AMC is responsible for weapon systems development, advanced research, and the maintenance and distribution of spare parts. With its headquarters in Alexandria, Virginia, AMC accomplishes its mission through nine major subordinate commands that direct the operation of numerous activities—depots, arsenals, ammunition plants, laboratories, test activities, and procurement operations. AMC is funded through direct appropriations and reimbursements from the Army’s Working Capital Fund, other Army activities, and non-Army sources. Approximately 63 percent of AMC’s civilian positions are funded through reimbursements. In May 1997, the Department of Defense (DOD) completed the QDR, a comprehensive review of national security threats, risks, and opportunities facing the United States to 2015. According to DOD, this review intended to provide a blueprint for a strategy-based, balanced, and affordable program. The review directed the Army to reduce 17,366 civilian positions. The Army allocated 8,530 of these reductions to AMC. The Army assumed that AMC could eliminate 6,980 positions by conducting public/private competitive sourcing studies and another 1,550 positions through implementing other organizational efficiencies. Appendix II shows the planned reductions among AMC subordinate organizations. The QDR reductions continue the downsizing of AMC that started in 1989. Between fiscal year 1989 and 1997, AMC reported reducing the number of its civilian positions from about 102,000 to 62,000, or 38 percent, as part of DOD’s overall downsizing. Prior to the QDR, the Army had planned to reduce AMC to about 56,000 civilians by fiscal year 2003. The QDR will reduce AMC to about 48,000 positions by fiscal year 2004. In addition to reductions called for in the QDR, the Army plans to reduce AMC civilian authorizations by another 2,000 positions between fiscal year 2000 and 2005. The Army’s plan for achieving its AMC personnel reduction goals are still evolving. However, given the large number of initiatives, there should be sufficient opportunities to achieve the reductions. The Army originally planned to achieve most of AMC’s QDR reductions (about 7,000) through competitive sourcing studies. However, the number of positions initially considered suitable for such studies is now considerably smaller and the Army is still uncertain about how many positions will actually be studied. Consequently, AMC now expects to achieve most of its personnel reductions through other initiatives to streamline its organization and achieve operational efficiencies. AMC is making its initial QDR reductions during fiscal year 1999 and 2000; however, some of the reductions are expected to take longer to implement than initially anticipated. Most, about 80 percent, of the total reductions are expected to occur between fiscal year 2001 and 2004. To achieve the QDR reductions, the Army assumed that about 35,000 of AMC’s civilian positions could be subjected to competitive sourcing studies. However, in October 1998, after completing action on a DOD directive that all components uniformly reassess the number of positions that were commercial in nature and that could be subject to competitive sourcing studies, the Army concluded that only about 19,000 AMC positions were clearly suitable for study. It found that nearly 11,000 additional positions might be candidates for study but first required additional assessment. This further assessment is expected to be completed by November 1999. In the short term, AMC was left with a still substantial study universe of about 19,000 positions. Of that universe, nearly 2,400 positions were already under study. Since then, studies of about 6,800 additional positions have begun. AMC officials have expressed some uncertainty about the extent to which studies of the remaining positions will be made because they include significant numbers of secretarial and administrative positions as well as some positions in functions that AMC plans to seek waivers to Circular A-76 requirements. While competitive sourcing studies remains a key tool to help achieve the planned reductions, AMC has turned its attention to other ways of achieving the personnel reductions. These initiatives can result in significant reductions and include such actions as position elimination, organizational realignments, and reengineering of functions. The range of initiatives AMC expects to use to achieve its reductions and the year the reductions are expected to occur are shown in table 1. AMC plans to restructure its commodity commands through competitive sourcing studies, privatization of selected functions, and reengineering business processes. The commodity commands include the Aviation and Missile Command, the Communications-Electronics Command, and the Tank-automotive and Armaments Command. Likewise, the research, development, and engineering restructure initiative involves reorganizing and restructuring the research centers to focus on critical core competencies as well as conducting competitive sourcing studies on selected functions. The initiative involves the same commands as well as the Soldier and Biological Chemical Command. In addition to these initiatives, the Army is considering a much broader reorganization of AMC. However, details of this proposed reorganization were not