Military Equipment: Selected Aspects of the Army's Program To Reuse Pershing Missile System Equipment

Published by the Government Accountability Office on 1990-12-28.

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

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                        Selected Aspects of the
                        Army’s Program to
                        Reuse Pershing M.issile
                        System Equipment


                   National Security and
                   International Affairs Division


                   The Honorable Michael P. W. Stone
                   The Secretary of the Army
                   Dear Mr. Secretary:
                   We have completed an analysis of the Army’s ongoing program to reuse
                   over $1 billion of Pershing missile system equipment. Our review
                   focused on (1) assessingthe program’s effectiveness in filling the
                   requirements of selectedgovernment activities and (2) determining the
                   related budgetary savings; that is, reductions in spending of funds
                   appropriated, requested in the President’s budget, or programmed for
                   future budget requests.

                   The Army’s program for the reuse of Pershing equipment addressesan
Results in Brief   unusual need-the managementand allocation of relatively modern,
                   high-cost equipment that originally had been procured to meet special-
                   ized requirements. Through mid-September 1990,the Army’s reuse pro-
                   gram had received 416 requests from 62 government activities for
                   Pershing equipment that originally cost $756 million. The Army had
                   approved requests for equipment costing $227 million.

                   Despite the demand for Pershing equipment, overall budgetary savings
                   appear limited. For the 90 requests we examined, the requested equip-
                   ment cost $292.6 million, but our review disclosedthat the estimated
                   savings for the requesting activities amounted to only $12.7 million, or
                   about 4.3 percent of the equipment’s cost. The specializednature of the
                   equipment could be a primary factor limiting savings. However, we
                   believe that savings could also have been limited becausethe Army’s
                   reuse program did not emphasize,collect, and consider budgetary infor-
                   mation in determining the priorities of requests.
                   Army reuse program officials acknowledged that consideration of bud-
                   getary information has the potential for increasing budgetary savings.
                   They agreedto request and consider this information when making allo-
                   cation recommendationsinvolving competing requests.

                   The Pershing is a ground-launched, intermediate-range nuclear missile
Background         system consisting of a two-stage missile, launcher, and associated
                   ground support equipment. The Pershing is deployed in Europe, but the

                   Page 1                           GAO/NSIAJI-91-96 Reuse of Pershing Missile Equipment

                        deployment will end on June 1, 1991, to comply with the Intermediate-
                        RangeNuclear Force treaty between the United States and the Soviet
                        Union. The treaty requires that the United States destroy certain Per-
                        shing equipment, but other equipment, which the Army estimates cost
                        over $1 billion, will be available for other needs.

                        To coordinate the allocation of equipment, the Army established the
                        Pershing reuse program. The reuse program office provides information
                        to potential users on equipment capability and availability, receives
                        requests for equipment, and recommendsapproval or disapproval of the
                        requeststo the Deputy Chiefs of Staff for Logistics and Operations.
                        When duplicate requests are submitted for an item, the reuse program
                        office recommendsthe priority for allocating the equipment, but the
                        Deputy Chiefs of Staff make the final determinations. The program pro-
                        vides the equipment free of charge to approved activities as it becomes

                        The Army’s reuse program appears to contribute to the disbursal of
ReuseProgram            potentially excess,relatively new, and complex equipment. The program
Coordinates Disbursal   provides (1) centralized control over treaty-related activities such as
of Equipment            readiness,treaty compliance, and reuse; (2) more time than permitted
                        under excess-propertyprocedures to accumulate requests before equip-
                        ment is scrapped; and (3) personnel familiar with the Pershing equip-
                        ment to act as advisers in determining how equipment can be reused.

                        The program will continue until at least the Pershing system’s deactiva-
                        tion. Reuseprogram officials estimated that more than $500 million
                        worth of Pershing equipment will becomeavailable during the last
                        6 months of the system’s permitted deployment-December 1, 1990,
                        through June 1,lQQl. At the completion of the program, the Army plans
                        to declare the uncommitted equipment excessand processit under
                        excess-propertydisposal procedures.

                        Reuseprogram documents,except in one case,did not include specific
Activities Report       data on the requesting activities’ expected or actual budgetary benefits
Benefits, but           from obtaining the Pershing equipment. However, officials from the
Budgetary Savings       14 government activities whose 90 requests we evaluated estimated
                        budgetary savings of only $12.7 million, or about 4.3 percent of the
Have Been Limited       equipment’s $292.6 million cost.

                        Page 2                        GAO/NSIAD91-96 Reuse of Pershing Missile Equipment

                        Eight activities requested equipment that was expected to result in
                        budgetary savings. The equipment originally cost $95.4 million, and
                        requesting officials estimated budgetary savings of $12.7 million, or
                        13.3 percent, from obtaining the equipment. Six of the eight activities
                        that identified budgetary savings believed that savings of $10.1 million
                        would result from filling requirements programmed for funding in
                        future years. The other two activities reported that Pershing equipment
                        filled requirements for which $2.6 million had been appropriated or
                        requested.According to requesting officials, one used the funds made
                        available for other requirements, and the other activity planned to
                        cancel procurement actions upon receipt of the equipment and apply the
                        savings to other program needs.

