oversight

Second Review of Phasedown of United States Military Activities in Vietnam

Published by the Government Accountability Office on 1971-08-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT TO


                                     111111111111111
                                       LM095548




Second Review Of                          n
Of United States
Activities In Vietnam
                          B-171579




Department   of Defense




BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
                      COMBTROLLER       GENERAL     OF      THE   UNITED   STATES
                                      WASHINGTON.    D.C.     20548




         B- 171579




         To the President   of the Senate and the
    L-   Speaker  of the House of Representatives

                 This is our report         on the second review                    of phasedown
         of United States military          activities in Vietnam.

                  Our examination   was made pursuant    to the Budget                        and
         Accounting     Act, 1921 (31 U.S.C. 53), and the Accounting                          and
         Auditing    Act of 1950 (31 U.S.C. 67).

                Copies of this report  are being sent to the Director,
    I
I        Office  of Management    and Budget; the Secretary  of Defense;
         and the Secretaries   of the Army,   Navy, and Air Force.




                                                    Comptroller              General
                                                    of the United            States
    I   I
    I
    I
            COMPTROLLERGENER4LrS                             SECOND REVIEW OF PHASEDOWNOF UNITED
    I       REPORT TO THE CONGRESS                           STATES MILITARY ACTIVITIES IN VIETNAM
    I                                                        Department of Defense B-171579
    I
    I
    I       DIGEST
            ------
    I

I           WHY THE REVIEW WAS IUDE
    I

I                   The General Accounting     Office    (GAO) has undertaken     a series of re-
I
I             ’
                    views of policies     and procedures    applied    by the Department of De-               ,“
I                   fense (DOD) in reducing military        activities    in Vietnam and of re-               I
I                   sults being attained.             -~
I
I
I                   GAO's objectives   are to identify    problems being encountered,    focus-
I
I                   ing particularly   on the logistics,     and to bring these problems
I                   promptly   to the attention    of the responsible   military commanders
I                   and to the Secretary      of Defense while the phasedown continues.
I
I
I                   In its first     report,    March 15, 1971 (B-171579),      GAO reported   its
I                   observations     concerning    phasedown actions    completed   through
I                   April    15, 1970.     This second report   presents   the results     of GAO's
I
I                   follow-up    review of phasedown actions       through December 1970.

I
I           FINDINGS AND CONCLUSIONS
I

                    Considerable       progress   has been made by DOD and the military           services
                    to ensure an orderly         phasedown and effective    redistribution        of-equip-
                    ment and materiel         and to cope with prob.~~B-identifieiE-'l'n‘GAi)'s
                    first    review.      This progress   has been achieved despite          the necessity
                    to fully      support forces    still  in the field  and engaged in combat.
                    (See p. 8.)

                    These are     GAO's observations         in the principal   areas   of its   review.

                    Disposition     of departing    units'      equipment                                          .
                    In the earlier     phasedown segments, there was a lack of coordination
                    between the services      in transferring     equipment from one United
                    States service     to other than its counterpart        service  in the Viet-
                    namese Armed Forces,      e.g.,  from the United States Air Force to the
                    Vietnamese Marines.       Procedures     have now been established     to correct
                    this situation.      One result    of this action     has been the transfer     of
                    about $2.9 million     worth of materiel      from the United States Marines
                    to various    Vietnamese services.        (See p. 8.)

                   Also, action    had been taken to correct            weaknesses in the procedures
                   for controlling    transfer  of equipment           among Army units.  As a




I           Tear Sheet
I
result,  requisitions     for equipment     having     a total       value     of $5.1 mil'-   0
lion were canceled.       (See p. 9.)

GAO found, in its subsequent work, that              effectiveness           of the program
was being hampered by other problems.

  --Unnecessarily   restrictive     criteria      concerning    the          condition  of
     equipment on hand in Vietnam eligible            for transfer            to the Viet-
     namese were resulting      in loss of opportunities          to         cancel ship-
     ments from the United States.           These criteria     were          revised when
     GAO questioned   their applicability.           (See p. 13.)

  --The Vietnamese requirements        for turned-in equipment were not ac-
     curately   identified.     Programs already under way in each service
     to correct    this problem were substantially    completed by Decem-
     ber 1970.     (See p. 15.)

  --The Air Force did not       have procedures   for screening    available
     equipment against the      needs of the Vietnamese.      This deficiency
     was corrected   when the    Air Force implemented a mechanized sys-
     tem to accomplish the      screening.    (See p. 16.)

  --Air     Force units returning     to the United States were taking along
     parts,     supplies,   and equipment which were available  in the United
     States and which could have been left for use by units remaining
     in Vietnam.        The Air Force is going to emphasize that in-country
     requirements       be met to the maximum extent from assets of rede-
     ploying units.        (See p. 17.j

  --Insufficient         maintenance capability   was affecting     timely disposi-
      tion of turned-in        equipment.   Army officials    stated that appro-
      priate     actions would be taken to avoid any undue backlogs of
      equipment.        (See p. 18.)

Use of   excess

Improvements   have been made in the system for redistributing          excess
equipment and materiel     in Vietnam to organizations       needing them.
Nevertheless   GAO believes that the use of this excess to meet cur-
rent needs--especially     those of the Vietnamese--generally        has not
been as complete as possible.        The problems identified      by GAO and
other audit organizations      were:

  --Until    July 1970 there were no procedures      for submission   of Viet-
     namese Army requisitions    through United States Army supply chan-
     nels for screening against      in-country  assets,  although  this
     screening   was technically   feasible.    (See p. 20.)

  --Until     November 1970 the Vietnamese were not allowed to requisi-
     tion their funded requirements     from the large volume of excess
     reported    to the Pacific Command Utilization   and Redistribution
     Agency.     (See p. 21.)


                                 2
                     --Even under new screening      procedures    established    in July 1970, op-
                        portunities   to use excess at depots in Vietnam were not being
                        realized.   Many items of equipment for the Vietnamese were req-
                        uisitioned  for them in the United States,         and these requisitions
                        were not being screened against       excess assets available      at de-
                        pots in Vietnam.     The Army has issued new guidance which provides
I
                        for the use of depot excesses to meet the requirements            of the
                        Vietnamese.     (See p. 22.)

               Adjustment       of supply   flow

                   The U.S. military    services      in Vietnam have taken many effective       ac-
                   tions to adjust   stock levels         in response to decreasing  requirements.
                   This has been reflected       in   a significant   decrease in the stockage
                   level.  GAO noted, however,          that further  improvements  were still     pos-
                   sible and brought problems         areas to management's attention      for cor-
                   rective action.    As a result:

                     --The Army and Earines are canceling   a greater  number of requisi-
                        tions of departing units and thus are further   decreasing  the
                        amount of unneeded materiel shipped to Vietnam.     (See p. 25.)

                     --The Army is preventing   more effectively    the processing   of requi-
                        sitions from units  scheduled for phaseout.     (See p. 28.)

                   Property   disposal   operations

                   GAO limited   its efforts    in the area of property    disposal,   to avoid
                   duplicating   audit work being performed      by the Army Audit Agency.
                   The Agency concltided     in its report  that the U.S. Army had exerted      a
                   strong effort    to develop means of disposing      of excess personal   prop-
                   erty within   a complex Vietnamese business environment.          (See p. 29.)


      RECOMfENDATIONS OR SUGGESTIONS

                   All the problem areas discussed       in this report  were brought      to local
                   management's   attention  and were discussed     with appropriate      officials
                   in DOD and the military    services.     In each instance     prompt corrective
                   action  was taken or promised.       As a result  no specific     recommendations
                   are included   in this report.

I
I     AGENCY ACTIONS AND UNRESOLVEDISSUES
I

                   The Deputy Assistant       Secretary    of Defense (Installations     and Logis-
                   tics) stated that the military          departments   concurred   in general with
                   GAO's conclusions     and proposals.        He stated also that the services
                   had undertaken    corrective     actions    to improve procedures    in accor-
                   dance with GAO's proposals.           (See app. I.)

