Reset is the repair, replacement, and  modernization of equipment that has been damaged or lost as a result of  combat operations. Total Costs to Fully Equip the Army Are Uncertain

The total cost to restructure and rebuild the Army is uncertain but this  effort will likely require many billions of dollars and take at least several  more years to complete. Our analysis of Army cost estimates and cost data  indicate that it is likely to cost at least $190 billion dollars to equip  modular units, expand the force, reset equipment, and replace  prepositioned equipment from fiscal years 2004 through 2013. However,  these estimates have limitations and could change. For example, the Army  is likely to continue to have shortfalls of some key equipment beyond then  and believes it will require additional funding to equip modular units  through fiscal year 2017. Information on Army Equipping-Related Costs for Key Initiatives Is Available but Some Estimates Are Incomplete or May Change

Although the Army has not identified a total aggregate cost for its key  equipping initiatives, it has previously reported some cost estimates and  cost data for equipping modular units, expanding the Army, resetting  equipment, and restoring pre-positioned stocks. Based on our analysis of various sources of Army cost data, it  appears that the cost of these initiatives will exceed $190 billion dollars  between fiscal years 2004-2013 (see table 1). These figures do not include  data on Army longer term transformation efforts such as the Army’s  Future Combat System. As shown in table 2,  most of these funds—$43.6 billion—were designated for equipment  purchases. In addition, the Army’s original plan for equipping modular units also did  not fully consider the equipping implications associated with the Army  National Guard’s changing role in supporting military operations. Equipment Costs to Expand the Force Are Significant

DOD’s plan to expand the size of the Army by over 74,000 personnel will  also add to the Army’s equipment needs. Given the magnitude of the Army’s  funding plan and potential changes to the plan, we recommended that the  Secretary of Defense direct the Secretary of the Army to provide Congress  with a revised funding plan for expanding the force and adhere to a high  quality cost estimating methodology. Given the  substantial amount of equipment deployed overseas, the uncertain length  of operations in Iraq and Afghanistan, and the lack of transparency and  accountability, it is unclear how much funding the Army will need to reset  its equipment. The Army Lacks a Strategic Approach That Promotes Transparency and Ensures That Equipment Investments Are Based on Sound Plans

A common theme in our work has been the need for DOD and the Army to  take a more strategic approach to decision making that promotes  transparency and ensures that programs and investments are based on  sound plans with measurable, realistic goals and time frames, prioritized  resource needs, and performance measures to gauge progress. A lack of linkage between overall Army equipment  requirements and funding plans impedes oversight by DOD and  congressional decision-makers because it does not provide a means to  measure the Army’s progress toward meeting long-term Army equipment  goals or to inform decisions that must be made today. Our work on modular restructuring has shown that the Army has  substantially revised its timeline for fully equipping units from an original  date of 2011 to 2019 but has not provided evidence of its overall equipment  requirements or specific plans, milestones, or resources required to fully  equip the modular force. Oversight of the Army’s key equipment initiatives has been complicated by  multiple funding requests. Actions Needed to Improve Management Controls and Improve Transparency of Army Equipping Efforts

We have recommended a number of actions intended to improve  management controls and enhance transparency of funding requests  associated with modular restructuring, force expansion, equipment reset,  and prepositioning of equipment stock. However, many of these  recommendations have not been adopted because the Army has not  developed concrete plans to address the recommendations and in some  cases, disagreed with our recommendations. As a result, senior DOD  leaders and Congress may not have sufficient information to assess  progress and fully evaluate the Army’s funding requests. Until these steps are  taken, decision makers will lack key information needed to gauge interim  progress and make informed choices aimed at balancing the need to  restore near-term readiness while positioning the Army for the future. GAO-08-354R. Force Structure: Better Management Controls Are Needed to Oversee the  Army’s Modular Force and Expansion Initiatives and Improve  Accountability for Results. Military Training: Actions Needed to More Fully Develop the Army’s  Strategy for Training Modular Brigades and Address Implementation  Challenges.
Why GAO Did This Study

The high pace of overseas operations is taking a heavy toll on Army equipment. Harsh combat and environmental conditions over sustained periods of time have exacerbated equipment repair, replacement, and recapitalization problems. The Army has also taken steps to restructure its forces before implementing its longer term transformation to the Future Combat System. To support ongoing operations and prepare for the future, the Army has embarked on four key initiatives: (1) restructuring from a division-based force to a modular brigade-based force, (2) expanding the Army by adding about 74,000 people and creating new units, (3) repairing, replacing, and recapitalizing new equipment through its reset program, and (4) replacing equipment borrowed from its pre-positioned equipment sets around the world. Since 2004, Congress has provided billions of dollars to support the Army's equipping needs. GAO has issued many reports on the Army's efforts to equip modular units, expand the Army, reset equipment, and manage and replace prepositioned equipment. This statement, which draws largely on these reports, will address (1) the equipment-related cost of these initiatives, and (2) the management challenges facing the Army and the actions needed to improve its implementation of these initiatives. GAO is issuing a separate statement today on the Future Combat System (GAO-08- 638T).

What GAO Found

Restructuring and rebuilding the Army will require billions of dollars for equipment and take years to complete; however, the total cost is uncertain. Based on GAO's analysis of Army cost estimates and cost data, it appears that the Army's plans to equip modular units, expand the force, reset equipment, and replace prepositioned equipment are likely to cost at least $190 billion dollars through fiscal year 2013. However, these estimates have some limitations and could change. Further, the Army has stated it plans to request additional funds to address equipment shortfalls in modular units through fiscal year 2017. Several factors are contributing to the uncertainties about future costs. First, the Army's $43.6 funding plan for equipping modular units was based on preliminary modular unit designs and did not fully consider the needs of National Guard units. Second, the Army expects to need $18.5 billion for equipment to expand the force but has not clearly documented this estimate. Third, costs to reset equipment may total at least $118 billion from fiscal years 2004-2013 but may change because they are dependent on how much equipment is lost, damaged, or worn beyond repair during continuing operations in Iraq and Afghanistan and how long these operations continue. Fourth, the Army believes it will need at least $10.6 billion to replace pre-positioned equipment that was taken out of storage to support ongoing operations, but this amount is an estimate and DOD's overall strategy for prepositioned equipment has not yet been issued Given the magnitude of these initiatives and potential for costs to change, DOD will need to carefully monitor the projected costs of these initiatives so that it can consider tradeoffs and allocate funding to balance the Army's equipping needs for the next decade and longer term transformation goals. A common theme in GAO's work has been the need for DOD and the Army to take a more strategic approach to decision making that promotes transparency and ensures that programs and investments are based on sound plans with measurable, realistic goals and time frames, prioritized resource needs, and performance measures to gauge progress. GAO's work on modular restructuring has shown a lack of linkage between the Army's funding requests and equipment requirements. This lack of linkage impedes oversight by DOD and Congress because it does not provide a means to measure the Army's progress in meeting modular force equipment requirements or inform budget decisions. Oversight of Army initiatives has also been complicated by multiple funding requests that makes it difficult for decision makers to understand the Army's full funding needs. GAO has recommended a number of actions to improve management controls and enhance transparency of the Army's plans for equipping modular units, expanding the force, resetting equipment, and replacing prepositioned equipment. However, many of these recommendations have not been fully implemented or adopted. For example, until the Army provides a comprehensive plan for its modular restructuring and expansion initiatives, which identifying progress and total costs, decision makers may not have sufficient information to assess progress and allocate defense resources among competing priorities.