Depot Maintenance

In February, the Defense Department (DOD) submitted a report to Congress on the distribution of depot maintenance workloads for fiscal year 1998. The law stipulates that no more than half of the funds made available in a fiscal year to the military for depot maintenance and repair can be used for performance by contractors. GAO reviewed DOD's report on the percentage of depot maintenance funding used by the public and private sector activities. This report (1) provides GAO's opinion on DOD's compliance with the law's percentage requirement; (2) compares the results of DOD's recent report on its fiscal year 1998 workload with earlier reports; (3) discusses continuing weaknesses in the accuracy, completeness, and consistency of reported data; and (4) discusses improvements in DOD's guidance, data collection processes, oversight, and opportunities to further improve the quality of future reports.

GAO noted that: (1) as submitted, DOD's report covering FY 1998 depot workloads would indicate that each of the covered military departments and the one reporting defense agency are in compliance with the 50-percent ceiling set by section 2466; (2) however, because of errors and inconsistencies in reporting, GAO could not determine whether DOD's departments and agencies were in compliance with the 50-percent ceiling for private sector performance; (3) further, consistent with DOD's stated plans, the private sector's portion of such work is continuing to increase; (4) DOD is collecting projected out-year obligation data that likely would have provided a more definitive outlook for future workload allocations, but has not yet completed its data collection and analysis of this data; (5) notwithstanding limitations in DOD's data, its report covering FY 1998 depot workloads was more comprehensive than prior years' reports because of improved guidance and, in the case of the Air Force, use of its audit agency to review its data; (6) DOD reported obligating a total of $14.1 billion for depot maintenance in FY 1998--about 37 percent more than was reported for fiscal year 1997; (7) the percentage reported going to the private sector increased from 37 to 42 percent between fiscal years 1997 and 1998, with much of the increase resulting from contractor logistics support and interim contract support; (8) the Office of the Secretary of Defense, the Air Force, and the Army have provided improved guidance and oversight for this year's report, and these actions resulted in more comprehensive reporting; (9) however, reporting requirements are unclear in certain areas such as distinctions between depot and other levels of maintenance and repair activities; (10) also, problems, occurred in this reporting cycle because guidance was not communicated to and understood by all organizational levels responsible for reporting; (11) further, data were not always reviewed for consistency and completeness within each service prior to submission to the Office of the Secretary of Defense; and (12) even once these issues are addressed, some subjectivity would likely continue because of difficulties in categorizing certain maintenance repair actions.

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.

Director: Team: Phone: