oversight

Defense Budget: Potential Reductions to DOD's Ammunition Budgets

Published by the Government Accountability Office on 1990-09-17.

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

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                                                              .
National Security and
International Affairs Division

B-216058

September 17,199O

The Honorable Daniel K. Inouye
Chairman, Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable John P. Murtha
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives

As you requested, we reviewed the military services’ justifications for their fiscal year 1991
budget requests for ammunition items and the Army’s request for ammunition production
base support. In addition, we examined selected segments of prior-year ammunition budgets.
In March and April 1990, we provided your offices with some observations and questions on
various ammunition line items for which fiscal year 1991 funds had been requested. In July
1990, we briefed your offices on the results of our review. This report includes the
information provided at those briefings and the final results of our review.

We are sending copies of the report to the Secretaries of Defense, the Army, the Navy, and
the Air Force; the Commandant of the Marine Corps; and other interested parties.

This report was prepared under the direction of Richard Davis, Director, Army Issues, who
may be reached on (202) 275-4141 if you or your staff have any questions. Other major
contributors are listed in appendix V.




Frank C. Conahan
Assistant Comptroller General
Elxecutive Swnmary


                          The Chairmen of the Subcommittees on Defense, Senate and House Com-
Purpose                   mittees on Appropriations, asked GAO to review the military services’
                         justifications for their fiscal year 1991 budget requests for ammunition
                          and the Army’s request for modernizing and expanding the ammunition
                         production base. GAO also examined selected segments of prior-year
                         ammunition budgets.


                         The military services requested about $2.2 billion for ammunition in
Background               fiscal year 1991. The services justified their ammunition requests by
                         stating that the funds were needed for training and a war reserve
                         stockpile.

                         The Army requested an additional $259.1 million for ammunition pro-
                         duction base support, of which $94.9 million was intended for
                         12 projects to modernize and expand the ammunition production base.


                             concluded that $434.0 million, or 19.6 percent, of the services’
Results in Brief         GAO
                         $2.2 billion fiscal year 1991 ammunition request is not justified and
                         should not be funded-$343.3     million for the Army, $19.6 million for
                         the Navy, $62.6 million for the Air Force, and $8.5 million for the
                         Marine Corps-and that the Army’s request for modernizing and
                         expanding the ammunition production base is adequately supported.
                         GAO also concluded that the services’ fiscal year 1989 ammunition
                         appropriations can be reduced by $88,000, and their fiscal year 1990
                         ammunition appropriations can be reduced by $49.9 million.



Principal Findings

Army Ammunition          The Army’s $1.2 billion fiscal year 1991 request for ammunition is over-
Program                  stated by $343.3 million for the following reasons:

                     . $192.8 million is for 2 items for which total program quantities will not
                       be needed to meet fiscal year 1991 delivery schedules;
                     . $106.6 million is for 13 items for which program quantities are greater
                       than needed;
                     l $15.6 million is for 1 item that will not be approved for production and
                       troop use in time for inclusion in the fiscal year 1991 budget;



                         Page2                                GAO/NSIAD~~     DOD’s   Ammnnitiun Budget
                                      Executive Summary                                                             1




                                 l   $2.7 million is for I item that can be procured in a less expensive
                                     manner;
                                 l   $16.6 million is for 1 item for which the purchase quantity represents an
                                     uneconomical buy; and
                                 l   $9 million is for 3 items the Army decided not to buy.                         I

                                     In addition, the Army does not need $88,000 that was included in its
                                     appropriation for fiscal year 1989 and $48.9 million that was included
                                     in its appropriation for fiscal year 1990 because it no longer intends to
                                     buy two items.


Navy Ammunition                      The Navy’s $345.7 million fiscal year 1991 request for ammunition is
                                     overstated by $19.6 million for the following reasons:
Program
                             l $5.3 million is for one item for which training consumption was
                               overstated;
                             . $8.9 million is for one item the Navy no longer intends to buy; and
                             l $5.4 million is for three items for which requirements have decreased.
                                                                                                                    4
                                     In addition, the Navy does not need $1 million that was included in its
                                     appropriation for fiscal year 1990 for one item whose unit cost has
                                     decreased.


Air Force Anu-nunition               The Air Force’s $417.6 million fiscal year 1991 request for ammunition
Program                              is overstated by $62.6 million for the following reasons:

                         l           $4.8 million is for one item for which total program quantities wil1 not
                                     be needed to meet fiscal year 1991 delivery schedules, and
                         l           $57.8 million is for one item the Air Force no longer intends to buy,

                                     The fiscal year 1991 request for another Air Force item could either be
                                     reduced by $2.4 million or the quantity increased. The Air Force overes-
                                     timated the unit cost of this item but needs additional quantities.

                                     In addition, the Air Force might have overestimated projected usage for
                                     three training items in its fiscal year 1991 request. Although GAO did not
                                     identify any specific budget reductions for these items, it has included
                                     information on them because the Committees on Appropriations should
                                     be aware of the issue when considering the Air Force’s budget request.




                                     Page 3                               GAO/NSIADW2Mi   DOD’s Ammunition Budget
                                    Executive Summary




Marine Corps Ammunition             The Marine Corps’ $284.7 million fiscal year 1991 request for ammuni-
                                    tion was overstated by $8.5 million for the following reasons:
Budget
                                  9 $7.5 million is for two items for which total program quantities will not
                                    be needed to meet fiscal year 1991 delivery schedules, and
                                  . $1 million is for one Marine Corps item for which total program quanti-
                                    ties would result in excessive inventory.

                                    The Marine Corps has a shortage of two items, and $2.3 million of the
                                    Marine Corps’ overstated $8.5 million request could be used to fund
                                    these needed items.


                                         recommends that the Senate and House Committees on Appropria-
Recommendations                     GAO
                                    tions adjust the Department of Defense’s fiscal year 1991 ammunition
                                    budget by the following amounts:

                              l     Reduce the Army’s request by $343.3 miIlion for 21 items.
                              l     Reduce the Navy’s request by $19.6 million for 5 items.
                              l     Reduce the Air Force’s request by $62.6 million for 2 items.
                              l     Reduce the Marine Corps’ request by $8.5 million for 3 items and
                                    increase the request by $2.3 million for 2 other items.

                                    These recommended adjustments are summarized by budget line number
                                    in appendixes I, II, III, and IV.

                                    In addition, GAO recommends that the Committees reduce the services’
                                    ammunition appropriations for fiscal years 1989 and 1990 as follows:

                          l Reduce the Army’s fiscal year 1989 appropriation by $88,000 for one
                            item.
                          . Reduce the Army’s fiscal year 1990 appropriation by $48.9 million for
                            two items.
                          . Reduce the Navy’s fiscal year 1990 appropriation by $1 million for one
                            item.


                                   As requested, GAO did not obtain agency comments on this report. How-
Agency Comments                    ever, GAO discussed the results of its work with Army, Navy, Air Force,
                                   and Marine Corps officials. They agreed with some of GAO'S recom-
                                   mended reductions and identified items for which funding could be
                                   increased. GAO included in its report, but did not evaluate, the potential
                                   funding increases identified by these officials.


                                   Page4                                 GAO/NS~~266DoD'sAmmunition3u~et
Page 6   GAO/NS~~266   DOD’s Ammunition Budget
Contents


Executive Summary                                                                                     2

Chapter I
Introduction           Objectives, Scope, and Methodology

Chapter 2
Army Ammunition        Deliveries Not Within Funded Delivery Period
                       Inventory Will Exceed Requirements
Program                Type Classification Delayed
                       Potential to Reduce Cost by Converting Existing
                            Inventory
                       Uneconomical Buy                                                          22
                       Canceled Plans to Buy                                                     23
                       Ammunition Production Base Support                                        25
                       Army’s Proposed Budget Increases                                          25
                       Conclusions                                                               26
                       Recommendations                                                           26

Chapter 3                                                                                        27
Navy Ammunition        Overstated Training Consumption
                       Canceled Plans to Buy                                                     ;;
Program                Requirements Decreased                                                    28
                       Unit Cost Decrease                                                        29
                       Navy’s Proposed Budget Increases                                          29
                       Conclusions                                                               30
                       Recommendations                                                           30

Chapter 4                                                                                        31
Air Force Ammunition   Deliveries Not Within Funded Delivery Period
                       Canceled Plans to Buy
                                                                                                 31
                                                                                                 32
Program                Overstated Unit Cost                                                      32
                       Projected Usage Might Be Overestimated                                    32
                       Conclusions                                                               35
                       Recommendations                                                           35

Chapter 5                                                                                       37
Marine Corps           Deliveries Not Within Funded Delivery Period
                       Projected Excessive Inventory
                                                                                                37
                                                                                                39
Ammunition Program     &nclusions                                                               39
                       Recommendations                                                          40



                       Page 6                               GAO/NSLAD-B&266 DOD’s Ammunition Budget
              Contents




Appendixes   Appendix I: Potential Reductions to the Army’s                             42
                 Ammunition Request
             Appendix II: Potential Reductions to the Navy’s                            44
                 Ammunition Request
             Appendix III: Potential Reductions to the Air Force’s                      45
                 Ammunition Request
             Appendix IV: Potential Reductions to the Marine Corps’                     46
                 Ammunition Request
             Appendix V: Major Contributors to This Report                              47

Tables       Table 1 .l: Military Services’ Fiscal Year 1991 Budget                     10
                  Requests for Ammunition and for Ammunition
                  Production Base Support
             Table 2.1: Projected Excessive Inventory for 13 Items in                   17
                  the Army’s Fiscal Year 1991 Ammunition Budget
             Table 2.2: Army’s Proposed Budget Increases                                26
             Table 3.1: Navy’s Proposed Budget Increases                                30
             Table 4.1: Comparison of Projected and Actual Usage                        33
                  Rates for 20-m Training Cartridges
             Table 4+2: Comparison of Projected and Actual Usage                        34
                  Rates for MK-82/BDU-50 Practice Bombs
             Table 4.3: Comparison of Projected and Actual Usage                        35
                 Rates for MK-84 2,000-Pound Empty Bombs
             Table 5.1: Projected Excessive Inventory of 5.56-mm                        39
                 Tracer Cartridges




             Page 7                              GAO/NSIAD40-266   DOD’s Ammunition Budget
Contents




Abbreviations

ADAh       area denial artillery munition
AT/M       antitank, antipersonnel
crws       close-in weapon system
DSTP       discarding sabot target practice                                     I
GAO        General Accounting Office
HE         high explosive
HEXA       high explosive anti-armor
HEDP       high explosive dual purpose
HERA       high explosive rocket assisted
IR         infrared
mm         millimeter
SMAW       shoulder-launched multipurpose assault weapon
TP         target practice
TPCSDS-T   target practice cone-stabilized discarding sabot with tracer
TP-T       target practice-traced


Page 8                                 GAO/NSIAD9&266 DOD’s Ammunition Budget
Page 9   GAO/NSIAD-90-266DOD’S Antmunition Budget
Introduction


                                                  As shown in table 1.1, the military services requested about $2.5 billion
                                                  for ammunition in fiscal year 1991, including the Army’s $259.1 million
                                                  request for ammunition production base support.

