Depot Maintenance
Change in Reporting Practices and Requirements Could Enhance Congressional Oversight Gao ID: GAO-03-16 October 18, 2002Under 10 U.S.C. 2466, the military services and defense agencies can use no more than 50 percent of annual depot maintenance funding for work by private-sector contractors. The Department of Defense (DOD) is to submit two reports to the Congress annually on the costs of public- and private-sector depot maintenance workloads: a "prior-years" report on the past 2 fiscal years and a "future-years" report on the next 5. Section 2466 also requires GAO to report to the Congress on whether DOD complied with the so-called "50-50 requirement" in the prior-years report and whether the future-years projections are reasonable. This report fulfills that requirement.
While DOD's prior-years report for fiscal years 2000 and 2001 showed the U.S. Army and Navy to be below the 50-percent funding limitation on private sector workloads and the Air Force to be above it, continuing weaknesses in DOD's data gathering and reporting processes prevented GAO from determining with precision whether the services complied with the 50-50 requirement. As in past years, GAO found errors and omissions in the data. For example, the Army erroneously reported workloads at two commands in millions of dollars instead of thousands of dollars, resulting in a $414 million--or 8 percent--overstatement of both public- and private-sector obligations for the 2 years in total. Because of the changing nature of budget projections and supporting data deficiencies, the future-years report does not provide reasonable estimates of public- and private-sector depot maintenance funding allocations for fiscal years 2002 through 2006. The services tend to place less emphasis and priority on collecting and validating future-years data. The reported projections are based, in part, on incorrect data, questionable assumptions, and some inconsistencies with existing budgets and management plans. For example, the Navy did not report depot maintenance workloads for a missile system and a ship defensive system, understating funding for private-sector work each year by an estimated $162 million and public-sector work by about $80 million.
RecommendationsOur 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:GAO-03-16, Depot Maintenance: Change in Reporting Practices and Requirements Could Enhance Congressional Oversight
This is the accessible text file for GAO report number GAO-03-16
entitled 'Depot Maintenance: Change in Reporting Practices and
Requirements Could Enhance Congressional Oversight' which was released
on October 18, 2002.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products‘ accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
United States General Accounting Office:
Report to Congressional Committees:
GAO:
October 2002:
DEPOT MAINTENANCE:
Change in Reporting Practices and Requirements Could Enhance
Congressional Oversight:
GAO Highlights: Highlights of GAO-03-16, a report to Congressional
Committees:
October 2002:
DEPOT MAINTENANCE:
Change in Reporting Practices and Requirements Could Enhance
Congressional Oversight:
Why GAO Did This Study:
Under 10 U.S.C. 2466, the military services and defense agencies can
use no more than 50 percent of annual depot maintenance funding for
work by private-sector contractors. The Department of Defense (DOD) is
to submit two reports to the Congress annually on the costs of public-
and private-sector depot maintenance workloads: a ’prior-years“ report
on the past 2 fiscal years and a ’future-years“ report on the next 5.
Section 2466 also requires GAO to report to the Congress on whether DOD
complied with the so-called ’50-50 requirement“ in the prior-years
report and whether the future-years projections are reasonable. This
report fulfills that requirement.:
What GAO Found:
While DOD‘s prior-years report for fiscal years 2000 and 2001 showed
the U.S. Army and Navy to be below the 50-percent funding limitation on
private sector workloads and the Air Force to be above it, continuing
weaknesses in DOD‘s data gathering and reporting processes prevented
GAO from determining with precision whether the services complied with
the 50-50 requirement. As in past years, GAO found errors and omissions
in the data. For example, the Army erroneously reported workloads at
two commands in millions of dollars instead of thousands of dollars,
resulting in a $414 million--or 8 percent--overstatement of both
public-and private-sector obligations for the 2 years in total.
Because of the changing nature of budget projections and supporting
data deficiencies, the future-years report does not provide reasonable
estimates of public-and private-sector depot maintenance funding
allocations for fiscal years 2002 through 2006. The services tend to
place less emphasis and priority on collecting and validating future-
years data. The reported projections are based, in part, on incorrect
data, questionable assumptions, and some inconsistencies with existing
budgets and management plans. For example, the Navy did not report
depot maintenance workloads for a missile system and a ship defensive
system, understating funding for private-sector work each year by an
estimated $162 million and public-sector work by about $80 million.
Past and Projected Percentage of Depot Maintenance Funds Allocated to
the Private Sector, as DOD Reported:
[See PDF for image]
Source: DOD ’50-50“ Reports, Feb. 4 and Apr. 12, 2002.
[End of figure]
What GAO Recommends:
Because of the inexactness of budget estimates beyond the current and
upcoming budget years, the future-years report has limited utility.
Since GAO cited the same problem in prior reviews and the volatile
nature of budget estimates will likely continue, GAO makes the
elimination or modification of the future-years-report requirement a
matter for congressional consideration. GAO also recommends that the
Secretary of Defense act to improve 50-50 reporting in problem areas.
DOD agreed with most GAO recommendations, but disagreed with parts of
two recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-16.
To view the full report, including the scope and methodology, click on
the link above. For more information, contact David Warren at (202)
512-8412 or warrend@gao.gov.
Contents:
Letter:
Results in Brief:
Background:
Weaknesses in Data Preclude Determinations of Compliance in Prior-
Years Report:
Future-Year Projections Are Not Reasonable and Not Very Useful:
Opportunities Exist to Improve 50-50 Reporting:
Conclusions:
Matter For Congressional Consideration:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: DOD Reported Depot Maintenance Workload Allocations:
Table 2: GAO Changes to Army Prior-Years Report:
Table 3: GAO Changes to Navy Prior-Years Report:
Table 4: GAO Changes to Marine Corps Prior-Years Report:
Table 5: GAO Changes to Air Force Prior-Years Report:
Table 6: Reporting Quality Compared to Last Year:
Abbreviations:
DOD:Department of Defense
OSD: Office of the Secretary of Defense:
United States General Accounting Office:
Washington, DC 20548:
October 18, 2002:
The Honorable Carl Levin
Chairman
The Honorable John Warner
Ranking Minority Member
Committee on Armed Services
United States Senate:
The Honorable Bob Stump
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:
Under 10 U.S.C. 2466, not more than 50 percent of annual depot
maintenance funding provided to the military departments and
defense agencies can be used for work accomplished by private-sector
contractors. The legislation provides that the 50-percent limitation
for a fiscal year can be waived based on a determination that a waiver
is necessary for reasons of national security and notification to the
Congress of the reasons for the waiver.[Footnote 1] Section 2466 also
directs the Department of Defense (DOD) to submit two reports to the
Congress annually on public-and private-sector depot maintenance
workloads. The first report is to identify the percentage of funds
expended by each military department and defense agency during the
preceding 2 fiscal years for the performance of depot maintenance
workloads by the public and private sectors (the ’prior-years report“).
The second report is to project the same information for the current
and 4 succeeding fiscal years (the ’future-years report“). For 2002,
DOD issued the prior-years report in February 2002 and the future-years
report in April 2002.
Section 2466 also requires us to submit our views to the Congress on
whether DOD complied with the so-called ’50-50 requirement“ in the
prior-years report and whether the projections in the future-years
report are reasonable.[Footnote 2] Accordingly, this report discusses
whether (1) the military departments met the 50-50 requirement for
fiscal years 2000 and 2001 and (2) the projections for fiscal years
2002 through 2006 represent reasonable estimates. As agreed with your
offices, we also examined DOD‘s efforts to improve the reporting
process and sought to identify further opportunities for improvement.
To accomplish these objectives, we analyzed the 50-50 reported data and
each service‘s procedures and internal management controls for
collecting, aggregating, and validating depot maintenance information
for purposes of responding to the section 2466 requirements.
Results in Brief:
While DOD‘s prior-years report for fiscal years 2000 and 2001 showed
the Departments of the Army and Navy to be below the 50-percent funding
limitation on private-sector workloads and the Air Force to be above
it, continuing weaknesses in DOD‘s data gathering and reporting
processes prevented us from determining with precision whether the
services were in compliance with the 50-50 requirement.[Footnote 3] As
in past years, we found errors and omissions in the data. For example,
the Army erroneously reported workloads at two commands in millions of
dollars rather than in thousands of dollars, resulting in a
$414 million--or 8 percent--overstatement of both public-and private-
sector obligations for the 2 years. Also, the Marine Corps did not
report most depot maintenance workloads from the command responsible
for system acquisitions and upgrades, understating private-sector work
by $59 million and public-sector work by $43 million for the 2 years.
Given these weaknesses, the prior-years report at best provides a rough
approximation of the allocation of depot maintenance workload between
the public and private sectors. In that regard, it does provide useful
information to the Congress in exercising its oversight role and to DOD
officials in managing the depot maintenance program.
Because of the changing nature of budget projections and supporting
data deficiencies, the future-years report does not provide reasonable
estimates of public-and private-sector depot maintenance funding
allocations for fiscal years 2002 through 2006. The services tend to
place less emphasis and priority on collecting and validating future-
years data. The reported projections are based, in part, on incorrect
data, questionable assumptions, and some inconsistencies with existing
budgets and management plans. For example, the Navy did not report
depot maintenance workloads for a missile system and a ship defensive
system, understating funding for private-sector work each year by an
estimated $162 million and public-sector work by about $80 million. The
Air Force understated the installation of modifications and contract
baseline changes totaling $336 million over the 5-year reporting
period, which would increase the private-sector percentages, and
understated exempted private-sector workloads by a total of
$206 million for the 4 years specified by the amended statute,[Footnote
4] which would decrease private-sector percentages. Such problems,
coupled with the inexactness of program estimates beyond the budget
year, limit the usefulness of the future-years report for congressional
and DOD decision makers. For example, although the Air Force future-
years report does not project a need for additional waivers during this
period, we believe the Air Force will continue to be significantly
challenged in this regard, particularly because the conditions that led
to the waivers for the past 2 years have not materially changed.
There are abundant opportunities to improve both the 50-50 reporting
process and results. Although in past years the services‘ reporting
improved incrementally, their efforts to improve 50-50 data collection
and reporting during this most recent reporting period were not as
widely apparent. Indeed, the overall quality of the reporting process
in terms of data accuracy, procedures, and supporting documentation
stayed about the same or declined. The Office of the Secretary of
Defense and each service did improve guidance somewhat to incorporate
some of our findings and recommendations from last year‘s report, but
priority and emphasis from top management of the services appear to be
flagging. Army and Air Force auditors reviewed and corrected 50-50 data
before it was reported to the Congress, but the Navy again did not use
its audit service to independently validate data. In addition to
addressing the individual errors and inconsistencies we found in each
service‘s data, we identified three systemic problem areas that the
services could improve for future 50-50 reports--the double counting of
repair costs for components incorporated into an overhaul of a larger
system or subsystem, the underreporting of depot work performed at
nondepot locations, and the underreporting of depot repair work managed
by system program offices. Expanding and clarifying guidance, improving
management processes and controls, and addressing several
problem-reporting areas can provide better, more useful information
for congressional oversight and DOD management.
Because of the inexactness of the budget estimates for those years
beyond the current year and the upcoming budget year, the future-years
report has limited utility. Given that we have seen the same problem in
our prior assessments of earlier 50-50 reports and that the volatile
nature of budget estimates is not likely to change, we are making the
elimination or modification of the requirement for the future-years
report a matter for congressional consideration. We are also
recommending executive action by the Secretary of Defense to improve
50-50 reporting in several problem areas.
DOD provided official oral comments on a draft of this report. The
department agreed with most of our recommendations and cited a number
of corrective actions they plan to take. However, DOD disagreed with
portions dealing with the potential double counting of some depot-level
reparables and the reporting of nonnuclear carrier workload. The agency
comments section of this report contains more details on DOD‘s
positions and why we believe the recommendations are still appropriate.
Background:
Governing Legislation and Previous Reports Concerning the 50-50
Requirement:
The Congress has on several occasions amended section 2466 and other
title 10 provisions to provide guidance to DOD regarding the allocation
of depot maintenance work between the public and private sectors.