I
I
I   Tear   Sheet
I                                                       3
MATTERS FOR CONSIDERATION BY THE CONGRESS

     GAO is reporting       these matters   to the Congress to provide       it with as   i
     current    information     as possible   on logistical actions     being taken in    I
                                                                                          I
     connection      with the phasedown of U.S. military     activities      in Viet-     I
     nam.                                                                                 I
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                         Contents
                                                               Page

DIGEST                                                           1



  1      INTRODUCTIONAND SCOPE                                   5

  2      PROGRESSOF PHASEDOWN                                    8
            Action taken to correct       problems   pre-
              viously  identified                               8

  3      DISPOSITION OF DEPARTINGUNITS; EQUIPMENT               11
             Restrictive   criteria  inhibited      transfer
                of equipment to Vietnamese                      13
             Vietnamese requirements     for turned-in
                equipment not accurately      identified        15
             Air Force did not have procedures for
                screening Vietnamese needs                      16
                   Agency comments                              16
             Need to revise Air Force policy on re-
                turn of materiel                                17
                   Agency comments                              17
             Need for better management of mainte-
                nance                                           18
                   Agency comments                              19

  4      UTILIZATION OF EXCESS                                  20
              Need to further     improve use of in-
                 country assets to meet Vietnamese
                 needs                                          20
              Increased use by Vietnamese of out-
                 of-country   excess                            21
              Opportunity   to use depot excess                 22
                    Agency comment                              23

  5      REDUCTIONIN FLOW OF MATERIEL TO VIETNAM                24
            Action taken to reduce stockage levels              24
            Cancellation of requisitions  of depart-
              ing units                                         25

  6      PROPERTYDISPOSAL OPERATIONS                            29
            Agency comments                                     30
CHAPTER                                                        Page

      7    INTERNAL REVIEW OF P'HASEDOWN
                                       OPERATIONS               31

APPENDIX

      I    Letter dated April 20, 1971, from the Deputy
             Assistant  Secretary of Defense (Installa-
              tions and Logistics)                              35

 II        Principal    officials    of the Department of
              Defense and the Departments of the Army,
              Navy, and Air Force responsible       for the
              administration      of activities discussed in
              this report                                      38

                           ABBREVIATIONS

CONUS      Continental    United   States

DOD        Department    of Defense

GAO        General Accounting      Office
COMPTROLLERGENERAL'S                     SECOND REVIEW OF PHASEDOWNOF UNITED
REPORTTO THE CONGRESS                    STATES MILITARY ACTIVITIES IN VIETNAM
                                         Department of Defense B-171573

DIGEST
-_----


WHYTHE REVIEW WASMDE
    The General Accounting    Office    (GAO) has undertaken     a series of re-
    views of policies    and procedures    applied    by the Department   of De-
    fense (DOD) in reducing    military    activities    in Vietnam and of re-
    sults being attained.

    GAO's objectives   are to identify    problems being encountered,    focus-
    ing particularly   on the logistics,     and to bring these problems
    promptly   to the attention    of the responsible   military commanders
    and to the Secretary      of Defense while the phasedown continues.

    In its first     report,    March 15, 1971 (B-171579),     GAO reported   its
    observations     concerning    phasedown actions    completed  through
    April    15, 1970.     This second report   presents   the results    of GAO's
    follow-up    review of phasedown actions       through December 1970.


FINDINGS AND CONCLUSIONS
     Considerable       progress   has been made by DOD and the military         services
     to ensure an orderly         phasedown and effective    redistribution      of equip-
     ment and materiel         and to cope with problems identified         in GAO's
     first    review.      This progress    has been achieved despite       the necessity
     to fully      support forces     still  in the field  and engaged in combat.
     (See p. 8.)

     These are     GAO's observations        in the principal   areas   of   its   review.

     Disposition     of departing   units'      equipment
     In the earlier     phasedown segments, there was a lack of coordination
     between the services      in transferring      equipment from one United
     States service     to other than its counterpart         service  in the Viet-
     namese Armed Forces, e.g.,       from the United States Air Force to the
     Vietnamese Marines.       Procedures      have now been established     to correct
     this situation.      One result    of this action      has been the transfer     of
     about $2.9 million     worth of materiel       from the United States Marines
     to various    Vietnamese services.         (See p. 8.)

     Also, action    had been taken to correct          weaknesses in the procedures
     for controlling    transfer  of equipment         among Army units.  As a
result,  requisitions     for equipment     having     a total       value     of $5.1   mil-   '
lion were canceled.        (See p. 9.)

GAO found, in its subsequent work, that              effectiveness           of the program
was being hampered by other problems.

  --Unnecessarily   restrictive      criteria     concerning    the          condition  of
     equipment on hand in Vietnam eligible            for transfer            to the Viet-
     namese were resulting      in loss of opportunities          to         cancel ship-
     ments from the United States.            These criteria    were          revised  when
     GAO questioned   their applicability.           (See p. 13.)

  --The Vietnamese requirements        for turned-in    equipment were not ac-
     curately   identified.     Programs already     under way in each service
     to correct    this problem were substantially        completed by Decem-
     ber 1970.     (See p. 15.)

  --The Air Force did not       have procedures   for screening    available
     equipment against   the    needs of the Vietnamese.      This deficiency
     was corrected   when the    Air Force implemented     a mechanized sys-
     tem to accomplish   the    screening.    (See p. 16.)

  --Air     Force units returning     to the United States were taking along
     parts,     supplies,   and equipment which were available     in the United
     States and which could have been left         for use by units   remaining
     in Vietnam.        The Air Force is going to emphasize that in-country
     requirements       be met to the maximum extent from assets of rede-
     ploying     units.    (See p. 17.)

  --Insufficient          maintenance   capability   was affecting     timely disposi-
      tion of turned-in         equipment.     Army officials    stated that appro-
      priate     actions    would be taken to avoid any undue backlogs of
      equipment.         (See p. 18.)

Use of excess

Improvements   have been made in the system for redistributing          excess
equipment and materiel     in Vietnam to organizations       needing them.
Nevertheless   GAO believes    that the use of this excess to meet cur-
rent needs--especially     those of the Vietnamese--generally        has not
been as complete as possible.        The problems identified      by GAO and
other audit organizations      were:

  --Until    July 1970 there were no procedures         for submission   of Viet-
     namese Army requisitions       through United States Army supply chan-
     nels for screening     against     in-country  assets,  although  this
     screening   was technically      feasible.    (See p. 20.)

  --Until     November 1970 the Vietnamese were not allowed     to requisi-
     tion their    funded requirements   from the large volume of excess
     reported    to the Pacific   Command Utilization  and Redistribution
     Agency.     (See p. 21.)


                                 2
       --Even under new screening      procedures    established     in July 1970, op-
          portunities   to use excess at depots in Vietnam were not being
          realized.   Many items of equipment for the Vietnamese were req-
          uisitioned  for them in the United States,          and these requisitions
          were not being screened against       excess assets available       at de-
          pots in Vietnam.     The Army has issued new guidance which provides
          for the use of depot excesses to meet the requirements             of the
          Vietnamese.     (See p. 22.)

    Adjustment     of supp'ly   flow

    The U.S. military    services         in Vietnam have taken many effective       ac-
    tions to adjust   stock levels            in response to decreasing  requirements.
    This has been reflected       in      a significant   decrease in the stockage
    level.   GAO noted, however,            that further  improvements  were still     pos-
    sible and brought problems            areas to management's attention      for cor-
    rective action.    As a result:

       --The Army and Marines are canceling  a greater  number of requisi-
          tions of departing units and thus are further   decreasing  the
          amount of unneeded materiel shipped to Vietnam.     (See p. 25.)

       --The Army is preventing   more effectively    the processing   of requi-
          sitions from units  scheduled for phaseout.     (See p. 28.)

    Property     disposai!   operations

     GAO limited   its efforts    in the area of property    disposal,   to avoid
     duplicating   audit work being performed      by the Army Audit Agency.
     The Agency concluded      in its report  that the U.S. Army had exerted a
     strong effort    to develop means of disposing      of excess personal   prop-
     erty within   a complex Vietnamese business environment.          (See p. 29.)


RECOMYENDATIONS OR SUGGESTIONS

     All the problem areas discussed       in this report  were brought to local
     management's attention    and were discussed     with appropriate      officials
     in DOD and the military    services.     In each instance     prompt corrective
     action  was taken or promised.       As a result  no specific     recommendations
     are included   in this report.


AGENCY ACTIONS AND UNRESOLVEDISSI;ES

     The Deputy Assistant-Secretary        of Defense (Installations     and Logis-
     tics) stated that the military        departments   concurred   in general with
     GAO's conclusions     and proposals.      He stated also that the services
     had undertaken    corrective   actions    to improve procedures    in accor-
     dance with GAO's proposals.         (See app. I.)



                                            3
MTTERS FOR CONSIDERATION BY THE CONGRESS

     GAO is reporting       these matters   to the Congress to provide      it with as
     current    information     as possible  on logistical actions     being taken in
     connection      with the phasedown of U.S. military    activities      in Viet-
     nam.




