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. 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. 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. 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.