Depot Maintenance
Public-Private Partnerships Have Increased, but Long-Term Growth and Results Are Uncertain Gao ID: GAO-03-423 April 10, 2003For several years, the Department of Defense (DOD) and the Congress have encouraged the defense logistics support community to pursue partnerships with the private sector to combine the best commercial processes and practices with DOD's extensive maintenance capabilities. In January 2002, DOD issued policy encouraging the use of public-private depot maintenance partnerships to improve the efficiency and viability of its depots. GAO reviewed these partnerships and assessed the extent that DOD is participating in these partnerships, the characteristics needed to achieve effective partnerships and where DOD is in its ability to measure success, and the management challenges to DOD's planned expansion of partnerships.
While the number of public-private partnerships that DOD is participating in has increased from 19 to 93 from fiscal year 1998 through fiscal year 2002, the existing partnerships represented only 2 percent of DOD's fiscal year 2002 $19 billion depot maintenance program. Even with the small amount of expenditures and workload associated with partnerships, some partnerships that GAO reviewed either improved some aspects of repair performance or showed potential for doing so. On the other hand, 19 partnerships have generated no work thus far. DOD and contractor officials have identified 14 characteristics that they believe over time will contribute to a partnership's success in achieving DOD's objective of improved depot efficiency and viability. However, DOD has a limited ability to measure the overall success of its partnering efforts because it has not yet developed measurable goals for the expected outcomes of the effort and the metrics that it has developed sometimes will not provide the data needed to fully assess the partnerships. Without initially establishing clear, measurable goals to define success in improving the efficiency and viability of its depots and metrics that provide the relevant data for the measurement, DOD has limited objective means to assess whether the partnerships are working as intended. Furthermore, DOD faces challenges in its efforts to expand its use of public-private partnerships. For example, opportunities available for DOD to expand its use of these partnerships may be limited by external factors that the services cannot replicate or create at will, such as one-time business opportunities. Also, while DOD is expecting private sector funding to support the establishment of capability for depot partnerships for new systems, the amount of private-sector investment to date is only $6.9 million, and the extent to which the private-sector will make additional investments is uncertain.
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-03-423, Depot Maintenance: Public-Private Partnerships Have Increased, but Long-Term Growth and Results Are Uncertain
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Report to the Subcommittee on Readiness, Committee on Armed Services,
House of Representatives:
April 2003:
DEPOT MAINTENANCE:
Public-Private Partnerships Have Increased, but Long-Term Growth and
Results Are Uncertain:
GAO-03-423:
GAO Highlights:
Highlights of GAO-03-423, a report to the Subcommittee on Readiness,
Committee on Armed Services, House of Representatives
Why GAO Did This Study:
For several years, the Department of Defense (DOD) and the Congress
have encouraged the defense logistics support community to pursue
partnerships with the private sector to combine the best commercial
processes and practices with DOD‘s extensive maintenance capabilities.
In January 2002, DOD issued policy encouraging the use of public-
private depot maintenance partnerships to improve the efficiency and
viability of its depots. GAO reviewed these partnerships and assessed
the extent that DOD is participating in these partnerships, the
characteristics needed to achieve effective partnerships and where DOD
is in its ability to measure success, and the management challenges to
DOD‘s planned expansion of partnerships.
What GAO Found:
While the number of public-private partnerships that DOD is
participating in has increased from 19 to 93 from fiscal year 1998
through fiscal year 2002, the existing partnerships represented only 2
percent of DOD‘s fiscal year 2002 $19 billion depot maintenance
program. Even with the small amount of expenditures and workload
associated with partnerships, some partnerships that GAO reviewed
either improved some aspects of repair performance or showed potential
for doing so. On the other hand, 19 partnerships have generated no work
thus far.
DOD and contractor officials have identified 14 characteristics that
they believe over time will contribute to a partnership‘s success in
achieving DOD‘s objective of improved depot efficiency and viability.
However, DOD has a limited ability to measure the overall success of
its partnering efforts because it has not yet developed measurable
goals for the expected outcomes of the effort and the metrics that it
has developed sometimes will not provide the data needed to fully
assess the partnerships. Without initially establishing clear,
measurable goals to define success in improving the efficiency and
viability of its depots and metrics that provide the relevant data for
the measurement, DOD has limited objective means to assess whether the
partnerships are working as intended.
Furthermore, DOD faces challenges in its efforts to expand its use of
public-private partnerships. For example, opportunities available for
DOD to expand its use of these partnerships may be limited by external
factors that the services cannot replicate or create at will, such as
one-time business opportunities. Also, while DOD is expecting private
sector funding to support the establishment of capability for depot
partnerships for new systems, the amount of private-sector investment
to date is only $6.9 million, and the extent to which the private-
sector will make additional investments is uncertain.
What GAO Recommends:
GAO recommends that DOD:
* establish overarching goals for expected outcomes from its partnering
initiative,
* refine current metrics for measuring partnership benefits, and
* require specific assessment and planning for new capability where
partnerships are expected for new systems.
DOD partially concurred but indicated that it did not plan to implement
these recommendations. Consequently, we are including matters for
congressional consideration that address our recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-423.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Barry W. Holman at (202) 512-8412 or
holmanb@gao.gov.