Amendments in 1997 increased the annual amount of depot funds that
could be used for contracting from 40 percent to 50 percent and defined
’depot maintenance“ in statute for the first time, including additional
categories of contract work that DOD had not always reported as depot
work before.[Footnote 5] A 1999 amendment established the requirement
for the future-years report.[Footnote 6]
Section 2460 of title 10 defines depot maintenance to encompass
material maintenance or repair requiring the overhaul, upgrade, or
rebuilding of parts, assemblies, or subassemblies and the testing and
reclamation of equipment, regardless of the source of funds or the
location at which maintenance or repair is performed. Depot maintenance
also encompasses software maintenance, interim contractor
support,[Footnote 7] and contractor logistics support[Footnote 8] to
the extent that work performed in these categories is depot
maintenance. The statute excludes from depot maintenance the nuclear
refueling of an aircraft carrier, the procurement of major
modifications or upgrades of weapon systems, and the procurement of
parts for safety modifications, although the term does include the
installation of parts for safety modifications.
The Office of the Secretary of Defense (OSD) has issued guidance to the
military departments for reporting public-private workload
allocations. The guidance is consistent with the definition of depot-
level maintenance and repair in 10 U.S.C. 2460.[Footnote 9] The
military departments have also issued internal instructions to manage
the data collection and reporting process, tailored to their individual
organizations and operating environments.
Section 2474 of title 10 directs DOD to designate public depots as
Centers of Industrial and Technical Excellence and to improve their
operations so as to serve as recognized leaders in their core
competencies.[Footnote 10] Section 342 of the National Defense
Authorization Act for Fiscal Year 2002 amended 10 U.S.C. 2474 to
exclude qualifying public-private partnerships[Footnote 11] from the
50-percent funding limitation on contracting. Section 342 provides that
the funds expended for the performance of depot-level maintenance by
nonfederal government personnel located at the centers shall not be
counted when applying the 50-percent limitation if the personnel are
provided pursuant to a public-private partnership. This exclusion only
applies to depot maintenance funding for fiscal years 2002 through
2005, although DOD is still required to report the exempted funds
separately in the 50-50 reports. On January 10, 2002, OSD issued an
addendum to the 50-50 guidance for implementing the partnering
exclusion and setting criteria for qualifying partnerships. Additional
clarification was issued on February 5, 2002.
This report is one in a series on the 50-50 requirement.[Footnote 12]
In prior years, we have reported on continuing data errors and
inconsistencies in reporting by the military departments and problems
in documenting and independently validating 50-50 data. We have
recommended increasing management attention to and emphasis on the 50-
50 reporting process, improving guidance in specific maintenance
categories, and using the service audit agencies to check the data and
procedures. Our prior reports also recognized the limitations of DOD‘s
financial systems, operations, and controls. Our audits of DOD‘s
financial management operations have routinely identified pervasive
weaknesses in financial systems, operations, and internal controls that
impede its ability to provide useful, reliable, and timely financial
information for day-to-day management and decision making.[Footnote 13]
To date, none of the military services or major DOD components has
passed the test of an independent financial audit. A continuing
inability to capture and report the full cost of its programs
represents one of the most significant impediments facing DOD.
Nonetheless, the data used to develop the 50-50 report are the only
data available and are accepted and used for DOD decision making and
for congressional oversight.
Summary of Data in DOD‘s 50-50 Reports:
Table 1 provides a consolidated summary of DOD‘s 2002 prior-years and
future-years reports to the Congress on public-and private-sector
workload allocations for depot maintenance. The amounts shown are DOD‘s
record of actual obligations incurred for depot maintenance work in
fiscal years 2000 and 2001 and projected obligations for fiscal years
2002-2006 based on the defense budget and service funding
baselines.[Footnote 14] The percentages show the relative allocations
between the public and private sectors and the exempted workloads.
Adding the private and private-exempted percentages together shows what
the private-sector amount would be reported as, absent the recent
legislation. The Army projects that it will exceed the 50-percent
limitation in fiscal year 2006, but the report to the Congress stated
that appropriate action will be taken to address this issue and to
ensure that the Army complies with the 50-50 requirement. The Navy
projects that its percentage of funds for private-sector work will be
relatively level. After issuing waivers for the past 2 years, the Air
Force projects that it will be under the 50-percent limitation
throughout this period.
Table 1: DOD Reported Depot Maintenance Workload Allocations:
Dollars in millions.
Army:
Public; Prior fiscal year: 2000: $1,362; Prior fiscal year: 2001:
$1,460; Future fiscal year: 2002: $1,532; Future fiscal year: 2003:
$1,854; Future fiscal year: 2004: $2,049; Future fiscal year: 2005:
$2,115; Future fiscal year: 2006: $2,223.
Prior fiscal year: 2000: 55.1%; Prior fiscal year: 2001: 54.8%; Future
fiscal year: 2002: 52.7%; Future fiscal year: 2003: 57.2%; Future
fiscal year: 2004: 53.7%; Future fiscal year: 2005: 53.5%; Future
fiscal year: 2006: 49.1%.
Private; Prior fiscal year: 2000: $1,108; Prior fiscal year: 2001:
$1,204; Future fiscal year: 2002: $1,285; Future fiscal year: 2003:
$1,297; Future fiscal year: 2004: $1,679; Future fiscal year: 2005:
$1,749; Future fiscal year: 2006: $2,307.
Prior fiscal year: 2000: 44.9%; Prior fiscal year: 2001: 45.2%; Future
fiscal year: 2002: 44.2%; Future fiscal year: 2003: 40.0%; Future
fiscal year: 2004: 44.0%; Future fiscal year: 2005: 44.3%; Future
fiscal year: 2006: 50.9%.
Private exempted; Prior fiscal year: 2000: [A]; Prior fiscal year:
2001: [A]; Future fiscal year: 2002: $89; Future fiscal year: 2003:
$90; Future fiscal year: 2004: $86; Future fiscal year: 2005: $89;
Future fiscal year: 2006: [A].
Prior fiscal year: 2000: [A]; Prior fiscal year: 2001: [A]; Future
fiscal year: 2002: 3.1%; Future fiscal year: 2003: 2.8%; Future
fiscal year: 2004: 2.2%; Future fiscal year: 2005: 2.2%; Future fiscal
years: 2006: [A].
Total; Prior fiscal year: 2000: $2,470; Prior fiscal year: 2001:
$2,664; Future fiscal year: 2002: $2,905; Future fiscal year:
2003: $3,241; Future fiscal year: 2004: $3,814; Future fiscal year:
2005: $3,953; Future fiscal year: 2006: $4,530.
Navy[B];
Public; Prior fiscal year: 2000: $4,292; Prior
fiscal year: 2001: $4,194; Future fiscal year: 2002: $4,701; Future
fiscal year: 2003: $4,856; Future fiscal year: 2004: $4,940; Future
fiscal year: 2005: $4,746; Future fiscal year: 2006: $5,295.
Prior fiscal year: 2000: 56.7%; Prior fiscal year: 2001: 54.4%; Future
fiscal year: 2002: 53.4%; Future fiscal year: 2003: 53.2%; Future
fiscal year: 2004: 53.8%; Future fiscal year: 2005: 51.7%; Future
fiscal year: 2006: 57.3%.
Private; Prior fiscal year: 2000: $3,274; Prior fiscal year: 2001:
$3,512; Future fiscal year: 2002: $4,075; Future fiscal year: 2003:
$4,237; Future fiscal year: 2004: $4,175; Future fiscal year: 2005:
$4,376; Future fiscal year: 2006: $3,945.
Prior fiscal year: 2000: 43.3%; Prior fiscal year: 2001: 45.6%;
Future fiscal year: 2002: 46.3%; Future fiscal year: 2003: 46.5%;
Future fiscal year: 2004: 45.5%; Future fiscal year: 2005: 47.6%;
Future fiscal year: 2006: 42.7%.
Private exempted; Prior fiscal year: 2000: [A]; Prior fiscal year:
2001: [A]; Future fiscal year: 2002: $30; Future fiscal years 2003:
$29; Future fiscal year: 2004: $59; Future fiscal year: 2005: $66;
Future fiscal year: 2006: [A].
Prior fiscal year: 2000: [A]; Prior fiscal year: 2001: [A]; Future
fiscal year: 2002: 0.3%; Future fiscal year: 2003: 0.3%; Future fiscal
years: 2004: 0.6%; Future fiscal year: 2005: 0.7%; Future fiscal
years: 2006: [A].
Total; Prior fiscal year: 2000: $7,566; Prior fiscal year: 2001:
$7,706; Future fiscal year: 2002: $8,807; Future fiscal year: 2003:
$9,122; Future fiscal year: 2004: $9,174; Future fiscal year: 2005:
$9,188; Future fiscal year: 2006: $9,240.
Air Force;
Public; Prior fiscal year: 2000: $3,000; Prior fiscal year: 2001:
$3,289; Future fiscal year: 2002: $4,117; Future fiscal year: 2003:
$4,261; Future fiscal year: 2004: $4,386; Future fiscal year: 2005:
$4,485; Future fiscal year: 2006: $4,557.
Prior fiscal year: 2000: 48.5%; Prior fiscal year: 2001: 48.1%; ;
Future fiscal year: 2002: 53.3%; Future fiscal year: 2003: 53.5%;
Future fiscal year: 2004: 53.9%; Future fiscal year: 2005: 54.2%;
Future fiscal year: 2006: 53.7%.
Private; Prior fiscal year: 2000: $3,181; Prior fiscal year: 2001:
$3,551; Future fiscal year: 2002: $3,599; Future fiscal year: 2003:
$3,686; Future fiscal year: 2004: $3,734; Future fiscal year: 2005:
$3,774; Future fiscal year: 2006: $3,935.
Prior fiscal year: 2000: 51.5%; Prior fiscal year: 2001: 51.9%; Future
fiscal year: 2002: 46.6%; Future fiscal year: 2003: 46.3%; Future
fiscal year: 2004: 45.9%; Future fiscal year: 2005: 45.6%; Future
fiscal year: 2006: 46.3%.
Private exempted; Prior fiscal year: 2000: [A]; Prior fiscal year:
2001: [A]; Future fiscal year: 2002: $14; Future fiscal year: 2003:
$16; Future fiscal year: 2004: $16; Future fiscal year: 2005: $16;
Future fiscal year: 2006: [A].
Prior fiscal year: 2000: [A]; Prior fiscal year: 2001: [A]; Future
fiscal year: 2002: 0.2%; Future fiscal year: 2003: 0.2%; Future fiscal
years: 2004: 0.2%; Future fiscal year: 2005: 0.2%; Future fiscal
years: 2006: [A].
Total; Prior fiscal year: 2000: $6,181; Prior fiscal year: 2001:
$6,840; Future fiscal year: 2002: $7,729; Future fiscal year: 2003:
$7,962; Future fiscal year: 2004: $8,136; Future fiscal year: 2005:
$8,275; Future fiscal year: 2006: $8,491.
[A] Under section 342 of the National Defense Authorization Act for
Fiscal Year 2002 (P.L. 107-107), contract funds for qualified public-
private partnerships are excluded from the calculation of
privateworkload percentages for fiscal years 2002-2005, but must be
reported separately.
[B] Marine Corps data are reported as part of the Navy total. The 50-
percent limitation on contracting in 10 U.S.C. 2466 applies to each
military department.
Source: DOD‘s ’50-50 Reports,“ dated Feb. 4 and Apr. 12, 2002.
[End of table]
Weaknesses in Data Preclude Determinations of Compliance in Prior-
Years Report:
DOD‘s prior-years report for fiscal years 2000 and 2001 showed the
Departments of the Army and Navy to be below the 50-percent funding
limitation on private-sector workloads and the Air Force to be above it
(see table 1). However, recurring weaknesses in DOD‘s data gathering
and reporting processes prevented us from determining with precision
whether the services had complied with the 50-50 requirement. We
identified significant errors and omissions in 50-50 data, such as the
Army mistakenly reporting funds for some workloads in millions rather
than thousands of dollars and the Navy not reporting depot maintenance
on a missile program and a ship defensive system.
Army:
We could not determine with precision whether the Army was in
compliance with the 50-50 requirement for fiscal years 2000 and 2001.
