Depot Maintenance

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) program to compete depot maintenance workloads between the public and private sectors. GAO found that: (1) 59 of 71 nonshipyard competitions involve at least one public-sector and one private-sector bidder; (2) public-sector bidders have won 61 percent of the competitions; (3) public depots have bid 1 to 172 percent below the lowest private-sector bidder; (4) DOD is revising its cost comparability handbook so that public-sector bidders can include the costs private-sector bidders normally include; (5) the Defense Contract Audit Agency (DCAA) has identified underpricing by public depots, but contracting officers have not considered this in their award decisions because of confusion as to what DCAA certification of bids in public-private competitions means; (6) DOD needs to improve the comparability of public- and private-sector bids; (7) the total costs of conducting public-private competitions are unknown; (8) DOD does not have a standard methodology for determining savings because of internal control and accounting systems weaknesses and reallocation of overhead costs; (9) although DOD has tried to provide equal competition, public- and private-sector competitors do not believe competition is fair; and (10) the private sector has won most of the competitions for Navy vessel maintenance.