Table 1.I : Military Services’ Fiscal Year
1991 Budget Requests for Ammunition               Dollars in millions
and for Ammunition Production Base                Military service                                                                           Amount
support                                                                                                                                      $1,424.4
                                                 Army
                                                 Navy                                                                                           345.7
                                                 Air Force                                                                                      417.6
                                                 Marine Corps                                                                                  284.7
                                                 Total                                                                                      82.472.4


                                                 The funds requested for ammunition will be used to meet training needs
                                                 and to build a war reserve stockpile. The Army’s request of $259.1 mil-
                                                 lion for ammunition production base support included

                                             l   $134.647 million for the provision of industrial facilities ($94.9 million
                                                 of this amount was for 12 projects to modernize and expand the ammu-
                                                 nition production base),
                                             l   $40.534 million for the layaway of industrial facilities,
                                             l   $12.1 million for components for prove-out,’
                                             l   $4 milion for the Yuma Proving Ground modernization, and
                                             l   $67.8 million for the maintenance of inactive facilities.


                                                 The Chairmen of the Subcommittees on Defense, Senate and House Com-
Objectives, Scope,and                            mittees on Appropriations, asked us (1) to assess the services’ justifica-
Methodology                                      tions for their fiscal year 1991 budget requests for ammunition and the
                                                 Army’s request for modernizing and expanding the ammunition produc-
                                                 tion base and (2) to identify potential adjustments.

                                                 We evaluated the ammunition budget requests by reviewing such fac-
                                                 tors as ammunition requirements, inventory levels, production
                                                 problems, item quality, testing and development, funded program
                                                 status, unit costs, and field malfunctions to identify items with potential
                                                 problems. We also analyzed production schedules, production capacities,
                                                 past production, procurement lead times, and component deliveries to
                                                 determine whether the services can execute the ammunition programs
                                                 efficiently and economically. We compared projected inventory levels to

                                                  ‘Trove-out” is a term used by the Army to describe the process of demonstrating a plant’s produc-
                                                 tion capacity.



                                                 Page 10                                           GAO/N3lAD-90-256 DOD’s Ammunition Budget
             Chapter 1
             Irdroduction




             training usage to ensure that inventories would not greatly exceed objec-
             tives. We also determined whether there will be sufficient quantities of
             components to produce end items. We did not verify the accuracy of
             data the services provided, such as inventory levels and training usage,
             but compared such information with data provided in prior years to
             evaluate its reasonableness. In conducting our review, we also examined
             selected segments of prior-year ammunition budgets.

             To evaluate projects for modernizing and expanding the ammunition
             production base, we determined whether their designs had been com-
             pleted prior to budget submission.

            In conducting our evaluation, we interviewed ammunition production
            managers, procurement officials, and quality assurance and engineering
            staff; observed the production process; and reviewed various docu-
            ments, such as briefings, program status reports, ballistics test reports,
            and budget support data, which we obtained at the following locations:

   Army, Navy, and Air Force Headquarters, Washington, D.C.;
        l


 . US, Army Armament, Munitions and Chemical Command, Rock Island,
   Illinois;
   U.S. Army Missile Command, Redstone Arsenal, Alabama;
    l


   U.S. Army Production Base Modernization Activity, Picatinny Arsenal,
    l


   New Jersey;
   Office of Project Manager for Binary Munitions, Aberdeen Proving
    l


   Ground, Maryland;
 . Project Manager, Tank Main Armament Systems, Picatinny Arsenal,
   New Jersey;
   Product Manager, Mortar Systems, Picatinny Arsenal, New Jersey;
    l


. Project Manager, Mines, Countermines and Demolitions, Picatinny                           t
   Arsenal, New Jersey;
. Close Combat Armaments Center, Picatinny Arsenal, New Jersey;
l  Fire Support Armaments Center, Picatinny Arsenal, New Jersey;
l  Armament Engineering Directorate, Picatinny Arsenal, New Jersey;
l  Longhorn Army Ammunition Plant, Marshall, Texas;
l  Talley Defense Systems, Mesa, Arizona;
l  Naval Air Systems Command, Arlington, Virginia;
. Naval Sea Systems Command, Crane, Indiana; and
. Ogden Air Logistics Center, Hill Air Force Base, Utah.

            We discussed a draft of this report with program officials of the Army’s
            Office of the Program Executive Officer for Ammunition, the Navy’s
            Office of the Deputy Chief of Naval Operations for Logistics, the Air


            Page 1 I                             GAO/NSUD90-266   DOD’s Ammunition Budget
 Chapter 1
 Introduction




Force’s Office of the Deputy Chief of Staff for Logistics and Engineering,
and the Marine Corps’ Office of Deputy Chief of Staff for Installations
and Logistics. We made changes to the report, where appropriate, to
reflect the views of these officials. As requested, we did not obtain offi-
cial agency comments on this report.

We conducted our review from November 1989 to July 1990 in accor-
dance with generally accepted government auditing standards.




Page 12                              GAO/NSIAIWO-266 DOD’s Ammunition Budget
Chapter 2

Army Ammunition Program


                            The Army requested about $1.17 billion for ammunition and $259.1 mil-
                            lion for ammunition production base support in its fiscal year
                            1991 ammunition budget request. We reviewed the justifications for
                            42 ammunition items, representing about $951 million (or about 82 per-
                            cent of the fiscal year 1991 request), and 12 ammunition production
                            base support items, representing $94.9 million (or about 37 percent of
                            the request). We also examined selected segments of prior-year ammuni-
                            tion budgets. Appendix I shows the budget lines we reviewed and the
                            potential reductions we identified.

                            We believe that the Army does not need $343.3 million in fiscal year
                            1991 for 21 ammunition items for the following reasons:

                        0 $192.8 million is for 2 items for which total program quantities will not
                          be needed to meet fiscal year 1991 delivery schedules;
                        l $106.6 million is for 13 items for which program quantities are greater
                          than needed;
                        9 $15.6 million is for 1 item that will not be approved for production and
                          troop use in time for inclusion in the fiscal year 1991 budget;
                        l $2.7 million is for 1 item that can be procured in a less expensive
                          manner;
                        l $16.6 million is for 1 item for which the purchase quantity represents an
                          uneconomical buy; and
                        9 $9 million is for 3 items the Army decided not to buy.

                            In addition, the Army does not need $88,000 that was included in its
                            appropriation for fiscal year 1989 and $48.9 million that was included
                            in its appropriation for fiscal year 1990 because it no longer intends to
                            buy two items.


                            According to Army budget guidance, ammunition program quantities for
Deliveries Not Within       which funds are being requested should be deIivered within the fiscal
Funded Delivery             year’s funded delivery period. The funded delivery period for an ammu-
Period                      nition item is defined as the time in months from the first delivery of the
                            ammunition item to the last delivery for a specific fiscal year’s procure-
                            ment. It begins the first day of the last month of the procurement lead
                            time and ends 12 months later.’ For example, if the procurement lead
                            time for an ammunition item in the fiscal year 1991 budget is 15 months,

                            ‘Procurement lead time is the sum of adminMrative and production lead times. Administrative lead
                            time begins at the start of the fiscal year and represents the time needed to award contracts for
                            components. E’roduction lead time begins when the component contracts have been awarded and ends
                            when initial delivery is made for the assembled ammunition item.




                            Page 13                                          GAO/NSIAD-40-266 DOD’s Ammunition Budget
                           Chapter 2
                           Army Ammunition   Program




                           the funded delivery period would start on December 1, 1991, and end on
                           November 30, 1992. Since ammunition programs are funded each year,
                           funding should not be provided for ammunition items that will be deliv-
                           ered after the funded delivery period.

                           The Army’s fiscal year 1991 ammunition budget request could be
                           reduced by $192.8 million because all or part of the quantities the Army
                           requested for the following two items will not be delivered within the
                           fiscal year 1991 funded delivery period. The potential reductions and
                           undelivered quantities are as follows:

                         9 $118.5 million for 138,000 155-n-~-11 M864 baseburner projectiles and
                         9 $74.3 million for a classified quantity of 155-t~~11
                                                                              M687 GB-2 projectiles.              1

                           In addition, the Army no longer needs the $47 million in fiscal year 1990
                           funding provided for M687 projectiles since the Army does not plan to
                           procure this item after the fiscal year 1989 program.                                  I


155~mm M864 Baseburner     The Army’s $118+5 million request for 138,000 155-m M864 projectiles
Projectile                 could be denied for two reasons. First, the Army has not proven that the
                           projectile meets required operating characteristics for reliability,
                           Second, the Army agrees that the fiscal year 1991 quantity cannot be
                           produced within the fiscal year 1991 funded delivery period without
                           increasing production beyond one shift and incurring additional costs.

                           In August 1989, the Army stopped producing M864 projectiles when the
                          joint between the projectile body separated from the baseburner
                           assembly (the base/body joint) during a drop test. The Army corrected
                           the base/body joint separation by redesigning the projectile to
                           strengthen the joint. However, when the Army tested 113 projectiles
                           with redesigned base/body joints, three projectiles experienced expul-
                           sion failures due to fractured ogive joints. According to Army officials,
                          the ogive joint fractures were caused by strengthening the base/body
                          joint. Army officials told us that the Army should have a new ogive joint
                           design in July 1990, but the Army has no assurance that the new design
                          will prevent ogive joint fractures.

                           An Army official said that last year, the Army produced parts for about
                           35,000 projectiles (at a cost of about $24 million) that were not assem-
                           bled because of defective base/body joints. In April 1990, the Army
                           decided to start producing M864 projectile parts again. The Army made



                          Page 14                                GAO/NSLAD-9CbZS6   DOD’s   Ammunition   Budget
                      Chapter 2
                      Army Ammunkion Program




                      this decision because the percentage of successful expulsions (97.3 per-
                      cent) during the tests of 113 custom-made casings exceeded the required
                      operating characteristics percentage for expulsion reliability (97.0 per-
                      cent). We analyzed the Army’s expulsion reliability test data and con-
                      cluded that the Army had not proven, within a reasonable level of
                      confidence, that the projectile’s expulsion reliability met required oper-
                      ating characteristics. Our analysis showed only a 59 percent probability
                      that the projectile was 97-percent reliable. Therefore, the Army is pro-
                      ducing M864 projectile parts without a reasonable assurance that the
                      projectile is reliable.

                      Furthermore, in April 1990, the Army revised its production schedule
                      for M864 projectiles. This schedule shows that the Army cannot deliver
                      the fiscal year 1991 program quantity within the funded delivery period
                      without increasing production beyond one shift. Even with multiple
                      shifts, the Army cannot produce the entire fiscal year 1991 program
                      within the funded delivery period. According to its April 1990 revised
                      production schedule, the Army plans to produce 36,162 projectiles,
                      about 25 percent of the fiscal year 1991 quantity, after the end of the
                      funded delivery period. The Army also estimated that an additional $4.2
                      million would be needed in fiscal year 1990 to pay subcontractors to
                      work more than one shift.