This is in contrast to last year, when we found relatively few errors
in the Army‘s data and reported that its reporting process was
generally sound and adequately implemented. We concluded in that report
that the Army met the 50-50 requirement for 1999 and 2000. However,
this year we found a significant number of errors in the Army‘s data
and do not have sufficient confidence in the reporting process to
conclude that the Army met the 50-50 requirement for 2000 and 2001. In
this year‘s review, we identified errors and revised the Army‘s 50-50
report by a total of $328 million in fiscal year 2000 and $499 million
in fiscal year 2001.[Footnote 15] In contrast, last year‘s review
identified errors totaling $53 million for fiscal year 2000 and only
$4 million for fiscal year 1999. These results indicate a trend that
undermines our confidence in the Army‘s data and reporting process. We
acknowledge that our revision of the Army‘s private-sector workload
percentages for 2000 and 2001 are approximately the same as the revised
percentages we calculated last year for 1999 and 2000. Nonetheless, due
to the significant number and dollar value of errors in the Army‘s data
and the trend we describe above, we do not have sufficient confidence
in the reporting process to conclude that the Army met the 50-50
requirement for 2000 and 2001.
Table 2 summarizes the errors and omissions we identified during this
year‘s review and the resulting impacts on the public-and private-
sector allocations. Correcting for the problems we found would increase
the private-sector percentages by 2 percent and 1.6 percent for fiscal
years 2000 and 2001, respectively.
Table 2: GAO Changes to Army Prior-Years Report:
Dollars in millions.
Public workload dollars reported; Prior fiscal year: 2000: $1,361.5;
Prior fiscal year: 2001: $1,460.4.
Percentage reported; Prior fiscal year: 2000: 55.1%;
Prior fiscal year: 2001: 54.8%.
Transcription errors; Prior fiscal year: 2000: ($168.3);
Prior fiscal year: 2001: ($113.2).
Reported other command‘s funds; Prior fiscal year: 2000: ($5.5);
Prior fiscal year: 2001: ($5.9).
Outdated data; Prior fiscal year: 2000: ($10.1);
Prior fiscal year: 2001: ($117.6).
Repairs at nondepot locations; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: $27.3.
Upgrades and rebuilds; Prior fiscal year: 2000: $1.6;
Prior fiscal year: 2001: $3.8.
Revised public workload; Prior fiscal year: 2000: $1,179.2;
Prior fiscal year: 2001: $1,254.8.
Revised percentage; Prior fiscal year: 2000: 53.1%;
Prior fiscal year: 2001: 53.2%.
Private workload dollars reported; Prior fiscal year: 2000: $1,108.0;
Prior fiscal year: 2001: $1,203.8.
Percentage reported; Prior fiscal year: 2000: 44.9%;
Prior fiscal year: 2001: 45.2%.
Transcription errors; Prior fiscal year: 2000: ($37.0);
Prior fiscal year: 2001: ($95.3).
Reported other command‘s funds; Prior fiscal year: 2000: ($66.4);
Prior fiscal year: 2001: ($69.7).
Outdated data; Prior fiscal year: 2000: $30.3;
Prior fiscal year: 2001: $10.8.
Repairs at nondepot locations; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: $51.3.
Upgrades and rebuilds; Prior fiscal year: 2000: $8.3;
Prior fiscal year: 2001: $4.3.
Revised private workload; Prior fiscal year: 2000: $1,043.2;
Prior fiscal year: 2001: $1,105.2.
Revised percentage; Prior fiscal year: 2000: 46.9%;
Prior fiscal year: 2001: 46.8%.
Note: Dollar amounts in parenthesis are negative.
Source: GAO analysis of DOD data.
[End of table]
* Transcription errors. As a result of transcription errors in
compiling the Army‘s prior-years report, depot maintenance funds for
two major commands were reported in the millions rather than thousands
of dollars, greatly overstating both public and private workloads by a
total of $414 million for 2000 and 2001--an 8 percent overstatement.
The overstatement is greater for the public sector.
* Other command‘s funds. The Army‘s report incorrectly included funds
that were to be reported by the U.S. Special Operations Command. Both
public and private workloads were overstated, but more so on the
latter. OSD‘s guidance specifies that each military service should
report its appropriated funds for support of special operations and
that the U.S. Special Operations Command should report depot
maintenance funded by its defensewide appropriation. The U.S. Special
Operations Command properly reported these funds.
* Outdated data. Several errors involved data used in the prior-years
report that was subsequently changed. One command initially used
outdated budget estimates to report its depot maintenance funding,
later updating the information to reflect actual recorded obligations
for the year. The data were not revised in time to be incorporated in
the Army‘s report. Another command‘s submission was not adjusted to
correct for an error identified by the Army Audit Agency.
* Nondepot locations. Two commands did not report depot maintenance
workloads associated with the Army‘s ongoing efforts to consolidate
maintenance activities. This understated private-sector funds by
$51.3 million and public-sector funds by $27.3 million. Officials at
these commands said it was now the responsibility of a third command to
report those funds, but an official from that command replied that it
was not yet ready to assume reporting responsibilities.
* Upgrades and rebuilds. We identified several other errors with
relatively small impacts on the 50-50 allocations: an unreported
vehicle upgrade effort, whose program officials were unaware of the 50-
50 reporting requirement, and two programs that reported old
information.
Navy:
We also could not determine precisely whether the Navy complied with
the 50-50 requirement. The net effect of the errors and inconsistencies
we identified would add more than 4 percent to the private-sector share
in both 2000 and 2001. Table 3 shows our adjustments to the Navy‘s
reported data and impacts on public-private sector allocations. Note
that this table does not include the Marine Corps‘ data, which are
added to the Navy‘s data for reporting compliance with the 50-50
requirement. Our adjustments show the Navy-only data as exceeding the
50-percent private-sector limitation in 2001. Adding in the adjustments
we made to the Marine Corps‘ data (from table 4 following this section)
would also show the Department of the Navy as exceeding the 50-percent
limit. Although the lack of precision in the data and the limited
number of reporting programs we reviewed do not enable us to determine
compliance with the 50-50 requirement, we believe that the Navy is much
closer to the private-sector limitation than what was reported to the
Congress.
Table 3: GAO Changes to Navy Prior-Years Report:
Dollars in millions.
Public workload dollars reported; Prior fiscal year: 2000: $4,140.7;
Prior fiscal year: 2001: $3,999.8.
Percentage reported; Prior fiscal year: 2000: 56.2%;
Prior fiscal year: 2001: 53.6%.
Missile maintenance; Prior fiscal year: 2000: $50.0;
Prior fiscal year: 2001: $50.0.
Component repairs; Prior fiscal year: 2000: ($69.4);
Prior fiscal year: 2001: ($67.0).
Private workload reported as public; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: ($78.2).
Public workload reported as private; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: $0.9.
Depot-level software maintenance; Prior fiscal year: 2000: $29.8;
Prior fiscal year: 2001: $29.8.
Modifications installations; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: $23.0.
Revised public workload; Prior fiscal year: 2000: $4,151.1;
Prior fiscal year: 2001: $3,958.3.
Revised percentage; Prior fiscal year: 2000: 52.4%;
Prior fiscal year: 2001: 49.4%.
Private workload dollars reported; Prior fiscal year: 2000: $3,229.6;
Prior fiscal year: 2001: $3,459.6.
Percentage reported; Prior fiscal year: 2000: 43.8%;
Prior fiscal year: 2001: 46.4%.
Missile maintenance; Prior fiscal year: 2000: $150.0;
Prior fiscal year: 2001: $150.0.
Component repairs; Prior fiscal year: 2000: ($30.8);
Prior fiscal year: 2001: ($33.0).
Private workload reported as public; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: $78.2.
Public workload reported as private; Prior fiscal year: 2000: $0;
Prior fiscal year: 2001: ($0.9).
Depot-level software maintenance; Prior fiscal year: 2000: $12.2;
Prior fiscal year: 2001: $12.2.
Carrier overhaul and modifications; Prior fiscal year: 2000: $387.1;
Prior fiscal year: 2001: $356.7.
Surface ship inactivations; Prior fiscal year: 2000: $29.1;
Prior fiscal year: 2001: $53.6.
Duplicate reporting; Prior fiscal year: 2000: -;
Prior fiscal year: 2001: ($22.0).
Revised private workload; Prior fiscal year: 2000: $3,777.2;
Prior fiscal year: 2001: $4,054.4.
Revised percentage; Prior fiscal year: 2000: 47.6%;
Prior fiscal year: 2001: 50.6%.
Note: Dollar amounts in parenthesis are negative.
Source: GAO analysis of DOD data.
[End of table]
* Missile maintenance. One command did not report $200 million in
fiscal year 2001 funding for depot maintenance on the Trident missile-
-$150 million for contract work and $50 million for work accomplished
by government personnel. Navy officials did not initially consider the
component repairs and missile recertification efforts to be depot-level
maintenance, but they later agreed with us and stated that the funds
will be reported in the future. For illustrative purposes in table 3,
we assumed the same amounts were unreported for fiscal year 2000.
* Component repairs. Some repairs were counted twice in the 50-50 data,
once when a component was repaired and the second time when it was
installed into a weapon system or subsystem. Available data for fiscal
year 2001 indicate that the amounts double counted were about
$67 million and $33 million, respectively, for the public and private
sectors. To estimate the overstatements in fiscal year 2000, we assumed
the same magnitude of the double count relative to the total reported
workload that year. In commenting on a draft of this report, DOD
officials argued that the repair of components and use of those
components during system overhaul are separate and distinct
transactions, and both should be reported as consistent with title 10.
We continue to believe that reporting both distorts the actual amount
of depot work and that an adjustment should be made in these situations
to give a more accurate accounting for 50-50 purposes. This issue is
discussed further in the agency comments section of this report.
* Public and private workloads wrongly reported. Several commands
wrongly reported private-sector work as public sector or vice versa.
For example, a spreadsheet formula error caused one command to
misreport $29 million of contract work as public. Another command‘s
clerical error in compiling its submission had the same effect. An
official discovered the error when preparing for our visit. A more
rigorous up-front review and data validation effort might have
corrected these mistakes before their inclusion in the annual report to
the Congress.
* Software maintenance. Officials did not report $42 million of depot-
level software maintenance for the Aegis program. Government employees
accomplished $29.8 million of the total workload--about three-fourths-
-while the private sector did the remaining $12.2 million. We assumed
the same amount of work for both years.
* Modification installations. The Navy‘s report did not include
$23 million in funding for installing two major upgrades. Although they
had received 50-50 guidance, officials did not know that major upgrades
accomplished with procurement funds were defined as depot maintenance
for reporting purposes.
* Carrier overhauls. The Navy apparently underreported the costs of
depot maintenance work on nuclear aircraft carriers when that work was
done in the private sector in conjunction with the nuclear refueling of
the carriers. Section 2460 excludes from depot maintenance the nuclear
refueling of an aircraft carrier. However, nuclear refueling work
typically is done under contracts that include other, separately priced
work that does not appear to relate to nuclear refueling. For example,
one of those contracts called for work on the underwater part of the
carrier hull and on catapults and arresting gear, which are used for
launching and landing aircraft. Although this work often has been done
during the same time frame and under the same contract as nuclear
refueling work, in some cases, this work has been done separately from
the nuclear refueling. In this latter case, the nonnuclear work has
been counted as depot maintenance. Nonetheless, the Navy treats the
costs of all work under contracts that include nuclear refueling work
as subject to the exception for nuclear refueling of an aircraft
carrier and therefore reports none of the costs of those contracts as
depot maintenance. Navy program officials reviewed the contracts and
identified the funding for depot maintenance and repair workloads that
are not related to nuclear refueling. Table 3 shows the impact if
that portion of the maintenance work is counted for 50-50 purposes--
$387.1 million for fiscal year 2000 and $356.7 million for fiscal year
2001. We note that the guidance provided by the Navy for depot
maintenance reporting does not directly address this issue; rather, it
simply states that nuclear refueling of aircraft carriers is to be
excluded from depot maintenance reporting. This issue is further
discussed in the agency comments section of this report.