[End of section]
Letter:
Results in Brief:
Background:
Growing Number of Partnerships Involve a Relatively Small Portion of
Depot Workload:
Characteristics for Effective Partnerships Identified, but
DOD Is Limited in Its Ability to Measure Partnerships‘ Overall Success:
Several Factors Could Affect DOD‘s Planned Partnership
Expansion:
Conclusion:
Recommendations for Executive Action:
Matters for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix I: Scope and Methodology:
Appendix II: Depot Maintenance Public-Private Partnerships Reviewed
and Depots Visited:
Appendix III: Summary Data Regarding the Reasons Cited and Approaches
Used for the 90 Partnerships Reviewed:
Appendix IV: Examples of Partnerships That Are Achieving Positive
Results:
Appendix V: Fourteen Characteristics Identified by DOD and Contractor
Officials Needed to Achieve Effective Partnerships:
Appendix VI: Comments from the Department of Defense:
Appendix VII: GAO Staff Acknowledgments:
Table:
Table 1: Characteristics That Partnerships Need to Achieve Success
Figures:
Figure 1: Number of Partnerships by Individual Service in Fiscal Year
1998 and Fiscal Year 2002:
Figure 2: Percentage of Workload Performed under Partnerships in Fiscal
Year 2002 at 14 Depots That GAO Visited:
Figure 3: Reasons Cited for Entering Public-Private Partnerships:
Figure 4: Types of Partnerships:
Figure 5: Frequency of Depots‘ and Contractors‘ Performance of
Logistics
Functions:
Figure 6: Depot and Industry Partnership Consultations at Corpus
Christi
Army Depot:
Figure 7: F/A-18 Auxiliary Power Unit Being Repaired Under a
Partnership
Between the Naval Aviation Depot Cherry Point and Honeywell:
Figure 8: The Nuclear-Powered Aircraft Carrier USS Enterprise Entering
Norfolk Naval Shipyard:
Figure 9: Honeywell‘s M1 Tank Engine Recuperator Manufacturing Line at
the Anniston Army Depot:
Figure 10: Depot and Contractor Employees Repairing and Testing LANTIRN
System:
Figure 11: ICBM Global Positioning System Modification Showing
Developmental Configuration Module:
BRAC: base realignment and closure:
CVN: nuclear aircraft carrier:
DOD: Department of Defense:
ICBM: intercontinental ballistic missile:
JSTARS: Joint Surveillance Target Attack Radar System :
LANTIRN: Low-Altitude Navigation and Targeting Infrared for Night:
NBCRS: nuclear, biological, chemical reconnaissance :
OSD: Office of the Secretary of Defense:
PDM: programmed depot maintenance:
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Letter April 10, 2003:
The Honorable Joel Hefley
Chairman
The Honorable Solomon P. Ortiz
Ranking Minority Member
Subcommittee on Readiness
Committee on Armed Services
House of Representatives:
For the past several years, the Department of Defense (DOD) and the
Congress have encouraged the defense logistics support community to
pursue partnerships with the private sector. These public-private
partnerships are arrangements through which the combined resources,
risks, and rewards of a public agency and a private company are
intended to provide greater efficiency, better access to capital, and
improved compliance with a range of government regulations. In January
2002, DOD issued policy encouraging the use of such public-private
partnerships in order to combine the best commercial processes and
practices with DOD‘s extensive depot maintenance capabilities with the
objective of improving the efficiency and viability of DOD‘s depots.
DOD also expects these improvements to depot operations to ultimately
improve support for war fighters.
Your subcommittee has supported the use of public-private depot
maintenance partnerships with its support of enabling legislation and
interest in DOD‘s use of such partnerships. This report addresses
the following questions: (1) to what extent is DOD participating in
public-private partnerships for depot maintenance; (2) what are the
characteristics that need to be present to achieve effective
partnerships, and where is DOD in its ability to measure success; and
(3) what factors could affect DOD‘s planned expansion of public-private
partnerships?
As part of our work, we reviewed 90 of the 93 partnerships DOD
identified as ongoing during fiscal year 2002. We also visited 14 of
DOD‘s 20 major maintenance depots where these partnerships are ongoing.
A more complete discussion of our scope and methodology is included in
appendix I. A listing of the services‘ partnerships we reviewed with
relevant information about each is included in appendix II. We
conducted our review from February 2002 through February 2003 in
accordance with generally accepted government auditing standards.
Results in Brief:
DOD has engaged in a growing number of public-private partnerships
for depot maintenance, but to date, the number of such partnerships
involves a relatively small portion of DOD‘s depot workload.
Specifically, the number of such partnerships increased from 19
partnerships (13, Army; 3, Air Force; 2, Navy; and 1, Marine Corps) in
fiscal year 1998 to 93 partnerships for all services in fiscal year
2002.[Footnote 1] The Army still had the greatest number of ongoing
partnerships in fiscal year 2002--42, a 3-fold increase from the 13 it
had in 1998. In fiscal year 2002, the Navy had a total of 31 ongoing
partnerships--a 15-fold increase, the Air Force had 19 ongoing
partnerships--a 6-fold increase, and the Marine Corps still had 1
partnership. While the number of DOD‘s public-private partnerships for
depot maintenance has increased since 1998, these partnerships
represented only 2.2 percent of DOD‘s total depot maintenance program
expenditures in fiscal year 2002. The partnerships at the depots we
visited typically accounted for a small portion of each depot‘s total
workload--0.01 to 2.5 percent of the hours worked in fiscal year 2002-
-or generally did not increase the workload to be performed at the
depots. Nineteen--or about one fifth--of the 90 partnerships we
reviewed had generated no workload for the depots, although many were
expected to do so at some point. However, even with the small amount of
expenditures and workload associated with partnerships, some
partnerships provided promising results or good potential, such as
reduced repair time or better parts availability.
DOD and contractor officials have identified 14 characteristics that
they believe over time will contribute to a partnership‘s success in
achieving DOD‘s objective of improved depot efficiency and viability;
however, DOD has not developed a baseline and measurable goals for the
expected outcomes needed to measure the overall success of its
partnership initiative. Almost all of these officials cited long-term
commitment, shared vision and objectives, and the right metrics as key
elements for successful partnering. While the 14 characteristics are
not in place in all partnerships, many depot partnership managers
stated that they are working toward pursuing the characteristics in
their partnerships and that, over time partnerships should evolve to
include these characteristics. At the same time, the depot partnership
managers agreed on the importance of having the right metrics (a key
characteristic) in place early in the partnership to measure success.
However, DOD has a limited ability to measure the overall success of
its partnering efforts because it has not yet developed a baseline and
measurable goals for expected outcomes for the effort and because the
metrics that it has developed sometimes will not provide the data
needed to fully assess the partnerships.