                      Army representatives agreed that the fiscal year 1991 program cannot
                      be executed within the funded delivery period without accelerating pro-
                      duction above one shift. They continue to believe, however, that the
                      fiscal year 1991 program should be funded because inventories are far
                      below amounts recommended by Department of Defense guidance and
                      because program costs will increase if the program is stretched out.
                      They also believe that the problems with the projectile body have been
                      resolved. In our opinion the Army has not demonstrated that the projec-
                      tile is reliable and that funding in fiscal year 1991 should, therefore, not
                      be provided.


155~mm M687 Binary    The Army’s $74.3 million fiscal year 1991 request for a classified quan-
Chemical Projectile   tity of 155-m M687 GB-2 projectiles could be denied for four reasons.
                      First, the canister supplier is behind in its delivery schedule; it has yet
                      to deliver quantities for prior-year programs. Second, the Army is
                      experiencing delays in completing a new chemical production facility
                      needed to produce the projectiles. Third, according to Army officials, the
                      Army does not have a source of supply for a key ingredient needed to
                      produce the new chemical. Finally, the Secretary of Defense has decided


                      Page 16                               GAO/NSL4D-90-266 DOD’s Ammunition   Budget
 Chapter 2
 Army Ammunition   Program




 that production funding is no longer required for fiscal year 1991
 because the United States and the Soviet Union have agreed to halt the
 production of chemical weapons. In addition, the Army’s fiscal year
 1990 appropriation of $47 million could be reduced since the Army does
 not plan to procure M687 projectiles after the fiscal year 1989 program.

The canister supplier has experienced problems in meeting past produc-
tion schedules and is still behind in its contract delivery schedules.
According to an Army official, the canister supplier did not meet con-
tract schedules even though it had been operating multiple shifts. In
addition, the Army has not demonstrated the capability to produce
enough M687 projectiles to complete its fiscal year 1991 program within
the program’s funded delivery period. On the basis of most recent pro-
duction rates, we estimate that the production backlog of M687 projec-
tiles cannot be eliminated until the end of the fiscal year 1991 funded
delivery period, making a fiscal year 1991 program unnecessary.

 Further, the Army’s production schedule at the Pine Bluff Arsenal
 requires the Army to operate a new chemical production facility to pro-
duce the M687 projectiles funded for fiscal years 1989 and 1990. Last
year, the Army anticipated that the new facility would be completed by
December 1989 and that full-scale production would start in March
 1990. However, according to an Army official, completion of the facility
has been delayed until the end of August 1990, and full-scale production
is now scheduled to start in October 1990. Also, according to Army offi-
cials, this facility cannot start production because the Army does not
have a source of supply for one of the ingredients needed to produce the
chemical.

On the basis of the Army’s current rate of production, we conclude that
the Army will not be able to produce the requested fiscal year 1991
quantity within the fiscal year 1991 funded delivery period. Therefore,
we believe that the Army’s $74.3 million request for fiscal year 1991
could be denied.

Army officials agreed that the program has slipped. They initially said
that they prefer to eliminate the fiscal year 1990 program, for which
$47 million was funded, and to stretch out the fiscal year 1989 and
prior-year programs to prevent a break in production. Subsequently,
they advised us that the Army no longer plans to procure M687 projec-
tiles after the fiscal year 1989 program. Therefore, the Army does not
need the $47 million that was included in its appropriation for fiscal



Page 16                              GAO/NSIADW256   DOD’s Ammunition Budget
                                           Chapter 2
                                           Army Ammunition Program




                                           year 1990 and the $74.3 million included in its budget for fiscal year
                                           1991.


                                           The Army’s $200.4 million fiscal year 1991 request for 13 items could be
Inventory Will Exceed                      reduced by $106.6 million because projected inventories will exceed the
Requirements                               Army’s inventory objectives, as shown in table 2.1. This reduction
                                           would not affect the Army’s ability to provide a sufficient number of
                                           cartridges for training.


Table 2.1: Projected Excessive Inventory for 13 Items in the Army’s Fiscal Year 1991 Ammunition Budget
Quantities In thousands
                                                Beginning          Fiscal year               Invent07          Inventory     Projected excess
Item                                            inventorya       1991 request       estimated usage            objective             inventory
5.56-mm blank cartridoe                          317,325.o               136,045               372,593.0          68,707                     12,070.O




120-mm M831 cartridge                                 174.0                   43                    163.0              42                        12.0
105.mm M39.5 cartridge                                137.7                  181                    32.1                1                       285.6
155-mm MB04 projectile                               440.5                   203                   369.7              55                        218.8
Hydra rocket, M274                                   468.8                   109                   448.0              85                         44.8
35-mm tralnina rocket                              1 q656.2                  313                 1.506.0             269                        194.2
Airburst simulator, M74                              429.0                   220                   494.0              90                         65.0
Artillery flash simulator, M21                     5,072.O                 1,111                 3,554.0             553                      2,076.O
g-mm ball cartridge                               39,901 .o                8,721                27,686.0           8,564                     12,372.O
                                           ??gures include Items due in from prior-year programs.

                                           bFigures include estimated usage through the end of the fiscal year 1991 funded d&very   period




5.56-mm and 7.62-mm                        The Army’s $56.2 million request for 5.56-INII and 7.62-KUIIcartridges
Cartridges                                 includes $54.8 million for 5.56-mm blank, 5.56-m ball, and 7.62-IIUIIblank
                                           cartridges that we believe could be reduced by $27.1 million. Army offi-
                                           cials agree that such a reduction is possible because projected invento-
                                           ries will exceed requirements. They pointed out, however, that such a
                                           reduction would increase the cost of other small caliber cartridges pro-
                                           duced at the Lake City Army Ammunition Plant because existing plant
                                           overhead expenses would have to be allocated to a smaller number of
                                           items. They also said that these reductions would result in personnel
                                           layoffs.



                                           Page 17                                             GAO/NSLAD-fJO-266 DOD’s Ammunition Budget
                           Chapter 2
                           h-my Ammunition Progr8m




                          We believe that the Army’s concerns about work loading should not be
                          used to justify funding ammunition items that are in excess supply.
                          Rather, the Army should reduce overhead expenses at the Lake City
                          plant to avoid cost increases. Funding for 5.56-I-IUIIand 7.62-mm car-
                          tridges totaling $27.1 million could, therefore, be denied in fiscal year
                          1991.


30-m   M788 Cartridge     The Army’s $9.5 million request for 30-m cartridges includes $9.2 mil-
                          lion for 841,000 30-ITUIIM788 cartridges. We believe that the M788
                          request could be reduced by $4.3 million for 389,000 cartridges. Army
                          representatives agreed that if these cartridges are funded in fiscal year
                          1991, inventories will exceed requirements. They also stated, however,
                          that the Army has considered the excess inventories and plans to reduce
                          the fiscal year 1992 budget request by a corresponding amount. Since
                          the cartridges are not needed in fiscal year 1991, we believe that the
                          request could be denied.


105-mm M724Al Cartridge   We believe that the Army’s entire $6.5 million request for 34,000 105-mm
                          M724Al cartridges could be denied. Army representatives agreed that
                          inventories of 105-m M724Al cartridges will be in excess of require-
                          ments at the end of the fiscal year 1991 funded delivery period. They
                          stated, however, that the Army was requesting more M724A1 cartridges
                          than it required in fiscal year 1991 to avoid buying this item in fiscal
                          years 1992 and 1993. We believe that since the Army does not need
                          more 105-mm M724Al cartridges in fiscal year 1991, the request could
                          be denied.


120-mm M83 1 Cartridge    We beheve that the Army’s $41.2 million request for 43,000 120-m
                          MS31 cartridges could be reduced by $5.8 million for 6,000 cartridges.
                          Army representatives agreed that inventories of 120-mmM831 car-
                          tridges will exceed requirements. They said, however, that 12,000 car-
                          tridges are unserviceable and that between 50 and 60 percent of
                          unserviceable cartridges are eventually demilitarized. On the basis of
                          the Army’s estimates, we believe that the $41.2 million request for
                          120-m M831 cartridges could be reduced by $5.8 million for
                          6,000 cartridges.


105~mm M395 Cartridge     We believe that the Army’s entire $5.7 million request for
                          181,000 105-m M395 cartridges could be denied. Army representatives


                          P8@   18                             GAO/NMAIMO-266 DOD’s Ammunition Budget
                         Chapter 2
                         Army Ammunition Program




                         agree that additional 105 -INII M395 cartridges are not needed in fiscal
                         year 1991 to support normal training and saluting requirements and
                         that existing inventories will be sufficient for several more years. They
                         stated, however, that a larger inventory is required because about
                         45,000 rounds are needed for saluting purposes when a current or
                         former president of the United States dies. We believe, however, that the
                         Army can use either the 105”mm M395 cartridge or the 75”mm M337Al
                         cartridge for saluting purposes. The Army will have about
                         384,600 M395 and M337Al cartridges in its inventory at the end of the
                         fiscal year 1991 funded delivery period without a fiscal year 1991 pro-
                         gram. This number is sufficient to cover all presidential saluting require-
                         ments. Therefore, the fiscal year 1991 request could be denied.


155~mm MB04 Projectile   We believe that the Army’s entire $32.6 million request for
                         203,000 155-m M804 training projectiles could be denied. The Army
                         uses M804 projectiles in place of Ml07 high explosive projectiles for
                         training with 155” ITUIIhowitzers. Army representatives agreed that there
                         would be an excess inventory of 155” mmM804 projectiles at the end of
                         the fiscal year 1991 funded delivery period. They said that the Army
                         would prefer not to buy additional M804 projectiles until a newer, less
                         costly version of the projectile is available about March 1991. They
                         stated, however, that the budget should not be reduced because the
                         Army would Iike to use the fiscal year 1991 funds designated for the
                         M804 to procure Ml07 projectiles.


Hydra Rocket, M274       The Army’s $43.5 million request for Hydra 70 rockets includes $36 mil-
                         lion for 109,000 M274 Hydra 70 signal practice rockets that we believe
                         could be reduced by $14.8 million. Army representatives, however, did
                         not agree that there would be an excess inventory of M274 Hydra
                         rockets at the end of the fiscal year 1991 funded delivery period. The
                         Army estimated greater training consumption during the fiscal year
                         1991 funded delivery period because it used a longer procurement lead
                         time than indicated by its own budget backup data. However, we found
                         no support for increasing the lead time. Since we calculated training con-
                         sumption based on the Army’s budget backup data, we believe that the
                         Army’s request could be reduced.


35-mm Training Rocket    The Army’s $5.6 million request for demolition munitions includes
                         $4.5 million for 313,000 35”ITUIItraining rockets that we believe could be
                         reduced by $2.8 million. Army representatives agree that an excess


                         Page 19                               GAO/NSL4D9D-266DOD’s Ammunition Budget
                            chapter2
                            Army Ammunition Program




                            inventory of 35” ~NIItraining practice rockets will exist at the end of the
                            fiscal year 1991 funded delivery period. However, they do not agree
                            with our calculation of the excess quantity of 194,200. The Army repre-
                            sentatives stated that we did not use official numbers in our calculation.
                            We disagree. Since we used more current Army data to calculate inven-
                            tories and the Army did not specifically show that we had used incor-
                            rect data, we believe that our computation of excess inventory is
                            correct.


