Navy Maintenance

GAO reviewed the Navy's plans and procedures for public-private competitions of aviation depot-level maintenance workloads. Various factors limited the amount of past depot-level work available for competitive awards, including the time and costs for performing competitions. Although actual savings were difficult to quantify, GAO found that the Navy's competition programs generally reduced operating costs and in many cases streamlined production processes. The Navy ended its aviation maintenance competition program in 1993, and the Defense Department terminated the program in 1994 despite continued congressional support for it. However, as DOD begins to implement recommendation by the Commission on Roles and Missions leading to the possible privatization of most depot maintenance, use of competitive procedures for distribution of workloads between the public and private sectors should prove cost-effective.

GAO found that: (1) Navy public-private competitions generally resulted in savings and benefits, although precisely quantifying such savings is not possible; (2) for competition workloads, public depots substantially reduced operating costs by streamlining production processes and reducing overhead, but the Navy's expectations to greatly expand public-private competitions and to thereby achieve over $550 million in savings over a 6-year period never materialized; (3) the time and cost of performing such competitions, combined with a rapidly declining depot maintenance workload and a private-sector concern about fairness, resulted in much less maintenance work being subjected to public-private competition than had been projected; (4) the fairness issue centers on private-sector concerns that military depot prices did not reflect the total cost to the government of performing this work; (5) congressional direction to reinstitute public-private competitions, together with recommendations by the Commission on Roles and Missions to privatize most depot maintenance work has resulted in DOD reexamining its deport workload with a view toward moving more work to the private sector; (6) while DOD maintains it has reinstituted its public-private competition program, in practice no competitions have been held since DOD terminated the program in 1994; (7) a number of factors may limit or impede a major competition program in the current environment, including the cost and difficulties of performing such competitions and the amount of work available for competition under current law and policies limiting the mix of public and private depot maintenance work; and (8) initiatives, such as improving cost accounting systems for deport work, can be undertaken to improve public-private competitions to ensure their future usefulness in identifying the most cost-effective source of repair for depot maintenance workloads.

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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