                                     4
                             CHAPTER1

                     INTRODUCTIONAND SCOPE

      In this second in a series of reviews by the General
Accounting Office on the policies   and procedures being ap-
plied in the phasedown of U.S. military    activities in the
Republic of Vietnam, our efforts  were focused on the logis-
tical aspects in three areas.

      1. Disposition     of equipment of U.S. military   units be-
         ing transferred     (redeployed)  or being placed in an
         inactive    status (deactivated).

      2. Disposition  of other equipment and materiel already
         in Vietnam and excess to the needs of the U.S. Forces
         remaining there.

      3. Adjustment of the flow of materiel  and equipment
         from the United States into Vietnam in accord with
         the reduced military  requirements.

        The authorized   troop strength in Vietnam was reduced
from about 549,000 in June 1969 to 284,000 in May 1971--a
reduction     of about 48 percent.     The reduction of about
265,000 troops was accomplished through five increments.           A
further    reduction   of 100,000 troops is scheduled to be com-
pleted by December 1, 1971. At that time there will have
been an aggregate reduction       of 365,000 troops, or 66 per-
cent, from the level authorized        in June 1969 when the first
withdrawal     increment was announced.
     Reductions in authorized    troop strength continue to be
accomplished by the deactivation     or redeployment of units.
Reductions in actual troop strength are made by transferr-
ing personnel out of the country and curtailing      the flow
of replacements.

       The following   table summarizes the force reductions
for the five increments through May 1, 1971, by comparing
authorized    troop ceilings  with actual numbers of troops.
                                                                        Aurhorized        Actual
                                                                          troop            troop
                                                          Date           ceiling          numbers

Level      at start     of increment         I   June      8, 1969       549,500           538,000
        First    reduction                                                25,000            23,000

Level      at end of increment         I         Aug. 31, 1969           524,500          515,000

        Second reduction                                                  40,500            31,000
Level      at end of increment         II        Dec. 15, 1969           484,000          484,000
        Third    reduction                                                50,000            58,417
Level      at end of increment         III       Apr.     15, 1970       434,000          425,583
        Fourth    reduction                                               50,000            46,641

Level      at end of increment         IV        Oct.     31, 1970       384,000          378,942

        Fifth    reduction                                                40,000            41,042

Level      at end of increment         V         Dec.     31, 1970       344,000          337,900

        Sixth    reduction                                                60,000             (4
Level      at end of increment         VI        &Y        1, 1971       284,000             (4
aInformation          had not been released        officially        at the time     of our review.

        This report is not intended as an overall   evaluation
of the activity     or program on which we are reporting.      It is
based, in large part, on our observations     made between July
and December 1970, the period of increments IV and V. Our
earlier     report commented on logistical aspects of increment
III as discussed in chapter.2.

      To avoid duplication     of audit work already performed,
CA0 made use of information      contained in audit reports of
DOD's Deputy Comptroller     for Internal    Audit, the Army Audit
Agency 3 and  the Air  Force  Auditor    General.

     During this review, our work was performed at the Mili-
tary Assistance  Command, Vietnam; at seven U.S. Army com-
mands in Vietnam, two in Okinawa, and one in California;   at



                                                      6
two U.S. Navy commands in Vietnam;     and at three   U.S. Air
Force commands in Vietnam.

      During our examination we brought important matters to
the attention    of responsible   officials in Vietnam through
meetings and memorandums. We kept the Office of the Secre-
tary of Defense informed through periodic       meetings with
staff personnel of the Office of the Assistant        Secretary of
Defense (Installations      and Logistics).   Responsible commands,
in many instances,     already have taken corrective     actions.

      The Deputy Assistant   Secretary of Defense (Installa-
tions and logistics),    in commenting on our draft report,
stated that the military    departments concurred in general
with our conclusions    and proposals.  He stated also that
the military  services had undertaken corrective    actions to
improve procedures in accordance with our proposals.         (See
app.   I.)
                               CHAPTER2

                          PROGRESSOF PHASEDOWN

        In our first    report,  issued March 15, 1971 (B-171579),
we reviewed phasedown actions completed through April 15,
1970. That report stated that DOD was faced with a formi-
dable task of complying with the President's          phasedown di-
rectives     and that, despite constraints      imposed, efforts
were being made to ensure an orderly phasedown and effective
redistribution       of equipment and materiel.
        Since then DOD and the military      services have continued
their efforts      and considerable   progress has been made to
cope with problems identified        in our first    review.     This
progress has been achieved despite continuing            constraints    to
efficient    phasedown planning and implementation.           Combat
operations,     including,   for a time, the extensive       operations
in Cambodia, still       had to be supported fully.       As before,
the decisions      as to which units were to be deactivated          or
redeployed were held closely at higher echelons for security
reasons.     Without this advance information,        planning at
lower levels was difficult.

ACTION TAKEN TO CORRECTPROBLEMS
PREVIOUSLY IDENTIFIED

        In our report on the earlier  phasedown actions,  we
identified    problems concerning procedures for processing
turned-in    equipment.  Our subsequent work showed that ap-
propriate    corrective action had been taken in most cases.
The more significant    problems previously  noted and correc-
tive actions taken are summarized below.
Improved   interservice     coordination

      We observed that there was no coordination     between the
United States military     services in identifying  opportunities
for transferring    equipment to other than a counterpart      Viet-
namese service;   for example, transfer    from the United States
Air Force to Vietnamese Marines.

    Our follow-up      work showed that the Military    Assistance
Command, Vietnam,     had established  procedures,   beginning with
increment IV, for identifying     such opportunities     as well as
for appropriately    transferring   equipment.    One result has
been the transfer    of equipment having a total value of
about $2.9 million     from the Marine Corps to the vario-us
Vietnamese services.

Improved control over transfer
of Army equipment
       Another problem observed concerned weaknesses in the
procedures for controlling       transfer     of equipment among Army
units.     These weaknesses included (1) failure          to cancel
outstanding    requisitions    by recipient     units for the same
equipment, (2) failure       to validate    the recipients'    require-
ments, and (3) approval of transfers           of items under special
control of the Department of the Army, contrary to its in-
structions    for disposition.

      Our follow-up    work showed that action had been taken
to strengthen    these procedures.   One accomplishment has been
the cancellation     of requisitions  for equipment valued at
about $5.1 million.

Improved accountability       for
turned-in equipment

      We previously  reported that the Army had developed a
computerized system for controlling        equipment turned in
during phasedown but that the system was not fulfilling          its
intended purpose.     The system was developed during incre-
ment III when it became apparent that the punch-card system
then in use could not handle the work load.          Weaknesses in
the system resulted    in inaccurate     and incomplete reports,
however, and the system did not provide the desired records
of accountability   for property     turned in.

        During increments IV and V, the Army substantially
improved and refined the system.           Accuracy checks on re-
corded data were incorporated,         controls   were established     to
prevent duplication      of entries,    and physical   controls    over
input data were centralized         to prevent loss of data.       As a
result    the system now appears to provide adequate account=-
ability     for property  from the time that it is turned in by
units until     it is redistributed     or otherwise disposed of.

                                    9
       Notwithstanding    these and similar    actions by the mili-
tary services to improve the efficiency         of logistical     sup-
port I  we  found   a number  of opportunities    for improving    the
management of the current and future troop withdrawals.
These opportunities      are discussed in following      chapters.




                                   10
                                        CHAPTER3

                 DISPOSITION OF DEPARTINGUNITS' EQUIPMENT

      During increments III,   IV, and V--carried out between
December 15, 1969, and December 15, 1970--the Army reduced
its authorized   troop strength by about 86,000.   During that
period the units involved in the phasedown turned in about
112,000 major items of equipment to supporting    supply points,
as follows:

                                         Number of items turned       in
                                           Increment
     5Pe of
    equipment                    III           -IV         (noze a)        Total

Wheeled vehicles                3,699         1,876          2,564           8,139
Tracked vehicles                   459           210            551          1,220
Artillery pieces                   191            70            119             380
Small     arms                 27,379        18,587         14,025          59,991
Communications-
  electronics                  15,655        13,591         12.852          42,098

        Total                  47.383        34.334         30,111         111,828

aThrough December 12, 1970.

     Departing units also disposed                   of several thousand other
items of equipment by transferring                   them directly  to other
Army units.

         Generally       the equipment     turned     in from departing     Army
units     is:

         --Sent to another Army unit            in Vietnam having     a requir*
            ment for the equipment.

         --Transferred       to the Vietnamese         Armed Forces to meet
            identified      needs.

