Reset encompasses activities related to the repair, upgrade, or replacement of equipment used in contingency operations. Aviation and ground equipment are managed separately within the Marine Corps, and different definitions of reset are used for each. Marine Corps officials defined aviation equipment reset as an aircraft material condition and readiness sustainment effort that is required due to prolonged combat operations. Included are actions to maintain, preserve, and enhance the capability of aircraft. Ground equipment reset is defined by the Marine Corps as actions taken to restore units to a desired level of combat capability commensurate with the unit’s future mission. It encompasses maintenance and supply activities that restore and enhance equipment that was destroyed, damaged, stressed, rendered obsolete, or worn out beyond economic repair due to combat operations by repairing, rebuilding, or procuring replacement equipment. Also included as part of ground equipment reset is recapitalization (rebuild or upgrade) that enhances existing equipment through the insertion of new technology or restores selected equipment to near-original condition. The Marine Corps’s equipment reset budget totals more than $8 billion for fiscal years 2009 through 2012. Maintenance-related activities included as part of reset are funded from operations and maintenance appropriations, while most recapitalization and all acquisitions of new equipment as part of reset are funded from procurement appropriations. Reset funds are requested and budgeted separately for aviation and ground equipment.  Aviation equipment: The Marine Corps’ aviation equipment reset budget was approximately $66.7 million in fiscal year 2009 and approximately $57.8 million in fiscal year 2010. The Marine Corps requested approximately $56.1 million for fiscal 2011 and has requested $45.3 million for fiscal year 2012 to reset aviation equipment. As discussed later in this report, reset funding for aviation equipment covers only operations and maintenance appropriations and excludes procurement appropriations.  Ground equipment: The Marine Corps’ ground equipment reset budget was approximately $2.2 billion in fiscal year 2009 and approximately $1.3 billion in fiscal year 2010. The Marine Corps requested approximately $2.6 billion for fiscal year 2011 and has requested $1.8 billion for fiscal year 2012 to reset ground equipment. This funding includes funds requested as part of operations and maintenance appropriations and procurement appropriations. The fiscal year 2011 request included a $1.1 billion increase in procurement funding over fiscal year 2010, which the Marine Corps attributed to increased equipment combat losses and to the replacement of equipment that is beyond economic repair. Appendix II provides further detail on reset funding for aviation and ground equipment. Our prior work has shown that sound strategic management planning can enable organizations to identify and achieve long-range goals and objectives. We have identified six elements that should be incorporated into strategic plans to establish a comprehensive, results-oriented framework—an approach whereby program effectiveness is measured in terms of outcomes or impact. These elements follow: (1) Mission statement: A statement that concisely summarizes what the organization does, presenting the main purposes for all its major functions and operations. (2) Long-term goals: A specific set of policy, programmatic, and management goals for the programs and operations covered in the strategic plan. The long-term goals should correspond to the purposes set forth in the mission statement and develop with greater specificity how an organization will carry out its mission. (3) Strategies to achieve the goals: A description of how the goals contained in the strategic plan and performance plan are to be achieved, including the operational processes, skills and technology, and other resources required to meet these goals. (4) External factors that could affect goals: Key factors external to the organization and beyond its control that could significantly affect the achievement of the long-term goals contained in the strategic plan. These external factors can include economic, demographic, social, technological, or environmental factors, as well as conditions or events that would affect the organization’s ability to achieve its strategic goals. (5) Use of metrics to gauge progress: A set of metrics that will be applied to gauge progress toward attainment of the plan’s long-term goals. (6) Evaluations of the plan to monitor goals and objectives: Assessments, through objective measurement and systematic analysis, of the manner and extent to which programs associated with the strategic plan achieve their intended goals. Over the past several years we have reported on equipment reset issues. In 2007, for example, we reported that the Marine Corps could not be certain that its reset strategies would sustain equipment availability for deployed units as well as units preparing for deployment, while meeting ongoing operational requirements. We have also made recommendations aimed at improving DOD’s monthly cost reports for reset and defining the types of costs that should be included in the base defense budget rather than funded from supplemental appropriations for contingency operations. Specifically, we recommended DOD amend its Financial Management Regulation to require that monthly Supplemental and Cost of War Execution Reports identify expenditures within the procurement accounts for equipment reset at more detailed subcost category levels, similar to reporting of obligations and expenditures in the operation and maintenance accounts. DOD