repair was not reset, pushing that workload to future fiscal years. These differences are not captured in the Armys monthly reports, and thus Congress may not have a complete picture of the Armys short- and long-term progress in addressing reset.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Army revise its monthly congressional reset reports to include its future reset liability and status information on equipment reset according to the initial reset plan by vehicle type. DOD did not concur. DOD stated that the Army would report its reset liability annually instead of monthly. Because DOD did not agree to report its reset status by vehicle type, GAO included a matter for congressional consideration to direct the Army to report this information.

section_title: Letter
paragraphs: The Army received about $42 billion from 2007 to 2012 to fund its  expenses for the reset of equipment—with more than $21 billion of that  total going to depot maintenance reset of about 676,000 pieces—in  support of overseas contingency operations in Southwest Asia. Reset  occurs at the Army depots and consists of a set of actions taken to  restore equipment to a desired level of combat capability commensurate  with a unit’s future mission. Reset mitigates the effects of combat stress  on equipment and restores destroyed, damaged, stressed, or worn out  equipment by repairing, rebuilding, or upgrading it, or procuring  replacement equipment. Reset equipment is used to supply non-deployed  units and units preparing for deployment while meeting ongoing  operational requirements. The Army transferred hundreds of thousands of  pieces of equipment to theater in support of Operation Iraqi Freedom  (OIF) and Operation Enduring Freedom (OEF), and has subsequently  brought much of that equipment back to the United States for reset and  redistribution to deploying and non-deploying units.
In the last 10 years, the pace of combat operations and harsh  environmental conditions has exacerbated the need to reset equipment  through repair, recapitalization, and replacement efforts. Rolling stock  equipment in particular—for example, tactical wheeled vehicles such as  High Mobility Multipurpose Wheeled Vehicles (HMMWV), Heavy  Expanded-Mobility Tactical Trucks (HEMTT), and other infantry fighting  vehicles—has experienced much higher rates of damage from combat  operations than in routine peacetime missions. Further, equipping the  Army has been a concern of Congress that has taken on added  importance as weapon systems and equipment have become more  expensive to procure and maintain. The Army reports that it continues to  meet mission requirements in theater and reports high readiness rates for  deployed units, but ongoing involvement in overseas contingency  operations has strained its resources and contributed to shortfalls in  inventories—some of which are long-standing—as well as equipment  shortages among specific units not deployed to Iraq and Afghanistan.
In recent years, Army leadership expressed concerns about possible  reductions in reset funding as a result of the mounting fiscal constraints  facing the federal budget and defense programs that support the Army’s  modernization efforts. In 2011, the Secretary of the Army and Chief of  Staff of the Army testified that the present conflict in Afghanistan and the  related increase of Army equipment in theater will require sustained  funding for 2 to 3 years beyond the end of conflict. reported on a series of equipment reset issues, including the lack of  equipment program strategies, poor condition of pre-positioned  equipment, and challenges related to replacing Army National Guard  equipment left in the OIF theater to support ongoing operations.
Testimony: Statement by the Honorable John M. McHugh, Secretary of the Army and  General George W. Casey, Jr., Chief of Staff, United States Army before the Committee  on Armed Services, United States Senate, First Session, 112th Congress On the Posture  of the United States Army, March, 31, 2011.
January 2007, we testified on a number of ongoing and long-term  challenges affecting the Army’s equipment reset strategies. In  September 2007, we reported that the Army’s reset strategy did not target  equipment shortages for deploying units. This report is a follow-up on our  2007 review of Army equipment reset strategies. We performed this  review under the statutory authority of the Comptroller General to conduct  evaluations on his own initiative. In this report, our objectives were (1) to  examine steps the Army has taken to improve its equipment reset  strategy since 2007, and (2) determine the extent to which the Army’s  reset reports to Congress provide visibility over reset costs and execution.
