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Defense Ammunition: Significant Problems Left Unattended Will Get Worse
(Chapter Report, 06/21/96, GAO/NSIAD-96-129).



Pursuant to a congressional request, GAO reviewed the status of the

Department of Defense's (DOD) ammunition stockpile, focusing on: (1) the

amount of excess ammunition in the stockpile; and (2) problems related

to the stockpile's management.



GAO found that: (1) of the $80 billion in usable and unusable ammunition

as of September 1994, about $31 billion was excess ammunition and about

$22 billion was ammunition that was still usable; (2) the excess in

usable ammunition is primarily due to the collapse of the Soviet Union

and reduced U.S. military requirements; (3) while shortages of some

specific ammunition types exist, the services generally have inventories

that exceed their wartime and peacetime requirements; (4) in 1993 and

1994, the services spent about $125 million for ammunition that exceeded

their fiscal year 1995 requirements; (5) the services have stored and

continue to manage significant amounts of ammunition for weapons that

are no longer in the active inventory; (6) increases in the ammunition

stockpile and decreases in budget, workforce, and storage space could

degrade the forces' readiness to meet wartime and peacetime needs; (7)

DOD has not been able to conduct adequate ammunition testing and

inspections to ensure the stockpile's usability and readiness; (8) DOD

does not know the extent of excess ammunition stored at the services

facilities; and (9) the ammunition stockpile will continue to grow until

the services' are given incentives to relinquish ownership of the

ammunition and the single manager is provided with the funding and

information necessary to expedite ammunition disposal.



--------------------------- Indexing Terms -----------------------------



 REPORTNUM:  NSIAD-96-129

     TITLE:  Defense Ammunition: Significant Problems Left Unattended 

             Will Get Worse

      DATE:  06/21/96

   SUBJECT:  Combat readiness

             Military inventories

             Inventory control systems

             Federal property management

             Spare parts

             Defense contingency planning

             Defense cost control

             Federal supply systems

             Ammunition

IDENTIFIER:  F-5 Aircraft

             M60A2 Tank

             M42 Self-Propelled Gun

             M551 Tank

             NIKE-HERCULES Missile System

             Air Force Standard Depot System Data Base

             MK-25 Mine

             M60A1 Tank

             PHOENIX Missile

             AIM-54C Missile

             High Speed Anti-Radiation Missile

             Patriot Missile System

             DOD Joint Defense Total Asset Visibility Program

             Desert Storm

             Europe

             DOD Integrated Ammunition Stockpile Management Plan

             MK66 Rocket

             M864 Projectile

             Army Tactical Missile System

             

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Cover

================================================================ COVER





Report to Congressional Requesters



June 1996



DEFENSE AMMUNITION - SIGNIFICANT

PROBLEMS LEFT UNATTENDED WILL GET

WORSE



GAO/NSIAD-96-129



Defense Ammunition



(703064)





Abbreviations

=============================================================== ABBREV



  ATACMS - Army Tactical Missile System

  DOD - Department of Defense

  GAO - General Accounting Office

  HARM - High-Speed Anti-Radiation Missile

  IG - Inspector General

  O&M - operation and maintenance

  RDAISA - Research Development Acquisition Information System Agency

  WARS - Worldwide Ammunition Reporting System



Letter

=============================================================== LETTER





B-260167



June 21, 1996



The Honorable Herbert H.  Bateman

Chairman, Subcommittee on Military Readiness

The Honorable Duncan Hunter

Chairman, Subcommittee on Military Procurement

Committee on National Security

House of Representatives



In March 1995, you asked us to review the status of the Department of

Defense's ammunition stockpile and production facilities available to

support the military's ammunition requirements.  This report

addresses your concerns about the ammunition stockpile, including

conventional ammunition, explosives, and missiles.  Our review

focused on the amount of ammunition excess to established

requirements and problems with the ammunition stockpile management,

which threaten readiness.  We issued a separate report addressing

your concerns about the production facilities available to support

the military's ammunition requirements (Ammunition Industrial Base: 

Information on DOD's Assessment of Requirements, GAO/NSIAD-96-133,

May 31, 1996). 



We are sending copies of this report to the Secretaries of Defense

and each of the military services; the Commanding General, Army

Materiel Command; the Commanding General, Army Industrial Operations

Command; and other interested parties.  We will also make copies

available to others upon request. 



Please contact me at (202) 512-5140 if you or your staffs have any

questions concerning this report.  Major contributors to this report

are listed in appendix II. 



Mark E.  Gebicke

Director, Military Operations

 and Capabilities Issues





EXECUTIVE SUMMARY

============================================================ Chapter 0



The military services have over 5 million tons of conventional

ammunition, explosives, and missiles (hereafter referred to as

ammunition) valued at about $80 billion as of September 30, 1994. 

This ammunition, if loaded onto railroad cars, would stretch over 800

miles--the distance from Washington, D.C., to Orlando, Florida. 

Because of concerns about the condition and readiness of this

ammunition, the Chairmen, Subcommittee on Military Readiness and

Subcommittee on Military Procurement, House Committee on National

Security, asked GAO to determine (1) whether the ammunition stockpile

meets wartime and peacetime requirements and (2) what problems the

Army single manager has in managing much of the military services'

ammunition stockpile. 





   BACKGROUND

---------------------------------------------------------- Chapter 0:1



Under the national military strategy, the military services are

required to maintain enough ammunition for two nearly simultaneous

major regional conflicts and for peacetime needs, such as training. 

The Defense Planning Guidance lays out general guidelines for the

services to determine how much ammunition they need to conduct

operations under the strategy.  Ammunition that exceeds these

requirements is to be shared among the services or disposed of

through sale to other nations, recycling, or destruction.  In 1977,

the Army assumed single manager responsibility for storing, managing,

inspecting, testing, and disposing of most of the services'

ammunition.  In this role, as of September 30, 1995, the single

manager was responsible for managing 3 million tons of ammunition

owned by the services.  The individual services also manage

additional stocks of ammunition in their own facilities. 





   RESULTS IN BRIEF

---------------------------------------------------------- Chapter 0:2



The services have to do a better job of managing their ammunition

needs.  As of September 30, 1994, the total stockpile of usable and

unusable ammunition was worth about $80 billion.  GAO estimates that

about $31 billion of this total ammunition stockpile was excess. 

This excess amount includes about $22 billion worth of ammunition

that was still usable. 



This situation has occurred primarily as a result of the collapse of

the Soviet Union in the early 1990s and the change in the primary

threat to the United States.  As a consequence, the services'

ammunition requirements were drastically reduced, and more of the

ammunition stockpile became excess.  The Army's war reserve

requirements, for example, were reduced by 74 percent. 



Of the various types of ammunition in the stockpile, GAO found that

almost half have amounts that exceed the services' needs in varying

quantities.  For some types of ammunition, the services have over 50

times their stated needs.  While there are shortages of some specific

ammunition types, overall the services generally have enough

ammunition to meet their wartime and peacetime requirements. 



Increases in the single manager's ammunition stockpile due to the

return of massive amounts of ammunition from Europe and Operation

Desert Storm, combined with a decrease in the single manager's

budget, workforce, and storage space, have created a situation that

could, if allowed to continue, degrade the forces' readiness to meet

wartime and peacetime needs.  The single manager's ability to manage

ammunition has been severely taxed.  As a result, ammunition

inspections and tests have fallen so far behind that the single

manager cannot ensure the usability and readiness of the ammunition

stockpile.  Moreover, the single manager does not know how much of

the ammunition is excess to stated requirements, in part, because the

single manager does not know the services' requirements or what

ammunition they also own and store in their own facilities.  In

addition, the services have not identified what ammunition the single

manager stores for them is required and what is above stated

requirements.  Because the services' total ammunition needs and the

extent of ammunition above stated requirements are both unknown,

ammunition that exceeds one service's needs is not always used to

fill another service's requirements, and services have bought

ammunition that could have been redistributed from other services'

excess ammunition. 



Finally, the single manager faces two problems in disposing of the

increasing amount of excess ammunition.  First, the single manager

must continue to store excess ammunition until the services identify

and relinquish ownership of it.  Currently, the services have no

incentives to identify their excess ammunition, in part, because the

single manager is responsible for and pays for its care; that is,

storage, inventories, surveillance, and disposal.  Second, although

the Congress has recently provided more funds for ammunition

disposal, the single manager cannot meet existing demands for

disposal.  As a result, the stockpile continues to grow. 





   PRINCIPAL FINDINGS

---------------------------------------------------------- Chapter 0:3





      MUCH OF THE AMMUNITION IS

      EXCESS OR OLD

-------------------------------------------------------- Chapter 0:3.1



When the Cold War ended, the Department of Defense's (DOD) ammunition

requirements decreased substantially.  Army war reserve requirements

alone decreased from 2.5 million tons to 650,000 tons.  When GAO

compared the amount of usable ammunition on hand to each service's

requirements to support two major regional conflicts and training and

testing needs for 7 years (6 years of testing for the Army), it found

that almost 50 percent of the different types of ammunition include

amounts that exceed the services' needs.  For example, the Air Force

and the Army have enough .30-caliber carbine ball ammunition to meet

their stated requirements

58 and 517 times, respectively. 



Of the $80 billion in usable and unusable ammunition, GAO estimates

the total value of excess ammunition to be about $31 billion.  This

includes about $22 billion of usable ammunition that exceeded stated

needs and about $9.4 billion in unusable assets excess to stated

needs.  In addition, over $2.9 billion of excess assets that were on

the single manager's inventory records did not appear on the

services' inventory records.  Also, over $2 billion in ammunition was

identified for disposal. 



Moreover, the services spent about $125 million for ammunition in

fiscal years 1993 and 1994 that exceeded their fiscal year 1995

stated requirements.  In addition, ammunition is being stored and

managed for weapon systems that either have been purged or are no

longer in the active inventory.  For example, the Marine Corps had

about 3 million .50-caliber cartridges for the M85 machine gun, even

though the Marine Corps has removed the M85 gun from its inventory

and no other weapon system uses this type of .50-caliber ammunition. 



The age of over half of the ammunition stockpile managed by the

single manager is not in the single manager's database.  Of the

ammunition for which the age is known, almost 25 percent is over 25

years old.  Even when this old ammunition is usable, it is not always

easily accessible in storage facilities, and commanders prefer not to

use it.  During Operation Desert Storm, battlefield commanders opted

to use more modern ammunition.  Moreover, commanders want to train

with ammunition they will use on the battlefield, not the "old

stuff." As a result, old ammunition continues to age and takes up

storage space. 



Of the services' 2,781 types of ammunition, 752 types have shortages

when compared to the services' requirements databases.  However, the

services generally believe that the ammunition shortages are

manageable because they have substitute items and procurements

planned to fill these shortages. 





      STOCKPILE MANAGEMENT

      PROBLEMS THREATEN READINESS,

      AND PLANNED IMPROVEMENTS

      HAVE BEEN DELAYED

-------------------------------------------------------- Chapter 0:3.2



Much of the huge amount of ammunition returned after Operation Desert

Storm and from bases closed in Europe came to the single manager's

depots in small, broken lots.  Also, the single manager's budget and

workforce have been greatly reduced.  These factors have combined to

make management of the stockpile difficult.  A 1993 Joint Ordnance

Commanders Group's report noted major deficiencies in the maintenance

of the ammunition managed and maintained by the single manager that

could affect readiness.  The single manager's main concern has been

the receipt of ammunition and quick delivery to customers at the

expense of efficient storage, disposal, inspection, and maintenance. 

Many problems affect the ammunition stockpile.  For example: 



  -- The condition of some ammunition is unknown because of delays in

     inspections and testing, which are important to ensure that war

     reserve items are usable, properly classified as to condition,

     and safe.  In addition, the single manager's database shows

     ammunition as usable, even though defect codes show it is

     overdue for inspection.  Although the single manager's database

     shows that only about 6,600 lots were past due for inspection,

     other records the single manager considers more accurate show

     that about 68,000 lots--10 times as many--were actually past due

     for inspection.  Also, 25 percent of the war reserve items were

     overdue for tests.  Both these backlogs are expected to double

     over the next

     3 to 5 years. 



  -- About 29 percent of the services' top priority wartime

     ammunition items, such as motors for the MK66 2.75-inch rocket,

     could not be issued as of March 1995 because they needed to be

     repaired or inspected or could not be fixed.  Eighteen percent

     of the top priority items needed repairs costing an estimated

     $99 million. 



The single manager has made little progress in implementing its 1994

Integrated Ammunition Stockpile Management Plan, which is intended to

streamline the stockpile.  Part of the problem is that the services

have not yet identified which of their ammunition is required and

which is excess to stated requirements.  Without this information,

the single manager cannot give priority to the storage and care of

required ammunition to ensure readiness.  In addition, ammunition

that exceeds one service's needs is not always used to fill another

service's requirements, and a service may make unnecessary purchases

of ammunition that is excess in another service.  GAO's analysis of

requirements and ammunition on hand identified opportunities for

cross-sharing among the services.  GAO found that (1) the services

spent about $185 million for ammunition items during fiscal years

1993-95, even though amounts in excess of stated requirements were

available in another service; (2) $1.2 billion in ammunition in

excess of stated requirements could be shared among the services to

alleviate shortages; and (3) $19 million in costs could also be

avoided if usable ammunition in excess of stated requirements was

shared with a service that planned maintenance on the same type of

ammunition. 



In addition, the single manager historically has not received the

funding requested or needed to manage the stockpile adequately and to

dispose of excess ammunition, in part, because of competition with

other Army funding needs.  In recognition of this problem, the

Congress statutorily established a funding minimum for the care and

maintenance of ammunition in 1995.  In addition, the conferees on the

DOD appropriations act directed that a minimum for fiscal year 1996

be expended for the same purpose.  This has helped, and in fiscal

year 1995, the single manager was able to do a complete ammunition

inventory to restore the accuracy of ammunition inventory records. 





      OPTIONS FOR HANDLING

      AMMUNITION STORAGE AND

      DISPOSAL PROBLEMS

-------------------------------------------------------- Chapter 0:3.3



GAO believes that the single manager will face difficulties for years

in managing the ammunition stockpile.  The single manager has

tremendous backlogs of ammunition to dispose of, and these backlogs

will increase for the foreseeable future, especially if the services

begin to identify ammunition that is excess to requirements.  One

problem is that the services are not inclined to declare ammunition

excess as they do not have to pay the single manager to store it. 

Also, once ammunition is declared excess, the owning service is not

reimbursed for its cost if another service wants it.  An option for

persuading the services to relinquish ownership of excess, old, and

obsolete ammunition, as pointed out in the Joint Ordnance Commanders

Group's 1993 report, would be for the single manager to charge the

services a storage fee.  The report also suggested that additional

storage space could be made available if excess ammunition were used

in training, included in foreign military sales or grant aid

programs, or was destroyed.  In addition, as GAO recommended in

1979,\1 the single manager could own, manage, and control the

ammunition stockpile and thus know what ammunition is excess to

stated requirements and distribute it to other services that need the

ammunition or dispose of it, if unneeded. 