* Surface ship inactivations. Reporting funds for inactivation work on
nonnuclear surface ships would increase private-sector reporting by a
total of $82.7 million for the 2-year reporting period. As we reported
last year, the Navy inconsistently reports inactivation activities. Its
reports include the funding for public-sector nuclear ship
inactivations but do not include funding for nonnuclear ship
inactivations done by contractors. Navy officials said that the
relatively complex nuclear ship inactivations are considered to be
equivalent to depot maintenance, while the less complex nonnuclear ship
inactivations are not. The Navy‘s revised 50-50 guidance reflects this
concept, and officials reiterated this position in commenting on our
draft report. According to a Navy maintenance official, however,
inactivation workloads on nuclear and nonnuclear ships have much in
common, differing mainly in the removal and disposal of the nuclear
power plant. We continue to believe that inactivations of nonnuclear
ships should be included in the 50-50 reports because OSD‘s reporting
guidance does not make this distinction of relative complexity and
requires reporting of all depot maintenance, regardless of location and
source of funding. Also, DOD‘s financial management regulation includes
inactivation activities as depot maintenance.[Footnote 16]
* Duplicate reporting. One command mistakenly reported funds for
contract work that were properly reported by another command. This
mistake resulted in double counting $22 million.
Marine Corps:
The Marine Corps‘ data for the prior-years report--which is included
with the Navy‘s data for purposes of determining compliance with the
private-sector limitation--are incomplete and inaccurate. Compared to
the other military services‘ programs, the Marine Corps‘ depot
maintenance program is small, but the errors we found were substantial
relative to the size of the total workload. Table 4 summarizes the
collective errors we found and shows that, if corrected, the private-
sector allocations would decrease by 5 percent for fiscal year 2000 and
would increase by about 9 percent for fiscal year 2001.
Table 4: GAO Changes to Marine Corps Prior-Years Report:
Dollars in millions.
Public workload dollars reported; Prior fiscal year: 2000: $150.8;
Prior fiscal year: 2001: $194.3.
Percentage reported; Prior fiscal year: 2000: 77.2%;
Prior fiscal year: 2001: 78.8%.
Mathematical and recording errors; Prior fiscal year: 2000: $7.8;
Prior fiscal year: 2001: $16.9.
Systems Command programs; Prior fiscal year: 2000: $40.4;
Prior fiscal year: 2001: $2.2.
Contracting-out work; Prior fiscal year: 2000: ($1.0);
Prior fiscal year: 2001: ($1.6).
Revised public workload; Prior fiscal year: 2000: $198.0;
Prior fiscal year: 2001: $211.8.
Revised percentage; Prior fiscal year: 2000: 82.2%;
Prior fiscal year: 2001: 70.0%.
Private workload dollars reported; Prior fiscal year: 2000: $44.5;
Prior fiscal year: 2001: $52.2.
Percentage reported; Prior fiscal year: 2000: 22.8%;
Prior fiscal year: 2001: 21.2%.
Mathematical and recording errors; Prior fiscal year: 2000: ($7.8);
Prior fiscal year: 2001: ($17.2).
Systems Command programs; Prior fiscal year: 2000: $5.1;
Prior fiscal year: 2001: $54.3.
Contracting-out work; Prior fiscal year: 2000: $1.0;
Prior fiscal year: 2001: $1.6.
Revised private workload; Prior fiscal year: 2000: $42.8;
Prior fiscal year: 2001: $90.9.
Revised percentage; Prior fiscal year: 2000: 17.8%;
Prior fiscal year: 2001: 30.0%.
Note: Dollar amounts in parenthesis are negative.
Source: GAO analysis of DOD data.
[End of table]
* Mathematical and recording errors. The Marine Corps‘ prior-years
submission contained several mathematical and recording errors due to
inaccurately transcribing data from source documentation to the final
report. These errors resulted in categorizing work on numerous items as
contract work, even though the command providing the source data
clearly reported the work as performed by government depots. For the
2 years, funding for the public sector was understated by $24.7 million
and for the private sector overstated by $25 million.
* Systems Command programs. The Systems Command is responsible for
acquiring and upgrading weapon systems. Most of its seven product
groups and five program managers, which are independent from the
product groups, did not report procurement funds mainly used for
private sector depot-level-maintenance work. The Systems Command also
did not report depot maintenance for the largest program maintained in
the public sector. These errors understated private-sector funding by
$59 million and public-sector funding by $43 million for 2 years.
Failure to report the depot maintenance appears to have resulted from a
combination of factors, including misunderstanding as to what should be
reported, limited dissemination of the 50-50 reporting guidance, and an
ongoing reorganization in the Systems Command that further complicated
the situation.
* Contracting-out work. Officials at the two maintenance bases did not
correctly report a total of $2.6 million in fiscal year 2000 and 2001
workloads. These workloads were contracted out but were reported as
part of the public-sector amounts. This resulted in overstating public
work and understating private work by the same amounts.
Air Force:
The Air Force‘s data, as presented, reaffirmed last year‘s 50-50
reports to the Congress that the Air Force had exceeded the 50-percent
limitation on funds for private-sector work in both fiscal years 2000
and 2001. We identified errors in the data that add almost 3 percent to
the private sector‘s share in each year, thereby increasing the amount
by which the Air Force exceeded the limitation.
As authorized under 10 U.S.C. 2466, the Secretary of the Air Force
waived the 50-50 requirement for fiscal years 2000 and 2001, citing
reasons of national security. On January 11, 2000, the Air Force
notified the Congress that the Secretary was waiving the requirement
for fiscal year 2000. The Air Force‘s explanation for the waiver was
based primarily on the need to use temporary contracts to support
transitioning workloads from closing depots. We reported, however, that
those temporary contracts represented only a minor share of the
contract workload.[Footnote 17] We noted that the more significant
factors were recent Air Force policies and management actions that
substantially increased outsourcing and left little flexibility for the
Air Force to respond to emergencies and stay under the 50-percent
limitation. On July 31, 2001, the Air Force notified the Congress that
the Secretary was also waiving the requirement for fiscal year 2001.
The Air Force again cited the impacts from transitioning workloads,
contractor field teams, and temporary contract personnel performing
depot maintenance at a government facility. It also cited significant
increases in workload and cost on several existing depot maintenance
contracts.
Table 5 summarizes the errors we found and the impacts on the
public-private sector allocations.
Table 5: GAO Changes to Air Force Prior-Years Report:
Dollars in millions.
Public workload dollars reported; Prior fiscal year: 2000: $3,000.0;
Prior fiscal year: 2001: $3,288.5.
Percentage reported; Prior fiscal year: 2000: 48.5%;
Prior fiscal year: 2001: 48.1%.
Component repairs; Prior fiscal year: 2000: ($315.7);
Prior fiscal year: 2001: ($354.0).
General and administrative; Prior fiscal year: 2000: ($45.8);
Prior fiscal year: 2001: ($64.7).
Other; Prior fiscal year: 2000: $0; Prior fiscal year: 2001: $1.9.
Revised public workload; Prior fiscal year: 2000: $2,638.5;
Prior fiscal year: 2001: $2,871.7.
Revised percentage; Prior fiscal year: 2000: 46.1%;
Prior fiscal year: 2001: 45.3%.
Private workload dollars reported; Prior fiscal year: 2000: $3,181.3;
Prior fiscal year: 2001: $3,550.9.
Percentage reported; Prior fiscal year: 2000: 51.5%;
Prior fiscal year: 2001: 51.9%.
Component repairs; Prior fiscal year: 2000: ($156.7);
Prior fiscal year: 2001: ($175.0).
General and administrative; Prior fiscal year: 2000: $45.8;
Prior fiscal year: 2001: $64.7.
Modification installations; Prior fiscal year: 2000: $16.8;
Prior fiscal year: 2001: $15.8.
Support contracts; Prior fiscal year: 2000: ($5.8);
Prior fiscal year: 2001: $5.6.
Contractor augmentees; Prior fiscal year: 2000: $5.4;
Prior fiscal year: 2001: $5.2.
Other; Prior fiscal year: 2000: $0; Prior
fiscal year: 2001: ($4.0).
Revised private workload; Prior fiscal year: 2000: $3,086.8;
Prior fiscal year: 2001: $3,463.2.
Revised percentage; Prior fiscal year: 2000: 53.9%;
Prior fiscal year: 2001: 54.7%.
Note: Dollar amounts in parenthesis are negative.
Source: GAO analysis of DOD data.
[End of table]
* Component repairs. Our review of Air Force workloads determined that
funding for some component repairs was counted twice in 50-50 data,
once when the item was repaired and the second time when it was
installed into a weapon system or major subsystem during its overhaul.
According to fiscal year 2001 data, the duplicate reporting for the Air
Force was about $354 million and $175 million for the public and
private sectors, respectively. We calculated the estimated amounts for
fiscal year 2000 by assuming the same magnitude of the double count
relative to the total workloads financed through the working capital
fund. As discussed in the earlier section on the Navy, DOD did not
agree with our adjustments for components when they are installed in
systems; the agency comments section includes a fuller discussion of
this issue.
* General and administrative. As in past years, Air Force officials
continue to adjust the 50-50 data for the salaries and overhead
expenses of government employees administering depot maintenance
contracts funded through the working capital fund. Officials subtract
these amounts (for example, $64.7 million in fiscal year 2001) from the
private-sector funding--where they are accounted for within the working
capital fund--and add them to the public-sector funding for 50-50
reporting. Air Force officials told us that they believe these costs
should be reported as part of the public sector since government
employees incur them. However, consistent with our prior assessments,
we believe that it is appropriate to count these general and
administrative costs for managing depot maintenance contracts as part
of the private-sector costs of doing business. Although this type of
cost is not specifically addressed, OSD‘s 50-50 guidance requires that
the costs for all factors of production--labor, material, parts,
indirect, and overhead--associated with a particular repair workload
should be counted in the sector accomplishing the actual maintenance.
Accordingly, in table 5 we reversed the Air Force adjustments to again
report these funds in the private-sector amounts. We note that this may
not be an issue much longer if the Air Force implements its plan to
remove contract depot maintenance from the working capital fund by
2004.
* Modification installations. We identified numerous modification
installation projects performed by contractors that were not reported
or were reported incorrectly in the Air Force‘s 50-50 report.
Correcting for these would add a total of $32.6 million to private-
sector funding for the 2 years. Installations are funded and reported
in several different ways, which complicates reporting. Also, officials
recognize that the data sources used are not always complete and up-to-
date.
* Support contracts. We identified several errors in reported funding
for interim and contractor logistics support contracts. Funding for one
contract was reported according to the year of appropriation rather
than the year of obligation, as prescribed by guidance. Another
workload had been reported twice in the 50-50 data, once as funded by
direct appropriation and once as financed through the working capital
account. We also identified software depot maintenance costs that had
not been reported on trainer programs.
* Contractor augmentees. We identified some augmentees working on
engines at one depot that were not included in the 50-50 report. The
underreporting totaled $10.6 million for the 2 years. Augmentees are
contractor personnel working temporarily at a government facility to
accomplish work originally planned for the public sector. We have noted
the underreporting of augmentees in prior reviews.
* Other. We identified several other relatively small errors in the 50-
50 data for fiscal year 2001, including public-sector workload that was
reported as private sector, a transcription error, and an uncorrected
error found by Air Force auditors.
Future-Year Projections Are Not Reasonable and Not Very Useful:
The projections of the Army, the Navy, and the Air Force in DOD‘s 50-50
report for fiscal years 2002 through 2006 are not reasonable estimates
of the future allocations of funding for public-and private-sector
workloads. The future-year projections have constantly changed,
particularly for years beyond the budget year. We also noted that they
are based, in part, on incorrect data, questionable assumptions, and
some inconsistencies with existing budgets and management plans. With
so many errors and frequent changes, the future-years data may be
misleading and not very useful to congressional and DOD decision
makers, particularly the further estimates are in the future. While we
have identified these shortcomings in the past, the problems continue.
Future-Year Estimates Are Not Reasonable:
Future-year estimates are not reasonable because they represent budget
and planning data that change over time, incorporate the same errors
found in prior-year data, and also have other problems. The budget and
planning data used to project the share of depot maintenance work to be
performed in the public and private sectors in the future are
estimates. At best, they provide only rough estimates of future funding
allocations and these estimates change over time. We analyzed the
services‘ past projections of the mix of their depot maintenance work
1, 2, 3, and 4 years in the future and found that predictability
declined as time moved out into the future. For example, compared to
the future-years report submitted to the Congress last year, the Army
reported substantially more workload in total and increased private-
sector percentages this year. This year‘s projections for the
allocation of depot maintenance work to the private sector increased
about 1.5 percent over last year‘s estimates for both fiscal years 2002
and 2003, and increased 6.5 percent and 7.8 percent over last year‘s
estimates of the percentage of private-sector Army maintenance work in
fiscal years 2004 and 2005, respectively. We saw similar patterns in
the Navy‘s and Air Force‘s projections of the future workload mix.