         --Sent to Army installations  elsewhere, as instructed
            by the Department of the Army in Washington or by
            Headquarters, U.S. Army, Pacific.
       If not handled as above, the equipment is either
placed in depots in Vietnam and retained    to meet future
requirements   or disposed of in accordance with Army proce-
dures for handling excess if there is no anticipated     need.

      Equipment which is required but which needs repair
first  would be sent to a maintenance facility and then would
be redistributed  as outlined   above.

      Marine Corps procedures differ      somewhat from the Army's.
Units redeploying    to locations   in the western Pacific      re-
tain their authorized     equipment to maintain operational
readiness.    The equipment of Marine units being redeployed
or being deactivated    is made available    for redistribution     to
the Vietnamese Armed Forces before the units are sent out of
the country.

        Air Force and Navy procedures differ    from those of the
Army and Marine Corps.      The Navy has been engaged since
1968 in a program aimed at turning over its facilities          and
vessels in Vietnam to the Vietnamese.        The reduction   in
Navy strength usually     does not make equipment available      for
redistribution,    because the Vietnamese assume responsibility
for the equipment and operation     simultaneously    with the U.S.
Navy strength reduction.

        The Air Force's redeploying   units generally  retain
their aircraft    to maintain operational   readiness.    To the
extent that aircraft    and other equipment are transferred       to
the Vietnamese, however, such transfers      are handled on a
unit-to-unit    basis.  Under this plan the equipment of a
United States unit is turned over to an equivalent        Vietna-
mese unit.
      Consequently the Air Force and Navy are not faced with
the large problem of piecemeal redistribution  of equipment
that must be handled by the Army and, to a lesser extent,
by the Marine Corps.

      During our review we identified       areas in which equip-
ment could be redistributed      more effectively.    In our opin-
ion, some of these improvements would contribute         materially
to the Vietnamization     program.   Examples of deficiencies
noted were:


                                 12
     1. Restrictive     criteria  that inhibited   transfer   of
        equipment     to the Vietnamese.

     2.   Failure to identify    what the Vietnamese    Armed Forces
          wanted and needed.

      3. Air Force redeployment policy and procedures that
         inhibited  the transfer of required materiel to the
         Vietnamese and caused unnecessary shipments from the
         United States.

     4. Inadequate manning of maintenance facilities          that
        caused a backlog of equipment needing repair.
RESTRICTIVE CRITERIA INHIBITED
TRANSFEROF EQUIPMENTTO VIETNAMESE

      About 10 percent of the vehicles  turned in by departing
units were transferred  to the Vietnamese Armed Forces, even
though the Vietnamese could have used many more. Military
Assistance Command, Vietnam, records through OctoSer 20,
1970, showed that less than 500 of about 5,600 vehicles
turned in during increments III and IV had been transferred
by the Army to the Vietnamese forces.

        In some instances this resulted     because there was no
identified     Vietnamese requirement   for the equipment; more
often there was a Vietnamese requirement         but the turned-in
equipment was no t in the condition      required   for it to be
eligible    for transfer  to the Vietnamese forces.

      The Military  Assistance    Command, Vietnam, established
mileage criteria   for transferring   vehicles.    Jeeps and
3/4=ton trucks could not exceed 10,000 miles; 2-l/2-ton
trucks and 5-ton trucks could not exceed 17,000 miles and
12,000 miles, respectively.
      The principal  reason for establishing       mileage criteria
was U.S. concern over the ability        of the Vietnamese to
handle the increased maintenance work load that would re-
sult from the acceptance of heavily used vehicles.          Al-
though we recognized    the validity     of this concern, we ob-
served obvious inconsistencies       between the objective    of the
policy and its results.     We saw vehicles      of various types


                                  13
that exceeded the mileage criteria   but were obviously   in
better condition than other vehicles   that were eligible    for
transfer.

     We discussed this problem with officials    of the Mili-
tary Assistance Cormnand, Vietnam, and DOD. After reevalua-
tion of the situation, mileage criteria   for all vehicles
were raised to 20,000 miles.

       This action will increase the amount of equipment being
transferred    to the Vietnamese.     These additional     transfers,
in turn, will reduce the quantity        of equipment being shipped
from the United States.       We calculated   that, because of this
change in criteria,    about 727 additional      vehicles,    worth
$6 million,   became eligible    for transfer    during increments
IV and V, as follows:

                                    Eligible
                                       for
                   Turned in        transfer            Additional
                    during       Old         New         vehicles
   5Pe of        increments     cri-         cri-        eligible
   vehicle         IV andV     teria       teria    Number        Value
l/4 ton                 712       49         196      147     $      473,594
314 ton                 804       91         330      239         1,008,430
2-l/2 ton            1,016      372          541      169         1,643,490
5 ton                   425       53         203      150         2,271,352
Miscellaneous           171     4             26      - 22           617,365
    Total           3.128       569       1,296       727    $6,014.231




                                  14
VIETNAMESEREQUIREMENTSFOR TURNED-IN EQUIPMENT
NOT ACCURATELYIDENTIFIED
      The Military     Assistance Command, Vietnam, periodically
issues a "want list"       setting forth unfilled     equipment re-
quirements of the Vietnamese Armed Forces.            This list is one
of the basic tools for identifying        opportunities     to meet
Vietnamese needs with equipment becomingavailableduring             the
phasedown.      Obviously it is important that the want list be
accurate if maximum transfers        of equipment to the Vietnamese
are to be realized.

      The DOD Deputy Comptroller      for Internal  Audit issued
a report on October 30,      1970, on   the results of a review of
materiel   furnished   to the Armed Forces of the Republic of
Vietnam.     The review included an examination     of requirements
computations     for each of the Vietnamese armed services,
which showed that full consideration        was not always given
to:

      1. The quantities and types of equipment             authorized
         for units and activities.

      2. Equipment    on-hand and due-in      from prior     years'
         programs.
      3. Expected    attrition.

For example, the Deputy Comptroller's    report noted that the
Unit Authorization  Lists and Consolidated    Authorization
List which set forth equipment authorized     for the Vietnamese
Air Force had not been updated after August 1967.

        Although the other military        services had more precise
definitions      of Vietnamese requirements,        problems still    were
noted.      Problems noted generally       involved the use of errone-
ous attrition      rates.    Overestimating      or underestimating     the
quantity     of equipment which will require replacement because
of combat loss, age, or some other cause has a direct                effect
on the computation        of requirements.      For example, the Deputy
Comptroller      reported that the Vietnamese Army requirement
for a certain       type of tractor   had been understated        by 18
pieces of equipment having a total value of about $430,000
because an erroneous attrition          computation had been used.


                                    15
        Tests made by the Deputy Comptroller          in his review dis-
closed understatements        of requirements     totaling   $1.4 mil-
lion.     Presumably a more exhaustive        examination would have
uncovered even more understatements.            Very large overstate-
ments of requirements        were also disclosed,       but the impact
of these errors is not as significant           because actual require-
ments of the Vietnamese are verified           after an offer is made
to fill     an indicated    need. Understatements        can result  in
offers'    not being made when requirements          do exist because
these requirements       will not be reflected       on the want list.

     At the completion   of our fieldwork, measures were being
taken to correct  errors noted by the Deputy Comptroller,  and
in November 1970 a revised want list was issued by the Mili-
tary Assistance Command.

AIR FORCEDID NOT HAVE PROCEDURES
FOR SCREENINGVIETNAMESENEEDS

       In our first  report we commented that the Air Force had
returned   to the United States equipment for which there was
a Vietnamese need identified     on the want list.   Cur follow-
up work showed that     the Air Force had not yet established
procedures for screening the want list against available
Air Force equipment.      We were told that one reason for not
performing   the screening was that it had to be done manually.

      The benefits     of screening Air Force equipment against
want list requirements      could be substantial.     Our screening
of 130 items on the August 1970 want list against equipment
at Air Force bases in Vietnam indicated         that 19 items, in
some quantity,     having a total value of about $300,000 were
excess to Air Force requirements       in Vietnam.

Agency comments

      The Deputy Assistant  Secretary   of Defense (Installations
and Logistics),  in commenting on our draft report,      stated
that the Air Force had a mechanized system for screening
Vietnamese Air Force requirements     against United States Air
Force excesses.