Disposing of excess ammunition is a time-consuming, expensive

process.  For example, at the installation with the largest disposal

capacity,

1,300 tons of ammunition were destroyed at a cost of about $1 million

during 1 week GAO visited.  With over 375,000 tons of ammunition

awaiting disposal at the end of fiscal year 1995 and additional

ammunition identified for disposal each year, it will take years to

dispose of the ammunition.  And because of the expense associated

with disposing of this much ammunition, finding the funds to

facilitate disposal is difficult.  One option would be to require the

services to include the cost to dispose of ammunition being replaced

in budgets for new ammunition.  While this option would not eliminate

the significant quantities of ammunition that already exist, it would

focus earlier attention on the ammunition disposal problem, provide

additional funds for disposal, and over time significantly reduce the

quantities awaiting disposal. 





--------------------

\1 Centralized Ammunition Management--A Goal Not Yet Achieved

(LCD-80-1, Nov.  26, 1979). 





   MATTER FOR CONGRESSIONAL

   CONSIDERATION

---------------------------------------------------------- Chapter 0:4



To impress upon the services the need to address the problem of

excess ammunition, the Congress may wish to consider requiring the

Secretary of Defense to report annually the amount of ammunition on

hand and the amount that exceeds established requirements.  This

report could also cite progress made in addressing specific

ammunition stockpile management problems, including identifying

ammunition in excess of established requirements, cross-sharing of

ammunition in excess of established requirements among services that

have shortages, inspecting and testing ammunition, and disposing of

excess ammunition that it no longer makes sense to retain.  With this

information, the Congress could make more informed annual budget

decisions related to the ammunition stockpile. 





   RECOMMENDATION

---------------------------------------------------------- Chapter 0:5



To facilitate implementation of the single manager's plan for

storing, maintaining, and disposing of ammunition, GAO recommends

that the Secretary of Defense develop incentives to encourage the

military services to categorize their ammunition as required or as

excess to established requirements, to update this information

annually, and to relinquish control of their excess ammunition to the

Army single manager for distribution to other services that have

shortages of ammunition or for disposal when it no longer makes sense

to retain it.  Possible changes in ammunition management, among

others, include (1) requiring the services to pay the single manager

a fee for storing their ammunition; (2) authorizing the single

manager to own, manage, and control the stockpile and/or be aware of

the services' total requirements and ammunition in their own storage

facilities, so the manager can identify ammunition excess to

requirements and coordinate redistribution of it to services that

need the ammunition or dispose of it when appropriate; and (3)

including the services' cost to dispose of excess ammunition in their

budgets for new ammunition. 





   AGENCY COMMENTS

---------------------------------------------------------- Chapter 0:6



DOD partially concurred with the findings in this report and the

matter for congressional consideration.  DOD disagreed with the

recommendation and the options for handling ammunition storage and

disposal problems. 



DOD stated that it took exception to the criteria that GAO used in

determining excess inventory and that GAO infers that stocks above

established requirements are excess and should therefore be disposed

of.  GAO agrees that not all the ammunition in excess of stated

requirements should be disposed of, and this report does not state

that all excess ammunition should be disposed of.  However, GAO

believes that the usable assets in excess of stated requirements

(about $22 billion) should be made available for cross-sharing with

other services to avoid one service purchasing assets that another

service has in excess of its requirements.  In addition, GAO believes

there are many items being stored that will never be used and should

be identified for disposal.  Other items may not need to have dollars

expended on them to convert them from unusable to usable ammunition. 

Without some sort of prioritization or identification of ammunition

required to meet wartime and peacetime requirements, only the $2

billion of ammunition identified for disposal would be treated

differently by the single manager. 



DOD stated that it recognizes that improvements to ammunition

management are needed.  It stated that its Integrated Ammunition

Stockpile Management Plan has resulted in significant progress in

many areas, such as demilitarization.  GAO agrees that the 1994

management plan is a step in the right direction but is concerned

about the plan receiving the services' full support in such areas as

identifying required and nonrequired ammunition, which is a critical

component of the plan. 



DOD partially concurred with the matter for congressional

consideration.  DOD said it already provides the Congress with

ammunition inventory data in the Supply System Inventory Report and

demilitarization information in the procurement budget

justifications.  GAO is aware of this report and the information

contained in it.  However, as currently prepared, the Supply System

Inventory Report does not provide any information on the amount of

ammunition that exceeds established requirements or stockpile

management problems. 



DOD disagreed with the recommendation and options given for potential

changes in ammunition management.  DOD stated that it considers the

present arrangement for managing much of the services stockpile to be

satisfactory.  GAO does not agree that the present arrangement for

managing the stockpile is working well and believes that existing DOD

practices will not solve the problems.  GAO continues to believe its

recommendation is valid. 





INTRODUCTION

============================================================ Chapter 1



The four military services stockpile in their retail and wholesale

inventories conventional ammunition, explosives, and missiles

(hereafter referred to as ammunition) valued at about $80 billion as

of September 30, 1994.  About $58 billion of this ammunition is

classified as usable or serviceable.\1 Serviceable ammunition valued

at about $34 billion is owned, stored, and managed by the services

(retail stocks).  The remaining serviceable ammunition, valued at $24

billion, is owned by the services but stored under Army management to

ensure that a sufficient supply is available to meet needs for

peacetime training and for war (wholesale stocks).  Including the

retail stocks, the amount of ammunition stored is over 5 million

tons, which if loaded into railway cars would stretch over 800 miles,

about the distance from Washington, D.C., to Orlando, Florida.  Under

current guidance, the services must maintain enough ammunition to

support forces fighting in two nearly simultaneous major regional

conflicts.  This requirement represents a change in national strategy

dictated by international developments and a major reduction in U.S. 

forces.  A 1993 study directed by the Joint Ordnance Commanders

Group\2 found that the changes had seriously affected stockpile

operations and readiness. 





--------------------

\1 Ammunition is coded so that its physical condition can be

identified and reported.  It is coded into three categories: 

serviceable or ready for issue, unserviceable or not suitable for

issue or use, and suspended or not suitable for issue or use pending

final classification. 



\2 The Group includes flag-rank officers from each military service

and is chaired by the Commander, Industrial Operations Command,

formerly called the U.S.  Army Armament, Munitions, and Chemical

Command. 





   MILITARY SERVICES DETERMINE

   AMMUNITION REQUIREMENTS

---------------------------------------------------------- Chapter 1:1



Each service determines the types and quantities of ammunition it

needs to meet requirements for war reserves and training.  The

requirements are based on the national military strategy, which

requires the services to be capable of fighting two major regional

conflicts.  The Defense Planning Guidance gives general direction to

the services and planning factors for the conduct of military

operations under the strategy.  Each service is to use the Department

of Defense's (DOD) capabilities-based munitions requirements process

to establish its munitions requirements.  Under this intricate

process, the services determine their requirements based on the

operational objectives of the combatant commander in chiefs against

potential threats.  The requirements determination process also

considers the services' logistics capabilities and the need for

sufficient ammunition to remain after an operation or conflict for

future contingencies.  Each service must maintain enough ammunition

to meet all those requirements.  The services assess the combination

of inventories at both wholesale and retail levels and in the

procurement pipeline to determine whether they have sufficient

ammunition to meet requirements for combat, strategic readiness,

residual readiness, training, and testing. 





   THE ARMY MANAGES THE WHOLESALE

   STOCKPILE OF CONVENTIONAL

   AMMUNITION FOR ALL THE SERVICES

---------------------------------------------------------- Chapter 1:2



In 1977, the Army became the single manager for conventional

ammunition, assuming responsibility for the storage, management, and

disposal of wholesale inventories of ammunition and explosives for

all the services.  As of September 30, 1995, this stockpile consisted

of 3 million tons of ammunition stored at nine depots, two plants,

and one arsenal (see fig.  1.1), comprising in all 37.8 million

square feet of storage space. 



   Figure 1.1:  Wholesale

   Ammunition Stockpile Sites



   (See figure in printed

   edition.)



The services own 80 percent\3 of the total tonnage of ammunition

stored by the single manager.  The Army owns the largest amount, 43

percent, followed by the Air Force with 17 percent, the Navy with 13

percent, and the Marine Corps with 7 percent. 



As the manager of the wholesale ammunition stockpile, the Army

undertakes all the management functions--distribution, storage,

inventorying, surveillance, maintenance, and disposal (see table

1.1).  The Army's effectiveness in performing these functions

determines the stockpile's readiness. 







                               Table 1.1

                

                     Stockpile Management Functions



Category                Description

----------------------  ----------------------------------------------

Distribution            Expeditious receipt and issue of items.



Storage                 Safe and secure storage of items; quick

                        response to customer requests; efficient use

                        of storage space.



Inventorying            Checking of stock location, quantity, and

                        condition against master records to provide

                        inventory accuracy and quick response.



Surveillance            Determination of the condition and

                        serviceability of stockpiled items through

                        inspections and testing.



Maintenance             Repair of defective stockpile items to restore

                        to usable state.



Disposal                Demilitarization and disposal of excess,

                        obsolete, and unsafe items from active

                        inventory through destruction or recovery of

                        resources for other uses.

----------------------------------------------------------------------



--------------------

\3 The remaining 20 percent of the wholesale stockpile is ammunition

designated for disposal (12 percent) and industrial and interservice

support agreement stocks (8 percent). 





   CHANGING WORLD CONDITIONS HAVE

   AFFECTED THE AMMUNITION

   STOCKPILE

---------------------------------------------------------- Chapter 1:3



During the 1980s, ammunition storage was generally stable.  In 1985,

with 55 to 60 percent of the storage space occupied, the stockpile

held about 2 million tons of ammunition.  Most of the stockpile

consisted of large lots, which optimized space and facilitated

economical surveillance and inventories.  However, in 1990 and 1991,

world politics changed significantly as the Soviet Union collapsed. 

As a result of this event and other worldwide changes, the United

States shifted from preparing for a global war to preparing for

regional conflicts and crises, and a general reshaping of military

resources and budgets began.  First, four major Army storage

installations were closed or realigned,\4 which reduced the

ammunition stockpile's storage capacity from 36 million to 30 million

square feet.  Second, because of overall reductions in the budget,

the single manager decided to significantly decrease its inventorying

of the wholesale stockpile.  Third, massive amounts of ammunition

were returned from overseas:  (1) prepositioned ammunition from

Europe, as U.S.  forces stationed there were withdrawn and (2) stock

from Operation Desert Storm, of which only 10 percent was used during

the war.  The continental U.S.  stockpile installations received

twice as much stock--1 million tons--as they had shipped out.  This

ammunition arrived in small, broken-up lots, which required more

storage space and inventory work. 



The stockpile has also been affected by (1) increases in retail stock

stored within its facilities, which increased the cost of storage

installation operations and reduced storage space and (2) lower usage

rates, as customer demand declined. 





--------------------

\4 The four major Army storage installations that were closed or

realigned were Fort Wingate Depot Activity, New Mexico; Navajo Depot

Activity, Arizona; Pueblo Depot Activity, Colorado; and Umatilla Army

Depot Activity, Oregon. 





   JOINT SERVICE-SPONSORED STUDY

   ADDRESSED STOCKPILE OPERATIONS

---------------------------------------------------------- Chapter 1:4



In 1993, the Joint Ordnance Commanders Group, concerned that the

wholesale conventional ammunition stockpile's readiness and quality

had been degraded, initiated a comprehensive study to assess the

wholesale ammunition stockpile.  The resulting report,\5 issued in

October 1993, identified several conditions adversely affecting the

readiness and reliability of the ammunition stored in the stockpile. 

The report identified problems in all the major functions that

related to stockpile operations and management.  Some degraded

functional areas, such as inventory and surveillance, directly affect

the readiness and reliability of the stockpile; others, such as

receipts, issues, and storage of ammunition, affect the efficiency

and effectiveness of operations.  The report predicted that

conditions would worsen over the next 4 years because of continued

funding problems and identified several initiatives to effect

improvements to the readiness and operations of the stockpile. 



The report's findings led to a charter for an ammunition functional

area analysis and the development of the Integrated Ammunition

Stockpile Management Plan to address funding and storage management

concerns. 





--------------------

\5 Wholesale Ammunition Stockpile Program (WASP) Review and

Assessment, October 1993. 





   OBJECTIVES, SCOPE, AND

   METHODOLOGY

---------------------------------------------------------- Chapter 1:5



Concerned about the condition and readiness of the wholesale

ammunition stockpile, given changes in world and stockpile

conditions, the Chairmen, Subcommittee on Military Readiness and

Subcommittee on Military Procurement, House Committee on National

Security, asked us to determine (1) the availability of ammunition to

meet wartime and peacetime requirements and (2) what problems the

Army single manager has in managing the military services' wholesale

ammunition stockpile. 



To determine whether DOD has sufficient ammunition to meet demands

for training and war reserves, we compared serviceable ammunition,

from both wholesale and retail inventories, on hand for each service

as of September 30, 1994, with the amount needed to meet requirements

for wartime and peacetime operations.  In making this determination,

we used the automated data systems that each service maintains for

its ammunition items.  Specifically, the requirements were obtained

from the Army Worldwide Ammunition Reporting System (WARS),\6 Navy

Non-Nuclear Ordnance Requirements System, Air Force Theater

Allocation Buy/Budget System, and the Marine Corps Ammunition

Requirements Management System.  We did not independently verify the

military's method of determining ammunition requirements. 



To determine whether the services have excess amounts of ammunition,

we analyzed computerized files of the services' inventories as of

September 30, 1994 (the end of the fiscal year).  First, we compared

the total on-hand serviceable inventory, item by item, to that needed

to satisfy wartime requirements, testing and training requirements

for 7 years

(6 years of testing for the Army), and other requirements.  We used

testing and training requirements for 7 years (1) to be conservative

in calculating on-hand quantities exceeding requirements, (2) because

DOD's retention policy authorizes this level of supply to meet

Defense Planning Guidance, and (3) because 7 years coincides with the

future years' planning of the services.  As requested by the Army, we

used operational project, wholesale, and basic load requirements in

addition to 6 years of testing requirements and 7 years of training. 

Second, we determined the amount of unserviceable ammunition by type

of ammunition for which there was excess serviceable inventory. 

Third, we compared the single manager's inventory database showing

ammunition stored for the services with the services' databases that

we had used in our comparison.  We then determined the amount of

additional ammunition excess to requirements that was not on the

services' records.  Finally, we identified the amount of ammunition

DOD has designated for disposal.  To determine the services'

rationale for excesses, we selected and discussed with item managers

145 types of ammunition (126 randomly selected and 19 judgmentally

selected because they had large quantities of excess items) for which

on-hand quantities exceeded service-determined requirements. 



To determine whether the services have shortages of ammunition, we

compared the same universe to the amount needed to meet wartime

requirements plus that needed for 1 year of training and testing.  We

used only 1 year of training and testing requirements to be

conservative in calculating ammunition shortages.  To determine the

services' rationale for types of ammunition with shortages, we

selected and discussed with item managers 154 types of ammunition

(152 randomly selected and

2 judgmentally selected because they represented large dollar values)

for which on-hand quantities were less than service-determined

requirements.  Additionally, we selected and discussed with service

officials the

42 highest unit cost items (representing $32 billion of the $60

billion shortage) to determine the rationale for shortages. 



We used the Standard Depot System database for our analyses of the

wholesale stockpile.  This database includes information from 11 of

the

12 storage installations (Pine Bluff Arsenal is not included in the

system).  We used data as of March 1995 for old ammunition in the

wholesale stockpile, serviceability of ammunition in the stockpile as

classified by condition codes, and backlogs of periodic inspections

and data as of September 1995 on the net storage space of

installations.  We also used data from an Army disposal study dated

September 1995 on items designated for disposal and estimates of

disposals anticipated in the future. 