In conducting our work, we reviewed and analyzed Army guidance and  other documentation on equipment reset strategies to determine the  steps the Army has taken to address target shortages, analyzed Army  data detailing reset that was planned and executed, and budget execution  reports submitted to Congress on reset to determine the consistency  between annual reset requirements and budget requests. We also  analyzed documents explaining the methodology the Army uses to  develop reset requirements. We reviewed and analyzed the Army  equipment retrograde priority lists identifying equipment returning for  reset and reviewed guidance on the retrograde of equipment to determine  the process used to develop and plan for sustainment-level repairs. In  addition, we interviewed officials in Headquarters Department of the  Army; Office of the Deputy Chief of Staff, G-3/5/7, Strategy, Plans, and  Policy; Office of the Deputy Chief of Staff, G-4, Logistics; Office of the  Deputy Chief of Staff, G-8, (Programs) Directorate of Force Development;  Office of the Under Secretary for Army Acquisition, Technology, and  Logistics; Army Budget Office; U.S. Army Materiel Command; U.S. Army  Sustainment Command; U.S. Army Forces Command; U.S. Army Central  Command, and U.S. Army TACOM Life Cycle Management Command to  discuss the Army’s guidance, policies, and procedures on reset equipping  strategies, reset budget trends, and information on the equipment repair  standards used in Southwest Asia and the continental United States. We  interviewed officials in the Office of the Secretary of Defense for Logistics  and Materiel Readiness to obtain information about DOD’s guidance on  reset. In addition, we reviewed Army equipment priority lists identifying  equipment for reset, and collected documents and data on historical  budget execution for reset to determine the consistency between annual  reset requirements and budget requests. Further details about our scope  and methodology can be found in appendix I.
We conducted this performance audit between January 2010 and May  2012 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 provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Since 2006, the Army has relied on the practice known as reset to restore  equipment readiness through a variation of repair, recapitalization, and  replacement of equipment activities. The Army defines reset as: “Actions  taken to restore equipment to a desired level of combat capability  commensurate with a unit’s future mission. It encompasses maintenance  and supply activities that restore and enhance combat capability to unit  and pre-positioned equipment that was destroyed, damaged, stressed, or  worn out beyond economic repair due to combat operations by repairing,  rebuilding, or procuring replacement equipment.”
Figure 1 provides the appropriations typically used to fund various kinds  of reset and definitions of the four categories that make up the Army’s  reset activities.
In 2007, the Army established the Reset Task Force to monitor and track  reset requirements and expenditures to ensure that reset dollars are  properly managed and reported, and to monitor the status of reset to  include repair, replacement, and recapitalization. This task force is  chaired by the Office of the Deputy Chief of Staff, G-8 (Programs) Force  Development Directorate, which has overall responsibility for the  preparation of monthly congressional reset reports, and for reporting on  the status of the Army reset program to Congress and the Department of  the Army.
In December 2009, DOD issued Resource Management Decision 700 to  (among other things) manage the funding of the military services’  readiness accounts and to move some overseas contingency operations  funding into the base defense budget to support the transition of depot  maintenance requirements from overseas contingency operations to the  base defense budget. To facilitate the implementation of this guidance  within the department, Resource Management Decision 700 outlines  several actions for organizations to take, including providing annual reset  updates to the Office of the Secretary of Defense, Cost Analysis and  Program Evaluation that incorporate an assessment of the multiyear reset  liability based on plans for equipment retrograde.
subsections: section_title: Retrograde
paragraphs: Retrograde is a process that includes the movement of equipment and  materiel from one theater of operations to a repair facility for reset, or to  another theater of operations to replenish unit stocks or satisfy stock  requirements. Equipment is redistributed in accordance with theater  priorities to meet mission requirements within areas of responsibility and  the DOD requirements worldwide. For example, in response to the  February 27, 2009, drawdown order for Iraq and surge of forces in  Afghanistan in August 2010, the Army began retrograding some  equipment out of Iraq to the U.S. for reset and transferring other  equipment to support units deploying to Afghanistan.