                                   16
NEED TO REVISE AIR FORCEPOLICY
ON RETURNOF MATERIEL

       Air Force policy for returning   materiel   to the United
States with units redeploying     from the Pacific   is set forth
in an August 4, 1970, Memorandum of Understanding.         This
reflected   agreements reached by representatives      of the Tac-
tical Air Command, Pacific    Air Forces, and Air Force Logis-
tics Command.
        The memorandum contained a policy statement that rede-
ploying units should be operationally        ready at their new
locations     as quickly as possible.     To attain this objective,
the memorandum provided that units redeploying         from the
Pacific    take with them supplies,     spare parts, and equipment
required    to quickly   reach readiness posture at the new bases.

       This could result     in unnecessary cross shipments of
like materiel    between Vietnam and the continental      United
States (COWS>. The Air Force Auditor General reviewed re-
deployment of an aircraft       wing from Tuy Hoa Air Base to
CON-US. His review identified        about $250,000 worth of spare
parts which had been returned to CONUSand which could have
been used to fill     current requirements    at another air base
in Vietnam.     The Auditor General verified      that the same ma-
teriel   had been available     in CONUS,

        In our opinion,   Air Force policy should recognize     that
supplies,     spare parts, and equipment needed to sustain      oper-
ational    readiness of units redeploying   from the Pacific      are
available     in CONUS.

       It appears that a more reasonable course of action
would be to transfer     materiel   to units remaining in the Pa-
cific    Theater where need exists,    particularly     in Vietnam.
The readiness of redeploying      units would not be adversely
affected    because there would be sufficient       lead time to pro-
vide the materiel     at the new bases from CONUSstocks.

Agency comments

      In response to suggestions      contained in our draft re-
port,   the Deputy  Assistant   Secretary    of Defense (Installa-
tions and Logistics)     informed us that Air Force procedures


                                  17
did provide for the redistribution    of materiel    to units re-
maining in Vietnam and that the Air Force would continue to
emphasize the importance of satisfying    in-country    require-
ments to the maximum extent consistent    with unit deployment
priorities.

     We plan to review and to evaluate the effectiveness of
the Air Force procedures during the conduct of our next re-
view of the phasedown.

NEED FOR BETTER MANAGEMENT
                         OF MAINTENANCE
      During the earlier increments of phasedown, a large
backlog of Army equipment which required  intermediate-level
maintenance accumulated at the Long Binh Depot.     Corrective
measures were taken at the Long Binh Depot, but we observed
that the same situation  developed during increment V at the
Qui Nhon Depot area.

        During prior increments a relatively    small quantity   of
equipment w&s processed at the Qui Nhon Depot--most of this
activity     being carried out at the Long Binh Depot.      Qui
Nhon Depot participation     increased considerably    during in-
crement V; about half of the Army's reduction        in materiel
was processed there.

       The unit responsible       for maintenance of equipment
turned in at the Qui Nhon Depot had only 29 of its 99 autho-
rized maintenance personnel.          Despite this shortage the unit
was responsible      for continuing     its normal direct support
mission --providing      maintenance support to units on duty in
Vietnam,     The maintenance outputs of phasedown-generated
vehicles   during October and November, prior to increment V,
were 46 and 50, respectively.          It was expected that about
500 vehicles     requiring    maintenance would be turned in at
Qui Nhon during increment V.

     We discussed this matter with Army officials    at Qui
Nhon. They told us that personnel had been requested to
fill the shortages.   Officials at Army headquarters   in Viet-
nam and at Military  Assistance Command, Vietnam, told us
that they were keeping close watch on the situation    at Qui
Nhon and that necessary steps would be taken to keep the
work load manageable and to prevent backlogs of equipment.

                                 18
Agency comments

      The Deputy Assistant      Secretary of Defense (Installations
and Logistics),     in replying   to our draft report,   stated that
action was being taken to ship reparable        assets to other
Army maintenance facilities       in the Pacific Command when the
in-country    backlog exceeded the capabilities      of the Army
maintenance units in Vietnam.




                                 .19
                                 CHAPTER4

                         UTILIZATION OF EXCESS

       The generation   of excess materiel         is an undesirable,
yet seemingly unavoidable,         side effect     of military       supply
systems.    Changes in operating        patterns,      obsolescence,
human errors,    and difficulties       in predicting       requirements
precisely   for all locations       produce excess materiel.             To
mitigate   this problem, DOD has tried to find other users
for the excess materiel.          This involves      transferring       the ex-
cess materiel    between organizations,         military      services,
agencies, and allies.
      We concluded from our review that      the DOD objective       to
use excess materiel   to meet current needs, especially          those
of the Vietnamese, had not been realized        to the fullest      pos-
sible extent.    This could   result in  unnecessary      shipments
from CONUSof materiel     that was available      in-theater.

NEIZDTO FURTHERIMPROVEUSE OF
IN-COUNTRYASSETS TO MEET VIETNAMESENEEDS

      Since January 1970 requisitions       submitted by the Viet-
namese have beenlrouted      to Okinawa to be screened against
Army long-supply     assets in various Pacific       locations.
Until July 1970 these requisitions        were screened only
against assets in Okinawa, Japan, and Korea but not against
assets in Vietnam.      It was expected that the Vietn          ese
would take advantage of Army long-supply                     ??
                                                 and excess assets
in Vietnam by periodically       screening lists   provided.      The
Vietnamese, however, lacked the computer capability             to per-
form such screening,      and thus opportunities     for transfers
were being missed.


1That quantity    which is above current          needs and which is
 authorized    for retention.
'That  quantity   which is above current          needs and above the
 long-supply    quantity.



                                      20
        Army records indicate        that, during the period January
to July 1970, screening of 83,037 requisitions              in Okinawa
resulted      in 15,783 requisitions,        or 19 percent,   being com-
pletely    filled       and 8,141 requisitions,    or 10 percent,   being
partially       filled.

      We tested 120 requisitions   submitted by the Vietnamese
Army in November 1970 and found that sufficient      long-supply
assets were on hand at depots in Vietnam to satisfy       24, or
20 percent,   of the requisitions.   It appears, therefore,
that screening against stocks available     in Vietnam would be
beneficial.
      In July 1970 procedures on Okinawa were modified to
include computer screening of Vietnamese Army requisitions
against long-supply   assets at the Army's Long Binh Depot.
Although this represents    a significant improvement, the
modified screening procedures are still     inadequate because
they provide that assets on Okinawa be screened and shipped
before the Long Binh Depot assets are screened.        Additional
improvement is needed in the screening procedures employed
on Okinawa, so that maximum use can be made of assets avail-
able in Vietnam to fill    Vietnamese Army requisitions.

      We suggested that the Army's procedures be revised to
provide for screening Vietnamese Army requisitions       against
assets available     in Vietnam before screening these require-
ments against assets on Okinawa.       Subsequently we were in-
formed that the Army intended to change the requisition--
screening priorities     to require that in-country  stocks be
drawn prior to those on Okinawa.

INCREASEDUSE BY VIETNAMESE
OF OUT-OF-COUNTRYEXCESS

       Prior to November 1970 the Vietnamese use of excess
reported to the Pacific       Command Utilization     and Redistribu-
tion Agency was limited       to assets designated      "nonreimburs-
able."     Assets become nonreimbursable        only after they have
been determined to be excess to the worldwide requirements
of U.S. Forces.      In addition,     procedures employed by the
Redistribution    Agency pertaining       to the order in which
customer requisitions     were screened against this nonreim-
bursable excess further       limited    opportunity  for these as-
sets to be used by the Vietnamese.
                                   21
      As a result of these limitations,      these assets could
be used to satisfy  lower priority    requisitions   from organi-
zations in other areas of the world or could even be re-
turned to the United States, even though there was Vietnamese
need for them.

      These defects were corrected  in November 1970 when the
Redistribution   Agency procedures were changed to provide the
Vietnamese with the same access to this excess as U.S. units
had.

OPPORTUNITYTO USE DEPOT EXCESS

       There are two basic procedures by which materiel          is
requisitioned       for the Vietnamese Army. Requisitions      for
certain    items of materiel       are originated by the Vietnamese;
requisitions      for other items of materiel,     principally   equip-
ment items, are originated          in the United States by the Inter-
national     Logistics    Center, Army Materiel   Command, on the ba-
sis of information        contained in the approved military     assis-
tance program.

        Requisitions  originating   in Vietnam are screened
against long-supply      assets available   in depots in the Pa-
cific.     Major items of equipment in depots in Vietnam which
became excess to current operating        needs of remaining U.S.
Forces, however, were not being considered promptly for
filling    the needs of the Vietnamese.

       For example, our sampling of 115 items scheduled to be
requisitioned   by the Center showed that, as of October 18,
1970, unreported    long-supply assets were available in depot
stocks in Vietnam to meet all or part of the requirements
for 19 of these items.

