GAO says cost of Army's 'modular' conversion will climb

The cost of the Army's effort to restructure its combat brigades is expected to exceed the last estimate of $52.5 billion as the service tries to fill the 190 planned "modular" units with enough equipment and personnel over the next several years, congressional investigators concluded in a report Monday.

The Army has not put a final price tag on equipping the new units, nor have officials provided "sufficient information" on their progress in creating the smaller and more rapidly deployable combat brigades, according to the report released by GAO.

"Without better [management] controls, decision makers will have difficulty assessing the Army's progress in meeting its goals, knowing what resources will be required to equip and staff modular units, and balancing funding requests for these initiatives with other competing priorities," the report said.

With a modular structure, Army leaders say they will be able to mix and match units so they can tailor the capabilities of the forces they deploy to particular missions or contingencies.

In early 2004, Army officials projected they needed $20 billion to create the modular units. By the end of that year, the Army had increased the scope of its so-called modularity efforts and received approval from then-Defense Secretary Donald Rumsfeld to spend $52.5 billion through fiscal 2011.

Army officials believe they will need additional funding through fiscal 2017 to fully equip the units by 2019.

During a review of 10 of the 138 modular units already created, GAO investigators found that they all had shortfalls in key personnel and equipment, including tactical wheeled vehicles and so-called blue-force tracking gear, which keeps track of friendly forces on the battlefield.

The Iraq war -- particularly, its toll on the Army's equipment stocks -- has exacerbated the service's plans to create the modular units. Indeed, the Army had assumed several years ago that much of the equipment deployed to Iraq would return to the United States in good enough condition to be used by the new units.

"Given the heavy use of equipment in Iraq and Afghanistan, this assumption may no longer be valid," GAO said.

Meanwhile, service officials had originally planned to give Army National Guard and Army Reserve units some older models of equipment, but the high demand now for reserve units has made them rethink those plans.

In addition, the original $52.5 billion estimate was devised before the Army had finalized unit designs for the modular brigades.

In its report, GAO warned that the Army "will not be in a good position to identify and provide transparency to Congress of its total funding needs" without a complete cost estimate for the conversion to modular units.

And investigators emphasized that Army plans to pay for the unit conversion out of both its annual base budget and wartime supplemental spending accounts further complicates lawmakers' ability to understand the full scope of the Army's financial needs.

"Our work has shown that major transformation initiatives have a greater chance of success when their funding plans are transparent, analytically based, executable, and link to the initiative's implementation plans," their report said.