Simulator, Project          The Army’s $10.2 million request for simulators includes $4.1 million
                            for 220,000 M74 airburst simulators that we believe could be reduced by
Airburst, M74               $1.2 million. Army representatives did not agree, however, that there
                            would be excess inventory of this item at the end of the fiscal year
                            1991 funded delivery period. We reviewed the Army’s inventory calcu-
                            lations and found that the Army had not used accurate inventory bal-
                            ances as of September 30, 1989.


M21 Artillery      Flash    The Army’s $10.2 million request for simulators includes $4.4 million
                            for 1 ,1 1 1,000 M21 artillery flash simulators that we believe could be
Simulator                   denied. Army representatives agreed that inventories of this item will
                            exceed requirements and that the Army’s fiscal year 1991 request could
                            be denied.


g-mm Ball Cartridges        The Army’s $4.2 million request for items less than $2 million each
                            includes $1.4 million for 8,721,OOO9 -~~UII
                                                                     ball cartridges that we believe
                            could be denied. Army representatives agreed that inventories of this
                            item will exceed requirements and that the fiscal year 1991 request
                            could be denied.


                            Type classification identifies items that are acceptable for their intended
I y yc   ud33111L;dltiorl
                            missions and for introduction into the inventory. Army policy states
Delayed                     that, in general, ammunition items to be procured in a particular fiscal
                            year should be type classified prior to their inclusion in the budget.

                            The Army’s $15.6 million fiscal year 1991 budget request for
                            34,000 XM913 ~O~-IIIIIIhigh explosive rocket assisted (HERA) artillery
                            cartridges could be denied because the XM913 must be type classified
                            before the Army can award the fiscal year 1990 contract, and the type
                            classification decision has shpped to at least September 1990.


                            Page 20                               GAO/NSIATMO-266 DOD’s Ammunition Budget
Chapter     2
Army Ammunition   Program




The Army originally planned to complete development and to type clas-
sify the cartridge for limited production in December 1987. However,
due to contract and technical problems with pyrotechnic timer delays,
the technical tests have not been completed, and the item has not yet
been type classified. Last year, the Army expected to complete technical
tests of the XM913 in January 1990 and to type classify it in March
1990. On the assumption that the XM913 would be ready for procure-
ment in fiscal year 1990, the Congress provided $8 million to the Army
in the fiscal year 1990 ammunition budget for the initial procurement of
13,000 cartridges.

The Army’s fiscal year 1991 budget justification    documents indicate
that the cartridge is to be type classified for full production in May
1990. However, according to Army project officials, the Army has not
been able to complete technical testing due to technical difficulty with
the timer delays. This, in turn, has delayed the type classification deci-
sion. The Army has switched from an electronic timer delay to a pyro-
technic timer delay for the XM913 to save time and to reduce cost. The
Army’s current plan is to complete technical testing in August 1990,
with type classification to follow in September 1990. This schedule,
however, depends on achieving satisfactory pyrotechnic timer delay
results and completing the cartridge firing tables.

Although the XM913 has not been type classified, the Army included it
in the budgets for fiscal years 1990 and 1991 based on a waiver of this
requirement. The waiver for fiscal year 1991 was granted because the
user indicated that it had a critical requirement for the item and because
the Army had scheduled type classification of the XM913 in May 1990.
However, as we have indicated, the type classification date has slipped
further to September 1990.

Since the XM913 cannot be type classified until at least September 1990,
leaving insufficient time to award the fiscal year 1990 contract in fiscal
year 1990, we believe that it is premature to provide additional funding
for the XM913 in fiscal year 1991, Army representatives agreed that the
XM913 cannot be type classified in time to award contracts for the fisca1
year 1990 program in fiscal year 1990. However, the Army prefers to
eliminate the $8 million provided in fiscal year 1990. We believe that the
fiscal year 1991 request of $15.6 million for 34,000 XM913 cartridges
could be denied because the $8 million the Congress provided for the
initial procurement of 13,000 XM913 cartridges in the fiscal year 1990
budget could be used to meet fiscal year 1991 needs.



Page 2 I.                             GAO/NSIAD90-256 DOD’s Ammunition Budget
                      Chapter 2
                      Army Ammunition   Program




                      The Army’s request of $8.7 million for 45,000 105-m, M490Al target
Potential to Reduce   practice-traced (TP-T) cartridges could be reduced by $2.7 million
Cost by Converting    because existing serviceable M456Al high explosive antitank cartridges
Existing Inventory    could be converted to M490 cartridges at an estimated savings of about
                      $60 per cartridge, or a total savings of $2.7 mil!ion.

                      According to Army representatives, the Army has about 260,000 ser-
                      viceable M456Al cartridges in its inventory that could be converted to
                      M490 cartridges- 80,000 at the Milan Army Ammunition Plant in Ten-
                      nessee and about 180,000 at other locations in the United States and
                      Europe. The Army could save an estimated $60 per cartridge, or a total
                      of $2.7 million, by converting these serviceable M456Al cartridges to
                      M490 cartridges. The M456Al cartridges could be converted because the
                      Army no longer uses them. It uses the M456A2, an improved version.
                      The converted cartridges could be used for training in lieu of
                      M490 cartridges.

                      Although Army representatives could not estimate the potential sales
                      for the M456Af cartridges, they said that they do not plan to convert
                      the M456Al cartridges because a demand from foreign governments and
                      other sources exists for these cartridges, Army representatives also said
                      that they would like to buy additional M490A1 cartridges in fiscal year
                      1991 to buy out the program by fiscal year 1993 but agreed that this
                      would result in an excess inventory of this item at the end of the fiscal
                      year 1991 funded delivery period.


                      The Army’s $16.6 million request for 11,000 AT-4 multipurpose
Uneconomical Buy      weapons could be denied because the purchase quantity represents an
                      uneconomical buy. According to Army procurement and production per-
                      sonnel, the contract for AT-4 weapons stipulates a minimum contract
                      quantity of 95,000 weapons. They said that the unit cost increases sub-
                      stantially for quantities less than 95,000 weapons. For this reason, the
                      estimated unit cost for the fiscal year 1991 program is about $1,467, or
                      $618 more than the fiscal year 1990 unit cost of about $849.

                      Although the projected inventory for the AT-4 is below the Army’s
                      inventory objective, the planned buy of 11,000 weapons in fiscal
                      year 1991 would not increase the inventory significantly. Delivery of
                      the quantities to be produced through the fiscal year 1990 program wili
                      provide an inventory of about 372,900 weapons, or about 83 percent of
                      the Army’s inventory objective. Adding the requested fiscal year 1991



                      Page 22                             GAO/NSIADW266   DOD’SAmmunitionBudget
                              Chapter 2
                              Army Ammunition Program




                             quantity to this amount would increase the inventory to about 86 per-
                             cent of the inventory objective.

                             In view of the high unit cost and the relatively small increase in inven-
                             tory level that results from such a procurement, we believe that the
                             Army’s fiscal year 1991 request for AT-4 weapons could be denied.

                             Army representatives agreed that procuring 11,000 weapons is
                             uneconomical. Therefore, they intend to negotiate with the contractor to
                             add the 11,000 weapons to the fiscal year 1990 production contract. If
                             the Army cannot negotiate a reasonable price, it will not procure the
                             additional quantity. The Army does not plan to buy the weapon after
                             fiscal year 1991.


                             A total of $9 million the Army requested for three items in fiscal year
Canceled Plans to Buy        1991 could be denied because the Army does not plan to buy them. The
                             items and amounts are as follows:

                           . $1.4 million for 57,000 Ml85 personnel distress signal kits;
                           9 $6.6 million for 121,707 L8A3 smoke screening red phosphorous
                             launcher grenades; and
                           . $1 million for 1,658,OOOM24 artillery flash simulators.

                             In addition, the Army does not need $88,000 included in its budget for
                             fiscal year 1989 and $1.9 million included in its budget for fiscal year
                             1990 because it no longer intends to buy Ml85 kits.


M 185 Personnel Distress     The Army requested $1.4 million for 57,000 Ml85 personnel distress
Signal Kit                   signal kits in fiscal year 1991. However, the Army no longer plans to
                             procure the kits because the technical data package required to produce
                             them is obsolete. Therefore, the Army’s fiscal year 1991 request could
                             be denied. Also, since the Army’s fiscal year 1989 appropriation
                             includes $88,000 for 4,000 kits and its fiscal year 1990 appropriation
                             includes $1.9 million for 81,000 kits, its appropriations for these fiscal
                             years could be reduced as well.

                             According to an Army representative, a technical data package is
                             required as part of the type classification process and must specify
                             design and performance. The Ml85 signal kit was type classified over
                             20 years ago, and the technical data package only specified performance
                             characteristics. As a result, the technical data package is obsolete.


                             Page 23                               GAO/NSIADBO-266 DOD’s Ammunition Budget
                         Chapter 2
                         Army Ammunition Program




                        Since the Ml85 signal kit cannot be procured at this time, the Army has
                        decided to procure the Mark 79 MOD-2 signal kit used by the Navy. The
                        Mark 79 signal kit was type classified for Navy use but not for Army
                        use. The Army estimates that type classifying the Mark 79 using
                        existing Navy data will take less time and cost less than developing a
                        new technical data package for the M185. However, the Army does not
                        know whether it can type classify the kit in time to include it in the
                        fiscal year 1992 budget. As of early March 1990, the Army Armament,
                        Research, Development, and Engineering Center was requesting funds
                        for this purpose. They estimated that, at best, type classification would
                        be completed about 10 months after funds were received.

                        Army representatives agreed that the $3.4 million in funding the Army
                        received or is requesting for this item for fiscal years 1989 through 1991
                        is not needed.


L8A3 Smoke Screening    The Army’s $6.6 million request for 121,707 L8A3 smoke screening red
Red Phosphorous         phosphorous launcher grenades could be denied because the Army no
                        longer plans to procure them. According to Army documents and offi-
Launcher Grenades       cials, a decrease in requirements has eliminated the need for the gre-
                        nades in fiscal year 1991. Army representatives agreed that the
                        $6.6 million request could be denied.


M24 Artillery   Flash   The Army’s $1 million request for 1,658,OOOM24 artillery flash simula-
Simulator               tors could be denied because the Army does not plan to purchase the
                        requested quantity until fiscal year 1992, after the item is type classi-
                        fied as “standard.”

                        According to Army officials, the M24, which will replace the M21 simu-
                        lator, is a “nondevelopmental” item. A “nondevelopmental” item is
                        available from a variety of sources, requiring little or no follow-on
                        developmental effort to meet Army requirements.

                        The Army uses a two-step type classification process for nondevelop-
                        mental items when the make and model are not initially known. First,
                        the Army type classifies the item “generic” in order to obtain a manu-
                        facturer. After the Army selects a manufacturer and the item passes
                        required testing, the Army identifies the make and model number and
                        then type classifies the item as “standard.” The M24 is currently type
                        classified as “generic.”



                        Page 24                              GAO/NSIAIMD-256 DOD’s Ammunition Budget
                   Chapter 2
                   Army Ammunition Program




                   According to Army officials, the Army is in the process of soliciting a
                   contractor to produce an initial quantity of 100,000 M24 simulators for
                   testing. An official stated that the Army has fiscal year 1990 funds for
                   this purpose. He also said that the Army does not plan to award another
                   contract until February 1992 after the M24 is type classified as
                   “standard.”