      We noted that the Army had 571 mine detectors        having a
total value of about $278,000 that were excess to current
needs while there was an identified      Vietnamese need for
1,711 of the same type of mine detector.         We brought this
matter to the attention   of Military    Assistance    Command,
Vietnam, officials,   and, as a result of their review of
these 19 items, equipment having a total value of $3.2 mil-
lion was identified   as available    for transfer   to the Viet-
namese. Similar opportunities      probably exist for those
items not included in our review.
                                  22
        The Army has procedures which provide that equipment
items in depots in Vietnam that are excess to needs be ap-
plied against Department of the Army predispositioned            in-
structions     and be furnished     to requisitioners   in order of
priority.      Items not identified      on Department of the Army
predispositioned     instructions     are to be reported to the U.S.
Army, Pacific.      This procedure has not been effective.

       In our opinion,     cognizant item managers should be re-
quired to make special analyses of available           depot stocks at
each control point in the Pacific,         especially   in Vietnam,
for those items identified        as being Vietnamese requirements.
The International      Logistics   Center could be informed of the
extent to which requirements        are met so that any actions
under way to acquire or ship additional          assets could be can-
celed.

Agency comment

      The Deputy Assistant Secretary of Defense (Installations
and Logistics),  in commenting on our draft report,   stated
that Army guidance required that depot excess, as well as
excess generated by redeploying   units, be used to fill    re-
quirements of the Vietnamese.




                                 23
                              CHAPTER5

          REDUCTIONIN FLOW OF MATERIEL TO VIETNAM

      There are two principal       tasks to be accomplished      in
making the flow of materiel       in the pipeline  responsive       to
phasedown activities,

        First,   new lower stockage levels must be calculated.
These lower levels defer or prevent replenishment          actions
that otherwise would be initiated         and also make possible
cancellation      of previous replenishment    actions for materiel
which is no longer needed,         Second, action must be taken to
cancel open requisitions        of units that are being redeployed
or deactivated,       to prevent shipment of unneeded materiel.
A collateral      action required   is the blocking of new requi-
sitions      for these units before they are submitted to sources
outside of Vietnam.

ACTION TAKEN TO REDUCESTOCKACELEVELS

       It appears from our review that the military     services
have taken action to reduce stockage levels in recognition
of decreasing demands by reducing these levels in propor-
tion to reduction    in troop strength,  e.g., a lo-percent     re-
duction in troop strength would be accompanied by a lo-
percent reduction    in stockage levels.    Adjustments for major
items of equipment, being based on analyses of the future
requirements    for specific  types of equipment, have been
more precise.

      We noted that the military    services had established
procedures for canceling   outstanding     replenishment requisi-
tions for materiel which, if received,       would be excess to
the new, lower stockage levels.

      The services also had instituted          other programs aimed
at reducing the quantity       of materiel     in Vietnam.   Their ef-
forts had been quite successful.           Between March 1969, shortly
before the phasedown started,       and September 1970, the Army
reduced its on-hand stocks worth $1.4 billion            to $317 million-
a reduction   of $1.1 billion,     or 78 percent.



                                   24
         Similarly,       between May 1969 and September 1970, the
Marine      Corps     reduced   its on-hand and due-in stocks worth
$104.5 million  to $28.3 million--a     reduction     of $76.2 mil-
lion, or 73 percent.    These rates   of reduction       significantly
exceeded the rates   at which Army and Marine Corps troop
strength   declined over the period involved.         The ratio of
in-country   stocks to troop strength     is significantly        lower
than it has been in the past, and the potential            for problems
in the future disposition    of residual    stocks has been less-
ened.

CANCELLATION OF REQUISITIONS
OF DEPARTING UNITS

        Although the accomplishments         in reducing stocks in
Vietnam were impressive,        the services were experiencing
some problems in effecting         cancellation     of requisitions.
The Army and Marine Corps had difficulty             in obtaining     can-
cellation      of orders already placed for units slated for re-
deployment or inactivation.          The Army also was not effec-
tively     preventing   the processing     of new requisitions       out of
Vietnam for these units.          Corrective    action has been taken
on these matters.

Army cancellation   procedures
for CONUSrequisitions

         The U.S. Army, Vietnam, has relied upon the Logistical
Control Office,      Pacific,    to cancel open requisitions       in
CONUS for units      departing     Vietnam because of phasedown op-
erations,       The Control Office,       which is at Fort Mason,
California,      is responsible      for monitoring   the status of req-
uisitions     for materiel     destined for Vietnam.      Information
copies ofrequisitions         and associated     documents regarding
status are to be sent to the Control Office for filing.

       Rather than take such action itself,  the U.S. Army,
Vietnam, depended on the Control Office for cancellation
action,   primarily because of a desire to restrict  the num-
ber of persons in Vietnam having knowledge of the identity
of departing units.

       The procedures used provided for the U.S. Army, Vietnam,
 to furnish   the Control Office with information on the


                                       25
identity  of units scheduled to depart during the period of
each increment,    Using this information,   the Control Office
searches its requisition    file and processes cancellation
requests to appropriate    CONUSsupply sources.

       The Control Office's   efforts    to obtain confirmation      of
cancellations    have met with little      success.    With respect
to increments I, II, and III, which were completed by
April 15, 1970, Control Office records indicated              that,
through October 30,    1970,  a  total   of  2,183   requisitions
were confirmed as canceled,        In contrast,     U.S. Army, Viet-
nam, records showed, as of October 29, 1970, a total of
about 8,200 open requisitions       which were for units that had
left during the periods of these increments and which should
have been canceled.

        Our examination   showed that the Control Office's    in-
ability    to cancel more requisitions    was due, in part, to
its incomplete files.        The files were incomplete because
information    on some of U.S. Army, Vietnam, CONUSrequisitions
(the Control Office's      estimate was 10 to 15 percent) was
never transmitted      to the Control Office.    Officials attrib-
uted this situation      to improper coding or routing of req-
uisitions    and to the loss of data during transmission.

       The Control Office was not successful   in obtaining  con-
firmation   of cancellation  requests for those requisitions
that were in its files.     Our review showed that, for one
increment,   the Control Office had not received any response
to over 60 percent of its cancellation    requests.

       Our findings     were corroborated      by a report of the Army
Audit Agency, issued in November 1970, which commented on
procedures used to cancel requisitions              of units departing
Vietnam.      The Army Audit Agency also noted that the Control
Office's    files were not complete; but it also reported that
this situation       had been overcome to some extent at certain
inventory     control   points.     At these locations        action was
taken to cancel not only the individual              requisitions    iden-
tified    by the Control Office but also all other requisitions
of the units indicated          on the cancellation      requests that
were received,



                                    26
        The Army Audit Agency reported                  that the Army Materiel
Command had issued           instructions        to all inventory        control
points    to set up automated             procedures       for canceling      requi-
sitions     of units       departing      Vietnam.        Under the new proce-
dures,    the Control        Office     will    not be responsible        for ini-
tiating     cancellation        requests.        These procedures        will    be in
effect    for increment         VI of the phasedown.             As the Army Audit
Agency noted,         inventory      control     points      have the most cur-
rent andcompletedata               on requisitions,          so they should be
able to cancel          these requisitions          effectively.

       We suggested    that,  as an interim        measure during    incre-
ment V, the U.S. Army, Vietnam,          initiate     its own cancella-
tion actions    on the requisitions        of departing     units   as soon
as security    considerations     allowed.        Our proposal    was ac-
cepted.

Army cancellation         procedures
for in-theater        requisitions

        Another      problem    that we brought   to the attention       of
the Army also was corrected.              This problem   involved     certain
requisitions         which were for items not normally         stocked     and
which were sent to Okinawa for screening.                A record     of these
requisitions         was not monitored     by the Inventory      Control
Center,      Vietnam.       Therefore  the Center could not take can-
cellation       actions     for these items requested      by departing
units     as it did for items which were stocked            normally.

       Although      unnecessary      procurements      normally      would not
result    from this situation,           needless    transportation        of ma-
teriel    back and forth        between Vietnam and Okinawa could
occur.      After    we brought     this problem       to the attention         of
appropriate       officials,     a special      computer    program     (named
"GAO Special")         was prepared      to effect     cancellation.        Through
use of the program,          about 3,100 requisitions             were identified
for cancellation.

Marine    Corps     cancellation       procedures

        Marine Corps procedures  provide    for its Force Logistics
Command in Vietnam to take action        to cancel back orders    of
departing     units. These are requisitions      for materiel  which
the Command normally     stocks but does not have on hand.