While DOD plans to expand its use of public-private partnerships,
several factors could affect the department‘s expansion efforts. First,
opportunities available for DOD to expand its use of public-private
partnerships may be limited by various external factors that led to
partnering arrangements in the past but that the services cannot
necessarily replicate or create at will, such as one-time business
opportunities. Second, while DOD is expecting private-sector partners
to fund the establishment of capability to repair new or upgraded
systems at military depots, it is uncertain to what extent the private-
sector will make such investments. For example, the amount
of partnership-related private-sector investment in military depots
through fiscal year 2002 was $6.9 million, which, based on a commercial
sector benchmark for such investments, is only about 1 percent of the
$621 million investment needed by DOD to improve and maintain its depot
infrastructure in fiscal year 2002. Finally, much publicity has been
given to a recently considered DOD proposal to change provisions of
title 10, United States Code, that currently limit the department‘s
ability to outsource depot maintenance workloads. According to DOD and
depot officials, these title 10 provisions currently provide the key
impetus for the expansion of public-private partnerships.
We are making a number of recommendations to improve DOD‘s management,
direction, potential for success, and assessment of its public-private
partnerships.
In commenting on a draft of this report, DOD agreed with the report‘s
information, findings and conclusions, and partially concurred with the
report‘s recommendations; however, DOD‘s comments indicated that it
does not plan to implement the recommendations. Consequently, we are
including matters for congressional consideration that address the
report‘s recommendations. DOD‘s comments and our evaluation of them are
discussed in the agency comments section later in this report.
Background:
DOD spends about $19 billion annually on depot maintenance, which
includes repairing, rebuilding, and overhauling weapon systems such as
ships, tanks, and aircraft. DOD estimates that approximately 53 percent
of its fiscal year 2002 depot-level workload will be performed in DOD-
owned facilities, and that the remainder will be performed by the
private sector, mostly in private-sector facilities. DOD has 20 major
depots:[Footnote 2] 9 in the Navy (3 aviation depots, 4 shipyards, and
2 warfare centers), 5 in the Army, 4 in the Air Force (3 air logistics
centers and 1 aircraft storage center), and 2 in the Marine Corps. The
private sector operates numerous facilities where depot-level
maintenance is performed on military and private (or nonmilitary)
equipment and systems. Some of these facilities are manufacturing
facilities where maintenance work is also performed, while others are
used only for maintenance.
For many years, debate has occurred between the Congress and various
administrations over who should perform depot work and where it should
be performed. Central to this debate has been the interplay between
DOD‘s efforts to rely more on the private sector for depot maintenance
and title 10 provisions that (1) limit private-sector workloads to 50
percent of available funding in a fiscal year,[Footnote 3] (2) require
the government to maintain certain core capabilities in military
depots,[Footnote 4] and (3) require public-private competitions for
certain workloads.[Footnote 5] The public-private partnership concept
for improving government operations provides a cooperative approach for
resolving this debate.
The use of public-private partnerships to improve government operations
was recently endorsed in 2002 by the report of the congressionally
mandated Commercial Activities Panel chaired by the Comptroller General
of the United States.[Footnote 6] One sourcing principle adopted by the
panel related to the need to create incentives and processes to foster
high-performing, efficient, and effective organizations throughout the
federal government. Commentary surrounding that principle stated that:
This principle recognizes that historically it has primarily been when
a government entity goes through a public-private competition that the
government creates a ’most efficient organization“ (MEO). Since such
efforts can lead to significant savings and improved performance, they
should not be limited to public-private competitions. Instead, the
federal government needs to provide incentives for its employees, its
managers, and its contractors to constantly seek to improve the
economy, efficiency, and effectiveness of the delivery of government
services through a variety of means, including competition, public-
private partnerships, and enhanced worker-management cooperation.
In early 1998, we reviewed DOD‘s use of public-private depot
maintenance partnering arrangements and concluded that contractors had
become more interested in sharing repair and maintenance workloads with
depots and depots were willing to enter into partnering arrangements
with the private sector in an effort to reduce overhead costs and
retain core capabilities.[Footnote 7] We also reported that the Army
had 13 partnerships ongoing at four of its depots, the oldest of which
was initiated in fiscal year 1994. While we did not report any
partnerships for the Air Force, Navy, or Marine Corps at the time of
our review, by the end of 1998, the Air Force had three partnerships
ongoing, the Navy had two, and the Marine Corps had one.
Historically, DOD has used public-private partnering arrangements for
depot maintenance, such as work-share agreements and facility-use
partnerships, under various legal authorities--although these
arrangements generally were not referred to as ’partnerships.“
Partnering with the private sector to (1) help sustain core depot
maintenance capabilities, (2) use underutilized public facilities, and
(3) leverage private-sector investment in these military facilities is
a relatively new concept that the department is pursuing on the basis
of congressional direction under 10 USC 2474. The objectives of public-
private partnerships under section 2474 are to:
* maximize capacity use at depots,
* reduce or eliminate the depots‘ ownership costs in areas such as
operations and maintenance and environmental remediation,
* reduce the cost of products made or maintained at depots,
* leverage private-sector investments in plant and equipment and
promote commercial business ventures at depots, and:
* foster cooperation between the military and private industry.
In response to section 2474, DOD issued policy governing the formation
of public-private partnerships and incorporated the concept of these
partnerships into its current departmentwide logistics reengineering
initiative.
In January 2002, the Deputy Under Secretary of Defense (Logistics and
Materiel Readiness) issued a policy memorandum on public-private depot
maintenance partnerships. The memorandum outlined policy, provided a
definition and directed the services to pursue partnerships to
strengthen DOD‘s depot maintenance operations and, ultimately, to
improve support to war fighters. The DOD policy focuses on using
partnerships to improve the efficiency and viability of its depots. The
policy memorandum noted that partnering can contribute to more
effective DOD maintenance operations, to the introduction of innovative
processes and technologies, and to the economical sustainment of depot
capabilities. The department defines a public-private partnership as
’an agreement between an organic [military] depot maintenance activity
and one or more private industry or other entities to perform work or
utilize facilities and equipment.“ According to DOD policy, depot
maintenance public-private partnering arrangements generally include
(but are not restricted to) one or more of the following forms:
* Use of public-sector facilities, equipment, and employees to perform
work or produce goods for the private sector.