In relation to the management of the stockpile, we interviewed

ammunition management officials and reviewed policies, procedures,

and documents related to the management of conventional ammunition at

the following sites: 



  -- Headquarters locations



Departments of the Army, the Navy, and the Air Force, Washington,

D.C. 



  -- Technical commands



U.S.  Army Materiel Command, Alexandria, Virginia



U.S.  Industrial Operations Command, Rock Island, Illinois



U.S.  Army Defense Ammunition Center and School, Savanna, Illinois



  -- Inventory commands



Air Force Air Logistics Center, Ogden, Utah



Naval Ordnance Center, Indian Head, Maryland



Marine Corps Systems Command, Clarendon, Virginia



  -- Storage installations



Hawthorne Army Depot, Hawthorne, Nevada



Letterkenny Army Depot, Chambersburg, Pennsylvania



Red River Army Depot, Texarkana, Texas



Sierra Army Depot, Herlong, California



McAlester Army Ammunition Plant, McAlester, Oklahoma



Crane Army Ammunition Activity, Crane, Indiana



We did this review from April 1994 to April 1996 in accordance with

generally accepted government auditing standards. 





--------------------

\6 We based our analyses on ammunition requirements contained in the

WARS database.  Although Army representatives suggested in March 1996

that we use the Army's Research Development Acquisition Information

System Agency (RDAISA) database for greater accuracy, we determined

that this alternative database does not contain requirements for all

Army ammunition items but requirements for ammunition items for which

procurement actions are in process or planned.  We further determined

that the RDAISA database was not any more complete than the WARS

database.  For example, 46 percent of the types of ammunition for

which the WARS database showed a requirement did not have a

requirement in the RDAISA database.  Therefore, we did not

recalculate our detailed analysis of ammunition requirements and the

amount of ammunition excess to requirements based on the RDAISA

database. 





   AGENCY COMMENTS AND OUR

   EVALUATION

---------------------------------------------------------- Chapter 1:6



DOD expressed concern about the requirements database we used,

particularly for the Army.  We used the WARS database, which was the

most complete automated database we found for the Army.  At our exit

conference, Army officials suggested that we use the Army's RDAISA

database for greater accuracy.  However, we determined that this

database does not contain requirements for all Army ammunition items;

it only contains requirements for ammunition items for which

procurement actions are in process or planned.  We remain unconvinced

that the Army has a more complete automated database that we could

have used.  Also, DOD notes in its comments on this report that it

started using a capabilities-based munitions requirements process

beginning with the fiscal year 1996 budget.  Our requirements data

were the latest available as of September 1994, which was after the

beginning of the development of the fiscal year 1996 budget and

included capabilities-based principles. 





MUCH OF THE SERVICES' AMMUNITION

IS EXCESS TO REQUIREMENTS AND IS

AGING

============================================================ Chapter 2



The services have to do a better job of managing their ammunition

needs.  As of September 30, 1994, the total stockpile of usable and

unusable ammunition was worth about $80 billion.  We estimate that

about $31 billion of this total ammunition stockpile was excess.\1

This excess amount includes about $22 billion worth of ammunition

that was still usable. 



This situation has occurred primarily as a result of the collapse of

the Soviet Union in the early 1990s and the change in the primary

threat to the United States.  As a consequence, the services'

ammunition requirements were drastically reduced, and more of the

ammunition stockpile became excess.  The Army's war reserve

requirements, for example, were reduced by 74 percent. 



Of the various types of ammunition in the stockpile, we found that

almost half have amounts that exceed the services' needs in varying

quantities.  For some types of ammunition, the services have over 50

times their stated needs.  While there are shortages of some specific

ammunition types, overall, the services generally have enough

ammunition to meet their wartime and peacetime requirements. 



DOD management practices perpetuate the buildup of excess and aging

ammunition, even though the ammunition stockpile is supposed to

comprise only ammunition and explosives essential for peacetime and

wartime needs.  In many instances, the services keep it available

just in case they or other organizations, such as state agencies or

foreign allies, have a need for it.  However, DOD often does not

determine what would be a reasonable amount to keep to meet these

needs.  For all these reasons, storage facilities are reaching

capacity levels, and the excess ammunition is stressing the ability

of installation personnel to manage required ammunition since all

ammunition not identified for disposal, including the $31 billion

excess mentioned above and $2.9 billion in excess that appears on the

single manager's inventory records but not the services' inventory

records, receives the same amount of single manager attention (see

ch.  3 for a discussion of stockpile management).  Moreover, in

fiscal years 1993 and 1994, the services spent about $125 million for

ammunition that exceeded fiscal year 1995 stated requirements.  No

service purchased ammunition items in fiscal year 1995 for which it

had quantities on hand in excess of stated requirements at the end of

fiscal year 1994. 



In addition to its ammunition in excess of stated requirements, DOD

has shortages of some types of ammunition.  However, the services

generally believe that these shortages are manageable because they

have substitute items and planned procurements to make up for

shortages. 



We believe that the shortages of some items could be satisfied by

better sharing of amounts in excess of stated requirements among the

services.  While the Army has shared some excess ammunition among the

other services, the single manager is unaware of all ammunition in

excess of stated requirements because the services have not

identified which of their ammunition is required and which is not

required.  Without this information, the single manager cannot

adequately identify and coordinate redistribution of excess

ammunition.  During our review, we identified $1.2 billion of items

in excess of stated requirements that could be shared to meet service

shortages of required ammunition, reduce potential future

procurements, and avoid maintenance. 





--------------------

\1 We define excess as ammunition quantities above the military

services' stated war reserve and peacetime requirements.  DOD's

definition of excess ammunition differs from our definition.  DOD

does not define ammunition as excess until the quantity of an item

exceeds all authorized retention levels (such as economic and

contingency retention levels) and the item is processed for

reutilization or disposal. 





   WAR RESERVE REQUIREMENTS HAVE

   BEEN SIGNIFICANTLY REDUCED

---------------------------------------------------------- Chapter 2:1



Because the threat the United States faces has changed from a global

war to a much smaller one involving two major regional conflicts, all

the services' war requirements have been reduced.  Army war reserve

requirements in total tonnage declined 74 percent--from 2.5 million

tons in fiscal year 1992 to 650,000 tons in fiscal year 1994 (see

fig.  2.1).  For example, the requirement for multiple launch rocket

system pods decreased by 82 percent.  Likewise, the requirement for

the 155-millimeter dual purpose improved conventional munitions

decreased by 61 percent.  The reduced threat has led to reduced

requirements, and reduced requirements have contributed significantly

to large quantities of various ammunition types becoming excess to

the services' stated needs. 



   Figure 2.1:  Reduction in Army

   War Reserve Requirement

   (tonnage in millions)



   (See figure in printed

   edition.)



Source:  Conventional Ammunition Functional Area Analysis. 





   ALMOST 50 PERCENT OF THE TYPES

   OF AMMUNITION HAVE QUANTITIES

   EXCEEDING REQUIREMENTS

---------------------------------------------------------- Chapter 2:2



All the services have serviceable ammunition in the stockpile that

exceeds their needs as defined in the Defense Planning Guidance; that

is, to support U.S.  forces during two nearly simultaneous major

regional conflicts, for training and testing during peacetime, and

for other needs.  In total, about 50 percent of the ammunition types

in the services' inventories include quantities exceeding

requirements.  The 50 percent includes ammunition types in their

inventories for which the services have no stated requirements. 



Although ammunition managers agreed that some items were excess, they

believed that ammunition should be kept for other uses, such as

training and foreign military sales.  However, they have set no

limits on how much should be kept for other purposes.  The retention

of excess ammunition adds unnecessarily to workload and costs and

requires the use of increasingly valuable storage space. 





      EXCESS SERVICEABLE

      AMMUNITION

-------------------------------------------------------- Chapter 2:2.1



The services own and store in the wholesale and retail stockpiles

excess ammunition valued at about $22 billion, or 40 percent of the

value of the total serviceable stockpile (see table 2.1).  To

determine the adequacy of the stockpile, we compared the amount of

serviceable ammunition on hand in both wholesale and retail level

storage facilities as of September 30, 1994, to the services' stated

requirements.  At that time, the services owned and stored 2,781

different types of serviceable conventional ammunition worth $58

billion.  Before considering stocks excess, we accounted for the

quantity of ammunition needed for two major regional conflicts and

for 7 years of training and testing (6 years of testing for the

Army).  For all services, we allowed 1-1/2 times the stated

requirements before determining excess quantities. 







                         Table 2.1

          

           Excess Serviceable Ammunition Owned by

                        the Services



                   (Dollars in billions)



                                                 Excess as

                                  Value of      percentage

                    Value of        excess        of total

                 serviceable   serviceable     serviceable

Service           ammunition    ammunition      ammunition

--------------  ------------  ------------  --------------

Army                   $26.4         $15.0              57

Navy\a                  14.9           3.8              26

Marine Corps             5.4           2.1              39

Air Force                7.0            .7              10

==========================================================

Subtotal               $53.7         $21.6              40

Excluded Navy            4.5

 items\a

==========================================================

Total                  $58.2

----------------------------------------------------------

\a We excluded items valued at $4.5 billion with a requirement of

zero because the Navy could not identify components versus end items

for several types of ammunition. 



Of the excess ammunition owned by the services, 30 percent exceeded

requirements by 1-1/2 to more than 30 times.  For another 18 percent,

the services did not identify a requirement.  The total value of

these items is $21.6 billion.  (See table 2.2.)







                               Table 2.2

                

                  Serviceable Ammunition That Exceeds

                Requirements Multiple Times (as of Sept.

                               30, 1994)



                         (Dollars in billions)



                                                    Percentage   Value

Number of times type of                 Number of     of total      of

ammunition exceeds                     ammunition   ammunition  excess

requirement\a                               types        types   items

------------------------------------  -----------  -----------  ------

More than 30                                  121          4.3    $3.7

15.01 to 30.0                                  83          3.0     0.3

1.51 to 15.0                                  637         22.9    14.6

======================================================================

Subtotal                                      841         30.2    18.6

No requirement                                500         18.0     3.0

======================================================================

Total                                       1,341         48.2   $21.6

----------------------------------------------------------------------

\a Amounts exceeding 1 indicate that more than enough ammunition is

on hand to meet the wartime and peacetime requirements through fiscal

year 2001. 



One example of excess ammunition types is the .30-caliber carbine

ball cartridge.  The Air Force has enough of this type of ammunition

to meet its stated requirement 58 times, and the Army has 517 times

the amount needed.  Similarly, the Navy has 276 times the amount of

the .50-caliber ball cartridges needed, and the Marine Corps has 92

times the number of offensive hand grenades needed to meet its

requirements. 



Also, as table 2.2 shows, 500 types of ammunition worth $3 billion

have no stated requirements.  For example, the Air Force has no

requirement in its database for its 4.8 million of 20-millimeter

cartridges worth over $21 million.  According to Air Force officials,

this ammunition is needed for the M39 gun and the F-5 aircraft and

can be used in the M61 gun, when separated.  In addition, the Marine

Corps does not show a requirement in its database for its 4,307

105-millimeter cartridges valued at over $2.5 million and 2.9 million

.50-caliber cartridges valued at about $2.7 million.  Marine Corps

officials stated that they do not need these types of ammunition. 

The other services similarly have ammunition on hand for which there

is no stated requirement.  Although Air Force officials said that

they have specific uses for the ammunition, they nevertheless do not

show that they need it by including it in their requirements

database. 





      ADDITIONAL EXCESS INVENTORY

-------------------------------------------------------- Chapter 2:2.2



We calculated the total amount of excess ammunition--serviceable and

unserviceable--at about $31 billion.  In addition to the $22 billion

of serviceable ammunition in excess of stated needs, we calculated

that as of September 30, 1994, DOD had about $9.4 billion in

unserviceable assets that exceeded stated needs (see table 2.3), for

a total excess of $31 billion, or about 39 percent of the $80 billion

ammunition stockpile.  In addition, there was over $2.9 billion of

excess assets on the single manager's inventory records that did not

appear on the services' inventory records, and over $2 billion of

ammunition that was identified for disposal.\2







                               Table 2.3

                

                Excess Unserviceable Ammunition Owned by

                              the Services



                         (Dollars in billions)



                                                             Excess as

                                                            percentage

                                                 Value of           of

                                                   excess        total

                                    Value of  unserviceab  unserviceab

                                unserviceabl           le           le

                                           e  ammunition\  ammunition\

Service                           ammunition            a            a

------------------------------  ------------  -----------  -----------

Army                                    $8.6         $5.5           64

Navy\b                                   6.7          3.4           51

Marine Corps                             1.5           .4           27

Air Force                                 .9           .1           11

======================================================================

Subtotal                               $17.7        $ 9.4           53

Excluded Navy items\b                    3.8

======================================================================

Total                                  $21.5

----------------------------------------------------------------------

\a This represents only unserviceable ammunition by type of

ammunition for which there was excess serviceable inventory. 



\b We excluded items valued at over $3.8 billion with a requirement

equal to zero because the Navy cannot identify components versus end

items for several types of ammunition. 



Without some identification of ammunition not needed to meet wartime

and peacetime requirements or some other prioritization, all

ammunition other than that identified for disposal receives the same

level of attention by the single manager.  As discussed in chapter 3,

the large amount of ammunition being stored by the single manager is

stressing the ability of installation personnel to manage required

ammunition. 





--------------------

\2 We were only able to determine a dollar value for 43 percent of

the ammunition identified for disposal as of September 30, 1994, and

this amounted to $2.1 billion. 





      ITEM MANAGERS' VIEWS ON

      EXCESS AMMUNITION

-------------------------------------------------------- Chapter 2:2.3



We queried ammunition item managers about the reasons that DOD had

excess ammunition for 145 selected (126 randomly and 19 judgmentally)

types of ammunition.  These managers agreed that they had excess

items for 59 (41 percent) of the 145 types we selected.  They

disagreed that the rest were excess for varying reasons.  All cited

training as a reason for keeping excess ammunition.  However, we had

already computed training and testing needs in our analysis, and the

ammunition they cited as needed for training was excess to stated

requirements.  Other reasons cited for keeping the ammunition were

for foreign military sales, research and development, trade purposes,

military competitions, and ceremonies, such as military funerals. 

However, the services had not determined what would be a reasonable

amount to meet these needs; rather, they seemed to keep all of any

item they thought might be needed. 





   SERVICE INVENTORIES CONTAIN

   MANY OLD AND AGING AMMUNITION

   ITEMS

---------------------------------------------------------- Chapter 2:3



Historically, the age of ammunition in the stockpile has been a

concern and the object of study since before fiscal year 1979.  In

fiscal year 1979, the single manager initiated a purification program

to eliminate old, obsolete, or otherwise unneeded ammunition items. 

This particular effort built on the results of past studies.  In

September 1985, the single manager issued an ammunition stockpile

rotation study that assessed the effectiveness of stockpile rotation

policies and regulations.  This study analyzed ammunition stocks in

the United States and Europe and found that 30 percent of the Army's

stocks in the United States and 26 percent of the overseas stocks

were 20 years old or older. 