                                           27
      Cancellation    of these back orders is important,       because,
if left on the records,      they   result in an overstatement    of
future requirements.      In turn, this overstatement      of require-
ments results     in the requisitioning    of unneeded and excess
materiel.

      Although the Command had procedures for canceling        back
orders,    a significant    number of orders that  should have
been canceled were open at the time of our review.          In
November 1970, 929 back orders totaling       $572,045 from 63
units that had departed Vietnam were still        on the records.
By the time we completed our fieldwork,        the Command was
correcting     this situation.

Army procedures    for   blocking   new requisitions

      The Army developed procedures for blocking    the process-
ing of new requisitions    for units scheduled for deactivation
or redeployment.     These procedures were put into effect    for
increment V of the phasedown.
       To prevent disclosure    of the identity    of units slated
for phasedown before public announcement was made, two se-
nior officers    at the Inventory   Control Center, Vietnam, were
given the task of manually reviewing       all requisitions    before
the units left the country.       Those requisitions     for units
known by these officers      to be slated for departure were ex-
tracted.

      Only the requisitions  of certain major units were
blocked in this way, because of the work that would have
been involved in manually screening requisitions          of all 109
units scheduled for departure     in increment V. We estimate
that, as a result   of this practice,    the requisitions     for at
least 50 percent of the 109 departing units escaped the
screening process.
        We brought this matter to the attention    of responsible
officials,     and the procedures were changed to provide for
blocking    requisitions   of all departing units,  rather than
just of major ones. This action will be of further          assis-
 tance in preventing     unnecessary shipments of materiel.




                                    28
                               CHAPTER6

                  PROPERTYDISPOSAL OPERATIONS

        The withdrawal      of U,S. troops from Vietnam has had a
significant     impact on property disposal operations.         More
materiel    is being turned in at a faster pace than ever be-
fore.     4s shown in the following       chart, average monthly re-
ceipts have increased significantly           since the phasedown be-
gan in June 1969. The increase accompanying increment IV is
especially     significant,     because we believe that this could
be indicative      of the impact of future withdrawal      increments.

                  Average Monthly Receipts of
         U.S. Army Property Disposal Yards in Vietnam

                                           Value of
                                            usable
                                           materiel         Scrap
             Period                     (000 omitted)   (short tons)

July 1968 to June 1969,
   prior to increment I                    $ 6,996           6,661
July 1969 to June 1970,
   increments I, II, and III                 8,351          11,468
July 1970 to October 1970,
   increment IV                             10,710          15,454

        At the time of our fieldwork,    the Army Audit Agency was
conducting    a detailed   review of property   disposal operations.
To avoid duplication      of audit work,, we limited    our efforts
to observations     of the daily routine at two property       disposal
activities    and to a review of statistical      data.

       The objective  of the Army Audit Agency review was to
evaluate procedures used to receive,        account for, store, and
sell foreign excess personal property.          It concluded that,
overall,   the Army headquarters     in Vietnam had put forth every
effort   to develop techniques    for disposing    of excess personal
property within the complex Vietnamese business environment.
The procedures used, however, to receive9 account for, store,
and sell excess property     could be improved.      It found that:



                                   29
      --Procedures   had not been developed to apprise autho-
         rized units of usable excess materiel   available for
         withdrawal  from property disposal yards.

      --Usable items available     for   issue were mixed with
         other items.

      --Locator   systems at property disposal     yards were ei-
         ther inaccurate  or nonexistent.

      --Usable items were not always accounted for, because
         of unrecorded sales, issues, and downgrading actions.

      --Materiel  requiring    covered storage deteriorated  in
         the yards while available    warehouse storage space was
         only 35 percent utilized,
      --For usable items sold, an average 175 days expired
         between the time that the items were received at the
         property  disposal yards and the time that they were
         removed after sale.

AGENCYCOMMENTS

      The Deputy Assistant    Secretary of Defense (Installa-
tions and Logistics),     in commenting on our draft report,
stated that progress had been made in reducing the inven-
tories at property    disposal activities      in Vietnam.   He re-
ported that dispositions     generally    exceeded generations    of
both usable items and scrap after September 1970.           Further
improvement in this area is anticipated          because DOD is work-
ing with the Department of State to have Vietnamese offi-
cials relax some of the export restrictions.

      The Secretary stated also that procedures        had been im-
plemented which facilitated       better accounting,   receiving,
storage, and physical     security    practices.

        We are not in a position    to report on the effectiveness
of these procedures at this time.        The whole area of property
disposal     in Vietnam is, in our opinion,   one which warrants
further    review.    We intend to look into this matter as part
of our continuing      review of the phasedown of U.S. military
activities     in Vietnam.

                                 30
                               CHAPTER7

            INTERNAL REVIEW OF --~
                                PHASEDOWN
                                        OPERATIONS

       A number of internal      audits and reviews of phasedown-
related   logistical  activities      in Vietnam have been con-
ducted by audit organizations         within DOD.

        The Deputy Comptroller    for Internal  Audit, Office of
the Secretary of Defense, issued three reports during 1970,
which covered some aspects of phasedown activities.           Dis-
cussed in these reports,       among other things,   were (1) prob-
lems in computing Vietnamese Armed Forces program require-
ments, (2) transfer     of equipment to the Vietnamese,      (3) uti-
lization    of equipment transferred     to the Vietnamese, and
(4) the need to screen excess against Vietnamese reqire-
ments.

       The &my Audit Agency performed 10 audits from June
1969, which related directly          or indirectly     to phasedown lo-
gistical     activities.       The more significant     reports  covered
cancellation       of requisitions    from units redeploying      from
Vietnam, property disposal operations,              and certain  aspects
of increment IV. The Army Audit Agency was in the process
of reviewing       increment IV when we started our review.           In
the interest       of ecomomy and to avoid unnecessary duplication
of effort,     the Army Audit Agency curtailed          its review and
issued a report on its findings           through October 1970.

       Five reviews of phasedown activities  were conducted by
the Air Force Auditor General from August through October
1970. These audits covered shipments made to the United
States when valid requirements    existed in Vietnam, stock
controls   during base phasedown, and packing and crating
problems.

     We found that the Department of the Navy had not per-
formed internal    audits of phasedown activities   in the Navy
or Marine Corps.     With this exception,  however, we concluded
that audit coverage of the phasedown had been adequate and D
that the auditors'    recommendations had been implemented.




                                   31
APPENDIXES
                                                                                                  APPENDIX I


                            ASSISTANT SECWETAFIYOF DEFENSE
                                   WASHINGTOY.        Q.C.    2G201




                                                                                     20 APR 1971



Mr.     C. M. Bailey
Director,     Defense   Division
General     Accounting   Office
Washington,       D. C.    20548

Dear    Mr.    Bailey:

The Secretary         of Defense       has asked             me to reply    to your      letter      of
February       17, 1971 which         transmitted              copies  of your    Draft       Report
entitled    “Second     Review      of Phasedown                of U. S. Military       Activities
in Vietnam,       ” (OSD Case       #3238)

We and the Military         Departments          have reviewed       the report     and concur
generally      with your conclusions          and recommendations.              Recognition     of
our efforts      to assure    an orderly       phasedown      and effective      redistribution
of equipment       and materiel        is appreciated.        Comments       which      follow
should    provide     you with    clarifying      information     for inclusion       in the Final
Report.

The need has        been recognized          for detailed     procedures       involving      unit
redeployments         and inactivations,         and redistributing         materiel     while     tacti-
cal operations        continue.      Appropriate        procedures       have been developed,
and associated        problems       continue    to receive        top management        emphasis.

The deficiency         noted    by the Department              of Defense    Deputy      Comptroller
for Internal     Audit      regarding       the update        of Vietnamese      Air    Force      (VNAF)
equipment      authorization          lists   has been corrected.            The Unit Authoriza-
tion Lists    and the Consolidated              Authorization          List were     updated      during
the second      quarter       of Fiscal      Year    1971.

Procedures        now exist       for screening       approved    VNAF       requirements        against
U.S.    Air Force        (USAF)      excesses.       For the most      part this is accomplished
by a mechanized           system      and the VNAF         has the capability        to comply.       When
VNAF      requirements          are converted       to the appropriate         card format      the mech-
anized     system      accomplishes         the screening.