* Private-sector use of public-sector equipment and facilities to
perform work for the public sector.
* Work-share agreements, using both public-and private-sector
facilities and/or employees.
DOD included public-private partnerships in its June 2002 logistics
reengineering initiative[Footnote 8] to meet war fighters‘ sustainment
needs and operational requirements of the National Defense Strategy.
The initiative states that public-private partnerships should help
address the many challenges facing military depots, which include
facilities and equipment that have become severely degraded because of
limitations in funds for recapitalization and an aging workforce that
has shrunk by 51 percent in the past 10 years. The department‘s desired
goal, according to this initiative, is a dramatic increase in public-
private depot maintenance partnerships. The initiative reinforces the
department‘s effort to improve the efficiency and viability of its
depots, stating that partnerships will result in creating greater
private-sector investment in facilities and equipment, better facility
utilization, reduced costs of ownership, workforce integration, more
efficient business processes, greater credibility, and a more collegial
working relationship with the Congress.
DOD‘s public-private partnership policy is intended to help the
services implement the department‘s performance-based logistics
initiative for its weapon systems sustainment policy and still comply
with title 10 provisions constraining the outsourcing of depot
maintenance workload. The 2001 Quadrennial Defense Review mandated the
implementation of performance-based logistics in order to improve
readiness for major weapon systems and commodities. DOD‘s resulting
performance-based logistics initiative seeks to achieve these
improvements by using predetermined performance or readiness goals in
evaluating a weapon system‘s logistics support provider. While
performance-based logistics does not require the use of a contractor as
the logistics provider, according to DOD officials, all of the
performance-based arrangements thus far have used a contractor as the
logistics provider, and they expect that this trend will continue. DOD
officials anticipate that as the department implements more
performance-based logistics arrangements with contractors as
integrators, the contractors will have to partner with military depots
for the services to comply with title 10 requirements, thus increasing
the use of public-private partnering.
Growing Number of Partnerships Involve a Relatively Small Portion of
Depot Workload:
DOD‘s public-private partnerships for depot maintenance increased from
19 to 93 from fiscal year 1998 through fiscal year 2002 and involved
2.2 percent of DOD‘s total depot maintenance program expenditures in
fiscal year 2002. The Army had the largest number--42 partnerships in
fiscal year 2002. The partnerships at the depots we visited typically
accounted for a small portion of each depot‘s total workload--0.01 to
2.5 percent--or generally did not increase the workload to be performed
at the depots. Two partnership arrangements resulted in large growth in
workload at individual depots although service officials do not
consider one of them as a typical increase because it was due to the
closure of another depot.[Footnote 9] Furthermore, about one-fifth of
the partnerships have not yet produced any workload for the depots,
although future workload is expected in many of these cases. However,
even with the small amount of new workload generated and the
partnerships‘ newness, some partnerships provided promising results or
good potential.
Services Expanding Use of Partnerships:
The department‘s emphasis on the use of public-private partnerships for
depot maintenance has resulted in increases in their use--from 19 in
fiscal year 1998 to 93 in fiscal year 2002, an overall 4-fold increase.
The partnerships were formed for a variety of reasons, such as the
contractors seeking a depot‘s unique capabilities. According to depot
officials, a key underlying factor for the increased use of
partnerships has been the legislative requirement to use at least 50
percent of available funding for depot maintenance work in DOD depots.
Simultaneously, long-term logistics support contracts with the private
sector are being pursued as the preferred DOD support arrangement.
While the department has experienced an increase in the use of
partnerships, just over one-half of these were initiated during the
last 2 fiscal years. In 1998 we reported that the Army had 13 ongoing
partnerships, a number that expanded to 42 during fiscal year 2002--a
3-fold increase. The Navy‘s use of partnerships increased from 2 in
1998 to 31 in fiscal year 2002--a 15-fold increase. Similarly, the Air
Force‘s use of partnerships increased from 3 in fiscal year 1998 to 19
in fiscal year 2002--a 6-fold increase. The Marine Corps‘ usage has
remained constant with one partnership in fiscal year 1998 and the same
one in fiscal year 2002.[Footnote 10] Overall, partnership growth in
the department represents a 4-fold increase from fiscal year 1998 to
fiscal year 2002. Figure 1 shows the number of total partnerships by
individual military service for fiscal years 1998 and 2002.
Figure 1: Number of Partnerships by Individual Service in Fiscal Year
1998 and Fiscal Year 2002:
[See PDF for image]
[End of figure]
These partnerships were formed for a variety of reasons and used
differing approaches on the basis of the circumstances surrounding the
specific partnering effort. For example, in a number of cases, the
contractor sought out the depot for its unique capabilities or for its
advantageous labor rates. In other cases partnerships formed to meet
title 10 requirements to maintain military depot capabilities for key
weapon systems.[Footnote 11] Depot officials stated that a key
underlying factor driving the use of partnerships has been the
legislative requirement for at least 50 percent of available funds to
be used for depot maintenance work in DOD depots.[Footnote 12] At the
same time long-term logistics support contracts with the private sector
are being pursued as the preferred DOD support arrangement. The lease
of underutilized depot facilities to a contractor and the sale of depot
repair services to a contractor are examples of the approaches used to
form partnerships. (See appendix II for summary data regarding the
reasons cited and approaches used for the 90 partnerships we
reviewed.):
Partnerships Account for a Small Portion of DOD‘s Depot Maintenance
Expenditure and of Depots‘ Workload:
While DOD has not established goals for the depot maintenance
expenditures or workload it expects to be involved in public-private
partnerships, currently, partnerships represent a small part of DOD‘s
overall in-house depot maintenance expenditures and workload. Some
partnerships had not yet resulted in work to be performed at their
depot, but depot officials anticipate some in the future.
