Air Force Depot Maintenance

This report provides information on programmed depot maintenance on five B-1B aircraft under contract with Boeing North American, Inc., and Boeing's proposal to reengine the B-52 fleet. Specifically, GAO compares the cost of performing depot maintenance on five B-1B aircraft at Boeing's Palmdale, California, facility to the estimated cost of performing similar work at the Oklahoma City Air Logistics Center. GAO also analyzes the differences between Boeing's proposal (and associated projected savings) to reengine the B-52 fleet and the subsequent Air Force analysis and projected costs of implementing the proposal.

GAO noted that: (1) in fiscal years 1995 and 1996, the Air Force paid twice as much for each B-1B aircraft repaired under contract as the Oklahoma City depot estimated it would have cost that depot to repair the same aircraft; (2) the Air Force paid approximately $19 million for five aircraft repaired by Rockwell International Corporation in each of the 2 fiscal years, compared to about $9 million estimated for similar repair of 5 aircraft in the depot each year; (3) in 1996, when the Oklahoma City depot had the capability to repair the 5 aircraft that were contracted out in addition to the 18 it already repaired each year, the B-1B program office considered allocating the entire annual requirement to the depot; (4) confronted with this situation and other factors, the contractor reduced the B-1B contract price from $18 million to $11 million--about 39 percent; (5) GAO estimates that in fiscal years 1997 and 1998 the Air Force could have saved approximately $5.3 million by consolidating the B-1B depot maintenance work at the Oklahoma City Air Logistics Center; (6) this is $4.5 million more than the Air Force projected it could save over that same period if the five aircraft repaired at Boeing were consolidated with B-1B's being repaired at the Oklahoma depot; (7) the two factors most significantly influencing this difference are the impact of overhead savings at the Boeing facility and at the depot; (8) Boeing's unsolicited proposal to reengine the B-52 fleet would cost the Air Force approximately $1.3 billion rather than save approximately $4.7 billion as Boeing projected; (9) an Air Force team formed to study Boeing's proposal analyzed the lease and purchase alternatives and concluded that both options are cost-prohibitive compared to maintaining the existing TF-33 engines; (10) on April 15, 1997, DOD reported to Congress that implementing Boeing's reengining proposal is not cost-effective; (11) risks such as the length of the lease, termination liability, and indemnification made Boeing's proposal unacceptable; (12) additionally, the Institute for Defense Analysis projected that implementing the Boeing proposal would cost the Air Force $1 billion; (13) faced with continuing pressure to modernize the fleet, the Air Force is currently exploring alternatives for modernizing all TF-33 engines; and (14) the Air Force has awarded contracts to three engine manufacturers to explore modernization options and expects to develop a rank-ordered list of alternatives by January 31, 1998.