made available to us; therefore, we were unable to assess any potential impact such a reorganization may have upon existing personnel requirements. AMC expects to eliminate about 1,800 positions during fiscal years 1999 and 2000. In fiscal year 1999, it plans to eliminate 70 positions of which, about half will be obtained by eliminating vacant positions in headquarters. The remaining 1,732 positions are to be eliminated in fiscal year 2000 through a combination of factors, including competitive sourcing studies and ongoing initiatives to decentralize and transfer responsibility for managing the depots from the Industrial Operations Command to individual commodity commands, consolidate war reserve sites in Europe, and merge two commands. However, some of the initiatives may not be implemented during fiscal year 2000 as planned. Table 2 shows that 713, or 41 percent, of the 1,732 reductions planned for fiscal year 2000 could be delayed and a final decision has not been made regarding another 257 positions. The primary reason some initiatives are being delayed is that competitive sourcing studies are taking longer to complete and implement than planned. AMC officials stated that they are assessing options to deal with the impact of these delayed studies. AMC also planned to eliminate 24 positions in fiscal year 2000 through competitive sourcing studies of some base operations functions in the Aviation and Missile and the Tank-automotive and Armaments Commands. However, officials at these commands stated that they now plan to eliminate vacant positions rather than conduct the studies. As shown in table 2, AMC plans to privatize some software design activities in the Communication-Electronics Command that would eliminate 257 positions. Under this initiative, the Army wants to modernize its wholesale logistics functions by awarding a long-term contract to a single vendor that will (1) operate the Army’s existing wholesale logistics software system, (2) reengineer the wholesale logistics business processes, and (3) customize a commercial off-the-shelf software system, which it will operate. However, to implement this initiative, AMC sought a waiver to Circular A-76 requirements. At the time we completed our work, the Army had not approved or disallowed the waiver. AMC has identified initiatives to eliminate the remaining 6,728 positions between fiscal year 2001 and 2004. Most of these reductions depend primarily on AMC’s ability to restructure the commodity commands, redesign the research, development and evaluation centers, and complete competitive sourcing studies on its arsenals. These three initiatives account for 4,174, or 62 percent, of the planned reductions. AMC plans to eliminate 1,972 positions under the initiative to redesign its commodity commands. Our work at two of the three commodity commands indicates that plans to achieve the reductions are still being developed. For example, the Tank-automotive and Armaments Command plans to reengineer its business processes and implement an integrated data environment to absorb the reductions. According to Tank-automotive and Armaments officials, the Command plans to implement its new organizational structure in fiscal year 1999, and then start to identify and prioritize the various business practices to be reengineered. The Aviation and Missile Command plans to achieve its reductions primarily through implementing the prime vendor support concept on selected systems. The Apache was selected as the first system; however, the implementation plan is still under review within the Army. An Aviation and Missile Command official stated that the Command’s ability to achieve the reductions relies primarily on replicating the Apache concept to other weapon systems. Another major initiative involves plans to redesign the research, development, and engineering centers and eliminate 1,567 positions. To achieve its reductions, the Aviation and Missile Command plans to combine the aviation and missile research centers and eliminate positions at some satellite locations and some performing lower priority work. Aviation and Missile Command officials stated efforts are underway to prioritize their workload. Likewise, the Tank-automotive and Armaments Command plans to achieve efficiencies by consolidating similar functions between its two research centers, as well as through projected decreases in workload. AMC expects to eliminate 630 positions in fiscal year 2002 by conducting competitive sourcing studies at its three arsenals. However, Army decisions since the QDR could affect the positions to be studied. For example, AMC planned to study about 2,600 positions at the Rock Island and Watervilet Arsenals, which AMC assumed, would achieve about 490 of the 630 planned reductions. However, in fiscal year 2000, the Army plans to reduce the personnel levels at the two arsenals by about 680 positions, which would reduce the study universe to about 1,900 positions. Using the revised universe and AMC’s assumption of a 20-percent saving, only 380 positions would be eliminated, or 110 fewer positions than anticipated. AMC officials stated that the Army is considering an option to convert the Watervilet Arsenal to a government-owned contractor-operated facility, which could impact the ongoing competitive sourcing study.