Maintenance performed in fiscal year 2002 by the depots under
partnerships accounted for only $435 million--or 2.2 percent--of the
$19.4 billion dollars that DOD reported spending on depot maintenance
in that year. Within the services, the amount of depot maintenance
expenditures involved in public-private partnerships varies from about
3.0 percent in the Army and 3.8 percent in the Air Force to about
0.5 percent for the Navy and Marine Corps combined.
Furthermore, in fiscal year 2002, the total of all depots‘ partnership
workload was 4.6 percent of DOD‘s total military depot workload.
However, as indicated by figure 2, the partnerships‘ workload at the
14 service depots we visited varied widely from 0.01 percent to nearly
26.0 percent.
Figure 2: Percentage of Workload Performed under Partnerships in Fiscal
Year 2002 at 14 Depots That GAO Visited:
[See PDF for image]
[End of figure]
Partnerships at 9 of the 14 depots we visited--which have 59
partnerships in total--involved workload that ranged from 0.01 to 2.53
percent of the depot‘s total workload. In addition, while partnership
activity at the other 5 depots we visited--which have 31 partnerships
in total--ranged from 7.5 to 26.0 percent of the depots‘ workload, the
partnerships themselves were not always the reason why this workload
was placed at the depots. According to depot officials, with two
exceptions, the placement of most of the partnership workload at these
depots was based on program managers‘ decisions that occurred prior to
the formation of the associated partnership. The program managers‘
decisions were based on reasons such as maintaining repair capability
in military depots, using the most cost-effective maintenance source,
or sustaining the viability of the industrial base.
The two instances where partnerships resulted in significant new
workloads for a depot were the Army‘s Abrams Integrated Management XXI
partnership--which accounts for about half of the Anniston workload
shown in figure 2--and the Air Force‘s Propulsion Business Area
partnership---which accounts for most of the Oklahoma City workload
shown in figure 2. The propulsion workload at the Oklahoma City depot
resulted from the closure of a major Air Force depot, and according to
DOD officials, this workload volume does not represent the typical
workload that a depot can expect as a result of a partnership.
In addition, as of December 2002, 19--or 21 percent--of the 90
partnerships we reviewed had generated no workload for the depot. For
example, seven partnerships at Tobyhanna Army Depot created from fiscal
year 1999 and through fiscal year 2001 for the depot to repair
electronic equipment for a contractor have not resulted in workload at
the depot, although workload was expected. Other partnering efforts,
such as the Air Force‘s Flexible Acquisition and Sustainment Tool
partnership and the Army‘s H-60 Helicopter Engineering Logistical
Services and Supplies partnership, are too new to have generated
workload, but the depots anticipate that workload will be forthcoming.
Experience Is Limited at This Time, but Some Partnerships Show Promise
for Achieving Positive Results:
While the small amount of workload and expenditures attributed to
partnerships and the newness of many of the partnerships limited the
availability of data to assess DOD partnerships‘ impact on the
efficiency and viability of depots, some partnerships provide promising
results or good potential for improving some aspects of repair
performance. Of the 90 partnerships we reviewed, 28 either improved
some aspects of repair performance or showed potential for doing so.
Improvements from these partnerships included better parts
availability, reduced repair time, reduced backorders, or reduced depot
support costs. These improvements relate to DOD‘s objective of
enhancing greater depot efficiency and viability. For example, reducing
repair time results in improved business processes--one approach for
enhancing depot operations. Reducing depot support cost can result in
reduced ownership costs of weapon systems--another approach for
enhancing depot operations. Appendix IV provides six examples of
partnerships that are achieving these improvements. On the other hand,
19 partnerships thus far have generated no work for the depots.
Characteristics for Effective Partnerships Identified, but
DOD Is Limited in Its Ability to Measure Partnerships‘ Overall Success:
DOD and contractor officials have identified 14 characteristics that
they believe over time will contribute to a partnership‘s success in
achieving DOD‘s objective of improved depot efficiency and viability,
but DOD has not developed sufficient data and goals for assessing its
partnering initiative. Many depot partnership managers stated that they
are working toward pursuing these 14 characteristics in their
partnerships, including having the right metrics in place early in the
partnership to measure success. However, DOD‘s ability to measure the
partnerships‘ overall success is limited because it has not yet
developed baseline data and measurable goals for assessing the outcomes
of its partnering efforts and the metrics that it has developed
sometimes will not provide the clear data needed to fully assess the
partnerships.
Characteristics Identified by DOD and Contractor Officials Needed to
Achieve Effective Partnerships:
While DOD continues to gain experience in partnering, senior-level DOD
and contractor officials have identified 14 characteristics, or best
practices, that they believe over time may be important for a
partnership‘s success in contributing toward achieving DOD‘s objective.
Almost all officials cited three characteristics as key--long-term
relationship and commitment, shared vision and objectives, and the
right metrics. The other 11 attributes were cited less frequently but,
according to the identifying officials, will nonetheless improve the
potential for success if present in a partnership. Table 1 summarizes
the 14 characteristics cited by DOD and contractor officials as
important to the success of partnerships.
Table 1: Characteristics That Partnerships Need to Achieve Success:
Success characteristic: Long-term relationship and commitment; Reason
for/Benefit of partnership: A long-term relationship and commitment (1)
permits both contractors and depots to better plan future workload
requirements and create a better business case for the contractor to
make investments to improve depot repair capability and (2) allows the
contractor to help manage parts obsolescence.
Success characteristic: Shared partnership vision and objectives;
Reason for/Benefit of partnership: Having partners share the same
partnership vision and objectives helps ensure that the partners will
not be working at cross-purposes.
Success characteristic: The right metrics and incentives; Reason for/
Benefit of partnership: The right metrics and incentives are needed to
effectively measure that progress is being made and ensure that the
partners are effectively motivated to achieve partnership goals
and objectives.
Success characteristic: Early acquisition community involvement;
Reason for/Benefit of partnership: Developing the partnership with
acquisition community involvement during the early phases of a weapon
system‘s acquisition helps to ensure that any additional depot
maintenance capability development needed is fully planned and
funded.[A].