Again, changes in reporting from prior years were more pronounced as
time into the future increased. In the Navy‘s case, between the report
issued in 2001 and the report issued in 2002, the Navy‘s projected mix
for fiscal year 2002 changed only about 1.7 percent from last year‘s
estimate, but the mix for fiscal year 2005 varied by 5.5 percent from
last year‘s estimate. Given the closeness of the services to the
percentage limitation on funding for private-sector work, a change in
outyear estimates of 5 percent over a year suggests the instability of
this information could greatly limit its value to decision makers as a
predictor of the actual balance of workload in some future year.
The services made many of the same errors in their future-year
projections as they made in the prior-years report and made other
mistakes as well. Regarding the repeat of errors, we found the
following in the future-years data:
* The Army‘s data had errors due to clerical mistakes, unreported
programs, and uncertain reporting responsibility for workloads
associated with the national maintenance program. The net effect of
these errors would add about 1 percent to the private-sector
allocations during each year of the reporting period.
* The Navy‘s data did not include the Trident missile work and Aegis
software maintenance, understating private-sector funding an estimated
$162 million per year and understating public-sector funding about
$80 million per year. In addition, depot maintenance work on nuclear
aircraft carriers and inactivation of nonnuclear ships were not
reported and component repairs were double counted. The net effect of
all the errors we found would add from 3½ to 4 percent to the private-
sector allocations annually, moving the Navy very close to the limit,
if not over.
* The Marine Corps‘ data did not include millions of dollars in planned
work for both the public and private sectors that was not reported for
numerous acquisition programs managed by the Systems Command and
programs that were in the source-of-repair process. We estimate that
the net effect of this error would more than double the private
sector‘s percentage share of the Marine Corps‘ maintenance work over
the 5-year reporting period.
* The Air Force‘s data did not include private-sector funding for
modification installations and contract-cost growth totaling about
$336 million for the reporting period. Other problems noted included
double counting of component repairs, inappropriate adjustment for
general and administrative expenses, and unreported contractor
augmentees. The double-counted reparables would significantly reduce
both the public-and private workloads while the other errors would
increase the private-sector work. For the 5-year reporting period taken
as a whole, the net effect from these adjustments would add 2.5 percent
to the private-sector share, with varying but similar amounts added
each year.
We also identified additional errors in the future-years report not
found in the prior-years report, particularly with the amounts
considered exempt from the section 2466 percentage limitation as a
result of recent legislation. The Navy overstated the funds it excluded
because officials misapplied the new guidance concerning public-private
partnerships. For example, under that guidance, workload must be
performed by private industry or other entity outside of DOD at a
Center for Industrial and Technical Excellence in order to be
considered exempt from the 50-percent limitation. The Navy, however,
exempted the cost of contractor-provided material to its naval air
depot partner, even though government personnel were responsible for
performing the maintenance workload. Under the circumstances, since the
workload was not performed by private industry or other entity outside
of DOD, it does not appear that this situation qualified for the
exemption. Correcting for the error increases the private-sector
funding and percentage share by a small amount.
The Air Force understated exempted private-sector workloads by a total
of $206 million over the 4 years specified by the amended statute. In
the 50-50 report, officials excluded only part of the budgeted funding
for a software maintenance workload accomplished by a contractor at a
public depot. It appears that the entire workload should have been
excluded. Correcting for the error decreases the private-sector funding
and percentage share by a small amount. Officials said the excluded
provision was passed in the midst of the reporting cycle and that there
were questions about implementing guidance and uncertainties as to the
application of this new requirement.
Future-Years Data Are Not Very Useful:
The uncertainty and instability of budget estimates combined with the
errors and omissions we found result in a future-years report that is
not very useful to congressional and DOD decision makers. As previously
discussed, the further into the future the estimate is, the more errors
and assumptions are made in the projection, and the less likely the
data will be useful as a predictor. For example, in 2001, we reported
that while the Army future-years‘ workload allocations showed an
increasing public-sector share, after adjusting the reported numbers to
correct for errors and omissions, the net effect was an increase in the
private-sector share of work.[Footnote 18] We also reported that the
Marine Corps‘ future-year data did not accurately reflect the planned
decrease in total revenues, the impact of new systems going to the
private sector for support, and the anticipated decrease in the public
depot workforce.
The future-years report issued in 2002 also included some potentially
misleading information. For example, after 2 years of waiving the
50-percent limitation on private-sector work, the Air Force now
projects that it will not exceed the ceiling in any of the next 5
years. Our analysis of the backup support for the Air Force‘s data
indicates this assessment is likely to change and the service will
continue to be challenged to comply with the 50-50 requirement. First,
the conditions leading to the need for waivers in fiscal years 2000 and
2001--policies and management actions to increase outsourcing--have not
materially changed. Also, as discussed previously, our review of
selected data identified errors and omissions that would collectively
increase the private-sector share each year, placing additional
pressure on the Air Force as it seeks to manage within the 50-percent
limitation.
Additionally, the Air Force‘s expectations about future compliance are
based not on performing more work in the public depots, but rather on
projections of big price increases for public-sector work already being
performed. The assumptions about workload execution, business plans,
and budgets that would need to occur for this to happen are already
changing. For example, the Air Force‘s projections assume that
100 percent of the programmed public-sector work will be performed.
However, in 7 of the last 8 years, actual production hours accomplished
by Air Force depots were less than estimated in budgets--by as much as
9 percent less. Further, Air Force officials told us that large price
increases generally cause customers to order less work than planned,
since there is a limited depot maintenance budget to work with. They
also noted that ’must-pay“ bills created by contractual arrangements
for high priority systems such as the C-17 and F-117 are increasing and
tying up repair budget resources. Finally, the biggest factor in the
projected public-sector price increases is the result of parts
increases, which are also likely to have an effect on the prices of
repairs accomplished in the private sector.
DOD officials agreed that the planning and budget data available for
making future projections beyond the budget year are not very useful as
a predictor of the balance of future workloads between the public and
private sectors. They also noted that when the services are within a
few percentage points of the 50-50 ceiling, as they are now, the
accuracy of the conclusions drawn from the unreliable future
projections do not provide a very good basis for forecasting the
future. Some suggested eliminating the future-years report and
combining information in the prior-years report with estimated funding
for the current year in which DOD is operating and the budget year,
which is 1 year beyond the current year.
Opportunities Exist to Improve 50-50 Reporting:
Notwithstanding the reporting problems discussed in previous sections,
opportunities still exist to improve the 50-50 process and results.
Improving the quality and accuracy of data can make the reports more
useful to the Congress in exercising its oversight role and more useful
to DOD as a management tool. In addition to helping maintain compliance
with the 50-50 requirement, such data can be used by DOD officials in
determining whether to support a new weapon system or major upgrade in
the public or private sector and in evaluating the impacts of depot
policies and practices.
Compared to prior years, service efforts to improve 50-50 data
collection and reporting for this most recent reporting period were not
as widely apparent. Our assessment this year is that the overall
quality of the services‘ efforts stayed about the same or declined
compared with last year‘s effort. We also identified three unresolved
systemic problem areas that complicate reporting and distort data, and
which could be improved by the services.
Improvements Minimal This Year:
In prior years we noted incremental improvements by DOD in the 50-50
reporting process and results. But our overall assessment this year is
that quality of reporting--in terms of accuracy, procedures, and
supporting documentation--has stayed about the same or has declined, as
shown in table 6. Individually, the Army and Marine Corps‘ efforts were
of lesser quality, the Air Force stayed about the same, and the Navy
improved its management process, although we found more errors and
inconsistencies in the Navy‘s data this year than last. OSD and each
service did improve guidance somewhat to incorporate the findings and
recommendations in our 2001 report;[Footnote 19] but the services‘
priority and overall emphasis from top management on the 50-50
reporting requirement seem to be waning. The Navy and the Marine Corps
did not use their audit services to validate data; the Army and the Air
Force did to good effect, but we note that the Air Force is considering
reducing audit service efforts next year.
Table 6: Reporting Quality Compared to Last Year:
Service: Army; Accuracy: Declined; Procedures: Declined;
Documentation: Declined.
Service: Navy; Accuracy: Declined; Procedures: Improved;
Documentation: About the same.
Service: Marine Corps; Accuracy: Declined; Procedures: Declined;
Documentation: Declined.
Service: Air Force; Accuracy: About the same; Procedures: About the
same; Documentation: Declined.
Source: GAO analysis of service reporting processes, management
controls, and data.
[End of table]
Army:
Overall, we found the Army‘s errors were more numerous and more
significant than those found in previous 50-50 reports. Some errors can
be attributed to reorganizations or changeover in personnel and the
resulting loss of institutional knowledge about 50-50 reporting
processes and procedures. While a variance analysis likely would have
spotlighted the most significant error--the mistaken reporting of depot
funding for two commands in millions, rather than thousands of dollars,
Army officials did not conduct even a simple check to compare the
reporting commands‘ data in the current report with that in last year‘s
report. Although Army Audit Agency auditors found and corrected a
number of errors in the initial submissions of 50-50 data by various
Army commands, the auditors did not catch this error because these two
relatively small commands were not included in the scope of the audit.
Navy:
While the Navy has taken steps to improve its reporting process, we
found a higher error percentage in the Navy‘s 50-50 reports this year
than we have found in previous years. The Navy improved its guidance to
focus on areas we had cited previously as needing improvement and the
50-50 office selectively reviewed more submissions this year to check
accuracy and documentation. Nonetheless, our review identified
substantial errors and inconsistencies in the Navy‘s data. Further,
although we have previously recommended audit service review of 50-50
data, the Navy again did not ask for an independent review by the Naval
Audit Service or the Navy Inspector General. Consequently, very little
of the Navy‘s data were validated through an extensive third-party
review.
The benefit of independent review is illustrated by the Philadelphia
supply office‘s use of its command evaluation office to improve the
quality of its submission. The reviewer detected and corrected a
computation error that overstated maintenance work. Also, upon
reviewing the errors and omissions that we identified in the 50-50
data, Atlantic Fleet officials said they are considering asking their
Inspector General to review current and subsequent submissions.
According to these officials, all of the errors we found would likely
have been detected and corrected had it undergone a third-party review.
Marine Corps:
The Marine Corps‘ data collection and validation processes were very
inadequate, and it appears that little priority and management
attention was accorded the 50-50 reporting process. Officials did not
disseminate the guidance to all potential reporting offices or follow
up to ensure that offices understood data reporting responsibilities.
Most weapon system and support system managers were unfamiliar with the
guidance and 50-50 reporting requirements. Several organizations that
should have reported did not report at all and various transcription
errors and omissions would likely have been caught with even limited
management oversight and account reconciliation.
Internal checks and balances were also inadequate to ensure that all
appropriate organizations reported or that the reported data were
accurate and complete. Little data validation was accomplished at any
level in the reporting chain and few attempts were made to ensure
compliance with OSD, Navy, and Marine Corps guidance. For example, the
largest Marine Corps reporting component did not have a focal point for
checking information before forwarding it to the central 50-50 office
compiling the overall report. This situation was made even more
difficult because of the Systems Command‘s reorganization.
Finally, the Marine Corps did not perform an internal or external audit
of the 50-50 reporting, and documentation was inadequate. A 1999 Naval
Audit Service ’quick look“ identified several weaknesses with the
reporting process. While the guidance was subsequently improved, it
appears that other corrective actions were not taken. We found that an
audit trail was not adequately maintained to support the collection and
aggregation of data, making data review and verification difficult.
Worksheets to support the numbers reported in the future-years report
were not maintained.
Air Force:
After several years of steady improvement, the Air Force 50-50 data
collection process plateaued this year in terms of quality. The
management process and controls were very similar to last year‘s. Air
Force auditors and we identified about the same level of problems as
last year and continued to find that the records to document data
collection processes, data sources, and estimating methods were not
always adequately maintained, particularly for acquisition programs.