The initial phase of the retrograde process begins when units coordinate,  through their normal chain-of-command in theater of operations, to obtain  disposition instructions for all theater-provided equipment that is no longer  needed by the current unit or follow-on units. For example, in Iraq, units  coordinated with Multi-National Forces in Iraq, Coalition Forces Land  Component Command, and U.S. Army Central Command. The U.S. Army  Central Command managers then conducted a vetting process to  determine if the equipment can fill other theater requirements such as  prepositioned stocks or unit requirements in Afghanistan. If the equipment  did not meet these requirements, U.S. Army Central Command sent the  equipment to Kuwait for processing as theater-excess equipment  expected to return to the U.S. for reset. Also, some equipment is included  on the Army’s Automatic Reset Induction (ARI) list, which is comprised of  unit equipment that automatically returns to the U.S. for depot-level reset.  U.S. Army Forces Command and Army Materiel Command place  equipment on the ARI list because of expected extensive wear and tear  experienced in theater that requires refurbishment or rebuilding, and not  to address equipping requirements. Army officials said that the Reset  Task Force inspects non-ARI equipment to determine the level of reset it  will require. Once the inspection is complete, the equipment is shipped  back to the U.S. with disposition instructions for reset or for automatic  reset induction. Figure 2 illustrates the retrograde process for equipment  leaving Southwest Asia and returning to the United States for reset  repairs.
In 2010, the Army transferred over 43,000 thousand pieces of  equipment—such as tactical wheeled vehicles, communications, and  other equipment—from Kuwait to Afghanistan to support OEF. From 2010  through 2011, the Army retrograded over 29,000 thousand pieces of  rolling stock,vehicles, from Southwest Asia to the U.S. for reset.
section_title: The Army Has Taken Steps to Adjust Its Reset Strategy Since GAO’s 2007 Report
paragraphs: Since our last review, the Army has taken steps intended to better  integrate and prioritize its retrograde, reset, and redistribution efforts. In  our 2007 report, we noted that the Army’s reset implementation strategy  did not specifically target shortages of equipment on hand among units  preparing for deployment to Iraq and Afghanistan in order to mitigate  operational risk. At that time the Army’s Force Generationimplementation strategy and reset implementation guidance provided  that, the primary goal of reset is to prepare units for deployment and to  improve next-to-deploy units’ equipment-on-hand levels. We noted at that  time, however, that the Army’s current reset planning process was based  on resetting equipment that it expected would be returning to the United  States in a given fiscal year, and not based on aggregate equipment  requirements to improve the equipment-on-hand level of deploying units.  Therefore, we concluded the Army could not be assured that its reset  programs would provide sufficient equipment to train and equip deploying  units for ongoing and future requirements. We recommended that the  Secretary of Defense direct the Secretary of the Army to assess the  Army’s approaches to equipment reset to ensure that its priorities address  equipment shortages in the near term to minimize operational risk and  ensure that the needs of deploying units could be met. However, DOD did  not agree with our recommendations at the time, stating that it believed  the Army’s overall equipping strategy was sufficient to equip units that  were deployed or deploying.
Although DOD disagreed with our recommendations in 2007, in the years  since our review, the Army has taken steps to address its reset efforts in  targeting equipment shortages. For example, in April 2008, the Army  issued its Depot Maintenance Enterprise Strategic Plan noting that filling  materiel shortages within warfighting units is a key challenge facing the  depot maintenance enterprise, and called for changes in processes,  programs, and policies to ensure the timely repair of equipment to  address these shortages. The plan also noted the challenge of linking the  equipment needs of the Army through the Army Force Generation model  using current depot maintenance production capabilities. Specifically, it  called for updates to policies and regulations governing depot  maintenance priorities, including revisions to Army regulation AR 750-1,  the Army Materiel Maintenance Policy, and the establishment of  processes resulting in depot production to support high priority unit  equipment needs. At the time of our review, the Army’s revisions to AR  750-1, intended to enable the depot maintenance program to support the  Army Force Generation readiness model, were in final review.