                   Army representatives agreed that the $1 million requested in fiscal year
                   1991 could be denied.


                   The Army requested about $259.1 million in fiscal year 1991 for produc-
Ammunition         Lion base support. This includes $134.647 million for the provision of
Production Base    industrial facilities, $67.8 million for the maintenance of inactive facili-
support            ties, $40.534 million for the layaway of industrial facilities, $12.1 mil-
                   lion for components for prove-out, and $4.0 miIlion for proving ground
                   modernization.

                   The $134.647 million requested for the provision of industrial facilities
                   includes $94.9 million for 12 facility projects to modernize and expand
                   the ammunition production base. We reviewed the status of the designs
                   for all 12 projects. Congressional guidance states that a project should
                   not be funded when the final design is not completed prior to budget
                   submission. We found that, where applicable, the fina designs had been
                   completed prior to budget submission for all projects.

                   We ascertained that none of the 12 facility projects would establish a
                   new or expand an existing production capacity. Ten projects valued at
                   $59 million are primarily designed to correct safety and environmental
                   deficiencies at existing facilities; one $10 million project is for the prove-
                   out of an initial production facility; and one project valued at $25.9 mil-
                   lion is for the design of future environmental projects.


                   Army representatives identified a list of items for which they believe
Army’s Proposed    additional funding could be used in fiscal year 1991. The Army provided
Budget Increases   the list after we had completed our fieldwork, and we did not evaluate
                   the justification for these items. However, the list includes items for
                   which we have recommended reductions in the fiscal year 1991 budget.
                   Items the Army proposed for increases are shown in table 2.2.




                   Page 25                                GAO/NSIAD90-266   DOD’s Ammunition Budget
                                    Chapter 2
                                    Army Ammunition       Program




Table 2.2: Army’s Proposed Budget
Increases                           Dollars tn millions
                                    item                                                                  Amount
                                    Armor enhancement initiative                                            $10.0
                                    M&-option  urban terrain fuze                                            18.0
                                    1S-mm Ml07 artillery projectile                                          32.6
                                    1OS-mm M490Al tank cartridge                                             14.3
                                    105-mm M724Al tank cartridge                                             16.6
                                    Nitroguanidine                                                            1.1
                                    105mm XM913 HERA cartridge                                                8.0
                                    Total                                                                  $700.6



                                    We believe that $343.3 million of the Army’s fiscal year 1991 request is
Conclusions                         not needed because (1) 2 items cannot be delivered within the funded
                                    delivery period, (2) requested program quantities for 13 items are
                                    greater than needed, (3) type classification is too late for 1 item,
                                    (4) 1 item can be purchased in a less expensive manner, (5) 1 item is an
                                    uneconomical buy, and (6) 3 items will not be bought. In addition,
                                    $SS,OOOof the Army’s fiscal year 1989 appropriation and $48.9 million
                                    of its fiscal year 1990 appropriation are not needed because the Army
                                    decided not to buy two items,


                                    We recommend that the Senate and House Committees on Appropria-
Recommendations                     tions reduce the Army’s ammunition budget request by $343.3 million
                                    for 21 items, as shown in appendix I. We also recommend that the Com-
                                    mittees reduce the Army’s fiscal year 1989 appropriation by $88,000 for
                                    one item and its fiscal year 1990 appropriation by $48.9 million for two
                                    items.




                                    Page 26                             GAO/‘NSuDz)o-256 DOD’s Ammunition Budget
Navy Ammunition Program


                          The Navy requested $345.7 million for ammunition items in its fiscal
                          year 1991 budget. We reviewed the justifications for 14 budget line
                          items representing $313.8 million, or about 90.8 percent of the funds
                          requested. We also reviewed selected aspects of the Navy’s prior-year
                          ammunition budgets. Appendix II shows the items we reviewed and the
                          potential reductions we identified. We believe that the Navy does not
                          need $19.6 million in fiscal year 1991 for five ammunition items for the
                          following reasons:

                      . $5.3 million is for one item for which training consumption was
                        overstated;
                      l $8.9 million is for one item the Navy no longer intends to buy; and
                      l $5.4 million is for three items for which requirements have decreased.

                          In addition, the Navy does not need $1 million included in its appropria-
                          tion for fiscal year 1990 for one item whose unit cost has decreased.


                          The Navy’s $38 million fiscal year 1991 request for practice bombs
Overstated Training       includes $13.2 million for 575,100 MK 76 practice bombs. The request is
Consumption               overstated by $5.3 million for 231,600 MK 76 practice bombs, because
                          the Navy overestimated training consumption rates. The Navy fore-
                          casted that it would use about 50 percent more MK 76 practice bombs
                          during the fiscal year 1991 funded delivery period than its highest
                          usage during fiscal years I983 through 1988.

                          Navy officials did not agree that they had overestimated training con-
                          sumption rates. They said that problems with the MK 14 suspension lug
                          (a component of the MK 76) had limited its MK 76 supply, requiring the
                          Navy to use other practice bombs and alternative methods to train pilots
                          and maintain readiness, They told us that MK 76 usage will increase
                          because the Navy has solved the suspension lug problem. However,
                          Army officials told us that production problems with the MK 14 suspen-
                          sion lug began in about 1985. Navy documents show that the monthly
                          consumption rate of the MK 76 during fiscal years 1983 through 1985
                          was lower than it was when the MK 76 was experiencing production
                          problems.

                          Given the Navy’s past consumption patterns, we believe that the Navy’s
                          fiscal year 1991 projected usage of its MK 76 practice bombs is overesti-
                          mated. On the basis of the highest annual usage during fiscal years 1983
                          through 1988, we believe that the Navy’s request could be reduced by
                          $5.3 million for 231,600 MK 76 practice bombs.


                          Page 27                              GAO/MXAD-96-266 DOD’s Ammunition Budget
                   Chapter 3
                   Navy Ammunition    Program




                   funding is no longer required for fiscal year 1991 because the United
                   States and the Soviet Union have agreed to halt the production of chem-
                   ical weapons. The Navy’s request for Bigeye bombs could, therefore, be
                   denied.


                   The Navy’s $33 million fiscal year 1991 request for 16-inch gun ammu-
neyuirements
n- --_
        3          nition and $4.4 million request for 5-inch/38-caliber gun ammunition
Uecreased          could be reduced by $5.4 million for three items because requirements
                   have decreased. The items and amounts are as follows:

               l $3.1 million for 399 16-inch blind, load, and plug projectiles;
               l $0.5 million for 53 l&inch electronic time/point detonating projectiles;
                 and
               . $1.8 million for 2,086 5-inch/38-caliber gun ammunition.

                   We believe that these reductions are possible because the Navy has
                   decided to retire two of its four battleships, resulting in decreased
                   requirements for the ammunition fired from 16-inch and 5-inch/38-cal-
                   iber guns on the ships. We determined that the Navy’s request could be
                   reduced by $5.4 million and that such a reduction would not affect the
                   Navy’s ability to provide a sufficient number of projectiles for training.
                   A Navy representative agreed that training requirements should
                   decrease but said that the Navy has not determined the amount of the
                   decrease.

                   Furthermore, as discussed in our May 1990 testimony before the Senate
                   Committee on Armed Services concerning several issues pertaining to
                   the April 19, 1989, explosion of the center 16-inch gun in Turret II
                   aboard the U.S.S Iowa, the planned retirement of two battleships raises
                   questions about the usefulness and supportability of the other two ships
                   in the active fleet.] A deployed battleship’s presence in overseas thea-
                   ters will be limited because of the effect of peacetime operating and per-
                   sonnel tempo restrictions on the two remaining battleships. Manning and
                   training problems will also be compounded by a smaller pool of experi-
                   enced l&inch gun-related personnel.



                   ‘3attleships: Issues Arising from the Explosion Aboard the U.S.S. Iowa (GAO/T-NSLAD-90-46,
                   May 25, 1990).



                   Page 28                                          GAO/NSIAMW-256
                                                                                DOD’s Ammunition                Budget
                      Chapter 3
                      Navy Ammunition   Program




                     As stated in our testimony, there is current pressure to greatly reduce
                     the defense budget, which led to the decision to retire two battleships.
                     Because the battleships are costly to maintain (about $58 million to
                     operate annually, according to the Navy) and difficult to man, and
                     because of the unanswered safety and missions-related questions, the
                     two remaining battleships seem to be top candidates for decommis-
                     sioning as the United States looks for ways to scale back its forces. If the
                     Navy also decommissions the remaining two battleships, the Navy’s
                     entire $33 million request for 16-inch ammunition could be denied, and
                     the $4.4 million request for 5inch/38caliber   gun ammunition could
                     reduced by $3.6 million.


                     The Navy’s $41.3 million fiscal year 1990 appropriation for practice
Unit Cost Decrease   bombs included $7.2 million for 16,200 BDU-45/B practice bombs. About
                     $1 million of this amount is no longer needed because the bomb’s unit
                     cost has decreased. The Navy’s budget justification documents show a
                     unit cost of $443.69 for the BDU-45/B fiscal year 1990 program. The
                     Army procures this item for the Navy, and more recent Army cost infor-
                     mation shows a unit cost of $374.18 for the practice bomb. This differ-
                     ence of $69.51 per bomb amounts to a total difference of $1,126,062 for
                     the fiscal year 1990 program.

                     Navy officials said that they intend to procure as many BDU-45/B
                     bombs as funds will allow. If they do this, however, the Navy will
                     exceed its inventory objective. The Navy only needs $112,254 of the
                     excess funds to procure an additional 300 bombs to reach its inventory
                     objective at the end of the fiscal year 1991 funded delivery period. The
                     remaining $1 million is not needed and could be reduced,


                     Navy officials provided a list of items for which they believed additional
Navy’s Proposed      funding could be used in fiscal year 1991 (see table 3.1). The Navy pro-
Budget Increases     vided the list after we had completed our fieldwork, and we did not
                     evaluate the justification for these items, However, the list includes an
                     item for which we have recommended a reduction in the fiscal year
                      1990 program.




                     Page 29                              GAO/NSLAD90-256 DOD’s Ammwition   Budget
                                     Chapter 3
                                     Navy Ammunition       Program




Table 3.1: Navy’s Proposed Budget
Increases                            Dollars rn millions
                                     Item                                                                              Amount
                                     20-mm target practice/M14 PGU-273                                                     $1.9
                                     20-mm target practice/unlinked    PGU-27B                                             20.0
                                     20-mm target practice-traced/PGU30/B                                                   1.5
                                     Sinch. ES-caliber blind, load, and plug/traced projectile                              2.3
                                     Adapter spotting charQe                                                                0.7
                                     5-i;unc; S&caliber smoke puff projectile with point detonating
                                                                                                                           14.0
                                    BDU45/B practice bomb                                                                   0.1
                                    Sinch, 54.caliber smoke puff projectlle with mechanical time
                                       fuze                                                                               12.4
                                    76.mm blind, load, and plug/traced projectile                                          2.3
                                    16-inch, 50.caliber blind, load, and plug/traced projectile                            3.1
                                    3-Inch, 50.caliber with blind, load, and plug/traced projectile
                                       (slow fire)                                                                         0.7
                                    3-inch, 50-caliber with blind, load, and plug/traced projectile
                                       (raoid fire\                                                                        0.9
                                    Total                                                                                $59.9



                                    We believe that $19.6 million of the Navy’s fiscal year 1991 budget
Conclusions                         request is unnecessary because training consumption was overestimated
                                    for one item, the Navy no longer intends to buy one item, and require-
                                    ments have decreased for three items. In addition, about $1 milion of its
                                    fiscal year 1990 appropriation is no longer needed because an item’s
                                    unit cost has decreased.