Success characteristic: Complementary skills and abilities; Reason for/
Benefit of partnership: Each partner should bring complementary skills
and abilities to the partnership because if each partner‘s capabilities
are the same, the relationship may result in a competitive and
potentially adversarial relationship, not the cooperative synergistic
relationship hoped for in a partnership.
Success characteristic: Senior-level advocacy and support; Reason for/
Benefit of partnership: DOD and contractor senior management support
for a partnership is necessary to ensure that the effort receives the
focus and resources needed to achieve success.
Success characteristic: Sound business case analysis; Reason for/
Benefit of partnership: A comprehensive business case analysis,
including expected outcomes, should be conducted as part of the
decision process for entering a partnership to ensure a sound result
benefiting both the depot and the private-sector partners.
Success characteristic: Mutual trust and shared risk; Reason for/
Benefit of partnership: The partnership should be firmly grounded in
mutual trust, open communications, and balanced risk among partners.
Success characteristic: Flexibility to change partnership scope; Reason
for/Benefit of partnership: To ensure the ability to adapt to changing
circumstances or factors, the partnerships should have the flexibility
to change the partnership scope.
Success characteristic: Balanced workload; Reason for/Benefit of
partnership: Workload should be balanced among the partners to ensure
meaningful involvement for each partner and ensure that one partner
does not receive only low-skilled work or no work at all.
Success characteristic: Independent review and oversight; Reason for/
Benefit of partnership: Independent review and oversight provides an
objective assessment of whether each partnership is achieving the
expected benefits and that each partner performs as expected. Such a
review also provides a basis for correcting or redirecting partnership
efforts if expectations are not being met.
Success characteristic: Enforce partnership decisions and
requirements; Reason for/Benefit of partnership: To ensure successful
partnering efforts, the partners‘ senior management must provide a
mechanism for enforcing compliance with partnership decisions and
requirements.
Success characteristic: Full coordination with all stakeholders; Reason
for/Benefit of partnership: Public-private partnership efforts should
include steps to get feedback from all stakeholders on planned efforts
and adjust the partnering strategies to reflect legitimate concerns of
these stakeholders.
Success characteristic: Clearly documented objectives in partnering
agreement; Reason for/Benefit of partnership: Once clear mutual
partnering objectives are determined, they should be documented into a
formal partnering agreement. The documentation can provide for dispute
mediation and resolution, and also help delineate each partner‘s
liability.
Sources: DOD and contractors.
[A] Recently, we reported that reducing the logistics costs for a
weapon system is enhanced with early involvement among the acquisition
and logistics community--see U.S. General Accounting Office, Best
Practices: Setting Requirements Differently Could Reduce Weapon
System‘s Total Ownership Costs, GAO-03-57 (Washington, D.C.: Feb. 11,
2003).
[End of table]
While we observed the presence of these characteristics in some of the
partnerships we reviewed, we did not attempt to validate the extent to
which the characteristics were present in all partnerships reviewed,
given the newness of many of the partnerships. (See appendix V for
examples of how some of the partnerships we reviewed exhibited these
characteristics.) Nonetheless, many of the depot officials responsible
for managing partnerships stated that the characteristics identified by
senior-level contractor and DOD officials will contribute to making
partnership efforts successful. They also stated that while the
characteristics are not currently present in all partnerships, over
time, more partnerships will evolve to include these characteristics.
The officials agreed that the characteristic of having long-term
commitment should permit both contractors and depots to better plan
future workload requirements and create a better business case for the
contractor to make investments to improve depot repair capability. The
officials agreed that the characteristic of sharing the same
partnership vision and objective helps ensure that the partners will
not be working at cross-purposes. Additionally, these officials pointed
out that another of the characteristics--having the right metrics--is
critical to develop early in a partnership. Without establishing sound
metrics for partnerships early, the services cannot effectively measure
that progress is being made toward achieving the partnerships‘ goals
and objectives. The officials added that in such instances a
partnership risks making no progress toward its goal or possibly even
having an impact that is counter to the partnership‘s goals and
objectives.
DOD‘s Ability to Measure Success Is Limited by Lack of Measurable Goals
for Outcomes and Unclear Metrics:
DOD is limited in its ability to measure the overall success of its
partnering efforts because it has not yet developed baseline data and
measurable goals for the expected outcomes of the effort. Furthermore,
the metrics that DOD has developed sometimes will not provide the data
needed to assess the partnerships‘ results.
While some partnerships have produced positive results, such as reduced
repair time, DOD has neither established a baseline regarding
efficiency and viability for where the depots are today nor developed
measurable goals for the expected outcomes that would define success
for achieving improved depot efficiency and viability. Such goals could
include measurable targets for the amount of reductions in general and
administrative expenses, degree of increased utilization of depot
capacity, number of jobs created at depots, and amount of private-
sector investment in depot infrastructure and equipment. Establishing
such goals would provide DOD and the Congress with a measuring stick
against which to determine the progress that DOD‘s partnering
initiative is making toward improved depot efficiency and viability.
Without the goals, DOD‘s existing metrics--the data that DOD is
collecting to measure individual partnership performance--do not
provide the clear information needed to assess a partnership‘s progress
in improving a depot‘s performance. DOD is collecting data to measure
individual partnership performance--revenue generated, capital
investment, jobs created, cost avoidance, increased facility
utilization, improved business processes, and improved responsiveness
to customers. However, these metrics are not tied to overarching goals
for DOD‘s partnership initiative. Consequently, DOD does not have a
clear means for assessing the accomplishments of its individual
partnerships toward meeting its overarching objective and therefore
risks not achieving the improvements to depot operations expected from
public-private partnership efforts. For example, investments made by
the private sector in military depots to date have been about $6.9
million in total at all DOD depots. However, without an established
goal for such investments based on each depot‘s strategic capital
investment needs, DOD does not have a means of evaluating how effective
these investments are toward improving a depot‘s viability
or efficiency.
