Navy Maintenance

One of the more significant developments in the Navy's $2 billion aviation depot maintenance program has been to allow the Navy and private contractors to directly compete for work. Overhaul of the F-14 airframe was the first major maintenance work completed under the public/private competition program. GAO found that the program provided an incentive for the Navy depots to streamline production processes and minimize costs, which has helped reduce the Navy's F-14 overhaul costs. Average overhaul repair costs, adjusted for inflation, have declined about 23 percent since fiscal year 1987. More effective administration of the F-14 competition program would have yielded even more savings. Cost overruns, which may top $6.9 million, were mainly due to (1) inconsistent contract administration guidance, (2) a lack of top management attention to resolve problems, (3) contract disputes, (4) problems in the depots' cost accounting system, and (5) depot inefficiency. F-14 overhauls not under the competition program cost about 21 percent more than competition overhauls in fiscal year 1990. The cost difference was caused primarily by differences in the management and oversight applied to each overhaul program.

GAO found that: (1) F-14 overhaul costs have declined by about 23 percent since the introduction of the competition program, which encourages NADEP to streamline the overhaul process, ensure that only necessary work is performed, and focus on minimizing costs; (2) other factors contributing to cost reductions include accounting changes and aircraft parts funding changes; (3) actual F-14 overhaul costs have exceeded the amounts approved for payment, due to inconsistent contract administration guidance, failure to resolve contract administration problems, contract disputes, problems with the NADEP cost accounting system, and some NADEP inefficiency; (4) NAVAIR has issued new guidance on administering competitive awards won by NADEP; (5) modification of the NADEP cost accounting system to allow better tracking of costs could help to prevent contract disputes; (6) although NADEP applied the same maintenance practices to overhaul work they won under competitive and noncompetitive awards, noncompetitive F-14 overhauls cost about 21 percent more than competitive F-14 overhauls; (7) NAVAIR attributed cost differences to differences in the way the overhauls were administered and cited the positive impact of independent oversight on minimizing costs; and (8) NADEP attributed overhaul cost differences to aircraft age, although noncompetitive overhauls of older aircraft cost more than competitive overhauls of aircraft of the same age.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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