                                    We recommend that the Senate and House Committees on Appropria-
Recommendations                     tions reduce the Navy’s fiscal year 1991 ammunition budget request by
                                    $19.6 million and its fiscal year 1990 appropriation by $1 million, as
                                    shown in appendix II,




                                    Page 30                                          GAO/NSIAD!%256   DOD’s Ammunition Budget
Chapter 4

Air Force Ammunition Program


                        The Air Force requested $417.6 million for ammunition items in its fiscal
                        year 1991 budget. We reviewed the justifications for 19 budget line
                        items representing $345.7 million, or about 82.8 percent of the funds
                        requested. Appendix III shows the items we reviewed and the potential
                        reductions that we identified. We believe that the Air Force’s request is
                        overstated by $62.6 million for two items-$4.8 million for one item for
                        which total program quantities will not be delivered during the fiscal
                        year 1991 funded delivery period and $57.8 million for one item the Air
                        Force no longer intends to buy. The fiscal year 1991 request for another
                        Air Force item could either be reduced by $2.4 million or the quantity
                        increased. The Air Force overestimated the unit cost of this item but
                        needs additional quantities.

                        In addition, the Air Force might have overestimated its funding needs
                        for three training items in its fiscal year 1991 request because the Air
                        Force might have overestimated projected usage. Although we did not
                        identify any specific budget reductions for these items, we have
                        included information on them because the Committees on Appropria-
                        tions should be aware of the issue when considering the Air Force’s
                        budget request


                        The Air Force’s $19.3 million request for 47,260 BSU-49 inflatable
Deliveries Not Within   retarders could be reduced by $4.8 million for 11,800 retarders because
Funded Delivery         that quantity cannot be delivered within the fiscal year 1991 funded
Period                  delivery period.

                        According to Air Force documents supporting the fiscal year 1991
                        budget, the procurement lead time for the BSU-49 is 12 months. Deliv-
                        eries of the fiscal year 1991 program should therefore begin in Sep-
                        tember 1991 and end in August 1992. According to Air Force officials,
                        however, deliveries of the fiscal year 1990 program are not scheduled to
                        be completed until November 1991. As a result, the fiscal year 1991
                        deliveries cannot begin until December 1991 and cannot be completed
                        until 3 months after the end of the fiscal year 1991 funded delivery
                        period. Consequently, the Air Force’s fiscal year 1991 budget request
                        could be reduced by $4.8 million for 11,800 retarders.

                        Air Force representatives agreed that 3 months of production are not
                        scheduled to be delivered before the end of the fiscal year 1991 funded
                        delivery period, but said that they need the requested funds to build
                        war reserve inventories and for training. Since the procurement of the



                        Page 31                              GAO/NSIAD-90-256 DOD’s Ammunition Budget
                         Chapter 4
                         Air Force Ammunition Program




                        11,800 retarders could be deferred to fiscal year 1992 and still be avail-
                        able in time to support scheduled production, the fiscal year 1991
                        request could be reduced.


                        The Air Force requested $57.8 million to procure Bigeye bombs in fiscal
Canceled Plans to Buy   year 1991. However, the Secretary of Defense has decided that produc-
                        tion funding is no longer required for fiscal year 1991 because the
                        United States and the Soviet Union have agreed to halt the production
                        of chemical weapons. The Air Force’s request for Bigeye bombs could,
                        therefore, be denied.


                        The Air Force overstated the estimated unit cost for MJU-23B flares
Overstated Unit Cost    included in its fiscal year 1991 request. The Air Force budgeted
                        $7.3 million for 5,052 MJU-23B flares but only needs $4.9 million for the
                        requested quantity. However, the Air Force has a shortage of MJLJ-23B
                        flares. Therefore, the Air Force’s $7.3 million request for
                        5,052 MJU-23B flares could either be reduced by $2.4 million, or the
                        overstated amount could be used to procure additional flares. The
                        request is overstated because the unit cost is overstated by about $481.
                        The Air Force’s budget support documents show a unit cost of $1,446.95
                        for the fiscal year 1991 program, which represents a previous research
                        and development unit cost. However, the fiscal year 1989 contract was
                        awarded at a unit cost of $966 in December 1989 for 1,887 flares.

                        Air Force officials agree that the fiscal year 1991 unit cost will most
                        likely be in the $1,000 range. However, they disagree that the program
                        should be reduced since the Air Force is significantly short of its war
                        reserve requirement for this item. We agree with this assessment.


                        The Air Force requested $38.5 million for 14,418,OOO~O-IIUTI  training car-
Projected Usage Might   tridges, $23.9 million for 68,732 MK-82 inert BDU-50 practice bombs,
Be Overestimated        and $27.8 million for 14,529 MK-84 2,000-pound empty bombs in its
                        fiscal year 1991 budget. We did not identify any specific budget reduc-
                        tions for these items because the Air Force followed established guide-
                        lines in estimating its funding needs However, the requests for these
                        three training items might be overstated because the Air Force might
                        have overestimated its projected usage of these items. In addition, after
                        the budget was submitted, the Air Force proposed force structure
                        changes that, if implemented, could affect the funding needs.



                        Page 32                               GAO/NSLADSO-256 DOD’s Ammunition Budget
                                         Chapter 4
                                         Air Force Ammunition Program




ZO-mrn Training Cartridge                The Air Force’s $38.5 million budget request for 14,418,OOO20-mm
                                         training cartridges may be overstated because the Air Force’s projected
                                         usage of 13.2 million cartridges for the fiscal year 1991 program
                                         exceeds historical usage rates. As shown in table 4.1, the projected
                                         usage of ZO-IMIcartridges has exceeded actual usage each year from
                                         1985 through 1989 except for 1986, for which no projected consumption
                                         data was available.

Table 4.1: Comparison of Projected and
Actual Usage Rates for 20-mm Training                                                 Projected              Actual
Cartridges                               Calendar year                                    usage              usage         Difference
                                         1985                                         8,000,OOO         6,908,676            1.091,324
                                         1986                                                           4,478,995                        a
                                         1987                                         7,552,OOO         4663.436            2,888,564
                                         1988                                         a.na.000          7.063.144           1.074,856
                                         1989                                         9,200,000         7,773,116           1,426,884
                                         aNo projected data was available for 1986.


                                         Annual usage averaged about 6.2 million cartridges during the 5-year
                                         period from 1985 through 1989. Although annual usage for the past
                                         2 years has increased significantly when compared to the prior 3 years,
                                         the projected usage still exceeds the actual usage for these 2 years.

                                         Air Force officials stated that the projected usage of 33.2 million car-
                                         tridges for fiscal year 1991 represents user requirements and that they
                                         try to support these requirements. These officials stated that, as a result
                                         of a change in force structure, there are more F-15 and F-16 aircraft in
                                         the Air Force’s inventory that require 20-mm training cartridges. Conse-
                                         quently, projected expenditures of this item have increased. Neverthe-
                                         less, historical data shows that the Air Force typically overestimates its
                                         usage of 2O-mmtraining cartridges. Thus, the projected usage of 13.2 mil-
                                         lion for the fiscal year 1991 program may be overstated,


MK-82/BDU-50 Practice                    The Air Force’s $23.9 million request for 68,732 MK-82/BDU-50 practice
Bomb                                     bombs may be overstated because the Air Force might have projected
                                         usage in excess of what it will actually consume.

                                          The Air Force projected fiscal year 1991 usage at about 82,718 practice
                                          bombs. This projection seems excessive compared to past usage rates
                                         Historical data from 1986 through 1989 shows that the Air Force’s pro-
                                         jected annual consumption rates exceed actual usage for each year in
                                         the period, as shown in table 4.2.


                                         Page 33                                           GAO/NSlA&90-256    MD’s Ammunition Budget
                                          Chapter 4
                                          Air Force Ammunition Program




Table 4.2: Comparison of Projected and
Actual Usage Rates for MK-82/BDU-50                                       Projected            Actuaf
Practice Bombs                           Calendar year                        usage         -.. usage         Difference
                                         1986                               101,643           45,156              56,487
                                         1987                                57,765           38,340              19,425
                                         1988                                79,557           26,827              52,730
                                         1989                                78,955           28,511              50,444


                                          Annual usage has averaged about 34,709 bombs during the past 4 years.
                                          However, projected usage during this period has averaged 79,480, Air
                                          Force documents supporting the budget show that usage was con-
                                          strained in calendar years 1988 and 1989 due to the unavailability of
                                          assets. On the other hand, with unconstrained expenditures, usage never
                                          exceeded 45,156 practice bombs. According to Air Force officials, the
                                          Air Force had 91,272 practice bombs on hand as of March 31! 1989, and
                                          157,612 due in with fiscal year 1990 and prior funds, for a total of
                                          248,884. On the basis of an average usage rate of 6,160 bombs per
                                          month (73,920 per year), these officials estimated that they would use
                                          248,884 bombs before fiscal year 1991 deliveries began in May 1992.
                                          However, actual usage for the past 4 years has been well below the pro-
                                         jected 73,920 annual usage rate. Projected usage for the highest uncon-
                                          strained consumption year (1986) exceeded actual consumption by
                                          56,487 bombs. Moreover, projected usage significantly exceeded actual
                                         usage for each year during the period.

                                         On the basis of past usage data, we believe that the Air Force’s projected
                                         usage rate for fiscal year 1991 may be overstated.


MK-84 2,000-Pound Empty                  The Air Force requested $27.8 million for 14,529 MK-84 2,000-pound
Bomb                                     empty bombs. This request may be overstated because the Air Force
                                         might have projected consumption in excess of what it will use.

                                         The Air Force’s projection that it would use about 10,058 bombs for the
                                         fiscal year 1991 program seems excessive compared to past usage rates.
                                         As shown in table 4.3, from 1986 through 1989, the Air Force projected
                                         annual consumption rates that exceeded actual usage for each year in
                                         the period except 1987.




                                         Page 34                              GA0,fNSIA.D90-256 DOD’s Ammunition Budget
                                         Chapter 4
                                         Air Force Ammunition Program




Table 4.3: Comparison of Projected and
Actual Usage Rates for MK-84 2,000-                                       Projected          Actual
Pound Empty Bombs                        Calendar year                        usage          usage          Difference
                                         1986                                 6,211           2,928                3,283
                                         1987                                 4,760           7,464               (2,704)
                                         1988                                 9,711            1,503               8,208
                                         1989                                10,732             857                9,875


                                         Annual usage has averaged 3,188 bombs during the past 4 years. How-
                                         ever, projected usage during this period averaged about 7,854 bombs.