initially disagreed with this recommendation but later revised its Financial Management Regulation, expanding the definition of acceptable maintenance and procurement costs and directing the military services to begin including “longer war on terror” costs in their overseas contingency operations funding requests. We subsequently recommended that DOD issue guidance defining what constitutes the “longer war on terror,” to identify what costs are related to that longer war and to build these costs into the base defense budget. While the department concurred with this recommendation and stated that it has plans to revise its Financial Management Regulation accordingly, it has not yet done so. The Office of Management and Budget (OMB) has issued budget formulation guidance for DOD that addresses overseas contingency operations, including reset funding. Guidance issued in February 2009 provided new criteria for DOD to use when preparing its budget request to assess whether funding, including funding for reset, should be requested as part of the base budget or as part of the budget for overseas contingency operations. The criteria identified geographic areas where overseas contingency operations funding could be used; provided a list of specific categories of spending that should be included in the overseas contingency budget, such as major equipment repairs, ground equipment replacement, equipment modifications, and aircraft replacement; and identified certain spending that should be excluded from the overseas contingency operations budget (i.e., should be included in the base budget) such as funding to support family services at home stations. For example, funding is excluded for the replacement of equipment losses already programmed for replacement in the Future Years Defense Plan. In September 2010, OMB issued updated criteria to, among other things, clarify language and eliminate areas of confusion. DOD has also issued its own budget formulation guidance for overseas contingency operations. In December 2009, DOD issued Resource Management Decision 700 to regulate the funding of the military services’ readiness accounts and to require that significant resources from the overseas contingency operations funding be moved into the base defense budget. Specifically, the services’ 2012 Program Objective Memorandum submissions for overseas contingency operations funding are restricted to resource levels appropriate for planned and projected troop levels. To facilitate the implementation of this guidance within the department, Resource Management Decision 700 outlines several actions for organizations to take. For example, it directed the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics, in coordination with the Director of Cost Assessment and Program Evaluation, the military services, the DOD Comptroller, and the Joint Staff, to conduct periodic reviews of the services’ in-theater maintenance activities and reset maintenance actions that include an assessment of the relationship between maintenance-funded base programs and contingency operations. This assessment was provided to the Deputy Secretary of Defense in July 2010. The Director of Cost Assessment and Program Evaluation tracks estimated total reset costs across the department based on data provided by the services. The total reset costs are the amount of funding needed to reset all equipment used in contingency operations if the operations were to cease. Specifically, the total reset costs equal the sum of the annual unbudgeted reset liability and the annual budgeted reset. The annual unbudgeted reset liability is the amount of equipment eligible for reset that stays in theater and is not reset during the budget year, based on operational decisions. The annual budgeted reset is the amount of equipment planned to return from operations that requires funds budgeted for reset. As part of its ground equipment reset strategy for Iraq, the Marine Corps developed the Reset Cost Model to generate cost estimates for the service’s supplemental budget requests. Additionally, the Reset Cost Model allows the Marine Corps to estimate reset costs for ground equipment, including budgeted and unbudgeted reset costs. Since the Reset Cost Model is focused on ground equipment employed in the U.S. Central Command area of responsibility, the Marine Corps continues to use the Reset Cost Model to develop overseas contingency operations budget requests for ground equipment used in Afghanistan. The cost estimates generated by the Reset Cost Model are based on the four possible reset actions:  First, equipment returning from theater is inspected to determine if depot-level repairs are required. Depot maintenance actions are conducted if the estimated cost of repair for the equipment is 65 percent or less than the latest acquisition cost.  Second, ground equipment used in operations is evaluated at various locations throughout the logistics chain to determine if the equipment requires field-level maintenance. These maintenance actions are conducted by operating forces.  Third, upon return to the continental United States, equipment identified as obsolete or uneconomical to repair is replaced through procurement as its reset action.  Fourth, if equipment acquired for combat operations does not have a long-term requirement within the Marine Corps, no reset maintenance actions are taken unless there is an immediate requirement in another campaign or theater of operations. Estimating aviation equipment reset costs follows a separate process. For aviation equipment reset, the Marine Corps has a process for requirements determination, budgeting, and execution, all of which are included in the annual budget process.