Little change, if any, has occurred since 1985.  Despite an awareness

of age and the need to rotate ammunition stocks, we found that as of

March 1995, a considerable portion of the wholesale ammunition

stockpile was over

25 years old.  The age of over 56 percent of the lots in the

wholesale ammunition stockpile is unknown because the date of

manufacture is either not recorded in the database or recorded

incorrectly.  Of the remaining 44 percent, 14 percent was over 30

years old, 34 percent was over 20 years old, and more than 55 percent

was over 10 years old. 

Table 2.4 shows the ages of the ammunition lots\3 in the wholesale

stockpile. 







                               Table 2.4

                

                   Age of Ammunition in the Wholesale

                      Stockpile (as of Mar. 1995)



                                                   Number

                                                       of   Percentage

Age in years                                         lots   of total\a

-------------------------------------------------  ------  -----------

0 to 5                                             40,688           26

5.01 -10                                           30,150           19

10.01 -15                                          18,474           12

15.01 -20                                          14,986            9

20.01 -25                                          15,130           10

25.01 -30                                          16,587           10

30+                                                22,453           14

======================================================================

Total                                              158,46          100

                                                        8

----------------------------------------------------------------------

\a Does not include 202,691 lots for which the age was unknown or

incorrectly entered into the database. 



We observed ammunition dating to the 1940s (see fig.  2.2).  Service

officials generally said that unless ammunition has a shelf life, its

age does not alter its serviceability.  They noted that if ammunition

is stored properly, it is as good as the day it was manufactured. 



   Figure 2.2:  Ammunition Dating

   From the 1940s



   (See figure in printed

   edition.)



While old ammunition may still be serviceable, it is less likely to

be used if a new item is available.  The 1985 rotation study noted

that soldiers in the field demanded the newest and best lots of

ammunition available, thus older lots remained in storage.  More

recently, during Operation Desert Storm, battlefield commanders opted

to use newer, more modern items.  Ammunition that was shipped to

Southwest Asia for Operation Desert Storm, partly from Europe, but

was not used now occupies over 2 million square feet of space in the

U.S.  depot system, awaiting potential use and continuing to age. 

Also, according to single manager officials, commanders insist on

training the way they are expected to fight a war.  Consequently,

they also do not want to train with the "old stuff." Rather, they

want to use the more modern and the most current ammunition, if

available. 





--------------------

\3 Ammunition is manufactured and controlled by lots.  An ammunition

lot identifies specific characteristics associated with a certain

quantity of ammunition (e.g., complete rounds, components,

propellants) that is manufactured or assembled by one producer under

uniform conditions and is expected to function in a uniform manner. 

Beginning around the mid-1970s, the month and year of manufacture

were incorporated among the characteristics of each ammunition lot

number. 





   MANAGEMENT PRACTICES PERPETUATE

   THE BUILDUP OF EXCESS AND AGING

   AMMUNITION

---------------------------------------------------------- Chapter 2:4



The Joint Ordnance Commanders Group's 1993 study and resulting report

on the wholesale stockpile found that the excess ammunition in the

stockpile contributes to the stockpile's annual operational costs. 

The report suggested that the services reduce the amount of excess

ammunition stored.  The report also suggested that training, foreign

military sales, grant aid programs, and destruction are among the

ways of eliminating excess.  However, the services have made little

progress in eliminating excess and aging ammunition because they are

reluctant to classify ammunition as excess; have no incentive to

declare ammunition excess, since the Army pays for its storage; are

storing ammunition for weapon systems no longer in their inventories;

and have purchased ammunition that, according to their records, was

not needed to meet required levels.  In addition, the services keep

ammunition over and above requirements, or in "long supply," to meet

various retention needs.  Moreover, single manager personnel do not

always issue the older stock, leaving it to continue to age. 





      SERVICES ARE RELUCTANT TO

      CLASSIFY AMMUNITION AS

      EXCESS

-------------------------------------------------------- Chapter 2:4.1



According to the 1993 report on the wholesale stockpile, the services

have known for some time that they have excess quantities of

ammunition items.  We were told that the services do not like to

declare ammunition excess because they then lose ownership of stocks. 

Also, if items in long supply are transferred to another service, the

transferring service is reimbursed for the items.  However, if an

item is identified as excess and then given to another service, the

issuing service is not paid for the item.  Also, theater commanders

may exercise their judgment to retain ammunition items even if

requirements no longer exist.  Air Force inventory control point

officials agreed in October 1994 that they could no longer provide

effective and efficient management of vast quantities of older,

obsolete weapon systems.  They listed 138 potential items for

disposal because they had no operational requirement, were no longer

reliable, were environmentally unacceptable, or their shelf life had

expired.  Although headquarters officials approved some of these

items for disposal, they directed that others be retained until

suitable substitutes became available or more data were provided

about the items. 





      SERVICES HAVE NO INCENTIVES

      TO REDUCE EXCESS AMMUNITION

-------------------------------------------------------- Chapter 2:4.2



Currently, the services have no incentive to reduce excess ammunition

in the wholesale stockpile because the single manager is responsible

for its care; that is, storage, inventories, surveillance, and

disposal of the ammunition.  The 1993 report on the wholesale

stockpile notes that an incentive for inducing the services to reduce

excess ammunition would be to charge a storage fee or charge each

service for the cost to maintain its stock in the wholesale system. 

However, single manager officials we talked to did not support

charging the services a storage fee.  In their opinion, the real

issue is the need for the services to identify nonrequired items and

turn them over to the single manager for disposal or identify them

for possible redistribution where they exceed stated requirements. 

However, the services have only partially provided this information. 





      SERVICES STORE AMMUNITION

      FOR WEAPON SYSTEMS NO LONGER

      IN THEIR INVENTORIES

-------------------------------------------------------- Chapter 2:4.3



Ammunition is being stored and managed for weapon systems that either

have been purged or are no longer in the active inventory.  Although

we did not determine the total amount of ammunition stored for weapon

systems no longer in the inventory, we found specific examples of

such ammunition. 



The M60A2 tank and the M42 self-propelled gun are obsolete weapon

systems to the Army.  However, the Army continues to store 147,300

152-millimeter cartridges valued at $43.6 million for the M60A2 tank

and 269,000 40-millimeter cartridges valued at $2.5 million for the

M42 self-propelled gun.  Although Army officials acknowledged that

the 152-millimeter cartridges were at one time used for the M60A2

tank, in commenting on this report, DOD said the Army is maintaining

these 152-millimeter cartridges for the M551 Sheridan tank.  However,

DOD noted that there will be a reevaluation of the need to retain

these cartridges.  Also, the Army is storing 97 million rounds of

various small arms ammunition valued at $146 million for weapons no

longer in the Army's inventory.  According to Army officials, this

ammunition cannot be used for other weapons currently in the

inventory. 



The Air Force continues to store motors for the Nike Hercules rocket. 

According to the Air Force's database, there is no requirement for

these rocket motors, and the Air Force owns only 39 of them. 

However, the Standard Depot System database, which accounts for

wholesale ammunition assets, shows that the Air Force owns 469 of the

Nike rocket motors--430 more than the Air Force's system shows.  The

Navy continues to store in the wholesale inventory about 4,000

16-inch projectiles for its battleships, which are no longer in the

active fleet.  These projectiles are in the single manager's

wholesale inventory database as belonging to the Navy.  However, they

are not in the inventory database used by the Navy.  Also, the Navy

stores 3-inch, .50-caliber ammunition and MK25 mines in the wholesale

system.  At one depot we visited, we were told it had little or no

issues of the 3-inch, .50-caliber ammunition in 15 years, and

according to an official at another installation, there had been no

activity at all for the MK25 mines in over 10 years.  Like the

16-inch projectiles, over 5,000 MK25 mines in the single manager's

wholesale inventory listed as belonging to the Navy are not in the

Navy's inventory database. 



The Marine Corps continues to store about 3 million .50-caliber

cartridges for the M85 machine gun, even though the Marine Corps has

removed the M85 gun from its inventory and no other weapon system

uses this type of .50-caliber ammunition.  Likewise, the Marine Corps

continues to store over 4,000 105-millimeter projectiles that were

used for the M60A1 tank.  The M60A1 tank, however, is also no longer

in the Marine Corps' inventory.  In commenting on this report, DOD

noted phasing out of the M60A1 tanks from the Marine Corps' inventory

began in 1991 and was completed in 1994.  DOD stated that the purging

of ammunition for the M85 and M68 weapons began in October 1991 and

is scheduled for completion in fiscal year 1997. 





      SERVICES HAVE BOUGHT

      AMMUNITION WHEN EXISTING

      INVENTORY WAS SUFFICIENT

-------------------------------------------------------- Chapter 2:4.4



We compared the services' ammunition purchases during fiscal years

1993 through 1995 to ammunition items in excess quantities as of

September 30, 1994.  For fiscal years 1993 and 1994, we found that

the Army and the Navy bought 17 types of ammunition at a cost of

about $124.4 million and $0.3 million, respectively, that according

to their records they did not need to meet stated requirements.  We

did not find that similar purchases were made for fiscal year 1995. 



As can be seen in table 2.5, in fiscal year 1993, the Army purchased

six types of ammunition at a cost of over $114 million.  According to

Army records, all of these items were excess to their fiscal year

1995 stated requirements, and after deducting the quantities

purchased in fiscal years 1993 and 1994, inventory quantities

remaining still exceeded service-defined requirements.  For example,

the Army bought 118,893 155-mm projectiles (D864) at a cost of $78.9

million.  After deducting this quantity from the excess quantity as

of September 30, 1994, 86,307 of these projectiles remained in

inventory. 







                                    Table 2.5

                     

                     Army Items Purchased That Were Excess to

                                   Requirements





                                                                          Excess

                                                                        quantity

                                                            Excess     remaining

                    1993                1994              quantity         after

          Descri  quanti              quanti              on 9/30/     deducting

Item      ption       ty   1993 cost      ty  1994 cost         94   purchases\a

--------  ------  ------  ----------  ------  ---------  ---------  ------------

D513      155-                        40,903  $9,999,96    119,200        78,297

           mm                                         5

           proje

           ctile

D532      155-    49,104  $27,508,06                       616,500       567,396

           mm                      1

           prope

           lling

           charg

           e

D864      155-    118,89  78,946,141                       205,200        86,307

           mm          3

           proje

           ctile

M995      Demoli   1,751      96,393     580     24,865      2,362            31

           tion

           charg

           e

M997      Demoli     341       9,265     487     10,319        940           112

           tion

           charg

           e

ML05      High     4,380     888,658                        10,580         6,200

           explo

           sive

           cutte

           r

ML10      Demoli                       4,578     79,978      6,083         1,505

           tion

           charg

           e

ML11      Demoli                       3,893     68,984      7,494         3,601

           tion

           charg

           e

ML18      Demoli                         439     11,976      6,136         5,697

           tion

           charg

           e

ML19      Demoli                       4,968    139,005      6,874         1,906

           tion

           charg

           e

N523      Percus  1,714,   6,651,966                     2,780,000     1,065,568

           sion      432

           prime

           r

================================================================================

          Total           $114,100,4          $10,335,0

           cost                   84                 92

--------------------------------------------------------------------------------

\a This is the excess quantity remaining after subtracting the 1993

and 1994 purchases from the excess on hand on September 30, 1994. 



An Army official told us that these purchases may have been made

because (1) the Congress directed the purchase, (2) it was more

economical to purchase a large quantity rather than a small quantity

to meet the requirement, or (3) the requirements decreased after the

item was placed in the budget request cycle.  Another Army official

commented that the purchases could have been made before the

requirements changed.\4



Smaller, but similar purchases were made by the Navy (see table 2.6). 

In fiscal years 1993 and 1994, the Navy bought six types of

ammunition at a cost of $320,000.  According to Navy records, all of

these items were excess to their fiscal year 1995 stated requirements

and after deducting the quantities purchased in fiscal years 1993 and

1994, inventory quantities remaining still exceeded service-defined

requirements. 







                                    Table 2.6

                     

                     Navy Items Purchased That Were Excess to

                                   Requirements





                                                                          Excess

                                                                        quantity

                                                            Excess     remaining

                           1993            1994           quantity         after

                         quanti    1993  quanti    1994   on 9/30/     deducting

Item      Description        ty    cost      ty    cost         94   purchases\a

--------  -------------  ------  ------  ------  ------  ---------  ------------

A064      5.56-mm         6,400  $2,816  179,20  $62,72  1,588,906     1,403,306

           cartridge                          0       0

A071      5.56-mm        30,240   7,862  13,440   2,957  32,198,09    32,154,412

           cartridge                                             2

B634      60-mm           2,724  203,86                     10,854         8,130

           cartridge                  4

G811      Practice hand                   4,950  24,849     11,394         6,444

           grenade

G878      Hand grenade    2,520   4,284   3,240   4,504    265,038       259,278

           fuze

M458      Detonating     152,00   6,080                    164,700        12,700

           cord               0

================================================================================

          Total cost             $224,9          $95,03

                                     06               0

--------------------------------------------------------------------------------

\a This is the excess quantity remaining after subtracting the 1993

and 1994 purchases from the excess on hand on September 30, 1994. 



Assuming ammunition requirements are accurate and in accordance with

Defense Planning Guidance, we believe the readiness posture of the

Army and the Navy could have been enhanced if fiscal year 1993 and

1994 procurements had been focused on items with shortages rather

than on items that either met and/or exceeded requirements. 





--------------------

\4 In commenting on this report, DOD expressed concern with the data

in table 2.4.  However, we could not address its concerns because the

data provided by DOD was not compatible. 





      PRACTICES FOR ROTATING STOCK

      LEAD TO AGING AND

      OBSOLESCENCE OF AMMUNITION

-------------------------------------------------------- Chapter 2:4.5



It is the single manager's policy for installations to first issue

ammunition from small lots and use older stocks for training. 

However, this policy is not always followed.  All the installations

we visited noted that, as a practical matter, this policy is often

too difficult to follow.  Not all items in a storage facility are

easily accessible, and if the facility is at or near capacity, single

manager personnel have little choice but to issue the more accessible

stock to maximize efficiency and to ensure that the customer's

required delivery date is met. 



We agree that additional work would be required to consistently issue

first-in stock and that this could increase labor costs and delay

deliveries.  We recognize, however, that the longer first-in stock

remains in storage facilities, the older it becomes and the more

likely it is to become obsolete and destined for destruction.  As we

noted previously, over 55 percent of ammunition in the wholesale

system for which the age of the ammunition is recorded is over 10

years old. 





   DESPITE SOME SHORTAGES OF

   AMMUNITION, SERVICES' MANAGERS

   GENERALLY BELIEVE THEY CAN MEET

   REQUIREMENTS

---------------------------------------------------------- Chapter 2:5



As of September 30, 1994, the services had shortages of items in 752

ammunition types valued at about $60 billion.  According to the

Deputy Chief of Staff for Ammunition, U.S.  Army Materiel Command,

however, "sufficient munitions are currently in the stockpile to

support any projected military operation." Inventory control point

officials from all the services agree that they have no major

problems with shortages because they consider inventory quantities

sufficient, they have substitutable items, and/or they have plans to

purchase the items.  During our review, Marine Corps officials stated

that the Marine Corps did not have enough ammunition to support

requirements.  However, in commenting on this report, DOD said a

Marine Corps ammunition study conducted after our review was

completed validated a lower level of war reserve requirements than

was previously identified.  Therefore, DOD commented that all the

services have sufficient ammunition to support their requirements,

although the mix of ammunition is not optimum. 