In 2010, the Army, recognizing that retrograde operations are essential to  facilitating depot level reset and redistribution of equipment, developed  the retrograde, reset, and redistribution (R3) initiative to synchronize  retrograde, national depot-level reset efforts, and redistribution efforts.  The R3 initiative was developed by the Office of the Deputy Chief of Staff,  Programs, Directorate of Force Development and several other key Army  commands to facilitate the rapid return of equipment from theater and to  increase equipment on hand for units. In March 2011, an initial R3  equipment priority list was issued, based primarily on shortages identified  by U.S Army Forces Command. According to Army officials, this initial list  was revised and reissued at the end of fiscal year 2011 to include critical  equipment shortages identified and fully endorsed by all Army  commands. According to officials, the Army is now using the R3 list to  prioritize the retrograde and reset of about 19,000 items of rolling stock  from Kuwait as of February 2012. Officials indicated that the Army plans  to return about half of these items to the U.S. by the end of March 2012 to  begin the reset process.
Officials with the Army’s Office of the Deputy Chief of Staff, Programs,  Directorate of Force Development said that the R3 equipment list is a  consensus among Army organizations on rank order priority needs and  provides Army leadership with timely and accurate information to make  strategic resourcing decisions to equip units for future missions. They  believe the R3 equipment list will benefit the Army in making key  decisions to address equipping and resourcing issues for units deploying  and training as part of the Army’s reset planning process. The Army plans  to monitor the effectiveness of the R3 initiative to better link reset funding  and execution to the Army’s equipping priorities. Because it had not  begun to fully implement the initiative until this year, the Army does not  expect to have sufficient data to gauge the effectiveness of the R3  initiative until the fourth quarter of fiscal year 2012.
As the Army continues to encounter equipment shortages and faces the  prospect of future fiscal constraints and limited budgets, as well as  uncertainties concerning the amount of equipment expected to return  from theater in the near term, the need to manage and prioritize reset  depot workload consistent with unit equipment needs remains critical. The  Army has previously noted that the challenge with reset is linking depot  maintenance capabilities with its retrograde and redistribution efforts to  meet the needs of the operational Army as it goes through the Army  Force Generation process. We believe full implementation of the R3  initiative would be a step in the right direction. However, it is too early to  tell whether this initiative will provide a consistent and transparent  process for addressing the Army’s equipping needs, or future needs that  may continue beyond the end of current operations.
section_title: Army Reporting Does Not Provide Visibility over Multiyear Reset Costs or Fully Capture Deviations between Planned and Executed Reset
paragraphs: The Army has taken steps under its own initiative to report its reset  execution quantities to Congress since 2007, but this reporting does not  capture important elements of the Army’s reset efforts, including its  estimated future reset costs and the amount of equipment planned for  reset each year that is successfully reset. Specifically, the monthly reports  identify the Army’s cumulative progress in terms of the number of items  reset in the current fiscal year to date, the number of brigades that have  undergone reset, and the number of new items procured as replacement  for battle-loss or damaged items. However, none of these measures  indicate the status of the Army’s future reset liability, which is the total  repair cost being incurred through ongoing and expected deployments.  Nor do the reports capture differences between the equipment the Army  resets during the year and the equipment it had initially planned to reset.  As a result, Congress does not have visibility over the Army’s progress in  addressing reset and expected total reset costs. We have reported that  agencies and decision makers need visibility into the accuracy of program  execution in order to ensure basic accountability and to anticipate future  costs and claims on the budget. In addition, programs should institute  internal controls that facilitate effective financial reporting for internal and  external users. Various congressional committees have expressed  concern about improving accountability and oversight of reset funding, the  lack of information to support accurate planning for reset, and whether the  Army is managing reset in a manner commensurate with its equipment  needs and budgetary requirements.
