LegiStorm

What GAO Found

In October 2013, the Army Chief of Staff approved the Aviation Restructuring Initiative that would seek to save an estimated $1 billion annually by reducing the Army’s end strength, retiring three older types of helicopters, and removing all AH-64 Apache helicopters from the reserve component. In January 2014, the National Guard Bureau (Bureau) announced an alternative proposal that retains Apache helicopters in the Army National Guard, which the Army believes would create operational risk. GAO reviewed the Army’s assessment of the two proposals and found the following:

• The Army and Bureau, in their force-structure proposals, agree on assumptions pertaining to military strategy, near-term training resources, the demand for forces, and Army National Guard unit readiness, but disagree on assumptions about the Army’s budget constraints and how Army National Guard units would be trained, mobilized, and used in combat.

• The Army’s analyses of the proposals’ abilities to meet the projected demand for forces are based on a reasonable methodology and are suitable for comparing the proposals, but additional sensitivity analysis could have been beneficial to decision makers. The Army’s analyses reflected generally accepted research standards about applying assumptions consistently in that they used the same assumptions derived from Department of Defense (DOD) and Army policies. For example, the Army’s analyses applied the same assumptions pertaining to unit readiness and deployment to both proposals. The Army’s initial analysis found that both proposals were able to meet more than 90 percent of the anticipated combat demands. However, Army officials said that assumptions pertaining to Army National Guard postmobilization training were unrealistic because they were not based on historical data. In subsequent analysis, the Army increased Army National Guard postmobilization training to 4 months causing the Bureau’s proposal to experience key combat shortfalls when compared to the Army’s proposal. Although we found the Army’s analyses to be suitable for comparing the two proposals under the given scenario, the Army did not include sensitivity analysis to evaluate how the proposals would have performed under a broader range of conditions. Such analysis could have provided senior Army leaders with insights on how adaptable the competing proposals would be when confronted with different combat requirements.

• The Army’s cost analyses generally met some leading practices for cost estimating and, as a result, were sufficiently reliable for comparing the costs of its and the Bureau’s force-structure proposals; however, the estimates were of limited value for projecting the actual implementation or annual costs of the Army’s proposal. The Army estimated that annual operating costs for its proposal and the Bureau’s alternative were $6.75 billion and $6.80 billion, respectively. Based on Army acquisition data, DOD also estimated that the Bureau’s proposal cost $220 million to $420 million more to implement than the Army’s proposal, because the Bureau proposed acquiring 11 additional Apache helicopters. Moreover, the Army subsequently stated that, based on its analysis, the Bureau’s proposal would create unacceptable risk to the force, which could be offset by acquiring additional Apache helicopters, for a total onetime cost of $5.52 billion and additional annual operating costs to sustain unplanned force structure. Federal standards for internal control identify the need for agency decision makers to have relevant, reliable, and timely information. GAO concluded that the Army’s estimates provided such information; reflective of leading cost estimating practices, the Army’s estimates were substantially comprehensive and well-documented, based on historic funding and manning levels, and based upon assumptions that were consistently applied to each proposal. However, the estimates were limited as a means to project actual costs, because the estimates did not account for manning, equipping, and operational uncertainties. Army officials told us that their approach to estimating costs was intended to permit a comparison of the two proposals, and not to develop future budgets.