Air Force Depot Maintenance

Privatization-in-Place Plans Are Costly While Excess Capacity Exists Gao ID: NSIAD-97-13 December 31, 1996

The report reviews the Defense Department's (DOD) decision to pursue privatization-in-place at two major Air Force maintenance depots slated for closure as part of the 1995 base realignment and closure process. Specifically, GAO reviews the Air Force's plans to privatize-in-place depot maintenance workloads at the Sacramento and San Antonio air logistics centers. GAO discusses (1) the impact on excess depot capacity and operating costs at the remaining defense depots; (2) the cost-effectiveness of the planned privatization initiatives, including the impact of delaying base closures until 2001; and (3) compliance with statutory requirements.

GAO found that: (1) privatizing-in-place rather than closing and transferring the depot maintenance workloads at the Sacramento and San Antonio air logistics centers will leave a costly excess capacity situation at remaining Air Force depots that a workload consolidation would have mitigated; (2) although the Air Force's privatization initiative for the Sacramento and San Antonio depots has not progressed far enough for GAO to estimate precisely costs and savings, consolidating depot maintenance workloads at remaining underused depots could result in a net savings in 2 years or less; (3) GAO's work shows that transferring the depot maintenance workloads to other depots could yield additional economy and efficiency savings of over $200 million annually in addition to the $268 million annual savings the Base Realignment and Closure (BRAC) Commission estimated could be achieved by eliminating the McClellan and Kelly infrastructures and downsizing nonmaintenance personnel; (4) if the workload consolidation does not occur, the remaining Air Force depots are likely to become more inefficient and more costly, unless other workloads are added, costly excess capacity is eliminated, or other efficiency and economy initiatives are successfully implemented; (5) plans to delay many closure-related actions until 2001 will substantially reduce future savings envisioned by the BRAC Commission and could result in a net loss of $644.4 million between 1997 and 2001 for the Air Force and $24 million for the Army; and (6) the Department of Defense (DOD) stated that it will structure the San Antonio and Sacramento privatizations to comply with existing statutory restrictions, but DOD's privatization plans are still evolving and sufficient information is not available for GAO to assess whether the conversion plans will comply with existing law.

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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