As before, the Air Force held a planning meeting of major reporting
offices to discuss this year‘s taskings and problem areas that had been
previously identified. The most notable addition to guidance resulted
from a recommendation we made last year regarding modifying budget
estimates in the future-years report to better reflect changes in
plans. Past reviews noted that the Air Force projections did not
accurately reflect historical program execution rates and expected
changes in workload from source-of-repair decisions for new and
upgraded weapon systems. Execution data and source-of-repair
information indicated that the future contract workload was expected to
increase the private-sector share significantly. Accordingly, we
recommended last year that guidance be expanded and clarified to allow
for revising budgetary estimates to better reflect known and
anticipated changes to workloads, workforce, priorities, and
performance execution rates. Such actions would achieve more reasonable
projections of depot requirements where historical data indicate that
budget and programming data are unrealistic. In implementing this
recommendation, Air Force officials in the future-years report added
$314.7 million for new contract workload estimates in fiscal year 2002
and an additional amount of $224.5 million to the private-sector
amounts for the remaining 4 years of the reporting period. Officials
added less than $4 million for new public workload estimates in the
same time period.
The Air Force Audit Agency again reviewed portions of the Air Force‘s
data, making substantial corrections to the data submission. It did not
review quite as much workload as in prior years, but the error rate was
comparable with recent years. Air Force officials said that the audit
effort might be reduced or eliminated in the future to focus on other
areas. Clearly, the participation of the audit agency has improved the
quality of the Air Force‘s data.
Unresolved Systemic Problems Complicate Reporting and Distort Data:
While we have been reviewing DOD‘s 50-50 reports for 4 years, we
continue to find unresolved systemic problems complicating 50-50
reporting and distorting the data. These problems include the double
counting of funding for repair of components incorporated into an
overhaul of a larger system or subsystem, the underreporting of depot
work performed at nondepot locations, and the underreporting of repair
work managed by system program offices.
Double Counting Repair Costs:
As discussed earlier in this report, the process the Air Force and the
Navy use to calculate their 50-50 data can result in some component
repair costs being reported twice: once when the item is repaired and a
second time when the repaired item is installed into a piece of
equipment at a contractor or military depot repair activity. For
example, when a service has a radio circuit card repaired, the service
includes the repair cost in its 50-50 report. Later, when that circuit
card is installed into a radio as part of a depot-level overhaul of the
weapon system, the service again reports the cost of the circuit card
in its 50-50 report as part of the material costs for the overhaul.
While a lack of data precludes precisely quantifying the impact of
duplicate 50-50 repair-cost reporting, indications are that the
magnitude may be material in the Air Force and less so in the Navy.
Correcting for the double count would reduce the public-sector amounts
more than the private sector‘s in both services, thereby increasing the
private-sector share of the total funds reported. We did not review
this issue in the Army, but OSD officials stated that the same
condition would likely exist in the Army.
The double counting of repair costs is particularly problematic since
the Congress in 1996 asked DOD to report the depot maintenance mix in
direct labor hours as well as in dollars. DOD officials, however,
stated that they did not collect direct labor hour data from
contractors and could not provide a reasonable labor hour comparison
estimate. Since that time, DOD has reported 50-50 data in total
dollars, which include labor and material costs. We have previously
reported[Footnote 20] that including the cost of material in the 50-50
reporting is a complicating factor and that it is difficult to
accurately associate all material costs to assure that public-and
private-sector activities are being measured based on comparable data.
In our 1996 report, we stated that reporting workload in direct labor
hours could address the material cost issue and provide a more accurate
picture of the workload mix. This could potentially be useful also in
rectifying the double counting of reparables since the double count
occurs when the reparable cost is included as a material cost in the
overhaul of the system or subsystem.
In its comments on our draft report, DOD stated that it was appropriate
to count both the initial repair and subsequent cost of material since
both were separate transactions. We think an adjustment is warranted in
these situations to more accurately reflect work. The agency comments
section later in this report discusses this issue further.
Underreporting of Work at Nondepot Locations:
Since the early 1990s, the distinction between depot-level maintenance
and lower levels of maintenance at field and regional locations has
become increasingly vague as the services move depot workloads to
operating locations, redefine required levels of maintenance,
consolidate maintenance organizations, and adopt new business
philosophies. We have previously reported how these actions have
complicated the 50-50 process and resulted in underreporting depot
maintenance in the Army and the Navy.[Footnote 21] Our 50-50 review
this year focused on the Air Force and found similar circumstances.
The Air Force appears to be underreporting public-and private-sector
depot maintenance workloads by an undetermined amount because its 50-50
reporting focuses primarily on those workloads and maintenance
locations managed and funded by the Air Force Materiel Command,
including operations financed through the working capital fund. It does
not capture depot-type work being performed at field locations that are
funded directly by the training and combat commands. Our work shows
that this command-centric approach may be too limiting because we
identified depot maintenance-like tasks being carried out in a wide
variety of locales outside the Materiel Command‘s purview that have not
been reported in the 50-50 data. These locales include operating bases,
regional maintenance sites, contract field teams,[Footnote 22] and Air
National Guard maintenance shops.
Historically, the Air Force organized the depot maintenance mission to
encompass only Materiel Command organizations and operations financed
through the working capital fund and acquisition program office
appropriations. As a consequence, only Materiel Command organizations
receive 50-50 guidance and are tasked to report depot maintenance work.
This does not appear to be sufficient due to changes in maintenance
philosophy and approach and a clarification of the definition of depot
maintenance in title 10. Depot maintenance is defined there as material
maintenance or repair requiring the overhaul, upgrading, or rebuilding
of parts, assemblies, or subassemblies, and the testing and reclamation
of equipment as necessary, regardless of the source of funds for the
maintenance or repair or the location at which the maintenance or
repair is performed.
Examples of maintenance activities we identified that appear to include
depot maintenance follow:
* Ninety percent of B-1B engine overhauls is not reported in 50-50
data. It is accomplished at Dyess and McConnell Air Force Bases by both
contract and government personnel and is funded by direct
appropriations of the Air Combat Command and the Air National Guard.
Ten percent of the overhauls, accomplished at the Materiel Command‘s
Oklahoma City Air Logistics Center and financed through the working
capital fund, is reported in the 50-50 data. Officials at McConnell
said the overhauls accomplished there and at Dyess--and the repair
capabilities at the bases--are essentially the same as that at the air
logistics center. The fiscal year 2001 work at McConnell was valued at
$30 million for materials used; personnel salaries and other costs were
not charged to the Air Force customer. Dyess did not provide a cost
estimate, but officials said the workload is comparable to McConnell‘s.
* McConnell also opened a B-1B avionics repair facility in 1998 that,
although classified as an intermediate facility, frequently does depot-
type repairs and has an agreement with the Materiel Command‘s Warner
Robins Air Logistics Center to handle its depot maintenance overflow.
Officials said the facility has depot-type repair equipment and that
its mechanics are trained in depot repairs. None of the $27.2 million
in work done at the avionics facility in fiscal year 2001 was reported
as depot maintenance for 50-50 purposes. However, much of the work is
equivalent in complexity and skills involved to the B-1B avionics work
done at Warner-Robins Air Logistics Center, which is reported in the
50-50 data. For example, the McConnell facility repaired transmitters
for the depot, which did not have enough capacity to do the entire
transmitter workload. The Air Force plans to shut down the McConnell
avionics facility in 2003.
* A contract field team at Randolph Air Force Base accomplishes
maintenance work on trainer aircraft, about $10 million annually.
Funds for this workload are reported in the 50-50 data because the work
is financed through the working capital fund managed by the Materiel
Command. Other contract field teams accomplish maintenance work on the
same trainer aircraft at regional locations, including engine work at
Laughlin Air Force Base. This work, about $8 million per year at
Laughlin and an unknown amount at other locations, is funded and
managed by the Air Education and Training Command, but is not reported
in the 50-50 data. Much of the work at these sites is considered to be
intermediate level tasks, but officials say the workload and the site
capabilities in terms of skilled technicians and plant equipment are
very similar to that of the public and private depots.
* The location and reporting status of C-5 engine overhauls and
modifications have changed over the years because of changed
maintenance philosophy and base closures. The workloads are now
accomplished at a contractor facility and at two Air Mobility Command
regional repair centers located on Dover and Travis Air Force Bases.
The work at the contractor facility is counted as depot maintenance in
the 50-50 reports, but the work at the regional sites--valued at about
$5.5 million per year and performed by contract and government
personnel--is not reported. Several years ago, the Air Force revised
its maintenance philosophy and moved some work from these regional
sites to the Materiel Command‘s San Antonio Air Logistics Center, where
it was reported as depot maintenance. With the 1999 closure of San
Antonio, some of the depot work returned to the regional sites and was
not reported as depot maintenance. Now, officials plan to decrease the
work at one or more of the regional sites and send it to the privatized
facility located on the site of the closed San Antonio depot, where it
will again be reported for 50-50 purposes. Air Mobility Command
maintenance officials said the capabilities at the regional sites to do
complete engine overhauls and major modifications are equivalent to
those at public depots and major contractor facilities.
* In November 2001, the Air Force Materiel Command and the Air National
Guard signed a memorandum of agreement for the Guard to assist in
overflow depot maintenance work from the air logistics centers. The
Guard had already been doing this at several sites, including McConnell
as previously discussed. Also, Guard personnel at the Rickenbacker
Airport overhaul small gas turbine engines and auxiliary power units
for several Air Force customers. During its 8 years of operation, they
charged about $26 million in material and transportation costs to their
customers, but they did not charge for personnel costs, which are paid
by the Guard. None of this work was reported for 50-50 purposes.
According to Guard officials, they are doing depot and depot-type work
at several other locations and are looking to expand opportunities in
this area. Under the agreement, funding for these workloads is to be
reported in the future as depot maintenance to the extent the Guard
substitutes or performs overflow work for the public depots. It is
unclear, however, whether all costs associated with the Guard‘s
performance of future depot maintenance work will be captured. For
comparability with repairs done at depots and contractor facilities,
labor costs would have to be included, lest the depot workload be
understated.
It is unclear what portion of the work in the situations above and at
other nondepot activities should be reported as depot maintenance. The
previous examples illustrate the transitory nature of reporting as
locations and funding sources change. We recognize that much of the
work is properly categorized as intermediate level maintenance work and
that there is a difference between the depot and intermediate levels in
terms of the skills involved, the equipment used, and the repair
specifications involved. However, it appears that government and
contractor personnel at several non-Materiel Command and nonworking
capital funded locations are performing work that is very similar if
not equivalent to depot maintenance and that the Air Force is not
considering this at all in the 50-50 mix. These locations and their
operating commands do not receive the 50-50 data call instructions,
which would at least offer an opportunity to determine its
applicability. In determining not to report certain activities in the
50-50 data, the Air Force is in effect adopting a de facto policy of
using location, command affiliation, and funding source as bases for
decisions, whereas OSD and Air Force guidance clearly states that depot
maintenance should be reported regardless of the location or funding
source used.
We also note that the Air Force has prescribed procedures for making
changes in the level of maintenance for individual workloads and for
obtaining approval to do depot maintenance at nondepot locations. From
our discussions with Air Force and Air National Guard personnel, it
appears that the formal process is not always followed and that there
is no tracking mechanism to determine how often such actions occur,
where they occur, and for which items. According to officials, an
informal system is used more often to get approvals for depot repairs
over the telephone from Materiel Command officials. The command focal
point told us that they are evaluating improvements to the formal
system.
In comments on our draft report, DOD stated that Air Force policy
provides that depot level repair can only be done at approved
locations. In providing oral comments, Air Force officials said they
had reviewed some of the situations we cited and believed the work to
be intermediate-level maintenance. They agreed with the intent of our
recommendation, which was to determine the potential and extent of
depot-level maintenance accomplished at nondepot locations, and stated
that they would further evaluate this issue to ensure the next 50-50
data call was complete and comprehensive.
In previous years we have reported on similar matters concerning the
Army and the Navy. With regard to the Army, we reported[Footnote 23]
about the proliferation of its depot maintenance work at nondepot
locations and its efforts to consolidate workloads and craft a national
maintenance program. We determined that the Army did not sufficiently
identify the extent of depot maintenance-type work performed at
nondepot facilities and was unable to develop accurate and consistent
estimates of its depot maintenance-type work. This occurred partly
because its reporting criteria were not consistent with the definition
in 10 U.S.C. 2460. Since then the Army has made efforts to identify all
depot maintenance performed in field-level activities. Although some
progress has been made, a recent Army-sponsored study of the
proliferation of depot maintenance-type activities concluded that not
all depot maintenance being performed in specialized repair activities
is being reported. Army officials said the study determined that the
definition of depot maintenance has not been institutionalized and much
depot maintenance data are not being reported. For example, several
major commands did not report component repair, refurbishment, and
other overhaul programs. This would suggest that the Army requires
additional emphasis in the oversight and control of its maintenance
activities and processes. When depot work is performed at field
locations without the rigorous standards maintained at a depot, the
Army cannot assure that its equipment will be as reliable as it needs
to be to respond to future contingencies.