subsections: section_title: Army Reports to Congress Do Not Provide Visibility over Multiyear Reset Costs
paragraphs: The Army has generally reported that its reset requirements may continue  for two to three years beyond the end of conflict, but has not included  estimated future reset costs in its reports to Congress. The Office of the  Secretary of Defense, Cost Analysis and Program Evaluation has  developed and tracks for each of the services a cost factor—the multiyear  reset liability—that estimates the military services’ future reset costs.  The multiyear reset liability is the amount of money that a service would  need to restore all equipment used in theater to its original, pre-conflict  state over several fiscal years. This includes the cost to reset all  equipment currently in theater, as well as all equipment that has returned  from theater and not yet been reset. In 2010, the Cost Analysis and  Program Evaluation analysis estimated the Army’s multiyear reset liability  at that time was $24 billion, and it plans to revise this figure in the  summer of 2012. As the Army successfully completes certain reset  actions, its overall reset liability can decrease. Further, some actions,  such as additional deployments, buildups of equipment in theater, or an  increased pace of operations can increase the multiyear reset liability. We  believe the multiyear reset liability is a useful estimate because it provides  a cost benchmark against which progress can be measured. However,  the Army’s monthly reset execution reports currently do not provide future  reset liability cost estimates to Congress. Rather, as discussed below, the  reports describe the cumulative progress being made against that fiscal  year’s requirement according to the number of items that the Army has  reset in a given month.
section_title: Army Reports Do Not Fully Capture Deviations between Planned and Executed Reset
paragraphs: The Army’s monthly congressional reports on reset do not provide  visibility over the impact of changes in reset execution on multiyear reset  liability because they do not distinguish between planned and unplanned  reset and provide only aggregate totals for broad equipment categories.  Specifically, the Army’s monthly reports to Congress currently provide  information on reset activity, such as the number of items scheduled to be  reset in the current fiscal year, the number of items scheduled for reset in  the prior fiscal year that were not executed (“carry-in”), and the number of  items still undergoing reset (“work in progress”). The monthly reports also  include the number of items completed, and the percent complete— number completed compared to total requirement. Table 1 provides an  example of what the Army reports to Congress each month, based on a  report provided in fiscal year 2012.
As table 1 shows, the Army reports aggregate information on reset  activity in broad categories, such as Tactical Wheeled Vehicles or  Aviation Support Equipment. However, for two reasons, the data do not  show the true picture of the Army’s progress in executing its reset plan.  First, the data do not distinguish between the planned items for reset— the funding for which items was programmed by the Army and included in  the Army’s budget justification materials to Congress—and the unplanned  items repaired through reset.  Rather, the figures shown as “completed”  include both planned and unplanned items.
To illustrate this point, our analysis of Army data from fiscal year 2010  shows that 4,144 tactical wheeled vehicles were planned for reset in fiscal  year 2010 and a total of 3,563 vehicles were executed (see table 2).  According to the Army’s current reporting method, this would result in a  reported total completion rate of 86 percent. However, our analysis  showed that, of the total number of items executed, 1,647 items or  approximately 40 percent of the equipment reset was actually equipment  that had been planned and programmed. More than half of the tactical  wheeled vehicles reset—1,916—were items that had not been planned  for reset.
According to Army documents, the reset of unplanned items is due  primarily to changes in, among other things, the mix and condition of  equipment returning to home stations and unforeseen changes to troop  commitments in theater. For example, DOD documents show that in fiscal  year 2010, reset requirements were affected by the expansion of forces in  Afghanistan. This force expansion also required additional equipment,  which the Army supplied in part by shipping equipment that had been  planned for retrograde from Iraq—and eventual reset in the United  States—to Afghanistan instead. While we acknowledge such challenges,  the Army’s current reporting of reset execution does not permit Congress  to see when deviations between planning and execution occur.
Second, by reporting in broad aggregate equipment categories, the  Army’s reports do not give Congress visibility over reset activity for  individual types of equipment. In some cases, our analysis shows that,  while the overall completion percentage may be high, the picture can be  significantly different when looking at individual items. For example, as  discussed above, the total number of items executed during fiscal year  2010 was 86 percent of the total planned reset for the aggregate category  of tactical wheeled vehicles. However, this number alone can obscure  important information on the pace of reset for individual types of vehicles  within the aggregate category. Table 3 offers a breakdown of the items  reset in the Tactical Wheeled Vehicle category for fiscal year 2010.