      SHORTAGES

-------------------------------------------------------- Chapter 2:5.1



Thirty percent of the items with shortages were on hand in quantities

ranging from over 50 percent of the requirement to almost the entire

requirement; 41 percent were on hand in quantities ranging from 1

percent to 50 percent of the requirement; and 29 percent had none on

hand to meet the requirement.  Some of the items are expensive, which

accounts for the large amount of money ($60 billion) needed to

eliminate these shortages.  Also, we used service-defined

requirements in our analysis, and these requirements did not always

take into account the availability of substitute items and the

planned phaseout of ammunition.  In six classified DOD/Inspector

General (IG) reports issued from June 1994 through June 1995 on

quantitative requirements for antiarmor munitions, DOD/IG concluded

that the services had overstated requirements by $15.5 billion. 



Forty-two of the items identified as in a shortage condition in our

analysis accounted for over 50 percent ($32 billion) of the total

dollar value of the shortages.  Fifteen items have a unit cost that

exceeds $1 million, which accounts for over $18 billion in shortages. 

Stated requirements for many of these items may not reflect the true

need for the item.  For example, according to the Navy's database,

the Navy has a shortage of

1,587 AIM-54C Phoenix missiles, but the Navy does not consider the

missile to be in a shortage status.  In fact, after considering

several other substitute items, the Navy's inventory has about 191

percent of the requirement for the Phoenix.  The replacement cost of

each missile would be over $2 million; the shortage amount accounts

for over $3.2 billion of the total shortage. 



Similarly, the Air Force is short about 18,000 AGM-88B High-Speed

Anti-Radiation Missiles (HARM), which account for over $6 billion of

the shortage amount.  However, according to Air Force officials,

HARMs are no longer being procured and their database only shows a

lesser shortage amount.  Likewise, the Army is short 616 Army

Tactical Missile System (ATACMS), which accounts for over $390

million, but according to Army officials, the ATACMS is not

recognized as being in a shortage position. 



Various versions of the Patriot missile are also shown in the

database as being in short supply.  The value of these missiles is

about $760 million.  According to an Army official, no procurements

had been requested since about 1993, and there had been no

procurements since about 1993 or 1994.  A more sophisticated version

of the Patriot missile will be the next missile purchased for the

inventory.  The official commented that the requirement in the

database may be the number that was needed at an earlier date. 



Service officials generally disagreed with the service-defined

requirements, which when compared to ammunition on hand indicated

that 42 high dollar value items were actually in a shortage position. 

To the contrary, we were told that inventories are generally

sufficient to meet requirements, particularly when quantities of

substitute items are considered.  With budget constraints, the

services do not have the money to purchase some items in a shortage

position.  And with the exception of the Marine Corps, service

officials generally believed that they had sufficient quantities of

substitute ammunition and that future procurements would be adequate

to meet wartime and peacetime requirements under the Defense Planning

Guidance.  Army officials noted, however, that in the future they

anticipate problems in filling training requirements. 



We randomly selected 152 ammunition items showing shortages. 

Managers said that 67 of the items had shortages, and they planned

future purchases for some of these items.  However, despite the

records, which showed that these items lacked sufficient quantities

to meet established requirements, the item managers contended that

most of the items (85) were not considered to have shortages because

of available substitutes and planned buys.  Our sample showed a

serious shortage of top-priority items for the Marine Corps but no

major problem for the other services. 



The Marine Corps asserted that it had an insufficient amount of some

ammunition to support two nearly simultaneous major regional

conflicts.  According to the Marine Corps' program manager for

ammunition, the Marine Corps "is prepared and capable of executing

one MRC [major regional conflict] and doing significantly more than

that .  .  .  [but] does not have the ammunition to support [two

MRCs]." The program manager noted that the Marine Corps is short of

ammunition valued at about

$1.5 billion, including $500 million in ammunition for current

training needs.  We were told that shortages are mainly long-range

artillery and war reserve items such as .50-caliber SLAP 4 and

1-linked cartridges, 9-millimeter ball cartridges, and

7.62-millimeter ball linked cartridges.  DOD's comments on this

report noted that a Marine Corps ammunition study conducted after

this review was completed has validated a lower level of war reserve

requirements than was previously identified.  Therefore, DOD said all

services, including the Marine Corps, have sufficient ammunition to

support their requirements. 





      MORE CROSS-SHARING OF EXCESS

      AMMUNITION CAN BE DONE

-------------------------------------------------------- Chapter 2:5.2



Although the Army has shared some excess ammunition across the

services, we found that (1) purchases of about $185 million in fiscal

years 1993 and 1995 could have been avoided if ammunition in excess

of stated requirements had been shared among the services, (2) $1.2

billion in ammunition in excess of stated requirements could be

shared to alleviate shortages, and (3) $19 million in costs could be

avoided by providing ammunition in excess of stated requirements in

good condition to services that planned maintenance for the same

ammunition.  The Senate Committee on Appropriations has also

recognized the need for the services to be more aggressive in sharing

excess ammunition.  For fiscal year 1995, on the basis of our

identification of potential ammunition budget reductions,\5 it

directed the Army to transfer at least 17,000 excess M203A1

155-millimeter red bag charges, at no cost, to the Marine Corps and

denied the Marine Corps $12 million for new charges. 



Ammunition officials stated that one reason that more ammunition in

excess of stated requirements has not been shared is that the single

manager does not know the other services' requirements or the total

holdings of ammunition.  Even if the single manager did have this

knowledge, it is not authorized to redistribute ammunition.  It,

therefore, cannot initiate the distribution of ammunition in excess

of stated requirements and purge the wholesale system of unnecessary

items for which there is no reason to retain. 





--------------------

\5 1995 Defense Budget:  Potential Reductions and Rescissions in

RDT&E and Procurement Programs (GAO/NSIAD-94-255BR, Sept.  8, 1994),

p.  91. 





         CROSS-SHARING TO AVOID

         UNNECESSARY PURCHASES

------------------------------------------------------ Chapter 2:5.2.1



Cross-sharing of existing ammunition that exceeds one or more

service's stated requirements can preclude unnecessary purchases and

redirect resources to fill or partially fill shortages.  During

fiscal years 1993 through 1995, the military services purchased

$184.5 million of ammunition items that were not needed to meet

stated requirements (see table 2.7).  The ammunition purchased,

according to service-defined requirements and inventory records, was

already available or partially available in DOD inventories in

quantities that exceeded fiscal year 1995 service requirements.  For

example, in fiscal year 1995, the most current year after the

September 30, 1994, excess analysis, the military services bought

18 types of ammunition at a total cost of $102.2 million.  However,

enough of the same types of ammunition were already in the inventory

system to completely satisfy or partially satisfy 58 percent, or

$59.4 million, of the total fiscal year 1995 purchase quantity. 

Similar conditions existed in fiscal years 1993 and 1994. 







                                    Table 2.7

                     

                     DOD Ammunition Purchases That Could Have

                       Been Filled With Existing Inventory

                              (fiscal years 1993-95)





Ammunition cost and

avoidance                            1993         1994         1995        Total

----------------------------  -----------  -----------  -----------  -----------

Purchase cost                 $131,039,72  $48,529,950  $102,200,70  $281,770,37

                                        2                         2            4

Purchase cost totally         100,306,079   17,520,692   38,634,122  156,460,893

 avoided

Purchase cost partially         2,191,111    5,108,352   20,757,027   28,056,490

 avoided

================================================================================

Total cost avoided            $102,497,19  $22,629,044  $59,391,149  $184,517,38

                                        0                                      3

Percent of purchase cost             78.2         46.6         58.1         65.5

 avoided for these specific

 item types

--------------------------------------------------------------------------------

Examples of excess ammunition that could have filled services'

shortages include the Marine Corps' 22 million 5.56-millimeter tracer

rounds.  As of September 30, 1994, the Marine Corps had a quantity of

this ammunition sufficient to meet the quantities bought by the Air

Force, the Army, and the Navy and still had about 12 million rounds

more than needed.  Redistribution of the Marine Corps' assets in

these instances could have saved and/or redistributed over $5 million

spent by the other services for the same ammunition.  In another

example, the Army had over 1.9 million 25-millimeter APDS-T

cartridges, which exceeded its stated requirements.  The Navy bought

this same item in fiscal years 1993 and 1995 at a cost of over $5

million, and the Marine Corps bought the item in fiscal years 1994

and 1995 at a cost of over $6 million.  Redistribution of these

assets could have saved or redirected over $11 million for ammunition

with shortages or for other purposes, and the Army would still have

had 1.4 million rounds more than its stated requirement.  We believe

that centralized oversight and management of DOD ammunition

requirements and assets would enable better use of ammunition through

redistribution and free up funds to purchase items determined to have

shortages. 





         CROSS-SHARING TO REDUCE

         SHORTAGES

------------------------------------------------------ Chapter 2:5.2.2



We identified $1.2 billion of ammunition in excess of stated

requirements that could be shared among the services to meet service

shortages.  Some cross-sharing of ammunition has been done.  For

example, in fiscal year 1993, the Army transferred over 1.8 million

excess .50-caliber blank linked cartridges and 61,500 60-millimeter

cartridges to the Navy and the Marine Corps, respectively.  And in

fiscal year 1994, the Army again transferred additional excess

ammunition--about 3,800 .45-caliber blank cartridges and about 68,000

.50-caliber blank cartridges to the Navy, about 484,000

5.56-millimeter dummy cartridges and about 118,000 7.62-millimeter

dummy cartridges to the Marine Corps, and 347,000 5.56-millimeter

dummy cartridges and 16.5 million 5.56-millimeter cartridges to the

Air Force.  While this is a step in the right direction, the services

must make a concerted effort to identify ammunition in excess of

requirements that can be shared to reduce shortages. 



DOD directives currently require each service to report to the single

manager its total assets against requirements to help identify

excesses and corresponding needs among the services.  However, the

single manager has not regularly received this data from all the

services.  Despite the Army's transfers of excess ammunition, our

analysis of ammunition requirements and assets showed 139 instances

where excess on-hand quantities of $1.2 billion could be shared among

the services to meet shortages.  For example, 30 ammunition items

with shortages in the Navy could be partially or totally filled by

excess quantities in the Army, the Air Force, and the Marine Corps;

shortfalls of 8 items in the Army could be relieved by excess items

from the Marine Corps; and 15 Air Force items with shortages could be

partially or wholly filled by excess items from the Army.  As shown

in table 2.8, for some ammunition types, two of the four services

have excess quantities that could be shared to fill a deficit in

another service, and even when shortages are relieved by excess

ammunition, excess quantities still remain. 







                                    Table 2.8

                     

                        Selected Ammunition Shortages and

                      Offsetting Excess Ammunition Among the

                                     Services



                                                                        Quantity

                                                                       remaining

                                                            Marine  after cross-

Item      Description        Army  Air Force       Navy      Corps       sharing

--------  ------------  ---------  ---------  ---------  ---------  ------------

B506      Cartridge,      745,200    (9,387)   (32,780)     21,079       724,112

           40-mm, red

           smoke

G900      Hand           (17,300)          0     43,232     19,992        45,924

           grenade,

           incendiary

G937      Hand/rifle            0      (124)     22,138     91,067       113,081

           grenade

A130      Cartridge,    12,427,90          0  (3,273,17  7,990,929    17,145,650

           7.62-mm              0                    9)

           ball

B508      Cartridge,      766,700          0    (5,977)     73,764       834,487

           40-mm,

           green smoke

L323      Signal           13,300          0    (4,684)     74,496        83,112

           smoke, red,

           hand held

L324      Signal            5,900          0    (9,904)     44,630        40,626

           smoke,

           green, hand

           held

M028      Demolition       10,100          0      (942)     19,369        28,527

           kit,

           Bangalore

           torpedo

N464      Fuze,         2,149,500   (33,043)          0    556,131     2,672,588

           proximity

ML14      Demolition        6,919      9,833    (9,091)          0         7,661

           charge,

           linear

           shaped

--------------------------------------------------------------------------------

Note:  Figures in parentheses indicate shortages. 





         CROSS-SHARING TO AVOID

         MAINTENANCE

------------------------------------------------------ Chapter 2:5.2.3



In addition to filling some of the services' shortages, the

cross-sharing of excess ammunition during fiscal years 1996 through

2000 could result in the avoidance of more than $19 million in

planned maintenance costs (see table 2.9).  For example, about $11.5

million in planned maintenance could be avoided by sharing a portion

of the 839,694 excess 155-millimeter projectiles with services that

plan maintenance on 370,000 projectiles.  In addition, the $3.4

million cost to repair 40-millimeter cartridges could be avoided

because, in this case, the Air Force has more than 1 million excess

cartridges that could partially fill the Army's requirement to repair

1.7 million rounds of this item. 







                               Table 2.9

                

                Costs of Planned Ammunition Maintenance

                 That Could Be Avoided by Using Excess

                  Ammunition (fiscal years 1996-2000)



                                    Ammunition

                                     requiring      Excess  Maintenanc

                                    maintenanc    quantity      e cost

Item      Description                        e     on hand     avoided

--------  ------------------------  ----------  ----------  ----------

A063      5.56-mm cartridge            288,096  22,301,824     $86,429

A071      5.56-mm cartridge          1,505,991  32,198,092     240,959

B542      40-mm cartridge              252,638     727,687     568,435

B546      40-mm cartridge            2,129,544   1,048,969   3,352,085

D502      155-mm projectile              9,000      23,078   1,305,000

D563      155-mm projectile            370,000     839,694  11,484,000

N285      Fuze                         245,010   3,773,600   2,290,844

======================================================================

Total                                                       $19,327,75

                                                                     2

----------------------------------------------------------------------



         SINGLE MANAGER DOES NOT

         HAVE INFORMATION OR

         AUTHORITY TO DIRECT

         CROSS-SHARING

------------------------------------------------------ Chapter 2:5.2.4



In 1979,\6 we recommended that the Secretary of Defense assign

responsibility to the single manager for operating a single national

inventory control point to provide DOD-wide integrated inventory

management, designate the single manager as owner of the ammunition

in the wholesale inventory, and require the single manager to apply

the principles of vertical stock management for inventory.  DOD

disagreed with these recommendations, stating that the single manager

organization's objective would be to permit the cross-sharing of

stocks between services and to avoid procurements by one service for

needs that could be satisfied with another service's excess

ammunition.  DOD stated that the single manager would be provided

information on location and condition of retail stocks and service

stratification of stocks.  This information would allow the single

manager to perform, with service approval, cross-sharing to gain

efficiencies in procurement, inventory, and transportation

management.  However, we found that the single manager does not have

information on location and condition of retail stocks or information

on service stratification of stocks. 



Concerning our 1979 recommendation that the single manager be the

owner of the ammunition in the wholesale inventory, DOD disagreed. 

DOD said the services have an obligation to control the assets they

acquire through congressional appropriations and the custodial

responsibility of the single manager does not conflict with

cross-sharing economies of common items or inhibit effective

depot-level management. 



In our 1979 report, we noted that several problems with the existing

organization of the single manager preclude achieving further

centralized ammunition management.  The single manager organization

lacks visibility over the services' retail stocks, has limited

communication channels, and must compete for resources with other

Army programs.  It is principally staffed by Army personnel and is

viewed by the other services as parochial.  In addition, the single

manager is unable to fully implement the concept within the single

manager's own service--the Army. 