Air Force       directives      provide           for the redistribution            of materiel        to units
remaining       in Vietnam.         With         regard   to the F-100            deployment        from    Tuy   Hoa
APPENDIX I

 Air Base,        approximately            3300 line items        of aircraft       and equipment             spares
 were     shipped       in late September            1970 to Phan Rang Air              Base to fill valid
 in-country        shortages.          The operational         taskings        of the Air Force            require
 that materiel          allocation      priority      be assigned       to redeploying         units.        The
 Air Force        will,      however,       continue     to emphasize           the importance           of satisfy-
 ing in-country           requirements           to the maximum           extent    consistent        with unit
 deployment         priorities.

 The management               of Army         maintenance        programs        in Vietnam        continues        to
 receive     priority        attention.         Maintenance         resources       are adjusted         in-country
 when workload            distribution         dictates     such action.         Action    is also taken          to
 retrograde         reparable          assets     to other    Army      maintenance       facilities         in the
 Pacific    Command             (PACOM)         when the in-country            backlog     exceeds         the U. S.
 Army,      Vietnam         (USARV)          management         level.

 The lack of computer                   capability       by the Vietnamese                did initially         Emit      Military
 Assistance         Command,              Vietnam       (MACV)          capability       to screen          U. S. Force          ex-
 cesses     against         Vietnamese            Armed      Forces         (RVNAF)         requirements.                This
 program       control         function,        which     facilitates        the Military          Assistance           Service
 Funded      (MASF)          redistribution           capability,          was transferred             to the 2nd Logisti-
 cal Command              from      the U. S. Army            International           Logistics        Center        on July       1,
  1970.     This     function,          together      with the screening               of U. S. Army,               Pacific
 (USARPAC)            secondary           item     excesses,          provides       a unique        centralized          pro-
  gram    authorization             and excess         edit capability            for both U. S. Army                 and ARVN
 requirements.               Since      February        1, 1971,         long supply          stocks      located       at all
 Army      depots       in Vietnam           have been screened                against       ARVN        requisitions           by
 the 2nd Logistical               Command.

 Army        has   provided     USARV         with guidance          which  requires        that depot                  excesses
 in Vietnam          be either     applied       against     predisposition       instructions           or            reported
 for possible          use in filling       RVNAF        requirements.          These       predisposition                    in-
  structions        are applicable         to principal        and secondary         items      generated                 by
  U.S.     units    in stand-down          status     as well      as depot   excesses         generated                  by re-
 deployments           and inactivations.                _

 All Services       continue        to place    emphasis             on the cancellation            of requisitions
 for departing       units.        In January       and February              1971,    the Army         conducted
 a comprehensive            review      of requisition           cancellation        procedures           in USARPAC.
 The overall       objective        was to assure           that requisitions            for items        no longer
 required      in Vietnam         are effectively          cancelled         and shipments            of such materiel
 are frustrated         or diverted.          The U.S.          Army       Inventory        Control       Center,
 Vietnam      (ICCV)      has developed          the capability            to generate        single      line cancella-
 tion requests       from      its customer          status       file and its basic          cycle     which,      together
 with mass       cancellations         by Inventory           Control        Points    (ICPs),        currently       offers




                                                                    36
                                                                                                               APPENDIX I


the best assurance            to reduce     the materiel          flow.    We have had to structure
the cancellation         system     to be compatible           with limitations        imposed       by
security    classifications         assigned      to troop       lists  of units    identified     for with-
drawal.      In spite      of such limitations,          significant       progress       is being    made   to
reduce   the flow of materiel             to Vietnam.

Property        disposal        operations        in PACOM          are of particular              concern       to us.
We have been gratified                  to note that the inventory              trends         for both useable
items     and scrap          are favorable,            as dispositions        have generally              exceeded
generations         since       September         1970.       We are also working                 very    closely         with
the Department             of State to further             ease export       restrictions            imposed          by
Vietnamese          officials.          Procedures          have been implemented                   which      facilitate
better     accounting,           receiving,         storage      and physical         security        practices.             We
will   continue       to explore          opportunities         for improving           the management                 of pro-
perty    disposal         operations         so that inventories           can be maintained                 at a reason-
ably low level           while     realizing        maximum         dollar    sales       returns.

It is recommended            that the first      sentence    of the last paragraph          on page 43 of
the Draft   Report        be changed       to read     “We found    that the Department           of the Navy
has not performed           internal      audits   of phasedown       activities     in the Navy     or the
Marine    Corps.     ‘I This       change     is necessary     because        the Marine    Corps    does not
have an audit      staff.

The     opportunity         to comment           on this     report          in draft     form      is appreciated.

                                                                Sincerely,




                                                                         Glenn          V. Gibson
                                                       Deputy      Assistant            Secretary      of   Defense




                                                                37
APPENDIX II


   PRINCIPAL OFFICIALS OF THE DEPARTMENTOF DEFENSEAND
     THE DEPARTMENTS
                   OF THE ARMY, NAVY, AND AIR FORCE

     RESPONSIBLEFOR THE ADMINISTRATION OF ACTIVITIES

                 DISCUSSEDIN THIS REPORT


                                        Tenure of office
                                        From            -To
                   DEPARTMENT
                            OF DEFENSE

SECRETARYOF DEFENSE:
   Melvin R. Laird                  Jan.    1969     Present
   Clark M. Clifford                Mar.    1968     Jan. 1969
   Robert S. McNamara               Jan.    1961     Feb. 1968
DEPUTYSECRETARYOF DEFENSE:
   David Packard                    Jan.    1969    Present
   Paul H. Nitze                    July    1967    Jan. 1969
ASSISTANT SECRETARYOF DEFENSE
  (INSTALLATIONS AND LOGISTICS):
     Barry J. Shillito              Feb.    1969    Present
     Thomas D. Morris               Sept.   1967    Jan. 1969
          0
                  DEPARTMENTOFTHEARMY

SECRETARYOF THE ARMY:
   Robert F. Froehlke               July    1971    Present
   Stanley R. Resor                 July    1965    June 1971
   Stephen Ailes                    Jan.    1964    July 1965

ASSISTANT SECRETARYOF THE ARMY
  (INSTALLATIONS AND LOGISTICS):
     3. Ronald Fox                   June   1969    Present
    Vincent P. Huggard (acting)      Mar.   1969    June 1969
     Dr. Robert A. Brooks          , Oct.   1965    Feb. 1969




                           38
                                                   APPENDIX II

 .
                                        Tenure of office
                                        From            -To
                  DEPARTMENTOF THE ARMY (continued)
COMMANDING GENERAL, U.S. ARMY
  MATERIEL COMMAND:
    Gen. Henry J. Miley             Nov.    1970      Present
    Gen. Ferdinand J. Chesarek      Mar.    1969      Oct. 1970
    Gen. Frank S. Besson, Jr.       July    1962      Mar. 1969


                  DEPARTMENTOFTHE NAVY

SECRETARYOF THE NAVY:
   John H. Chafee                   Jan.    1969      Present
   Paul R. Ignatius                 Sept.   1967      Jan. 1969

ASSISTANT SECRETARYOF THE NAVY
  (INSTALLATIONS AND LOGISTICS):
     Frank Sanders                  Feb.    1969      Present
     Barry J. Shillito              Apr.    1968      Jan. 1969
CHIEF, NAVAL MATERIAL COMMAND:
    Adm. J. D. Arnold               Aug.    1970      Present
    Adm. Ignatius J. Galantin       Mar.    1965      July 1970
COMMANDANTOF THE MARINE CORPS:
   Gen. Leonard F. Chapman, Jr.     Jan.    1968      Present
   Gen. Wallace M. Greene, Jr.      Jan.    1964      Dec. 1967


                DEPARTMENTOF THE AIR FORCE

SECRETARYOF THE AIR FORCE:
   Dr. Robert C. Seamans, Jr.       Jan.    1969      Present
   Dr. Harold Brown                 Oct.    1965      Jan. 1969
UNDERSECRETARYOF THE AIR FORCE:
   John J. McLucas                  Mar.    1969      Present
   Townsend Hoopes                  Oct.    1967      Feb. 1969




                            39
APPENDIX II
                                                          .

                                        Tenure of office
                                        From            -To
                 DEPARTMENTOF TJ# AIR FORCE (continued)
ASSISTANT SECRETARYOF THE AIR
  ~oRa-2 (INsTAL;LATI~NS AND LO-
  GISTICS):
    Pkillip   N. Whittaker           May    1969    Present
    Robert H. Charles                Nov.   1963    May 1969

COMMANDER, AIR FORCELOGISTICS
  COMMAND:
    Gen. Jack G. Merrell             Mar.   1968    Present
    Lt. Gen. Lewis L. Mundell        Feb.   1968    Mar. 1968
    Gen. Thomas P. Gerrity           Aug.   1967    Feb. 1968




                              40