Furthermore, in some cases, the metrics that DOD has developed may not
indicate whether improvements in depot performance are due to a
partnership or to other factors. This is because some partnerships
coincide with changes to a weapon system program (such as adopting a
new repair approach) that may cloud the service‘s ability to measure
whether the partnership is responsible for any of the measured impacts.
For example, metrics for the Army‘s T700 helicopter engine partnership
will measure changes in an engine‘s reliability. However, the Army
began a recapitalization effort shortly after the start of the
partnership, and according to a program management official, the
recapitalization effort will affect the reliability of the metrics. An
Army depot official stated that it is not possible to separate the
impact of the recapitalization from the impact of the partnership,
since the two initiatives were implemented concurrently. Eleven of the
partnerships we reviewed involved similar recapitalization or other
major weapon system modifications and improvements that likewise have
the potential for distorting the metrics for these partnerships.
Several Factors Could Affect DOD‘s Planned Partnership Expansion:
While DOD plans to expand its use of public-private partnerships to
improve the efficiency and viability of its depots, several factors
could affect the department‘s expansion efforts. The opportunities for
increased partnering may be limited by external factors that the
services cannot create at will, and uncertainties over the extent to
which the private sector will invest to improve or develop new
capabilities at DOD depots to support partnerships. In addition, should
the Congress change title 10 provisions pertaining to depot
maintenance, the changes could affect the impetus for public-private
partnerships.
Partnering Opportunities May Be Limited by External Factors:
The opportunities available for DOD to expand its use of public-private
partnerships may be limited by external factors that the services
cannot replicate or create at will. Indeed, the creation of some
partnerships resulted from the occurrence of one-time business
opportunities arising from external factors, such as contractors‘
decisions to divest themselves of repair capabilities.
Such one-time opportunities may be critical to developing successful
partnerships, but their occurrence is unpredictable. For example,
Northrop Grumman made a business decision to discontinue its in-house
composite repair capability for B-2 aircraft flight control surfaces.
This created an opportunity for the Air Force‘s Ogden depot to develop
repair capability for the flight control surfaces and enter into a
partnership with Northrop Grumman, which retained the overarching
contract responsibility for the B-2‘s airframe maintenance. This
partnering opportunity between the Ogden depot and Northrop Grumman was
wholly contingent on the contractor‘s decision to divest itself of this
repair capability.
Expected Private-Sector Investments to Establish New Capabilities Are
Uncertain:
Expanding the use of partnerships to new or upgraded systems where
depots do not currently have the capability to accomplish the work will
require investment directly from system program offices or from the
private-sector partner to develop new system capabilities in the depot.
Although DOD expects private-sector partners to contribute to
developing these capabilities, the extent to which the private sector
will make such investments is uncertain.
The department‘s January 2002 partnership policy encourages public-
private partnerships to be structured to improve the deteriorating
condition of depot facilities and equipment by ’leveraging private-
sector investments, such as facilities and equipment, to contribute to
re-capitalization of depot maintenance activities.“ However, DOD‘s data
on the investments made by the private sector in military depots to
support partnership as of the end of fiscal year 2002 show only about
$6.9 million in private-sector investment at all DOD depots. Ninety-six
percent of this total occurred at one depot--the Army‘s Anniston depot-
-and the remaining 4 percent occurred at one other depot--the Air
Force‘s Warner Robins depot. For fiscal year 2002, DOD invested about
$330 million in the depots through its defense working capital fund‘s
capital investment program. This funding was for equipment replacement,
productivity improvements, environmental compliance, computer
equipment and software, and minor construction. Additional investments
are made in depots by program management offices for establishing new
system capabilities, and while DOD does not quantify the amount of this
investment, we reported in 2001 that program management offices had
invested $403 million over a 10-year period ending in 2000--about $40
million annually.[Footnote 13] The department recognizes that adequate
funding has not been made available to revitalize the depots and
incorporate new systems capabilities, and is looking to private-sector
investments by its partners to mitigate this shortfall.
In its recently issued depot maintenance strategy plan, the Air Force
states that a commercial-sector benchmark for adequate investment
levels in depots is from 6 to 7 percent of revenue per year. Assuming
that this represents a reasonable target for the services, investments
in depots‘ infrastructure would equate to about $621 million for fiscal
year 2002. However, at its fiscal year 2002 level, private-sector depot
investments resulting from partnerships equated to about 1 percent of
this investment level. While the department has not established
specific goals for the share of private-sector investments, the extent
to which DOD will be able to rely on the private-sector investments is
uncertain.
Changes to Title 10 Could Limit Impetus for Expanding Use of
Partnerships:
Recently, DOD considered proposing changes to title 10 provisions
that limit the outsourcing of depot maintenance workloads. Should
the Congress make such changes, the impetus for expanded use of
public-private partnerships could be reduced.
While DOD recognizes that some of its partnerships have resulted from
external factors beyond the services‘ control, the department expects
that its initiative to expand contractors‘ involvement in logistics
support for weapon systems will increase partnering opportunities for
depots. According to DOD officials, this will occur because the
services will require contractors to partner with depots for some depot
maintenance work to satisfy title 10 provisions that limit the amount
of depot maintenance work that can be performed by the private sector.
Recently, however, much publicity has surrounded discussions within DOD
over its tentative proposal to change title 10 by repealing six
provisions in order to create greater flexibility in determining the
most effective and efficient sources for depot maintenance.[Footnote
14] At the time we completed our review, DOD had discontinued this
current effort to repeal these provisions, but the department has
proposed repeal of depot-related provisions in the past and could again
in the future. If the Congress were to repeal these provisions,
private-sector contractors might not consider public-private
partnering as an attractive alternative to performing the work
themselves or to subcontracting the work to another private-sector
entity.
Our work found that these provisions have fostered the use of
partnerships. For example, 11 percent of the 90 partnerships we
reviewed cited compliance with title 10 provisions as the reason for
partnering (see fig. 3 in app. III), and depot officials indicated it
was an underlying factor influencing the decisions to form other
partnerships. According to depot officials, these title 10 provisions
currently provide the key impetus for the expansion of public-private
partnerships and removal of these title 10 provisions could have an
adverse impact on partnering opportunities.