We have also previously reported[Footnote 24] on the Navy‘s
regionalization of maintenance activities, which is consolidating depot
and intermediate levels of maintenance at common locations. After
attempting to develop a reporting system at Pearl Harbor--the first
regional site--that would isolate depot from intermediate tasks, the
Navy revised its 50-50 guidance for this year to require that all
maintenance at consolidated locations should be reported as depot
maintenance. Accordingly, the Navy‘s prior-years report includes work
at Pearl Harbor that is classified as intermediate-level maintenance
and that was not reported previously for 50-50 purposes. The Navy‘s
future-years report includes similar actions at other regional sites as
they come on board.
Underreporting of Depot Repair Funding Provided by System Program
Offices:
As previously discussed, some weapon system program offices in each of
the military departments did not report depot maintenance funding for
weapon systems that should have been reported. These errors are
difficult to identify, because it is more difficult to identify
something that is not reported at all than to find errors in data that
are reported. Nonreporting system office officials told us that they
did not think they were required to report depot repair costs they
managed under temporary or long-term logistics support contracts. Both
OSD and the military departments have developed guidance that specifies
that depot maintenance and repair costs should be reported, regardless
of the source of the funds or the location of the work. However, we
reported[Footnote 25] in the past that system program offices sometimes
do not recognize or respond to logistics guidance regarding 50-50
reporting requirements or adequately consider impacts on the 50-percent
limitation during the decision-making process when determining whether
a new system or upgrade should be supported in the private or the
public sector. For example, the failure to recognize the impact on 50-
50 requirements led to the assignment of the repair work for so many
new weapon systems to the private sector that the Air Force has for 2
years exceeded the 50-percent funding limitation on work performed in
the private sector.
Conclusions:
Although we cannot tell with precision whether the military departments
met the 50-50 requirement, the prior-years report does provide a rough
approximation of the allocation of depot maintenance workload between
the public and private sectors. This information is useful to the
Congress in its oversight role and to DOD officials in deciding support
strategies for new systems and in evaluating depot policies and
practices. On the other hand, the future-years report is not a very
useful tool for informing the Congress and DOD officials about likely
future compliance because it does not provide a reasonable estimate of
projected public-private sector workload balances. This occurs because
of the changing nature of projections, a combination of errors and
omissions, less emphasis by the services on the collection and
validation of future-years data, and the use of ever-changing budgetary
estimates to construct projections. Furthermore, such budget
projections and assumptions get more difficult to make accurately as
the distance into the future increases because of their very
speculative and volatile nature. We believe that these problems are
likely to continue because of the uncertainty associated with
estimating depot maintenance workload allocations between the public
and private sectors beyond 2 years. The cost-effectiveness of
continuing to collect and aggregate data for 4 years in the future is
questionable given the problems we have identified with the estimates.
With such estimating problems added to reports of the Air Force being
above the ceiling and the Army and the Navy approaching the ceiling,
all military departments will be challenged to managing their depot
maintenance programs to remain within the 50-percent limitation.
Furthermore, after several years of incremental improvements, the
overall quality and direction of DOD‘s reporting seem to have
plateaued. In addition, service plans to not use third-party checks or
to decrease the involvement of auditors without identifying controls or
plans to substitute for the loss of independent review are a concern.
Acting on these plans is likely to result in less accurate and
comprehensive 50-50 reports. While the 50-50 guidance has improved over
the years, several areas of guidance still do not adequately address a
number of problems, including (1) exemption for partnering workloads,
(2) double counting of component repair costs, (3) depot workloads
accomplished at nondepot locations, and (4) proper reporting by system
program offices. In addition, the complexity of the 50-50 process and
changes in how maintenance is managed will present continued challenges
to the services in making significant improvements to their collection,
documentation, and reporting processes.
Matter For Congressional Consideration:
Because of the continuing limitations in the value of outyear
information, inherent difficulties in projecting future requirements
and capabilities and the volatility of such projections, the Congress
should consider altering the 50-50 reporting requirement in 10 U.S.C.
2466 to recognize the current shortcomings in the future-years
reporting. Possible alternatives are to (1) eliminate the requirement
for the future-years report; (2) modify the future-years report to
include only the current year and the next budget year (the 2 future-
year projections that are generally more realistic); or (3) combine the
prior-and future-years reports to include the prior, current, and the
next budget years. The revised 50-50 report could also be required to
include an explanation of actions each military department is taking to
comply, or remain in compliance, with the 50-percent ceiling.
Recommendations for Executive Action:
To improve the 50-50 data collection, validation, and reporting
processes, we recommend that the Secretary of Defense require:
* the Assistant Deputy Under Secretary of Defense for Maintenance
Policy, Programs, and Resources, in conjunction with the secretaries of
the military departments, clarify guidance on (1) the exemption of
partnering workloads from the 50-50 requirement and (2) the treatment
of component repair costs to prevent the double counting in 50-50
reports when the repaired items are used in higher-level assemblies;
* the Secretary of the Navy to (1) direct the use of the Naval Audit
Service to review and validate 50-50 processes and data during next
year‘s and subsequent reporting cycles and (2) revise its guidance in
order to report nonnuclear-related depot maintenance and modification
work accomplished on aircraft carriers in conjunction with nuclear
refueling overhauls as discussed in this report;
* the Secretary of the Army to (1) initiate steps to improve management
and controls of the 50-50 data collection and documentation process and
(2) finalize and issue guidance concerning the reporting of depot
maintenance at nondepot locations;
* the Secretary of the Air Force to determine the extent and nature of
depot maintenance and depot-like tasks accomplished at nondepot
locations (including field and regional maintenance centers) and apart
from Air Force Materiel Command reporting responsibility and, pending
the outcome of that determination, revise Air Force 50-50 guidance and
management processes for tasking, collecting, and validating data in
order to ensure more complete and consistent reporting of 50-50 data;
and:
* the Commandant of the Marine Corps to (1) initiate steps to improve
management and controls of the 50-50 data collection and documentation
process and (2) ensure that 50-50 reporting guidance is disseminated
and understood by all potential reporting organizations.
Agency Comments and Our Evaluation:
DOD provided official oral comments on a draft of this report. DOD
agreed with most of our recommendations and cited a number of
corrective actions it plans to take. However, DOD disagreed with parts
of two recommendations; these are discussed below. DOD also provided
technical comments, which we incorporated in the report as appropriate.
DOD disagreed with the part of our first recommendation addressing the
double counting of repair costs of components used in higher-level
assemblies. We stated that reporting both the cost of the original
repair of a component as well as the cost of that repaired component
when it is installed in a system or subsystem during an overhaul
distorts the aggregation of workload data for determining the mix of
work between the public and private sectors. DOD officials said that
the repairs of components and the use of those items during system
overhaul are two distinct and separate transactions. According to DOD,
both transactions are depot-level maintenance events that must be
reported based on the provisions of title 10.
We continue to believe that reporting both actions distorts the
reporting because the cost of the repair of some items can be counted
twice. For example, an item can be counted when it is repaired and a
second time as a material cost of installing the item in a system
overhaul. DOD does not disagree that its treatment of component repair
costs results in counting those costs twice in some cases.
Nevertheless, according to DOD, it is consistent with congressional
intent to report both as funds made available for depot maintenance. In
our view, there is no reason to conclude that the intent of title 10
requires double counting component repair costs. A more reasonable
reading is that DOD can implement those provisions so as to allow for
adjustments in reporting to more accurately reflect the cost of depot
work. We continue to believe that DOD can clarify its guidance to
prevent double counting of repairs when the repaired items are used in
higher-level assemblies.
DOD also disagreed with the part of the recommendation made to the Navy
concerning the reporting of nuclear carrier overhauls. DOD officials
noted that for a variety of practical reasons, a Navy contract for the
nuclear refueling of an aircraft carrier typically includes not only
the removal and replacement of the nuclear reactor core but also
necessary repair and modernization efforts for the ship. They stated
that to date the Navy has treated all costs associated with the nuclear
refueling of an aircraft carrier, including all such non-nuclear repair
and modernization efforts, as subject to the exclusion. Therefore, the
Navy has reported none of the funds made available for aircraft carrier
nuclear refueling overhauls as depot-level maintenance and repair.
We continue to believe that the cost of depot repairs and upgrades not
directly associated with nuclear refueling tasks during a refueling
availability should be reported. Many maintenance tasks performed at
the same time as a nuclear refueling are not related to refueling
activities, and when these tasks are performed during other types of
availabilities, they are reported as depot maintenance. Further, the
funding associated with these other tasks is clearly identifiable in
the carrier overhaul contract and in financial records. In our view,
without some nexus between that work and nuclear refueling, it would be
inconsistent with the plain language of section 2460 to exempt that
work from reporting simply because it was performed during a nuclear
refueling availability.
We are sending copies of this report to the Secretary of Defense, the
Secretary of the Army, the Secretary of the Navy, the Commandant of
the Marine Corps, the Secretary of the Air Force, the Director of
Office of Management and Budget, and interested congressional
committees. We will also make copies available to others upon request.
In addition, the report will be available at no charge on the GAO Web
site at http://www.gao.gov.
Appendix I contains our review scope and methodology and appendix II
lists key contributors. Please call me on (202) 512-8412 or Julia
Denman on (202) 512-4290 if you or your staff have any questions
concerning this report.
David R. Warren, Director
Defense Capabilities and Management:
Signed by David R. Warren
[End of section]
Appendix I: Scope and Methodology:
To determine whether the military departments met the 50-50 requirement
in the prior-years report, we analyzed each service‘s procedures and
internal management controls for collecting and reporting depot
maintenance information for purposes of responding to the section 2466
requirement. We reviewed supporting details (summary records,
accounting reports, budget submissions, and contract documents) at
departmental headquarters, major commands, and selected maintenance
activities. We compared processes to determine consistency and
compliance with legislative provisions, Office of the Secretary of
Defense (OSD) guidance, and military service instructions. We selected
certain programs and maintenance activities for a more detailed
review.[Footnote 26] We particularly examined reporting categories that
Department of Defense (DOD) personnel and we had identified as problem
areas in current and past reviews; these areas included
interserviced[Footnote 27] workloads, contractor logistics support,
warranties, software maintenance, and depot maintenance at nondepot
locations. We evaluated processes for collecting and aggregating data
to ensure accurate and complete reporting and to identify errors,
omissions, and inconsistencies. We coordinated our work, shared
information, and obtained results of the Army and Air Force service
audit agencies‘ data validation efforts.
To determine whether the future-year projections were based on accurate
data, valid assumptions, and existing plans and represented reasonable
estimates, we followed the same general approach and methodology used
to review the prior-years report. Although the future-years report is a
budget-based projection of obligations, the definitions, guidance,
organization, and processes used to report future data are much the
same as for the prior-years report of actual obligations. We discussed
with DOD officials the main differences between the two processes and
the manner in which the data were derived from budgets and planning
requirements and key assumptions made in the outyear data.
For reviews of both 50-50 reports, we performed certain checks and
tests, including variance analyses, to judge the consistency of this
information with data from prior years and with the future-years
budgeting and programming data used in DOD‘s budget submissions and
reports to the Congress. For example, we compared each service‘s 50-50
data reported in February and April 2002 for the period 2000 through
2005 with data reported for these same years in the 50-50 reports
submitted in 2001. We found repeated and significant changes, even
though the estimates were prepared only about 1 year apart. This
comparison helped us identify large transcription errors and unreported
costs that the Army had made, which resulted in the data reported to
the Congress erroneously indicating an increase in the percentage of
depot maintenance work assigned to the public sector. This comparison
also revealed a greater increase in the Navy‘s shift to more private-
sector workload than had been projected last year.
Variance analysis showed that congressional and DOD decision makers
were given quite a different view of the public-private sector workload
mix than that presented just last year.