                                         Air Force documents supporting the fiscal year 1991 budget show that
                                         usage in calendar years 1988 and 1989 was constrained due to the
                                         unavailability of assets. The Air Force used an average of
                                         5,196 MK-84 bombs during calendar years 1986 and 1987 when usage
                                         was not constrained.

                                         Air Force officials stated that the expenditure of 7,464 MK-84 bombs in
                                         calendar year 1987 presents a more realistic picture of actual usage.
                                         However, these officials also stated that usage rates, even during uncon-
                                         strained availability years, are very dependent on weather, range air
                                         space, and specific aircraft availability. We believe that these factors
                                         may account for part of the significant differences between projected
                                         and actual usage. Consequently, the Air Force’s projected usage for the
                                         fiscal year 1991 program may be overstated.


                                         We believe that the Air Force’s request is overstated by $62.6 million for
Conclusions                              two items-$4.8 million for one item for which total program quantities
                                         will not be delivered during the fiscal year 1991 funded delivery period
                                         and $57.8 million for one item the Air Force no longer intends to buy.
                                         The fiscal year 1991 request for another Air Force item could either be
                                         reduced by $2.4 million or the quantity increased, because the Air Force
                                         overestimated the unit cost of this item but needs additional quantities.
                                         In addition, the Air Force might have overstated its needs for three
                                         items in fiscal year 1991 because it might have overestimated projected
                                         usage.


                                         We recommend that the Senate and House Committees on Appropria-
Recommendations                          tions reduce the Air Force’s ammunition budget request by $62.6 million
                                         for two items, as shown in appendix III. We also recommend that the



                                         Page 36                              GAO/NSIAlMO-256 DOD’s Ammunition Budget
 Chapter 4
 Air Forte Ammunition   Program




 Committees either reduce the request for another item by $2.4 million or
 increase the procurement quantity for the item.




Page 36                             GAO/NSIAD-90-256 DOD’s   Ammunition   Budget
Chapter 5

Marine Cops Axnmunition Program


                         The Marine Corps requested $284.7 million for ammunition items in its
                         fiscal year I991 budget. We reviewed the justifications for 13 budget
                         line items representing $183.5 million, or about 64.5 percent of the
                         funds requested. Appendix IV shows the items we reviewed and the
                         potential reductions that we identified. We believe that the Marine
                         Corps does not need $7.5 million for two items for which total program
                         quantities will not be delivered during the fiscal year 1991 funded
                         delivery period and $1 million for another item for which total program
                         quantities would result in excessive inventory.

                        However, the Marine Corps has a shortage of two items, and $2.3 million
                        of the Marine Corps’ overstated $8.5 million request could be used to
                        fund these needed items.



Deliveries Not Within
F’undedDelivery
Period

40-mm, All Types        The Marine Corps’ $25.6 million request for all types of 40-m cartridges
                        in fiscal year 1991 includes $10.9 million for 727,743 M918 target prac-
                        tice (TP) cartridges and $13 million for 1,106,145 high explosive dual
                        purpose (HEDP) cartridges. The Marine Corps does not need $1.3 million
                        for 87,111 M918 cartridges in fiscal year 1991 because that quantity is
                        not scheduled to be delivered within the fiscal year 1991 funded
                        delivery period. However, the Marine Corps could procure additional
                        40-m HEDP cartridges with this $1.3 million.

                         In its role as the Single Manager for Conventional Ammunition, the
                         Army procures 40-m cartridges for the Marine Corps. In November
                         1989, the Army terminated a contract with one of two producers of
                         M918 projectile assemblies because it had not delivered 1,455,OOOpro-
                        jectile assemblies it agreed to produce for the fiscal years 1987 and
                         1988 programs. The remaining contractor is successfully producing
                        M918 projectile assemblies at a rate of about 156,000 assemblies per
                        month.

                        As of January 31, 1990, the Army needed about 6,534,111 projectile
                        assemblies to complete deliveries of M918 projectiles for fiscal
                        years 1986 through 1990 programs and the requested fiscal year 1991



                        Page 37                             GAO/NSIAD-90-266 DOD’s Ammunition Budget
                          Chapter 6
                          Marine Corps Ammunition   Program




                          program. According to an Army official, the Army is looking for a
                          replacement contractor to manufacture the 1,455,OOOprojectile assem-
                          blies not delivered under the terminated contract. The current producer
                          will manufacture the other 5,079,111 projectile assemblies needed. But,
                          according to the Army official, the Army will not ask the current pro-
                          ducer to increase production above 156,000 projectile assemblies per
                          month because it has obligations under other government contracts,

                         Producing at a rate of 156,000 projectile assemblies per month, the cur-
                         rent contractor could manufacture 4,992,OOOM918 projectile assemblies
                         by the end of the fiscal year 1991 funded delivery period, or 87,111
                         fewer than required. As a result, the Marine Corps’ fiscal year 1991
                         request could be reduced by $1.3 million for 87,111 M918 cartridges that
                         cannot be produced in time. However, according to Marine Corps docu-
                         ments supporting the fiscal year 1991 budget request, the Marine Corps
                         has a shortage of 40- ~lun HEDP cartridges. We estimate that the Marine
                         Corps could procure an additional 110,356 40-m HEDP cartridges with
                         the $1.3 million that is not needed for 40-mm M918 cartridges.

                         The Marine Corps did not disagree with our analysis and stated that
                         since it had no control over the production of M918 cartridges, it could
                         not comment on the production status of the item. It added, however,
                         that the Marine Corps could use additional 40-IIUIIHEDP cartridges.


155~mm MS64 Baseburner   The Marine Corps’ $6.2 million fiscal year 1991 request for
Projectile               7,205 155-mm M864 projectiles could be denied for the same reasons that
                         the Army’s request could be denied. The Army cannot produce these
                         projectiles within the fiscal year 1991 funded delivery period without
                         increasing production beyond one shift and incurring additional costs.
                         Further, the Army has not resolved all technical problems with the
                         M864 projectile.

                         In view of the unresolved technical problems with the M864 projectile
                         and the large backlog of undelivered items from prior-year Army pro-
                         grams, additional funding for the M864 in fiscal year 1991 is unneces-
                         sary. The Marine Corps’ request could be denied because none of the
                         Marine Corps’ $6.2 million request for 7,205 M864 projectiles can be
                         delivered within the fiscal year 1991 funded delivery period.

                         Marine Corps representatives did not disagree with our analysis but said
                         that the fiscal year 1991 program is needed because the number of



                         Page 33                              GAO/NSIAD-90-266 DOD’s Ammunition Budget
                                            Chapter 5
                                            Marine Corps Ammunition    Program




                                            M864 projectiles in its inventory is far below the Marine Corps’ inven-
                                            tory objectives. While we agree that M864 inventory levels are below
                                            objectives, additional funding is not needed in fiscal year 1991 because
                                            problems have caused a large production backlog.


                                           The Marine Corps’ fiscal year 1991 request of $30.9 million for all types
Projected Excessive                        of 5.56-m cartridges could be reduced by $1 million for 5.56-IIU~Itracer
Inventory                                  cartridges that are not needed in fiscal year 1991. As shown in table 5.1,
                                           procuring the requested quantity of 5.56-m tracer cartridges would
                                           result in a projected excessive inventory of 3,114,718 cartridges by Sep-
                                           tember 30, 1992, which marks the end of the fiscal year 1991 funded
                                           delivery period.

Table 5.1: Projected Excessive Inventory
of 5.56-mm Tracer Cartridges               Item                                                                           Quantity
                                           Inventory as of September 30, 1989                                            15,517,830
                                           Projected increases
                                              Quantity due in from ftscal year 1990 and prior years                      26,886,160
                                              Quantity requested for fiscal year 1991                                     4,970.312

                                           Total                                                                        47,334,302
                                           Estimated usage through September 30, f992                                  - 19,037,052
                                           Projected inventory as of September 30, 1992                                 28,337,250
                                           Inventory objective                                                         -25,222,532
                                           Projected excessive inventory                                                 3,114,718


                                           Although the Marine Corps does not need to procure additional
                                           5.56-mm tracer cartridges in fiscal year 1991, it has a shortage of
                                           5.56~I~UIIblank and linked cartridges. Therefore, the $1 million not
                                           needed for 5.56-mm tracer cartridges could be used to procure additional
                                           quantities of 5.56-1~.1t1
                                                                   blank and linked cartridges.

                                           Marine Corps representatives agreed with our calculation of excess
                                           inventory for 5.56-m tracer cartridges.


                                           We believe that $8.5 million of the Marine Corps’ fiscal year
Conclusions                                1991 request is not needed because two items cannot be delivered within
                                           the funded delivery period, and the requested quantity for one item will
                                           cause inventory to exceed the Marine Corps’ needs. On the other hand,




                                           Page 39                                        GAO/NSIAD-90-256 MD’s Ammunition Budget
                   Chapter   6
                   Marine Corps   Ammunition   Program




                                                                                                       r
                   the Marine Corps has shortages of two items, and $2.3 million of the
                   unneeded funds could be used to procure these other items.


                   We recommend that the Senate and House Committees on Appropria-
Recommendations    tions reduce the Marine Corps’ ammunition budget request by $8.5 mil-
                   lion for three items and increase its request by $2.3 million for two other
                   items, as shown in appendix IV.




                                                                                                   i




                  Page 40                                GAO/NSI.AlH@256 DOD’s Ammunition Budget
Page 41   GAO/NSIAD-90-256 DOD’s Ammunition Budget
Potential Reductions TVthe Army’s
Ammunition Request


Dollars in millions
Bud et line                                                          Budget    Potential    Adjusted
numQer                Item                                          request   reduction      request   Remarks
3                     Projectile, 155mm binary chemical,              $74.3        s74.3a          0   Deliveries not within funded delivery
                      M667                                                                             penod (see p, 15).
4                     Cartridge, 5.56mm,                               52.0         23.6       $28.4   ;v;:,tory will exceed needs (see
                      all types
                           ,,
5                     Cartridge, 7.62-mm. all types                     4.2          3.5         0.7   Inventory will exceed needs (see
                                                                                                       D. 17).
7                     Cartridge, .50 caliber, all types                 3.1            0         3.1   :
8                     Cartridoe. 20-mm. all tvbes
                             I                .   .
                                                                        9.9            0         9.9   -
9                     Cartridae. 25mm. all tvpes                       89.6            0        89.6   .
10                    Cartridge, 30-mm, all types                       9.5          4.3         5.2   Inventory will exceed needs (see
                                                                                                       p. 18).
11                    Cartndge, 40mm, all types                         2.4            0         2.4   .
12                    Cartndge, 60-mm, smoke M72                        4.0            0         4.0   .
21                    Cartridge, 105-mm, TP-T, M490Al                   8.7          2.7         6.0   Can obtain 105mm less expensrvely
                                                                                                       through conversion (see p. 22).
22                    Cartridge, DS-TP, M724Al                          6.5          6.5           0   Inventory will exceed needs (see
                                                                                                       p. 16).
23                    Cartndae. 105-mm. M900El                         67.0            0        67.0   .
28                    Cartridge, 120-mm, TP-T M831                     41.2          5.8        35.4   Inventory will exceed needs (see
                                                                                                       p. 18).
29                    Ca;;dge,   120-mm, TPCSDS-T,                    130.5            0       130.5   .

