Depot Maintenance

The Air Force recently waived a provision of 10 U.S.C. 2466 that places a 50-percent ceiling on the amount of depot maintenance funds that can be used for work done by the private sector. The statute allows the military to waive the 50-percent requirement for reasons of national security. In notifying Congress of the waiver, the Air Force explained that waiver was needed primarily because the private sector was needed to temporarily support maintenance that is being moved from the closing Sacramento, California, and San Antonio, Texas, depots to other military depots or private sector sources. This testimony focuses on the basis for the waiver and the likelihood that the Air Force will need additional waivers in the future.

GAO noted that: (1) the Secretary of the Air Force acted within his legal authority to waive the 10 U.S.C. 2466 requirement that not more than 50 percent of the funds made available for depot maintenance work be performed by private sector contractors; (2) although the Air Force explanation for the waiver was based primarily on the need to use temporary repair contracts and temporary contract personnel to support workloads at closing depots, these temporary contracts represent only a minor share of the Air Force contract workload and did not in and of themselves create the need for a waiver; (3) a significant factor leading to the waiver were previous Air Force actions that increased the private sector share of depot maintenance work from 36 percent in 1991 to the 50-percent ceiling in 2000--leaving little room to respond to emergencies; (4) preliminary Air Force data indicates the Air Force will be close to the 50-percent ceiling through fiscal year (FY) 2004; (5) yet repair costs for work already on contract are increasing more than previously estimated; (6) long-term depot maintenance contracts are expected to grow from $1.1 billion in FY 2000 to $1.5 billion in FY 2004; (7) in addition, the Air Force is implementing initiatives to outsource total systems support responsibility to the private sector--including depot maintenance--for 64 new or modified systems, including the Joint Direct Attack Munition, AC-130U Gunship, Sensor Fuzed Weapon, and Joint Air to Surface Standoff Attack Missiles; and (8) while the Air Force indicated a waiver should not be needed beyond 2001, the increasing amount of the Air Force's contract depot maintenance work and future outsourcing plans create a significant challenge to the Air Force in managing its depot maintenance work within the 50-percent ceiling.