As table 3 shows, the actual reset activity for items labeled as “other  automotive” was significantly more than planned—1,641 compared to  667, whereas the reset activity for high mobility multipurpose wheeled  vehicles was significantly less than planned—895 compared to 1,966.  Therefore, reporting the overall completion percentage for the category  without information on the status of vehicle types does not provide  transparency into the Army’s progress on its total reset efforts. This  information is important because it has cost implications. Specifically,  while items may fall into the same category, the cost to reset can vary  broadly depending on the vehicle type. For example, both the M1200  Knight (an armored security vehicle) and the M1151 HMMWV are  categorized as Tactical Wheeled Vehicles in the Army’s monthly reports  to Congress. For planning purposes, in 2010 the Army requested over  $500,000 for the repair of each M1200, while requesting about $154,000  for the repair of each M1151. However, in 2010 more M1200s were  repaired than planned, thus accounting for a larger share of the budgeted  reset funds. At the same time, with fewer funds remaining, some  equipment planned and budgeted for repair was not reset, pushing that  workload to future fiscal years. Conversely, if fewer M1200s had been  reset than were planned, the $500,000 estimated reset liability for each  M1200 would be incurred in a future fiscal year, as they would still require  reset eventually. In either case, the Army would record the actions taken  within the numbers shown for the reset of Tactical Wheeled Vehicles, but  the cost impact of these two scenarios will be different given the  difference in estimated costs for the two items. Therefore, understanding  how many items of each vehicle type have been reset is important to  understanding the implications of changes in reset execution for the  Army’s multiyear reset liability. Without information on the multiyear reset  liability and additional details within current reports, Congress may not  have a complete picture of both the Army’s progress in meeting its reset  plan as well as the long-term cost implications of reset.
section_title: Conclusions
paragraphs: The Army needs to balance multiple factors that make reset planning and  execution a complicated and challenging process. Efficient reset planning  must identify the type of equipment that needs to be retrograded from  theater, prioritized through the depots, and redistributed to units based on  immediate equipment needs. Since our 2007 review, the Army has taken  steps to incorporate deploying units’ equipment needs into their reset  planning, including the implementation of the R3 equipment list, but it is  too early to tell whether this initiative will provide a consistent and  transparent process. Further, decision makers in the Army and Congress  could benefit from greater visibility into reset program execution in order  to ensure accountability, improve planning, and anticipate future costs  and claims on the budget. The Army has taken positive steps towards  providing this visibility by issuing reports on its reset execution to  Congress on a monthly basis. However, these monthly reports currently  lack key information that could illustrate the Army’s overall effectiveness  at managing reset long-term, including information by vehicle type. With  more complete information on the Army’s total reset efforts, Congress will  be able to exercise oversight and determine if the amount of funding  appropriated for equipment reset is being used for the planned  equipment—in the short term—and to monitor the Army’s progress in  addressing its multiyear reset liability.
section_title: Matter for Congressional Consideration
paragraphs: To improve accountability and oversight, Congress should consider  directing the Secretary of the Army to include status information on the  percentage of equipment reset according to the initial reset plan by  vehicle type in its monthly reports to Congress.
section_title: Recommendations for Executive Actions:
paragraphs: To ensure that the Army provides information to Congress that is useful  for assessing its short and long-term reset progress, we recommend that  the Secretary of the Army direct the Office of the Chief of Staff of the  Army, Logistics to take the following two actions:
Revise the monthly congressional reset reports to include the Army’s  multiyear reset liability, which should include the anticipated cost to  reset all equipment in-theater as well as all equipment returned to the  United States that has not yet been reset; and
Revise the monthly congressional reset reports to include information  on the percentage of equipment reset according to the initial reset  plan by vehicle type.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD did not concur with our  two recommendations. Although DOD disagreed with our  recommendation to revise the monthly congressional reset reports to  include the Army’s multi-year reset liability, it cited actions it plans to take  that would meet the intent of our recommendation. DOD also disagreed  with our recommendation to include reset information by vehicle type in  its monthly reset reports to Congress. We continue to believe that this  information is important to provide adequate visibility to Congress over  reset and thus are including a matter for congressional consideration.  DOD’s comments appear in their entirety in appendix II. DOD also  provided technical comments that we incorporated as appropriate.