As we noted in our 1979 report, the services are reluctant to give

the single manager the degree of control the manager needs to provide

efficient and economic inventory management in peacetime and the

intensive inventory management needed during war. 



Ammunition at U.S.  storage and production facilities is designated

wholesale and the remainder retail.  The services retain total

responsibility for the retail inventory.  In our 1979 report, we

noted that single manager officials claim they could achieve more

savings if they had retail asset visibility for all services through

transportation savings and matching long supply and excess ammunition

items against projected procurements.  The wholesale and retail

designations, coupled with the services' responsibilities, preclude

the single manager from managing a substantial segment of the

inventory. 





--------------------

\6 Centralized Ammunition Management--A Goal Not Yet Achieved

(LCD-80-01, Nov.  26, 1979). 





   AGENCY COMMENTS AND OUR

   EVALUATION

---------------------------------------------------------- Chapter 2:6



DOD partially concurred with our findings.  DOD agreed that there

were excesses, but took exception to the criteria that we used in

determining excess inventory.  It said we inferred that stocks above

established requirements were excess and should therefore be disposed

of.  Our report states that DOD has about $22 billion of serviceable

ammunition that exceeds established needs and about $31 billion in

excess serviceable and unserviceable ammunition. 



We agree that not all the ammunition in excess of stated requirements

should be disposed of and do not state that it should be.  However,

we believe that the assets in excess of stated requirements should be

made available for cross-sharing to avoid one service purchasing

assets that another service has in excess of its wartime and

peacetime requirements.  In addition, we believe there are many items

being stored that will never be used and should be identified for

disposal.  Furthermore, items in excess of stated needs that should

be retained should be identified as not required, but to be retained

for potential future use.  This could greatly help the single manager

to better apply limited resources to storing and maintaining

ammunition. 



DOD agreed that cross-sharing of ammunition at the wholesale level

would allow for better use of ammunition through redistribution.  DOD

stated the planned Joint Defense Total Asset Visibility Program will

provide all the services the capability to review all assets and will

further expand cross-sharing of assets at the wholesale level.  DOD

did not agree with our analysis of ammunition requirements and assets

that showed excess on-hand quantities of $1.2 billion that could be

shared among the services to meet shortages.  DOD provided

information for the Army that showed stockage retention levels rather

than excesses for most of these items.  DOD makes available for

cross-sharing ammunition it considers excess; however, it does not

consider stocks in its retention categories as available for

cross-sharing.  We believe all assets in excess of requirements,

including retention stocks (such as economic retention levels) should

be considered for cross-sharing, which may avoid a future

procurement. 



Army data from its September 30, 1994, asset stratification of

conventional ammunition, which excludes missiles, shows total assets

of $18.7 billion and an authorized acquisition objective of $13.3

billion.  It shows various retention levels totaling $4.4 billion, or

23.7 percent, and a potential excess of about $1 billion, or 5

percent.  Using the stratification data for cross-sharing would only

make the $1 billion of potential excess available while the $4.4

billion in various retention levels would not be identified for

cross-sharing.  We believe the economic retention amounts of over $1

billion should be made available for cross-sharing to avoid purchases

by another service and other retention stocks should be considered

for cross-sharing. 





PROBLEMS WITH AMMUNITION STOCKPILE

MANAGEMENT THREATEN READINESS, AND

THE SINGLE MANAGER'S PLAN FOR

IMPROVEMENT HAS BEEN DELAYED

============================================================ Chapter 3



Increases in the wholesale ammunition stockpile due to returns of

massive amounts of munitions from Europe and Operation Desert Storm,

combined with a decrease in the wholesale stockpile's workforce, have

created a situation that could, if allowed to continue, degrade the

forces' readiness to meet wartime and peacetime needs.  Because the

Army has placed a lower priority on funding ammunition functions,

management of the stockpile has become a difficult task, and managers

have had to concentrate on the receipt and delivery of ammunition to

the detriment of their inspections, tests, maintenance, storage, and

disposal.  During the summer of 1993, the Joint Ordnance Commanders

Group's study team assessed the management of the stockpile and found

major deficiencies in stockpile management.  The team predicted that

unless something was done about the deficiencies, conditions would

worsen.  Our review confirmed that the stockpile's condition and

readiness have indeed been degraded.  We found that



  -- ammunition was reported as serviceable when it might not be

     because the single manager's method of recording the condition

     of stock was misleading;



  -- the condition of ammunition was often unknown because required

     inspections and testing had not been done;



  -- top-priority ammunition was not serviceable because repairs had

     not been done;



  -- ammunition was inefficiently stored, taxing facilities where

     space is at a premium; and



  -- the ammunition designated for disposal is accumulating faster

     than it can be eliminated. 



In 1994, the single manager developed the Integrated Ammunition

Stockpile Management Plan to improve the poor condition of the

wholesale ammunition stockpile.  However, the single manager has made

little progress toward improving the stockpile's operations and

readiness.  Two factors beyond the single manager's control hinder

the success of implementing the plan:  (1) the services' lack of

incentives to identify required and nonrequired items in the

stockpile and (2) the uncertainty of sustained funding for the care,

maintenance, and disposal of ammunition.  None of the services,

including the Army, have provided a list of required and nonrequired

ammunition, and although funding increased in fiscal years 1995 and

1996, the sustainment of increases to carry out the plan to

completion is not ensured. 





   CONDITION OF THE STOCKPILE IS

   SIGNIFICANTLY IMPAIRED

---------------------------------------------------------- Chapter 3:1



Because of the vast influx of ammunition from overseas in recent

years and decreases in storage space, funding, and staff, the ability

of the single manager to manage the stockpile has been taxed.  As

discussed in

chapter 2, much of this ammunition is excess, old, and deteriorating

but has not been removed from the inventory and is taking up valuable

space.  The single manager has concentrated on receiving and issuing

ammunition and because of resource constraints has neglected the

surveillance, maintenance, and disposal of ammunition.  As a result,

the condition of the stockpile is unknown.  This situation degrades

the overall readiness of the ammunition stockpile and could, if

allowed to continue, degrade the forces' readiness. 





      ARMY'S METHOD OF CLASSIFYING

      AMMUNITION AS SERVICEABLE

      LEADS TO UNCERTAINTY

-------------------------------------------------------- Chapter 3:1.1



As of March 1995, 59 percent of the ammunition tonnage and 223,293 of

the services' ammunition lots were classified as serviceable; the

remaining 41 percent of the tonnage was unavailable for issue because

it was unserviceable, suspended, or designated for disposal.  Because

of the lack of identification of required and nonrequired items, we

could not determine serviceability statistics for required stocks. 

Of the services' top-priority items (which make up 25 percent of the

stockpile's tonnage), about 71 percent were classified as

serviceable, but 29 percent were termed unusable because they needed

repair, could not be fixed, needed inspection, or were suspended from

issue (see fig.  3.1).  For example, motors for the MK66 2.75-inch

rocket could not be issued as of March 1995 because 100 percent of

them needed inspection. 



   Figure 3.1:  Condition of Items

   in the Wholesale Ammunition

   Stockpile



   (See figure in printed

   edition.)



Source:  GAO analysis of the wholesale ammunition stockpile Standard

Depot System database as of March 1995. 



The condition of ammunition lots is identified by codes signifying

that the ammunition is serviceable, unserviceable, or suspended. 

Lots in all conditions may also have defect codes indicating, for

example, rust, paint needed, replacement of unserviceable components

required, or nonhazardous/unserviceable/nonreparable.  Of the lots

classified as serviceable, 24 percent had at least one defect, and

1,752 lots (about 1 percent) were identified as

nonhazardous/unserviceable/nonreparable.  Of the services'

top-priority serviceable items, 19 percent had at least one defect. 

When the lots with defect codes are deducted from the serviceable

tonnage, the portion of the stockpile classified as serviceable

without defect is about 46 percent, and the portion of top-priority

items classified as serviceable is about 58 percent. 



One defect code indicates that an ammunition lot is overdue for

periodic inspection by at least 6 months.  Before 1990, overdue

inspections were clearly indicated by changing the lot's condition

code, but the other services objected to this procedure, and the Army

dropped it.  Now, the condition code remains unchanged, and the

defect code is added.  According to one official, under this system,

the lot's condition does not look as bad as it really is, since the

condition code is not changed. 



Even though the defect code is indicated on ammunition lots,

inventory records that item managers routinely use do not include

defect codes.  Item managers must look up the lot number in an

ammunition lot report to determine whether it has a defect.  Because

of personnel shortages, only a small percentage of overdue inspection

codes is entered into the inventory database.  Although stockpile

officials' statistics show that about 68,000 lots were past due for

periodic inspections as of June 30, 1995, our analysis of stockpile

data shows that only 6,609 lots had been coded as past due. 

Therefore, lots that appear to item managers as available for issue

may, in fact, not be available.  This situation creates a false

impression of readiness, and issuance of ammunition could be delayed

as a result. 





      CONDITION OF AMMUNITION IS

      SUSPECT BECAUSE OF DELAYS IN

      INSPECTIONS AND TESTS

-------------------------------------------------------- Chapter 3:1.2



To ensure that requisitions can be speedily filled with usable

ammunition, especially in wartime, the single manager must

continually check the condition of ammunition items to ensure that

they are ready for use and safely stored.  Each stockpile

installation is supposed to inspect ammunition periodically to ensure

that items are serviceable, properly classified as to condition, and

safe.  Based on the expected rate of deterioration, ammunition is to

be inspected every 2 to 10 years.  For example, Army guidelines

specify that blasting caps should be inspected every 2 years and

small arms ammunition every 5 years.  In addition, regular tests are

to be done to ammunition, not only to ensure that all items are safe

and reliable but also to identify those of marginal reliability or

capacity and those for maintenance or disposal.  However, inspections

and ammunition tests have fallen so far behind in recent years due to

personnel and funding cuts that the condition of many items,

including the services' top-priority items, is no longer known, with

the result that stockpile readiness may be impaired. 





         INSPECTION BACKLOGS ARE

         GROWING

------------------------------------------------------ Chapter 3:1.2.1



According to stockpile officials, a backlog of inspections has

existed since the 1980s, when the lack of personnel precluded

periodic inspections of unserviceable ammunition.  However, the

backlog has more than doubled since fiscal year 1989 (see fig.  3.2),

largely because of the influx of material from Europe and Operation

Desert Storm and the loss of inspection personnel.  In fiscal year

1994, stockpile managers suspended periodic inspections for all but

fast-moving items, and in fiscal year 1995, they concentrated instead

on reducing the backlog of lots that were in an unknown condition. 

By fiscal year 2001, periodic inspections of more than 139,000 lots

could be backlogged. 



   Figure 3.2:  Increase in

   Periodic Inspection Backlog



   (See figure in printed

   edition.)



Source:  U.  S.  Army Industrial Operations Command. 



Our analysis shows that the services' priority items had not been

treated any differently from lesser priority items when periodic

inspections were done.  As of March 1995, the periodic inspections of

15 percent (4,444) of the services' top-priority lots were past due,

meaning the serviceability, condition, and safety of these priority

items were questionable.  This number is likely to be larger because

the date for the next inspection for 22 percent (8,396) of these lots

was not in the inspection database.  Periodic inspections of

top-priority items are important because these are the items the

services need to be available (without defect) and ready for war. 





         TEST PROGRAM IS BEHIND

         SCHEDULE

------------------------------------------------------ Chapter 3:1.2.2



Because inspections cannot detect all deterioration of ammunition,

lot samples are regularly taken for test-firing or examination at

test facilities or laboratories.  This effort includes several

testing programs, including programs for small-caliber and

large-caliber ammunition.\1 According to stockpile officials, of all

the testing programs, only the large-caliber program is backlogged. 

Stockpile management has concentrated its limited testing funds on

such programs as small arms at the expense of the large-caliber

program, which is a much more costly effort.  The large-caliber

program covers 129 items having a 5-year test cycle, 85 of which are

war reserve stock; the remaining 44 are classed as substitutes and do

not have a war requirement.  As of September 1995, testing for 25

percent of the war reserve items and 59 percent of the substitutes

was overdue.  Officials predicted that, by fiscal year 1998, these

backlogs could increase to 55 percent for war reserve items and to 84

percent for the substitutes.  (See fig.  3.3.)



   Figure 3.3:  Current and

   Projected Backlogs of Tests for

   Large-Caliber War Reserve

   Ammunition in the Wholesale

   Stockpile



   (See figure in printed

   edition.)



Source:  U.S.  Army Industrial Operations Command. 





--------------------

\1 For testing purposes, large-caliber items comprise all ammunition

in sizes ranging from 40 millimeters to 8 inches. 





      UNCERTAINTY OF EXTENT OF

      UNSERVICEABLE CRITICAL ITEMS

      THREATENS READINESS

-------------------------------------------------------- Chapter 3:1.3



In the 1993 report on the wholesale stockpile, the single manager

stated that 27 percent of the services' critical items for war,

including the M830 120-millimeter cartridge and the M864

155-millimeter projectile, were unserviceable; that is, the items

needed maintenance before they could be used, were missing

components, or were earmarked for reclamation.  As of March 1995, 18

percent of the services' top-priority ammunition for war and training

needed repair, and 2 percent was beyond repair.  Because of the

backlog in inspections and tests of ammunition, however, the full

extent of unserviceable items in the stockpile today is uncertain. 

As long as managers lack accurate information on the condition of

stored items, effective planning and performance of maintenance are

problematic.  More important, the failure to maintain ammunition in

good condition could affect the services' ability to meet wartime

requirements. 



Repairs and maintenance of ammunition in storage are important not

only to sustain readiness but also to save funds, since an

unserviceable item can be repaired, on average, for 10 to 12 percent

of the cost of a new item.  The single manager estimates that the

average cost to repair a ton of ammunition is $800.  Using that

estimate, about $99 million would be needed to repair the 18 percent

of top-priority ammunition currently known to need repair.  The

estimated cost to purchase new items could be as much as $826

million. 





      INEFFICIENT USE OF STORAGE

      SPACE IMPEDES EFFICIENCY OF

      STOCKPILE OPERATIONS

-------------------------------------------------------- Chapter 3:1.4



Several factors contribute to the inefficient use of storage space. 

These factors include the loss of storage space due to downsizing,

the addition of ammunition from Europe and Operation Desert Storm,

the retention of ammunition that is unusable or awaiting disposal,

and the proliferation of fragmented (broken up) lots of ammunition. 

As a result of these factors, some usable ammunition is stored

outside when it should be stored inside. 



Since 1988, the storage space for ammunition has been drastically

reduced.  Storage space was reduced by 6 million gross square feet

when four installations were closed based on the recommendations of

the 1988 Base Realignment and Closure Commission.  As of September

1995, over

80 percent of the stockpile installations' net storage space\2



of 26.1 million square feet\3



was full, and that space will be reduced by about 16 percent when the

Sierra, Seneca, and Savanna storage areas are closed, as recommended

by the 1995 Base Realignment and Closure Commission. 



In addition to dealing with less space, storage facilities had to

accommodate a vast amount of ammunition returned from abroad after

Operation Desert Storm and from bases closing in Europe.  Ammunition

storage space will soon become even more cramped as ammunition use

declines through force reductions and the stockpile receives another

113,000 tons of ammunition from Europe in fiscal year 1996. 