31                    Cartrjdge, 105-mm blank, M395                     5.7          5.7           0   b”“fs;ory   will exceed needs (see

32                    Cartridge,, 105-mm, HERA, M913                   15.6         15.6           0   Type classification delayed (see
                                                                                                       D. 201.
                                                                                                             ,
35                    Projectile, 155-mm, ADAM-S, M731                 36.9           0         36.9   .
38                    Projectile, 155mm, Baseburner,                  118.5       118.5            0   Deliveries not within funded delivery
                      ME64                                                                             period (see p. 14).
39                    Projectile, 155-mm, M804                         32.6         32.6           0   Inventory will exceed needs (see
                                                                                                       p. 19).
44                    Fuze, eiectronic trme, M767                       3.1            0         3.1   -
45                    Fuze, proximity, M732                            33.0            0        33.0   .
                                                                                                                                                ,
49                    Fuze, electronic time, M762                       7.2            0         7.2   .
52                    Mrte, Volcano, practice, M88                      1.6            0         1.6   .
53                    Mine, Volcano, AT/AP, MB7                        78.5            0        78.5   -
54                    Mine, clearino charoe, all tvwes
                                   -      I           _
                                                                        1.6            0         1.6   .
57                    AT-4 multipurpose weapon                         16.6         16.6           0   Uneconomical    buy (see p. 22).
                                                                                                                                  (continued)




                                                          Page 42                              GAO/NSIAD90-266 DOD’s Ammunition Budget
                                               Appendix I
                                               Potentid R.educdon.9 to the Army’s
                                               Ammunition  Request




Bud et line                                                      Budget         Potential        Adjusted
num& er       Item                                              request        reduction          request          Ftemarks
59            Rocket, Hydra 70, all types                           43.5               14.8                 28.7   Inventory will exceed    needs (see
                                                                                                                   p. 19).
62            Demolition   munitions, all types                       5.6               2.8                  2.6   Inventory will exceed    needs (see
                                                                                                                   p, 20).
64            Grenades. all tvoes                                     8.0              6.6                   1.4   Army decided not to     buy (see P. 24).
65            Signals, all types                                     2.7                1.4b                 1.3   Army decided not to     buy (see i. 23j.
66            Simulators. all types
                               .                                    10.2               6.6                   3.6   Inventory will exceed    needs, and
                                                                                                                   Army decided not to     buy (see pp. 20
                                                                                                                   and 24).
69            items less than $2 million                              4.2              1.4                  2.8    ;,v;;uy   will exceed    needs (see

73            Nitroguanidine                                        28.6                0               28.6       -
76            Provision of industrial facilities                   134.6                0              134.6       -
              TotaP                                             1,091.4            343.3d             748.1
              Total=                                              333.0                  0            333.0

              Total                                           $1,424.4            $343.3d        $i,oai.i

                                              aExcludes $47 million in potentlai reductions to the Army’s fiscal year 1990 appropriation.

                                              ‘Excludes $88,000 in potential reductions to the Army’s fiscal year 1989 appropnatlon        and $1.9 million in
                                              potential reductions to the Army’s fiscal year 1990 appropriation

                                              ‘Total for budget requests we reviewed

                                              dExcludes $88,000 in potential reductrons to the Army’s fiscal year 1989 appropriation       and $48 9 million
                                              In potential reductions to the Army’s fiscal year 1990 appropriation

                                              eTotal for budget requests we dud not review.




                                              Page 43                                                GAO/NSIAD90-256          DOD’sAmmunition        Budget
Appendix II

Potential Reduetions to the Navy’s
Ammunition Request

                                                              ..--        ..,-         -     ,-      ,,,
                                                                     .
Dollars In millions
Budget line                                                               Budget            Potential      Adjusted
number                Item                                               request           reduction        request   Remarks
60                    Generat purpose bombs                                $48.0                     0        $48.0   -
61                    2.75inch rockets                                      14.6                     0         14.6   -
62                    Machine aun ammunition                                12.5                     0         12.5   -
63                    Practice bombs                                         38.0                 §&3a         32.7   Overstated training consumption
                                                                                                                      and decreased unit cost for a prior
                                                                                                                      year program (see pp. 27 and 29).
64                    Blaeve chemical weaoon
                        1,                                                       8.9               8.9            0   Canceled Dlans to buv (see D. 28).
                                                                                                                                              _.     .    .




65                    3-inch, 50 caliber qun ammunition                          0.5                 0          0.5   -
66                    Vnch, 38 caliber gun ammunition                            44                1.8          2.6   Requirements have decreased (see
                                                                                                                      p. 28).
67                    5-inch, 54 caliber gun ammunition                      11.9                    0         11.9
68                    16-inch gun ammunition                                33.0                   3.6         29.4   pR.e$,rements have decreased (see

69                    CWS ammunition                                        32.8                    0          32.8   -
70                    76-mm gun ammunition                                   1.1                    0           1.1   -
71                    Other ship gun ammunition                             32.9                    0          32.9   -
72                    Small arms and landing party                          33.9                    0          33.9   -
                      ammunition                                                                                                                     ._
191                   Airborne expendable counter-                          41.3                    0          41.3
                      measures
                      Totalb                                              313.8                   19.6O       294.2
                      TotaF                                                 31.9                     0         31.9

                      Total                                                                    $19.6”       $326.1
                                                  aExcludes $1 million In potential reductions to the Navy’s appropriation   for fiscal year 1990.

                                                  bTotal requested for these budget items.

                                                  CTotal for budget Items we did not review.




                                                 Page 44                                                     GAO/NSIhD90-266    DOD’s Ammunition Budget
 Appendix III

Potential Reductions to the Air Force’s
Ammunition Request


Dollars in millions
Budget line                                                             Budget        Potential        Adjusted
number                 Item                                            reauest       reduction          reauest          Remarks
1                      2.75inch   rocket   motor                          $15.8                  0            $15.8
2                      2.75inch rocket head                                  45.-                l-l            45.-     -
4                     Items less than $2 million                            3.9”                 0              3.9
6                     5.56-mm cartrtdge                                     6.6                  0              6.6
7                     Cartridge, 20-mm, combat                              6.9                  0              6.9      _
8                     Cartridge, ZO-mm, training                           38.5                  0             38.5      Requested quantity may be
                                                                                                                         overstated (see p. 33).
9                     Cartrrdge, 30.mm, training                           46.6                  0             46.6
14                    Cartridge, Impulse, 3,000.foot                        6.2                  0              6.2
                      pounds
16                    Items less than $2 mlllion                             7.5b                0              7.5      -
17                    MK-82 Inert, BDU-50 practice bomb                    23.9                  0             23.9      Requested quantity may be
                                                                                                                         overstated (see p. 33).
18                    BSU-49 Inflatable Retarder                           19.3             $4.8               14.5      Delivenes not within funded delivery
                                                                                                                         period (see p 37).
23                    Bomb, practice, 25 pound, BDU-33                     23.9                  0             23.9      -
25                    MK-84 bomb, empty                                    27.8                  0             27.8      Requested auantitv may be
                                                                                                                         overstated (ice p. $4).
27                    Blgeye bomb                                                                                    0   Canceled plans to buy (see p. 32).
29                    Flare. IR. MJU-78                                                                         AA       _




                      Total                                            $417.6            $62.6           $355.0
                                                   aThe total request for this budget lrne was $6 3 million for five items We reviewed two Items valued at
                                                   $3 9 million.

                                                   bThe total request for this budget line was $17 million for 21 Items We revrewed four items valued at
                                                   $7.5 mtllfon.

                                                   ‘Additional   quantltres can be procured because the unit cost was overstafed.
                                                   dThe total request for this budget line was $17.7 million for 24 items We reviewed two items valued at
                                                   $3.8 milllon.
                                                   eTotal requested and reviewed in these budget lines

                                                   ‘Total for items In budget lmes that we did not review.




                                                   Page 45                                                   GAO/NSLAD!40-256 DOD’s Ammunition Budget
Appendix IV

Potential Reductions to the Marine Corps’
Ammunition Request


Dollars in millrons
Budget line                                                          Budget         Potential         Adjusted
number                Item                                          request        reduction           request       Remarks
1                     5.56.mm, all types                               $30 9                $1 .O”         $29 9    ~v;~;‘ory   will exceed needs (see

2                     7.62-mm, all types                                  0.3                  0             a.3    _
4                     50 caliber                                         19.5                  0            19.5    -
5                     40-mm, all types                                   25.6                1.35           24.3    Deliveries not within funded delivery
                                                                                                                    period (see p. 37).
6                     60.mm, illumination, M721                          10.7                  0            107
7                     60-mm, smoke, WP                                    3.0                  0             30
8                     60-mm, HE, MB88                                     5.7                  0             57
9                     81 -mm, HE                                          3.6                  0             36
11                    81 -mm. TP, MB79                                    9.2                  0             92     -
14                    120.mm, TPCSDS-T, MB65                             18.6                  0            186
15                    120.mm, TP-T, MB31                                 12.9                -0             129
21                    155-mm. MB&t, projectile,                           6.2               62                 0    Delrveries not within funded delivery
                      Baseburner                                                                                    penod (see p. 38).
28                    83.mm, rocket, HEAA (SMAW)                        29.3                  0            29.3     -
                      TotaF                                           183.5                 8.5d          175.0
                      TotaP                                           101.2                   0           101.2

                      Total                                          $284.7              $8.5d          $276.2
                                                  aThe $1 mllllon potential reduction IS for 5 56.mm tracer cartrldges   These funds could be used to pro-
                                                  cure additional quantlttes of 5 56.mm blank and llnked cartrldges

                                                  bThe $1.3 million is for 40.mm M918 cartndges.     These funds could be used to procure
                                                  40.mm HEDP cartridges

                                                  CTotal for budget requests we reviewed.

                                                  dlncludes $2.3 million that could be used to Increase the request for two other items

                                                  eTotal for budget requests we did not review.




                                                  Page 46                                                GAO/NSIAD90-256 DOD’s Ammunition Budget
 Appendix V

 Major Contributors to This Report


                        Henry L. Hinton, Associate Director, Army Issues
National Security and   Raymond Dunham, Assistant Director
International Affairs
Division,
Washington, D.C.

                        Antanas Sabaliauskas, Evaluator-in-Charge
Chicago Regional        Adrienne Friedman, Site Senior
Office                  David A. Bothe, Evaluator
                        Donald Krause, Evaluator
                        Timothy L. Clouse, Evaluator
                        Alan Runde, Evaluator


                        Ted B. Baird, Regional Manager Representative
Denver Regional         Alan J. Wernz, Evaluator
Office                  James B. Dalton, Evaluator


                        Donald F. Lopes, Regional Manager Representative
New York Regional       Manfred J. Schweiger, Site Senior
Office                  Philip F. Merryman, Evaluator




(393368)                Page 47                            GAO/‘NSL4IMO-266 DOD’s Ammunition Budget
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