Review of Air Force Accounting Practices for Financing Depot Maintenance Contracts Through Its Depot Maintenance Industrial Fund

Pursuant to a congressional request, GAO examined the merits of the Air Force's practice of financing depot maintenance contracts through its depot maintenance industrial fund rather than through direct appropriation.

The depot maintenance industrial fund is a working capital fund which uses customer orders for the repair of major end items of equipment to generate the budgetary resources needed to finance depot maintenance contracts. An earlier GAO report showed that the Air Force was illegally financing portions of depot maintenance contracts by using obligation authority that the industrial fund expected to receive from anticipated customer orders the following fiscal year; this practice amounted to using appropriated funds before they were authorized by Congress. Although the Air Force disagreed that it had acted illegally, it revised its procedures to require a fully funded customer order prior to the award of a depot maintenance contract that obligates industrial funds. The new procedure satisfied the objections GAO raised in its prior report and provides the needed administrative control over industrial fund financing of depot maintenance contracts. Therefore, GAO did not recommend discontinuance of the practice of financing depot maintenance contracts through the Air Force industrial fund.