In disagreeing with our first recommendation for the Army to include its  multi-year reset liability in the monthly congressional reset reports, DOD  stated that the Army’s monthly reset report was intended to show the  status of equipment reset activities in the year of execution. According to  DOD, the Army does not plan to include the estimate of future reset  liability projections in every monthly report because developing those  estimates includes the projection of future deployed force levels as well  as major force redeployment timelines, which are factors that do not  significantly change on a month-to-month basis. However, DOD stated  that the Army plans to include the Army’s estimate of future equipment  reset liability in its summary report to Congress for the fiscal year. We  believe the Army’s plan to report future equipment reset liabilities in its  summary report for each fiscal year would meet the intent of our  recommendation.
DOD also disagreed with our second recommendation that the Army  include in its monthly congressional reset reports status information on  the percentage of equipment reset by vehicle type. DOD stated that the  Army intends to provide more detailed information on reset program  adjustments in those reports, but noted that the Army does not  recommend doing so by vehicle type. Specifically, DOD stated that actual  monthly equipment reset production rates are extremely dynamic and  adjustments in the depots are made daily based on a number of factors.  Further, DOD stated that adjustments are common across all of the  nearly 800 systems that proceed through the depots for reset each year  and are best summarized by the most major changes among large  categories. The department further stated that current vehicle categories  in the monthly reports are adequate for this purpose, but indicated that  additional explanation of major variances between planned, newly  planned and executed equipment reset would be included in future  reports. However, as we reported, the broad categories do not fully  capture deviations between planned and executed reset by vehicle type,  and the Army did not explain what information it will include in these  additional explanations. Therefore, we remain concerned that the  changes in reset reporting suggested by the Army would not provide  adequate visibility to Congress over planned and executed equipment  reset. Consequently, we have added a matter for congressional  consideration suggesting that Congress consider directing the Army to  include status information on the percentage of equipment reset  according to the initial reset plan by vehicle type in its monthly reports to  Congress.
We are sending copies of this report to interested congressional  committees, the Secretary of Defense and the Secretary of the Army.  This report will be available at no charge on GAO’s website,  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (404) 679-1808 or russellc@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this letter. GAO staff who made key contributions are listed in  appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To examine any steps the Army has taken to improve its equipment reset  strategy and address target shortages since our 2007 report, we reviewed  the Department of Defense’s (DOD) comments in that report. We also  reviewed Army guidance explaining the definition of reset and how it is  employed to restore equipment for units to pre-deployment levels. We  reviewed the Army Force Generation regulation to determine the criteria  to establish Army policy to institutionalize the Army Force Generation  model, which supports strategic planning, equipment prioritization, and  other resources to generate trained and ready forces, and the role of  reset in supporting the model to repair equipment for units to meet future  missions. We obtained and reviewed the Army Reset Execution Order,  which provides guidance to the Army on reset operations. We obtained  written responses on our inquiries from Army officials and conducted  interviews to discuss the execution order and their interpretation of the  roles, responsibilities, and activities required to execute the reset of  equipment returning from overseas to the United States. We reviewed  and analyzed reset documents associated with the execution order, which  contained information on the Army’s annual sustainment-level reset  workload requirements estimates. We obtained written responses on our  inquiry from Army officials and conducted interviews to discuss and  understand the methodology used to develop those estimates and the  equipment mix and quantities expected to return from Southwest Asia to  the United States for reset for the current fiscal year. We reviewed and  analyzed the Army’s equipment retrograde priority lists identifying  equipment needed to be returned to the United States for reset and  reviewed guidance on the retrograde of equipment to understand the  methodology used to develop the list. We analyzed the relationship  between the sustainment-level reset workload requirements estimates  worksheet and retrograde priority list to determine the similarities and  differences in the type and mix of equipment identified for depot-level  reset. We discussed these similarities and differences to understand how  they affect the Army’s ability to identify and reset the right equipment to  support both deploying and training units. We held several discussions  with Army officials to learn about the retrograde, reset, and redistribution  (R3) initiative and how they expect this initiative might improve  equipment-reset processes to better align reset efforts with unit  equipment needs. We interviewed officials in the Office of the Secretary  of Defense for Logistics and Materiel Readiness to obtain information  about DOD’s guidance on reset.