Due to the inefficient storage of ammunition, some serviceable items

that should be stored inside were stored outside, while material with

less demanding storage requirements occupied high-explosive storage

areas.  For example, serviceable high-explosive items were stored

outside, while inert material was stored in about 600,000 square feet

of structures designed to house high-explosive and small arms items. 

Also, serviceable Maverick, Patriot, and Hawk missiles, which should

be stored inside, were stored outside at one depot.  (Fig.  3.4 shows

Maverick missiles stored outside.)



   Figure 3.4:  Maverick Missiles

   Stored Outside



   (See figure in printed

   edition.)



Among the serviceable ammunition stored at installations were items

that were beyond repair and designated for disposal and occupying

considerable space.  As of September 1995, 12 percent, or 3.2 million

square feet, of the stockpile's storage capacity was occupied by

stocks designated as beyond repair or for disposal.  For example,

about 300,000 tons of items designated for disposal were stored

inside at an annual cost of about $8 million and occupied nearly 2.8

million square feet.  Aggregated, these stocks would fill at least

two storage installations that could be used to store serviceable

stocks.  We found the following examples of individual types of

ammunition with questionable needs. 



In one case, 251,000 propelling charges (for 155-millimeter guns)

that had been condemned but not designated for disposal were taking

up 36,031 square feet (see fig.  3.5). 



   Figure 3.5:  Old Propelling

   Charge for 155-millimeter Gun



   (See figure in printed

   edition.)



   Note:  Propelling charge should

   be all white.



   (See figure in printed

   edition.)



In another case, 715 unserviceable Nike Hercules rocket motors with

no requirements occupied 31,212 square feet.  One depot was storing

458 of these items, some of which were manufactured in 1959. 

According to an official there, these rocket motors occupied 16 to 20

storage sites at that depot (see fig.  3.6). 



   Figure 3.6:  Nike Hercules

   Rocket Motors With No

   Requirement



   (See figure in printed

   edition.)



Two types of 3-inch, 50-caliber gun ammunition occupied about 15,000

square feet, even though the Navy no longer has any weapon in active

inventory that uses this ammunition.  According to an official at one

installation, this ammunition has had few or no issues in 15 years. 



In yet another case, 5,382 Navy MK25 mines that appeared in the

Army's wholesale inventory database as belonging to the Navy did not

appear in the Navy's inventory database, and was occupying 49,552

square feet.  About 2,200 (40 percent) of these mines had been

suspended because their condition was unknown.  We noted that some of

these mines at one installation were manufactured in 1954, and at

another installation, none of these mines had moved in over 10 years

(see fig.  3.7). 



   Figure 3.7:  Navy MK25 Mines

   Manufactured in 1954



   (See figure in printed

   edition.)



The proliferation of small, fragmented lots of ammunition also

impedes the efficient management and use of ammunition storage space. 

According to the 1993 report on the wholesale stockpile, about 32,000

fragmented lots were stored largely because of base closures and the

return of ammunition from Europe and Operation Desert Storm. 

Installations were forced to store the returned ammunition without

knowing whether additional quantities of the same lots would be

received.  These lots were often stored in more than one location. 

To optimize storage space and reduce inventories and surveillance,

ammunition from the same lot in the same condition should be located

in one storage structure when possible.  If personnel have to fill

requisitions from several locations, response time is delayed and

issue costs increase. 



Our analysis shows that since October 1993, the number of fragmented

lots in the stockpile has increased 14 percent.  These lots--some of

which were stored in more than three structures--occupy 24 percent

(5.9 million square feet) of the total storage space (see fig.  3.8). 

Fragmented lots can be reduced by selecting them first when filling

requisitions, either by using an automated lot selection process or a

manual selection process. 



   Figure 3.8:  Example of Wasted

   Space With Fragmented Lot



   (See figure in printed

   edition.)





--------------------

\2 To determine an installation's net storage space, the single

manager reduces its total storage space by the amount of unusable

space and aisle space it contains, and then subtracts 10 percent from

that difference to account for losses due to multiple lots and other

abnormalities. 



\3 Our analysis did not include Pine Bluff Arsenal because it is not

included in the Standard Depot System database. 





      ITEMS MARKED FOR DISPOSAL

      ACCUMULATE FASTER THAN THEY

      CAN BE ELIMINATED

-------------------------------------------------------- Chapter 3:1.5



As storage space has been significantly reduced and ammunition has

been added, the disposal of excess, obsolete, and unusable ammunition

has become crucial.  (See fig.  3.9 for ammunition disposal

operations.)



   Figure 3.9:  Ammunition

   Disposal Operations



   (See figure in printed

   edition.)



   Truck carrying Ammunition (Navy

   bombs) to Disposal Site



   (See figure in printed

   edition.)







   (See figure in printed

   edition.)



   Blast on Destruction of Navy

   Bombs



   (See figure in printed

   edition.)







   (See figure in printed

   edition.)



   Air Force Bombs Awaiting

   Destruction



   (See figure in printed

   edition.)







   (See figure in printed

   edition.)



   Blast on Destruction of Air

   Force Bombs



   (See figure in printed

   edition.)



As of September 1995, nearly 375,000 tons of ammunition items

designated for disposal remained stored in the stockpile.  According

to single manager officials, the ammunition designated for disposal

has increased and is likely to increase further.  Also, in recent

years, the identification of ammunition for disposal has greatly

exceeded the amount disposed of.  Ammunition designated for disposal

from fiscal years 1986 through 1995 amounted to 681,000 tons, while

the amount eliminated was 390,000 tons (see fig.  3.10). 



   Figure 3.10:  Increase in

   Ammunition Disposal Backlog



   (See figure in printed

   edition.)



Source:  U.S.  Army Industrial Operations Command. 



Storage installations and contractors execute the ammunition disposal

program.  Before an item is earmarked for disposal, other

options--sales, transfers, and reuse--are explored.  According to

single manager officials, foreign military sales have not proved a

successful means of disposing of excess ammunition because foreign

countries buy new, rather than obsolete, items if they have the means

to do so.  Currently, the primary means of disposing of ammunition is

by open burning or detonation.  Greater emphasis, however, is being

placed on the resource recovery and recycling method of ammunition

disposal, even though this will increase costs. 





   DESPITE 1994 PLAN FOR

   IMPROVEMENTS, LITTLE PROGRESS

   HAS BEEN MADE

---------------------------------------------------------- Chapter 3:2



In 1994, the single manager developed the Integrated Ammunition

Stockpile Management Plan to improve the poor conditions found in the

wholesale ammunition stockpile.  The plan proposes specific actions

to achieve, by 2001,\4 a smaller, safer ammunition stockpile by

changing operations and optimizing space with fewer installations and

staff.  However, except in its inventorying of ammunition, the single

manager has not substantially improved the operations and readiness

of the wholesale ammunition stockpile.  The single manager cannot

ensure success in implementing the plan and managing the stockpile

until the Army and other services identify their ammunition as

required and nonrequired, but the services have no incentives to do

so.  Successful implementation of the plan also is dependent on

sufficient funding being provided for the care, maintenance, and

disposal of stockpile items.  The Congress established a minimum

funding level in fiscal year 1995, and the conferees on the DOD

appropriations act established a funding minimum for fiscal year 1996

for the care and maintenance of ammunition.  Also, the House

Committee on Appropriations, in its report on DOD's fiscal year 1995

appropriations, said it expects DOD to fund disposal activities at a

level that will decrease the disposal backlog to a sustainable level

of about 100,000 tons early in the next century. 





--------------------

\4 Although fiscal year 2001 is the goal for implementing the plan,

the single manager also set a goal of reducing the disposal stockpile

to 100,000 tons by fiscal year 2004. 





      THE SINGLE MANAGER HAS BEGUN

      TO IMPLEMENT PARTS OF THE

      STOCKPILE PLAN

-------------------------------------------------------- Chapter 3:2.1



The single manager has greatly improved its inventory records, a

critical function previously identified as seriously degraded.  In

1995, the single manager inventoried the entire wholesale stockpile

at a cost of $14 million.  This inventory restored the stock records'

accuracy of item locations and quantities.  It also introduced major

changes in the inventory process to focus on the accuracy of

quantities within storage sites.  It did not, however, assess

condition.  Once a site is physically inventoried, it is sealed and

no longer subject to a yearly inventory unless activity affects its

stock balance.  To ensure that stock balances are correct, 10 percent

of all sealed locations will be sampled annually.  This new process

is intended to reduce the inventory workload, freeing staff for other

duties. 



The single manager has also taken steps to improve the stockpile's

operations, as planned.  For example, it has consolidated some small,

fragmented lots of material and redistributed them within warehouses

and has removed some items from inappropriate storage.  Storage

installations in fiscal years 1994 and 1995 freed about 800,000

square feet of space.  In addition, the single manager has adopted a

priority system to ensure that required war reserve and training

items receive maintenance first.  Quarterly reviews will focus on the

most urgent maintenance needs. 





      THE SERVICES HAVE NOT YET

      IDENTIFIED REQUIRED AND

      NONREQUIRED AMMUNITION

-------------------------------------------------------- Chapter 3:2.2



At all six storage installations we visited, officials either were

unaware of any progress made or had not detected any change in

operations resulting from the single manager's "tiering" concept,

which relies on each service's categorization of its ammunition as

required and nonrequired.  The problem is that neither the Army nor

the other services have identified stock in those categories.  The

single manager's three-tier concept is designed to ensure that the

more critical ammunition is stored in depots capable of providing the

quickest response to mobilization.  Four tier I depots would contain

mostly required items needed in the first 30 days of mobilization,

items needed for training, and items needed beyond 30 days to augment

tier II and III depots' war reserve stocks.  Tier I depots would

receive all support necessary for storage, surveillance, inventories,

maintenance, and disposal.  Tier II depots would normally store war

reserves needed more than 30 days after mobilization, production

offset items, and some nonrequired stocks awaiting disposal.  Tier

III depots would be caretakers for items awaiting disposal or

relocation. 



The single manager has not aggressively pursued the services' efforts

to identify stock as required and nonrequired, and the single manager

does not know the priority the services place on each type of

ammunition.  As a result, surveillance,\5 maintenance, storage, and

inventories may not be focused on priority stock to ensure it is

ready for shipment when needed, and scarce resources may be spent on

items with low or no priority.  During our review, we found that the

Army had not fully complied with the single manager's plan to

identify ammunition, and the other services may not fully understand

the stockpile's definition of required and nonrequired ammunition. 

Some attempts were made to generate the necessary data, but the

services did not provide sufficient detail. 



  -- In 1993, the Air Force classified serviceable high-priority

     items as tier I, unserviceable items as tier III, and all others

     as tier II, but it did not know whether the items in tiers I and

     II were required and the items in tier III were nonrequired. 

     Officials said that the single manager did not ask for the

     information by required and nonrequired categories. 



  -- In 1994, the Navy provided tonnage data to the single manager by

     types of ammunition, which in a general sense categorizes items

     into tiers.  Navy officials could not recall being requested to

     categorize ammunition as required or nonrequired, and they noted

     that the wholesale stockpile manages only 13 percent of the

     Navy's ammunition inventory.  Most of the Navy assets are stored

     aboard ships and at naval weapon stations, which they consider

     to be tier I and II locations. 



  -- Marine Corps officials said they had not been required by the

     single manager to categorize items as required or nonrequired. 



During our review, we found that for inspection purposes, the Army

had assigned a priority to each type of ammunition that can be used

to identify required and nonrequired ammunition.  The priorities

range from ammunition needed for training and war reserve to

ammunition for which there is no formal requirement.  The single

manager requested that the other services concur with these priority

definitions.  The Marine Corps responded; however, the Navy and the

Air Force have not responded to this request, and the single manager

cannot require the services to provide this information. 





--------------------

\5 The serviceability of ammunition is determined through

surveillance inspections and tests by sampling ammunition lots. 





      THE SINGLE MANAGER MAY NOT

      HAVE SUFFICIENT FUNDS TO

      CARRY OUT THE PLAN

-------------------------------------------------------- Chapter 3:2.3



The single manager is concerned that it will not consistently have

sufficient funds through 2001 to implement its $2.7 billion plan to

restore the stockpile to a usable condition and dispose of unneeded

ammunition.  The single manager uses operation and maintenance (O&M)

funds for receipts and issuance, inventories, and surveillance of

ammunition and procurement appropriations for disposal of excess,

obsolete, and unsafe ammunition.\6



The O&M funding allocated by the Army for inventories, storage, and

surveillance has historically been less than needed by the single

manager and has not yet been provided to implement the single

manager's plan.  Therefore, the single manager has made little

progress in correcting stockpile problems.  Moreover, the progress

made in correcting inventory records in 1995 may be jeopardized

because funding allocated by the Army is insufficient to maintain the

accuracy of the records. 



According to the single manager, to successfully carry out its plan

and restore stockpile readiness, it must have consistent full funding

over several years for stockpile activities.  The plan was based on

near-term funding levels, beginning in fiscal year 1996, and it

projected full implementation by fiscal year 2001.  However, actual

funding for fiscal years 1996 and 1997 was less than required, which,

according to the single manager, postponed implementation of the plan

by 2 years--from 2001 to 2003.  Moreover, because of limited staff at

stockpile installations, large funding levels in any given year will

not enable the single manager to catch up--a lost year will add an

additional year to fully implement the plan. 



For fiscal year 1995, the Congress statutorily required that a

minimum of $388.6 million of the Army's 1995 O&M account be spent

specifically for the safety and security, receipt and issue,

efficient storage and inventory, surveillance, and other activities

associated with conventional ammunition.\7 For fiscal year 1996, the

conferees on the DOD appropriations act directed that a minimum of

$300.9 million be spent for the same purpose.  According to single

manager officials, setting a minimum is a good approach because

funding levels are consistent and better planning and management

decisions can be made.  The House Committee on Appropriations report

on the 1995 DOD appropriations stated that it expects the Army to

fully fund ammunition activities in future budget submissions.  It

also commended DOD for increasing its budget for disposal activities

to $95 million for fiscal year 1995, and it recommended funding of

$110 million and stated the expectation that DOD would continue this

level of funding in future budgets. 



In its 1994 plan to improve stockpile management, the single manager

set a goal to reduce the 423,000 tons of ammunition awaiting disposal

to 100,000 by fiscal year 2004.  The three interrelated factors to

accomplish this goal are anticipated disposal quantities between

fiscal years 1996 and 2004, the actual disposal funding, and the

average cost to destroy a ton of ammunition.  In March 1996, the Army

estimated that 685,900 tons--more than triple the 1994 single

manager's estimate of 225,000 tons--will be generated between fiscal

years 1996 and 2004.  This estimate does not include 98,834 tons

(85,733 tons of industrial stocks and 13,101 tons of tactical missile

and large rocket motor assets) that will be generated which have

other sources of disposal funding.  If the single manager receives

$100 million a year through fiscal year 2004 for disposal, and the

disposal cost per ton is no more than $909 a ton, the single manager

will meet its goal of eliminating the 100,000-ton backlog.  The

single manager recognizes that it will be difficult to meet this goal

because it relies on a significant level of funding and the cost to

dispose of ammunition may increase.  Therefore, the goal will not be

met if the single manager does not receive $100 million a year or if

the disposal cost per ton increases.  For example, if the average

cost per ton is $1,100, the disposal backlog will be over 239,000

tons at the end of fiscal year 2004.  Likewise, if the cost is $1,300

a ton, the backlog will be over 365,000 tons.  The disposal stockpile

most likely will grow even more as ammunition quantities excess to

service requirements are identified (see ch.  2). 



