History of the Ammunition Industrial Base - JMC - U.S. Army

of the Army depot system became acute the Services became concerned about reducing the
stockpile, because it became more difficult to have their preferred stock issued rapidly. 140 The
bottom line was that as Army budgets decreased, the ammunition portion of the budget also grew
smaller and the SMCA was unable to maintain the budget levels to adequately maintain the
stockpile.
On several occasions, Congress became involved in trying to correct the funding issues.
At one point they issued a report on the growing demilitarization requirements and directed
minimum annual expenditures to reduce the stockpile. In another instance, Congress directed
GAO investigations on the management of excess stocks. One GAO conclusion was that the
Services had no interest in directing or funding the disposal of excess as they were not paying the
costs of storage. It was, perhaps, the lack of funds that led to reductions in force in the
ammunition community in the late 1980s and early 1990s. These reductions led to slower
processing times that were noted by Service leaders, but never fixed. 141
Despite problems and concerns, the SMCA experienced increased effectiveness and
efficiency in many areas. Management of all wholesale stocks by one entity improved
effectiveness and saved money. The ability to see stocks and suggest that excess be transferred
to another Service instead of buying new rounds saved hundreds of millions of dollars. The
centralization of buys under Conventional Ammunition Working Capital Fund (CAWCF)
reduced competition between the Services and created magnitudes of scale efficiencies. The
Integrated Conventional Ammunition Procurement Plan (ICAPP), created in 1981, fostered
cooperation between the Services while forging more effective use of the government and
commercial production base. The Integrated Conventional Ammunition Maintenance Plan
(ICAMP), created in 1983, provided line-by-line analysis of maintenance requirements across
the Services and allowed for better forecasting and smoothing of maintenance requirements at
the depots. The main intent of creating the SMCA, increased effectiveness and efficiency in the
management of conventional ammunition was accomplished. 142
Throughout the 1980s, the government owned base was revitalized and modernized, but
this was due more to a general influx of funding during the Reagan Administration buildups than
a DoD or DA level systemic attempt to improve management of the base. The general increase
in funding and activity masked the problems of managing the base, stockpile balance, unsteady
requirements, and fluctuating production schedules. As soon as the Cold War ended, budgets
began to drop and the same issues returned to the forefront.
In the mid 1990s, the GAO published several new reports on DoD‟s management of
ammunition. Reports on small arms ammunition management (1995), artillery shell production
(1996), and the ability of the industrial base to meet requirements (1996) were generally
favorable. However, each report mentions GAO concerns on management of excess inventory in
the wake of post-Cold War drawdowns. In June 1996, after a two year investigation, the GAO
published a report on DoD‟s management of excess ammunition. GAO report GAO/NSIAD-96-
129, “Defense Ammunition: Significant Problems Left Unattended Will Get Worse” was critical
140 EDCA and AMCCOM Annual Reports, 1981-1994.
141 Ibid. See also GAO Report GAO/NSIAD-96-129, “Defense Ammunition: Significant Problems Left Unattended
Will get Worse,” June, 1996.
142 The annual reports of SMCA activities, prepared by the EDCA, contain figures on cost avoidance. See the
annual reports for specific numbers on cost avoidance and savings.
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