To determine the extent to which the Army’s monthly reset reports to  Congress provide visibility over reset costs and execution, we obtained  data published in the Reset Execution Order on the Army’s annual  sustainment-level reset workload requirements estimates from fiscal  years 2007 through 2012 to determine the quantities of equipment  planned for reset. We obtained reset execution data generated by the  Army Materiel Command and Army Logistics Management Program  System from fiscal years 2007 through 2010 to determine the actual  amount of equipment reset in support of contingency operations. We  provided questions, received written responses, and interviewed Army  officials to understand the reset planning and execution process, and  reporting requirements to Congress on both planned and actual reset  data and budgets. We focused our analysis on the reset of Army rolling  stock, which was heavily rotated in and out of Southwest Asia to support  Operation Iraqi Freedom because it accounts for the majority of the  Army’s depot reset funding. We compared the reset workload  requirements estimates to the reset execution data, using the National  Stock Number, to determine whether the data were accurate,  comparable, and consistent for our review purposes. In addition, we  collected and reviewed documents and data on historical and current  budget execution for reset to determine the consistency between annual  reset requirements and budget requests. We performed a data reliability  assessment of the information systems containing the execution data and  determined that the date were sufficiently reliable for the purpose of this  engagement. We provided questions, received written responses, and  interviewed Army officials to clarify how budget data were used and to  ensure that we had a good understanding of how to interpret the data for  our purposes. We also discussed with Army officials the process for  tracking and reconciling reset expenditures with quantities of equipment  based on planned equipment requirements. Further, we obtained and  reviewed historical and current monthly Supplemental Cost of War  Execution Reports on Army reset expenditures and funding requests  submitted to Congress, and the Army’s monthly congressional reports on  the quantity of equipment repaired through reset to determine the type of  information reported on reset costs and the equipment quantities repaired  at the depots. We have previously reported on problems relating to the  reliability of data generated from the Army’s Logistics Management  Program, but have not specifically reviewed the reliability of the reset  depot execution data.
To address each of our objectives, we also spoke with officials, and  obtained documentation when applicable, at the following locations:
Office of the Under Secretary of Defense for Acquisition, Technology,  and Logistics, Assistant Secretary of Defense for Logistics and  Materiel Readiness, Deputy Assistant Secretary of Defense for  Maintenance, Policy, and Programs
Office of the Secretary of Defense for Cost Assessment and Program
Office of the Under Secretary of Defense (Comptroller)
Headquarters Department of the Army; Office of the Deputy Chief of  Staff, G-4 Logistics; Office of the Deputy Chief of Staff, G-8,  (Programs), Directorate of Force Development; Office of the Deputy  Chief of Staff, G-3/5/7 Strategy, Plans, and Policy; and Army Budget  Office
U.S. Army Central Command
U.S. Army Materiel Command
U.S. Army Forces Command
U.S. Army Sustainment Command
TACOM Life Cycle Management Command  We conducted this performance audit between January 2010 and May  2012 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 Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Cary B. Russell, (404) 679-1808 or russellc@gao.gov.
section_title: Acknowledgments
paragraphs: In addition to the contact named above, William M. Solis, Director  (Retired); Larry Junek, Assistant Director; James Lackey; Latrealle Lee;  Oscar Mardis; Cynthia Saunders; John Van Schaik; Amie Steele; Michael  Willems; Monique Williams; Erik Wilkins-McKee; and Gregory Pugnetti  made key contributions to this report.