Several factors concerning data validity and completeness were
considered in our methodology and approach to reviewing the prior-and
future-years reports. One key factor is the continuing deficiencies we
have noted in DOD‘s financial systems and reports that preclude a clean
opinion on its financial statements and that result in limited accuracy
of budget and cost information. Another factor is that documenting
depot maintenance workload allocations between the public and private
sectors is becoming more complicated by the consolidation of
maintenance activities and the performance of depot-level maintenance
at field locations. These complicating factors (1) make it more
difficult to identify work that meets the statutory definition of depot
maintenance, (2) complicate workload reporting, and (3) result in
underreporting of depot maintenance for both the public and private
sectors. In addition, changes in business philosophy and approach can
make analysis more difficult. For example, many new contracts are
performance-based and may not discretely identify maintenance
activities or account separately for their costs. This can result in
under-and overreporting of depot maintenance work performed in the
private sector. It also forces more reliance on the contractor for
providing information needed in 50-50 reporting and may result in DOD
officials having to use more assumptions and estimating methodologies
in lieu of contract data.
To review DOD‘s efforts to improve the accuracy and completeness of
reports, we discussed with officials managing and coordinating the
reporting process their efforts to address known problem areas and
respond to recommendations by the audit agencies and us. We compared
this year‘s sets of instructions with last year‘s to identify changes
and additions. We reviewed efforts to identify reporting sources and to
distribute guidance and taskings. We asked primary data collectors to
provide their opinions on how well efforts were managed and data
verified and to identify ’pain points“ and ideas they had to improve
reporting. We reviewed prior recommendations and service audit agency
findings to determine whether known problem areas were being addressed
and resolved.
We interviewed officials, examined documents, and obtained data at OSD,
Army, Navy, Marine Corps, and Air Force Headquarters in the Washington,
D.C., area; Army Materiel Command in Alexandria, Virginia; Naval Sea
Systems Command in Washington, D.C.; Naval Air Systems Command in
Patuxent River, Maryland; Marine Corps Materiel Command in Albany,
Georgia; Air Force Materiel Command in Dayton, Ohio; Army Audit Agency
in Washington, D.C.; Air Force Audit Agency in Dayton, Ohio; several
public depots managed by the military departments‘ materiel commands;
and selected operating bases. We conducted our review from February to
June 2002 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Julia C. Denman (202) 512-4290:
Acknowledgments:
In addition to the name above, John Van Schaik, Bruce Fairbairn, Chris
DePerro, Jane Hunt, Larry Junek, Robert Malpass, Andy Marek, Frederick
Naas, John Strong, and Bobby Worrell made key contributions to this
report.
[End of section]
Related GAO Products:
Depot Maintenance: Management Attention Needed to Further
Improve Workload Allocation Data. GAO-02-95. Washington, D.C.:
November 9, 2001.
Defense Logistics: Actions Needed to Overcome Capability Gaps in the
Public Depot System. GAO-02-105. Washington, D.C.: October 12, 2001.
Defense Maintenance: Sustaining Readiness Support Capabilities
Requires a Comprehensive Plan. GAO-01-533T. Washington, D.C.: March 23,
2001.
Depot Maintenance: Key Financial Issues for Consolidations at Pearl
Harbor and Elsewhere Are Still Unresolved. GAO-01-19. Washington, D.C.:
January 22, 2001.
Depot Maintenance: Action Needed to Avoid Exceeding Ceiling on Contract
Workloads. GAO/NSIAD-00-193. Washington, D.C.: August 24, 2000.
Depot Maintenance: Air Force Waiver to 10 U.S.C. 2466. GAO/
NSIAD-00-152R. Washington, D.C.: May 22, 2000.
Depot Maintenance: Air Force Faces Challenges in Managing to 50-50
Ceiling. GAO/T-NSIAD-00-112. Washington, D.C.: March 3, 2000.
Depot Maintenance: Future Year Estimates of Public and Private
Workloads Are Likely to Change. GAO/NSIAD-00-69. Washington, D.C.:
March 1, 2000.
Depot Maintenance: Army Report Provides Incomplete Assessment of Depot-
type Capabilities. GAO/NSIAD-00-20. Washington, D.C.: October 15,
1999.
Depot Maintenance: Status of the Navy‘s Pearl Harbor Project. GAO/
NSIAD-99-199. Washington, D.C.: September 10, 1999.
Depot Maintenance: Workload Allocation Reporting Improved, but
Lingering Problems Remain. GAO/NSIAD-99-154. Washington, D.C.:
July 13, 1999.
Navy Ship Maintenance: Allocation of Ship Maintenance Work in
the Norfolk, Virginia, Area. GAO/NSIAD-99-54. Washington, D.C.:
February 24, 1999.
Defense Depot Maintenance: Public and Private Sector Workload
Distribution Reporting Can Be Further Improved. GAO/NSIAD-98-175.
Washington, D.C.: July 23, 1998.
Defense Depot Maintenance: DOD Shifting More Workload for New Weapon
Systems to the Private Sector. GAO/NSIAD-98-8. Washington, D.C.: March
31, 1998.
Defense Depot Maintenance: Information on Public and Private
Sector Workload Allocations. GAO/NSIAD-98-41. Washington, D.C.:
January 20, 1998.
Defense Depot Maintenance: Uncertainties and Challenges DOD Faces
in Restructuring Its Depot Maintenance Program. GAO/T-NSIAD-97-112.
Washington, D.C.: May 1, 1997. Also GAO/T-NSIAD-97-111. Washington,
D.C.: March 18, 1997.
Defense Depot Maintenance: DOD‘s Policy Report Leaves Future Role
of Depot System Uncertain. GAO/NSIAD-96-165. Washington, D.C.: May 21,
1996.
Defense Depot Maintenance: More Comprehensive and Consistent Workload
Data Needed for Decisionmakers. GAO/NSIAD-96-166. Washington, D.C.: May
21, 1996.
Defense Depot Maintenance: Privatization and the Debate Over
the Public-Private Mix. GAO/T-NSIAD-96-148. Washington, D.C.: April
17, 1996. Also GAO/T-NSIAD-96-146. Washington, D.C.: April 16, 1996.
Depot Maintenance: Issues in Allocating Workload Between the Public and
Private Sectors. (GAO/T-NSIAD-94-161. Washington, D.C.: April 12,
1994).
FOOTNOTES
[1] Section 2466(b) was recently amended to permit only the Secretary
of Defense to waive the requirement. (Sec. 341, P.L. 107-107, Dec. 28,
2001). Previously, the secretary of a military department could waive
the requirement.
[2] Based on the congressional mandate regarding the DOD 50-50
requirement, this will be the fifth year that we have reported on the
prior-year numbers and the third year reporting on the future-year
numbers.
[3] The Secretary of the Air Force issued a national security waiver
for both years as provided by 10 U.S.C. 2466.
[4] The National Defense Authorization Act for Fiscal Year 2002 (P.L.
107-107, Dec. 28, 2001) amended 10 U.S.C. 2474 to exempt qualified
public-private partnerships from the 50-percent limitation for fiscal
years 2002-2005.
[5] These provisions were contained in the National Defense
Authorization Act of Fiscal Year 1998 (P.L. 105-85, Nov. 18, 1997).
[6] This provision was in the National Defense Authorization Act for
Fiscal Year 2000 (P.L. 106-65, Oct. 5, 1999).
[7] Interim contractor support is designed to be an interim support
arrangement in which a contractor provides depot maintenance (and
sometimes other logistics support) as part of the acquisition strategy
for new systems.
[8] Contractor logistics support is designed to be a lifetime support
concept in which a contractor provides most or all elements of
logistics support, including depot maintenance.
[9] Because of the difficulty of segregating installation costs for
safety modifications from costs for installing other modifications
(e.g., for improved performance), OSD‘s guidance specifies that all
modification installation costs be reported when an installation is
considered to be a depot-level service.
[10] Core competencies are depot-level maintenance capabilities to be
retained in public depots to meet defense strategic and contingency
plans and for which the military departments believe that DOD should be
a recognized leader in the national technology and industrial base.
[11] OSD‘s guidance defines a public-private partnership for depot
maintenance as an agreement between a public-sector depot maintenance
activity and one or more private industry or other entities to perform
work or utilize facilities and equipment. Such an arrangement includes
use of public facilities, equipment, and employees to perform work for
the private sector under certain defined circumstances; private-sector
use of public-sector equipment and facilities to perform work for the
public sector; and work-sharing agreements using both public-and
private-sector facilities and/or employees.
[12] See U.S. General Accounting Office, Depot Maintenance: Management
Attention Required to Further Improve Workload Allocation Data, GAO-02-
95 (Washington, D.C.: Nov. 9, 2001) and Depot Maintenance: Action
Needed to Avoid Ceiling on Contract Workloads, GAO/NSIAD-00-193
(Washington, D.C.: Aug. 24, 2000). Other related reports are listed at
the end of this report.
[13] See U.S. General Accounting Office, DOD Financial Management:
Integrated Approach, Transparency, and Incentives Are Keys to Effective
Reform, GAO-02-537T (Washington, D.C.: Mar. 20, 2002).
[14] Although 10 U.S.C. 2466 specifies reporting of funds expended in
the prior years and projected to be expended in the future years, DOD‘s
past and current 50-50 reports are based on obligation data. A DOD
official explained that obligation data are considered to be more
appropriate because of the statutory requirement to report funds made
available in a given fiscal year and because expenditure data may not
be completely recognized in the accounting records for a year or more
following the funds‘ obligation.
[15] These figures constitute the absolute value of all errors found,
in other words the summing of all errors whether positive or negative,
public or private.
[16] DOD Financial Management Regulation 7000.14-R, vol. 6, ch. 14
prescribes depot maintenance reporting requirements and includes
inactivation as a depot maintenance activity. It defines inactivation
as the servicing and preservation of an item before it is placed in
storage or in an inactive status.
[17] See U.S. General Accounting Office, Depot Maintenance: Air Force
Faces Challenges in Managing to 50-50 Ceiling, GAO/T-NSIAD-00-112
(Washington, D.C.: Mar. 3, 2000) and Depot Maintenance: Air Force
Waiver to 10 U.S.C. 2466, GAO/NSIAD-00-152R (Washington, D.C.: May 22,
2000).
[18] GAO-02-95.
[19] GAO-02-95.
[20] U.S. General Accounting Office, Defense Depot Maintenance: More
Comprehensive and Consistent Workload Data Needed for Decisionmakers,
GAO/NSIAD-96-166 (Washington, D.C.: May 21, 1996).
[21] GAO-02-95.
[22] Air Force regulations define a contract field team as contract
maintenance personnel accomplishing depot-level maintenance and
modification at military installations or on-site. The work involves
depot-level maintenance tasks and may include concurrent organizational
and intermediate level tasks. The contractor provides supervision,
personnel, and hand tools, and the government provides maintenance
equipment, supplies, and special tools. The Air Force 50-50 guidance
defines depot maintenance to include depot field teams, which can be
contract field teams or organic field teams of government workers
deployed to field locations. The Air Force manages several contracts
that the services use to order contract field team services.
[23] See U.S. General Accounting Office, Depot Maintenance: Army Report
Provides Incomplete Assessment of Depot-type Capabilities, GAO/NSIAD-
00-20 (Washington, D.C.: Oct. 15, 1999).
[24] See U.S. General Accounting Office, Depot Maintenance: Key
Financial Issues for Consolidations at Pearl Harbor and Elsewhere Are
Still Unresolved, GAO-01-19 (Washington, D.C.: Jan. 22, 2001).
[25] See GAO/NSIAD-00-193, GAO/T-NSIAD-00-112, and U.S. General
Accounting Office, Defense Depot Maintenance: DOD Shifting More
Workload for New Weapon Systems to the Private Sector, GAO/NSIAD-98-8
(Washington, D.C.: Mar. 31, 1998).
[26] We selected the programs reviewed based on size and importance,
leads obtained from internal auditors, and any previously identified
areas of concern. Given the nature of our sample, the results are not
projectible to the universe of depot maintenance activities. We also
did not audit the integrity of DOD‘s financial systems and accounting
data used to prepare the 50-50 reports.
[27] Interserviced workload is maintenance that one military service
performs on equipment owned and funded by another service.
GAO‘s Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO‘s Web site (www.gao.gov) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ’Today‘s Reports,“ on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select ’Subscribe to daily E-mail alert for newly
released products“ under the GAO Reports heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000
TDD: (202) 512-2537
Fax: (202) 512-6061
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800
U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