                        In addition, six activities requested $197.2 million in equipment but did
                        not identify budgetary savings. Requestingofficials said that the Per-
                        shing equipment provided additional capability relevant to their mis-
                        sions and useful to their programs, but they said that their programs
                        could not have afforded to buy the equipment.

                        The specialized requirements of the Pershing equipment may partly
Specialized Equipment   explain the limited budgetary savings when compared to the equip-
May Limit Budgetary     ment’s cost. For example, one activity requested 32 Pershing platoon
Savings                 control shelters costing $18.1 million, but program officials estimated
                        the budgetary savings to be $770,880-the cost of procuring and modi-
                        fying new shelters to fill their specific requirement. The program offi-
                        cials attributed the limited savings to the Pershing’s specialized
                        requirements, such as the need for the shelters to meet nuclear, biolog-
                        ical, and chemical warfare specifications-a capability not required by
                        the requesting activity.

                        Emphasizing, collecting, and considering budgetary information in
Potential Budget        making equipment allocation decisionscould reduce budget requests in
Reductions Possible     future years. At present, program officials give first priority (without
                        obtaining or considering budgetary information) to requesting activities
                        selectedby the President or the Secretary of Defenseto receive special
                        The reuse program decidesbetween competing requests without consid-
                        ering the requesting activities’ funded requirements and the potential to
                        use Pershing equipment to satisfy those requirements. Reuseprogram
                        instructions provide for giving somepreference to activities that will

                        Page 8                        GAO/NSIAD-91-96 Reuse of Pershing Missile Equipment

                   make the best use of the equipment and will save money as a result of
                   obtaining it. However, the Army obtained budgetary information for
                   only 1 of 416 requests received through mid-September 1990. The pro-
                   gram officials making reuse recommendationsdid not use the budgetary
                   information and did not provide it to the Department of Army level for
                   consideration in making final allocation decisions.

                   The limited information developed during our analysis showed that
                   approving requestswithout considering budgetary information could
                   have limited savings in at least one instance if the Department of Army
                   officials had not intervened. In that case,basedon an activity’s special
                   priority assignedby the President, reuse program program officials rec-
                   ommendedapproving a request for four Pershing test station vans that,
                   according to requesting officials, would yield budgetary savings of
                   $74,000, or $18,600 for each $1.9 million van. At the sametime, reuse
                   officials recommendeddenying a request for one of the vans submitted
                   by another activity that did not have special priority. However,
                   according to that activity’s chief of systems engineering,the additional
                   van would have satisfied a funded requirement of about $500,000-
                   more than 27 times the funding neededto fill the special priority
                   activity’s requirement for one van.

                   In the end, officials from the Offices of the Deputy Chiefs of Staff for
                   Logistics and Operations denied both requests becausethey believed a
                   better use could be made of the van. But, in taking this action, they did
                   not know the relative potential budgetary savings of each request.

                   Reuseprogram officials said that budget savings may not be the only
                   basis for allocating military equipment; however, they agreedthat con-
                   sideration of budgetary information has the potential for increasing
                   budgetary savings.

                   We did not obtain official agency commentson this report. However, we
Views of Program   discussedthe results of our work with Army reuse program officials.
Officials          Reusemanagementofficials agreedto (1) request budgetary information
                   from requesting activities, (2) consider this information as a major
                   factor when making allocation recommendationsinvolving competing
                   requests, and (3) notify potential requestors that the remaining Pershing
                   equipment will be available to meet fiscal year 1991 requirements. In
                   view of these planned actions, we are not making any recommendations.

                   Page 4                        GAO/NSIAD-91-96 Reuse of Pershing Missile Equipment

              We examined the Pershing ReusePlan, the Pershing inventory listing,
Scopeand      other reuse program documents and reports, and the requests for Per-
Methodology   shing equipment. We also reviewed pertinent Department of Defense
              and Army regulations concerning disposal of excessmateriel. In addi-
              tion, we interviewed Army officials concerningthe priority processfor
              competing requests and Department of the Army procedures for
              approving requests.

              To examine program benefits, we reviewed 90 requests from 14 govern-
              ment activities asking for $292.6 million in Pershing equipment. We gen-
              erally selectedthe activities basedon the value of the Pershing
              equipment requested and examined all requests from that activity. We
              acceptedthe activities’ projections of budgetary or other benefits
              without independent verification.

              In performing this review, we visited activities located at the U.S. Army
              Missile Command,the Strategic DefenseCommand,the Ballistics
              ResearchLaboratory, and the Naval Surface Warfare Center.

              We conducted our review from May to October 1990 in accordancewith
              generally acceptedgovernment auditing standards.

              We are sending copiesof the report to the Director of the Office of Man-
              agementand Budget and to the Chairmen of the HouseCommittee on
              Government Operations, SenateCommittee on Governmental Affairs,
              and House and SenateCommittees on Appropriations and on Armed Ser-
              vices. Copieswill also be made available to others upon request.
              Pleasecontact me on (202) 276-4141if you or your staff have questions
              concerning this report. Major contributors to this report are listed in
              appendix I.
              Sincerely yours,

              Richard Davis
              Director, Army Issues

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Appendix I

Major Contributors to This Report

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

                        T. Wayne Gilliam, Regional ManagementRepresentative
Atlanta Regional        W, Stan I.,ipscomb,Evaluator-in-Charge
Office                  Carol T. Mebane,Evaluator
                        Lisa Warde, Evaluator

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