Moreover, the single manager is concerned that the disposal program

will suffer from funding cuts, personnel shortages, and low priority. 

If the past is any indication, the single manager may be correct. 

During fiscal years 1986-94, funding for disposal totaled $266

million, considerably less than the $695 million the single manager

estimated was needed to operate at maximum capacity. 



The disposal of obsolete and deteriorated ammunition is a

time-consuming and expensive process.  At the installation with the

largest disposal capacity, 1,300 tons of ammunition were destroyed at

a cost of about $1 million during 1 week we visited.  Additionally,

the lack of Army funding has affected the single manager's ability to

operate disposal facilities at full capacity.  Although the estimated

disposal capacity is over 100,000 tons of ammunition per year, the

single manager has not been able to fully fund this function.  Prior

to 1995, the greatest amount disposed of was 61,500 tons in 1992;

only 11,700 tons were disposed of in 1990.  For example, one

installation that can process 27,800 tons of ammunition annually had

been allocated only 19,200 tons for disposal in fiscal year 1995. 

Another installation with a capacity to dispose of about 35,900 tons

had been allocated only about 3,800 tons in fiscal year 1994. 



The single manager plans to gradually decrease its reliance on open

burning/detonation of ammunition because environmental regulations

have made these methods difficult and undesirable.  Currently,

however, open burning/detonation is the only cost-effective method of

disposal for some items, such as cluster bombs and large rocket

motors.  Nonetheless, the single manager plans to increase disposal

through resource recovery and recycling methods.  These methods are

more costly--over $2,000 per ton or over twice as much as for open

burning/open detonation.  Should the cost per ton to dispose of

ammunition approach this higher level, the backlog would increase

significantly. 





--------------------

\6 The services provide funds for maintenance and repairs on items

they own. 



\7 The Chemical and Biological Defense Command split from the U.S. 

Army Armament, Munitions, and Chemical Command/Industrial Operations

Command in fiscal year 1995, taking $59.8 million of this amount,

leaving $328.8 million for the stockpile.  In total, $396.95 million

was obligated for this activity in fiscal year 1995. 





   AGENCY COMMENTS AND OUR

   EVALUATION

---------------------------------------------------------- Chapter 3:3



DOD concurred that problems with the ammunition stockpile management

threaten readiness.  DOD noted that funding levels in fiscal years

1993 and 1994 were so low as to force concentration on shipments and

receipts at depots.  DOD said that during this period surveillance,

stockpile reliability testing, and priority maintenance projects were

severely limited.  DOD agreed that defect codes had not been entered

for all items with overdue inspections but said inspections are

performed prior to issuance of any item.  DOD also said that during

the first quarter of fiscal year 1996, significant progress was made

toward prioritizing ammunition items and identifying those that

satisfy power projection and training requirements.  Based on the new

priorities, periodic inspection backlogs were adjusted and reduced

from approximately 60,000 lots to approximately 30,000 lots with the

identification of the required part of the stockpile.  We strongly

support identifying what is needed for power projection and training

and concentrating limited resources on these ammunition items.  We

believe that DOD's observation that periodic inspection needs were

reduced from 60,000 to 30,000 lots and is indicative of potential

reductions that can be made in the care and maintenance functions of

the single manager. 



DOD partially concurred that the single manager's plan for

improvement has been delayed.  DOD said that while funding has been

problematic, DOD does not believe that the implementation of the

improvements in ammunition management will be delayed.  DOD said the

overall goal of the Integrated Ammunition Stockpile Management Plan

is to accomplish (1) depot tiering by 2001 and (2) the other changes

in stockpile management as soon as possible.  With the closure of

three depots, DOD expects to accomplish the tiering goal on schedule. 

DOD notes that the two major requirements to implement the management

plan are adequate funding and segregation of the stockpile.  We agree

that these are important.  We are particularly concerned that the

identification of required ammunition, such as for power projection

and training, be done as quickly as possible so that the single

manager can better use limited resources.  We are also particularly

concerned that unless funding levels and ammunition disposal are

closely monitored, the single managers will not meet its 2004

disposal goal. 





CONCLUSIONS AND RECOMMENDATION

============================================================ Chapter 4



Unquestionably, the single manager faces difficulties in resolving

problems that developed with the wholesale stockpile as the Cold War

ended.  These difficulties stem from DOD's downsizing of its force

and facilities in response to the much reduced threat.  Reductions in

ammunition storage space and the workforce, coupled with the return

of massive amounts of ammunition from closed bases in Europe and from

Operation Desert Storm, have degraded the single manager's ability to

manage the stockpile.  In addition, this ammunition was returned in

small, broken lots that were stored haphazardly as they came from

overseas. 



Partly as a result of this situation, half of the ammunition types in

the stockpile contain items in excess of stated requirements, which

we estimated to be valued at about $31 billion.  This $31 billion of

usable and unusable ammunition, as well as $2.9 billion of excess

ammunition that was on the single manager's inventory records but not

the services' inventory records, was being treated by the single

manager as necessary to meet requirements.  Because the single

manager has concentrated on responding to requests for usable

ammunition, inspections and tests of ammunition have been delayed. 

The single manager does not know how much ammunition in excess of

stated requirements is in the stockpile and is therefore unaware of

what ammunition could be shared among the services to alleviate

shortages and what unusable ammunition does not need attention beyond

that for safety reasons.  In addition, there are tremendous backlogs

of ammunition to dispose of.  For the foreseeable future, this

disposable ammunition will increase and take up limited storage

space. 



These problems are not insurmountable, but they will take time to

overcome.  The Integrated Ammunition Stockpile Management Plan is a

step in the right direction.  In addition, the minimum levels set for

the care and maintenance of ammunition established by the Congress

for fiscal year 1995 and the House Committee on Appropriations for

fiscal year 1996 have helped the single manager in meeting its

responsibilities. 



The single manager's success in implementing the management plan is

limited by the services' lack of incentives to identify excess

ammunition.  The services are not inclined to determine which of

their ammunition is required and declare the remainder excess because

once ammunition is declared excess, a service is not reimbursed for

its cost if another service wants it.  Also, the services have no

incentive to mark ammunition for disposal because they do not have to

pay the single manager to store it.  As the Joint Commanders Ordnance

Group's 1993 report points out, the single manager could charge the

services a storage fee as an incentive for the services to relinquish

ownership of excess, old, and obsolete ammunition.  The report also

suggested that additional storage space could be made available if

excess ammunition was used in training, included in foreign military

sales or grant aid programs, or destroyed.  In addition, as we

recommended in 1979, the single manager could own, manage, and

control the entire ammunition stockpile.  If this was the case, the

manager would have visibility over ammunition in excess of

established requirements and could distribute it to other services

that need it or, if unneeded, dispose of it when there was no longer

a reason to retain it. 



Another troublesome problem is the disposal of excess ammunition,

which is a time-consuming, expensive process.  For example, at the

installation with the largest disposal capacity, 1,300 tons of

ammunition were destroyed at a cost of about $1 million during 1 week

we visited.  With over 375,000 tons of ammunition awaiting disposal

at the end of fiscal year 1995 and additional ammunition identified

for disposal each year, it will take years to dispose of the

ammunition.  And because of the expense associated with disposing of

this much ammunition, finding the funds to facilitate disposal is

difficult.  One option would be to require the services to include

the cost to dispose of ammunition being replaced in budgets for new

ammunition.  While this option would not eliminate the significant

quantities of ammunition already awaiting disposal, it would focus

earlier attention on the ammunition disposal problem, provide

additional funds for disposal, and over time significantly reduce the

quantities for disposal. 





   MATTER FOR CONGRESSIONAL

   CONSIDERATION

---------------------------------------------------------- Chapter 4:1



To impress upon the services the need to address the problem of

excess ammunition, the Congress may wish to consider requiring the

Secretary of Defense to report annually the amount of ammunition on

hand and the amount that exceeds established requirements.  This

report could also cite progress made in addressing specific

ammunition stockpile management problems, including identifying

ammunition in excess of established requirements, cross-sharing of

ammunition in excess of established requirements among services that

have shortages, inspecting and testing ammunition, and disposing of
excess ammunition when it no longer makes sense to retain it.  With

this information, the Congress could make more informed annual budget

decisions related to the ammunition stockpile. 





   RECOMMENDATION

---------------------------------------------------------- Chapter 4:2



To facilitate implementation of the single manager's plan for

storing, maintaining, and disposing of ammunition, we recommend that

the Secretary of Defense develop incentives to encourage the military

services to categorize their ammunition as required or as excess to

stated requirements, to update this information annually, and to

relinquish control of their excess ammunition to the Army single

manager for distribution to other services that have shortages of

ammunition or for disposal when it no longer makes sense to retain

it.  Possible changes in ammunition management, include requiring the

services to pay the single manager a fee for storing their

ammunition; using excess ammunition in training; authorizing the

single manager to own, manage, and control the wholesale stockpile

and/or have visibility of the services' retail stocks and total

requirements so the manager can identify ammunition excess to stated

requirements and coordinate redistribution of it to services that

need the ammunition or dispose of it; and requiring the services to

include the cost to dispose of excess ammunition in their budgets for

new ammunition. 





   AGENCY COMMENTS AND OUR

   EVALUATION

---------------------------------------------------------- Chapter 4:3



DOD partially concurred with the matter for congressional

consideration.  DOD said it already provides the Congress with

ammunition inventory data in the Supply System Inventory Report and

demilitarization information in the procurement budget

justifications.  We are aware of this report and the information

contained in it.  However, as currently prepared, the inventory

report does not provide any information on the amount of ammunition

that exceeds established requirements.  Also, information on

stockpile management problems and progress in solving these problems

is not provided. 



DOD disagreed with the recommendation and options given for potential

changes in ammunition management.  DOD stated that it considers the

present arrangement for managing much of the services' stockpile to

be satisfactory.  DOD stated it believes stockpile stratification and

cross-sharing could be enhanced but does not consider incentives to

be necessary to encourage compliance by the military services. 

Problems with cross-sharing among the services noted in our 1979

report continue.  In addition, due to large quantities of ammunition

in storage and a reduced work force to manage this ammunition,

problems with ammunition management threaten readiness.  Therefore,

we do not believe that existing DOD practices will solve the serious

problems.  The Integrated Stockpile Management Plan is a step in the

right direction, yet all the services still have not identified

required and nonrequired ammunition as called for in the 1994 plan. 

This is a very important part of this plan's implementation.  DOD

disagreed with the options to require a storage charge or increase

the single manager's responsibilities.  We agree other options are

possible; those in our report are some potential options.  However,

we do not agree the present arrangement for managing the stockpile is

working well and believe that existing DOD practices will not solve

the problems.  We are not advocating erosion of the centralized

management of ammunition but are providing options to further

strengthen ammunition management and provide incentives to the

services to help the single manager operate more effectively.  We

continue to believe our recommendation is valid. 









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COMMENTS FROM THE DEPARTMENT OF

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   GAO COMMENTS

---------------------------------------------------------- Chapter 4:4



1.  The draft report we sent to the agency for comments concentrated

on the $22 billion in serviceable ammunition that was excess to

stated requirements.  However, when DOD responded to this report and

dealt with excess ammunition, it addressed the total ammunition

stockpile--serviceable and unserviceable ammunition.  Since the

single manager treats both serviceable and unserviceable ammunition

the same if it has not been declared excess by the services, we

expanded our discussion of excesses to cover the entire ammunition

stockpile.  This increased the amount in excess of stated

requirements to about $31 billion for usable and unusable ammunition. 

In addition, $2.9 billion in excess ammunition is on the single

manager's inventory records but not the services' records.  Also,

over $2 billion of items are awaiting disposal. 



2.  The Department of Defense (DOD) stated that it had trouble

identifying the sources of data we used.  Our sources were discussed

with DOD, and they are identified in our scope and methodology

section in chapter 1.  The computerized database we used to compare

assets on hand to requirements was created using DOD-supplied data,

and our sources have been provided to DOD.  Other sources of data,

such as DOD's report on the Wholesale Ammunition Stockpile Program,

are identified throughout our report. 



3.  DOD discussed the need to retain three types of

munitions--16-inch gun ammunition; 3-inch, .50-caliber gun

ammunition; and the MK25 mines.  DOD stated that two of these items

have been retained for "mothballed" ships that have been kept as

mobilization assets.  DOD agreed that the MK25 mines are excess.  We

believe that ammunition retained for mothballed ships needs to be

identified as such to the single manager so that it can best use its

scarce resources.  As discussed in responding to agency comments in

chapter 2 of this report, we do not advocate disposing of excess

ammunition for which there is a potential future need. 



4.  DOD stated that 40-millimeter ammunition for the M42

self-propelled gun has been declared excess for several years, with a

quantity of 17,000 remaining to be supplied to Turkey.  Although

declaring ammunition as potentially excess initiates an inventory

reduction of unneeded ammunition, a declaration "for several years"

does not rid it from the inventory system.  As of September 30, 1994,

the Army's inventory records showed that it still owned 269,000

40-millimeter cartridges.  These cartridges at that time had not been

transferred to the disposal account. 



5.  DOD stated that the services have active annual processes for

identifying excess, screening excess with other services' and foreign

military customers, and for transferring any remaining excess to the

resource recovery disposal account.  We agree that DOD has a process

for identifying and sharing excess with others.  However, we believe

this DOD process needs to be improved.  For example, the

identification of an excess asset for cross-sharing among the

services is not done until a service removes all retention category

holds on the asset.  Therefore, for example, if one service has more

of an asset than its wartime and peacetime requirements and decides

that it might sometime in the future buy this asset, the service

places the excess in an economic retention category.  This asset then

does not appear as excess, and another service could buy the item. 

DOD has over $1 billion in assets in this economic retention

category, which we believe should be made available to other services

for potential cross-sharing to prevent another service from buying

these same items. 



6.  DOD stated that the age of an ammunition item is not necessarily

related to its combat usefulness.  DOD also stated that depots

normally ship the older lots first.  However, in our visits to

ammunition depots, we were told that the older lots are not shipped

first unless it is cost-effective to do so.  Furthermore, we noted

many ammunition items dating from the 1940s to the 1960s.  Also, as

found by the single manager's stock rotation study in 1985, soldiers

in the field demanded the newest and best lots of ammunition

available.  We agree that just because ammunition is old does not

mean it is unusable.  However, we question whether much of the

ammunition dating from the 1940s, for example, will ever be used. 



7.  We annotated our report to note that the Marine Corps' hand

grenades referred to as being in excess are offensive hand grenades. 





MAJOR CONTRIBUTORS TO THIS REPORT

========================================================== Appendix II





   NATIONAL SECURITY AND

   INTERNATIONAL AFFAIRS DIVISION,

   WASHINGTON, D.C. 

-------------------------------------------------------- Appendix II:1



Sharon A.  Cekala

Joan B.  Hawkins

Nancy L.  Ragsdale





   NORFOLK FIELD OFFICE

-------------------------------------------------------- Appendix II:2



Dudley C.  Roache, Jr.

Bradley D.  Simpson

Sandra D.  Epps

Linda H.  Koetter

Jeffrey C.  McDowell

Patricia W.  Lentini





   DALLAS FIELD OFFICE

-------------------------------------------------------- Appendix II:3



Calvin E.  Phillips

Donald R.  McCuistion





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