Conclusion:
Even with the significant increase in the number of DOD‘s public-
private partnerships from fiscal year 1998 through fiscal year 2002,
the existing partnerships represent only 2.2 percent of DOD‘s $19
billion depot maintenance program. DOD does plan to greatly expand the
use of public-private partnerships to help achieve the partnership
initiative‘s objective of improving the efficiency and viability of its
military depots. However, it has neither established a baseline
regarding depots‘ efficiency and viability for where they are today nor
developed measurable goals for expected outcomes to define the degree
of the improved depot efficiency and viability desired. Additionally,
the metrics that DOD has developed will not, in certain circumstances,
provide the relevant data needed to assess individual partnership
results. Without initially establishing both clear and measurable goals
to define success in improving the efficiency and viability of its
depots and the metrics that provide the relevant data for the
measurement, DOD has limited objective means to assess whether the
partnerships are working as intended. Furthermore, while DOD is
expecting private-sector investment in public depots to support the
creation of capability to support new systems the extent to which this
investment is likely to occur is uncertain. Absent additional planning,
this situation could result in capability shortfalls or lead to delays
in establishing needed capabilities.
To improve DOD‘s management, direction, potential for success, and
assessment of its public-private partnerships, we provided DOD with a
number of recommendations in a draft of this report. In commenting on
the draft, DOD indicated that it does not plan to implement our
recommendations because it found them to be too general and thus not
actionable. However, the department‘s reluctance to establish overall
goals for partnerships makes it unclear as to the overall role that DOD
envisions for partnerships in its depots--even though DOD‘s focus on
partnering was intended as one means of fostering improvements in
government owned and operated depot facilities. We have long reported
on weaknesses in DOD‘s processes for identifying core capabilities to
be accomplished in government-owned depot maintenance facilities,
continuing deterioration in depot facilities with inadequate
recapitalization plans, and a smaller but aging workforce with
inadequate human capital plans in place to preserve depot capabilities
for the future. Such conditions place at risk the role of these
facilities in ensuring the existence of a ready and controlled source
of in-house technical competence and resources so that the military can
respond to mobilizations, national defense emergencies, and
contingencies. Clear goals for partnership arrangements are important
if they are expected to play a role in improving depot operations.
Recommendations for Executive Action:
To improve the management, direction, potential for success, and
assessment of its public-private partnerships, we recommend that the
Secretary of Defense direct the Under Secretary of Defense for
Acquisition, Technology and Logistics to:
* establish baseline data and overarching goals for expected outcomes
of partnership efforts, including the partnership initiative‘s desired
improvements to depot operations and:
* develop or refine metrics as needed to provide a more complete basis
to assess the results of the depot partnering arrangements as well as
ensuring that they differentiate between improvements to a weapon
system‘s support resulting from partnering and from other factors or
changes affecting the weapon system.
To support the expansion of partnership arrangements for new systems,
we recommend that the Secretary of Defense require the Under Secretary
of Defense for Acquisition, Technology and Logistics:
* to require specific assessment and planning for new capability in
military depots where partnership arrangements for new systems are
expected and:
* as part of this planning, assess the likelihood of private-sector
investment in new systems capability in military depots and other
alternatives as needed.
Matters for Congressional Consideration:
To encourage the Department of Defense to more clearly identify its
long-term goals for its depot facilities and the role of public-private
partnerships in meeting those goals, the Congress should consider
requiring DOD to develop measurable goals for improving future
operations of its depot facilities to include (1) facilities
recapitalization, (2) retention of specific depot capabilities, and (3)
human capital plans for preserving a viable workforce. In doing so, the
Congress should also consider requiring DOD to establish time frames
against which it will periodically assess and report to the Congress on
progress in each of these areas, including the contribution of
partnering arrangements to those goals.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, the Deputy Under Secretary of
Defense for Logistics and Material Readiness agreed with the report‘s
information, analysis and conclusions but only partially concurred with
the report‘s recommendations. Overall, he expressed the view that the
recommendations were so generally drawn that they are not actionable as
a practical matter. We disagree and continue to believe that they are
needed actions. The department‘s comments are included in this report
in appendix VI.
With regard to our first recommendation to establish baseline data and
overarching goals for expected outcomes of partnerships, DOD stated
that it has already established baseline data and goals. However, these
baselines and goals relate to individual partnerships rather than to
the partnership program as a whole. We agree that baseline data and
goals are needed to measure the progress of individual partnership
initiatives; however, our intent was to have the department establish
overarching goals with measurable outcomes to help gauge the success of
DOD‘s overall partnership initiative toward strengthening DOD‘s depot
maintenance operations. Such goals would be key to measuring progress
toward achieving the expectation identified in DOD‘s partnership policy
memorandum, which was to have partnerships ’contribute to more
effective depot maintenance operations, the introduction of innovative
processes or technologies, and the economical sustainment of organic
capabilities.“ We do not agree that the goals stated in the policy
memorandum in and of themselves are specific enough to provide
measurable outcomes against which to assess the collective
effectiveness of the department‘s efforts to improve depot efficiency
and viability.
Regarding our second recommendation to develop or refine metrics as
needed to provide a more complete basis to assess the results of depot
partnering arrangements, DOD said it will be difficult, if not
impossible, to differentiate between improvements solely resulting from
partnering versus other factors. While we agree that it may be
difficult, we nonetheless believe that it will be critical in assessing
the department‘s partnering initiative. Unless the department develops
meaningful metrics that reasonably determine relative contributions of
various factors contributing to changed conditions in weapon system
support, it will not be in a position to determine the results of
ongoing partnerships and the conditions under which additional
partnerships should be undertaken.
Regarding our third recommendation to require specific assessment and
planning for new capability in military depots where partnership
arrangements for new systems are expected, the department stated that
it currently requires assessment and planning for new weapon systems
but agreed that more emphasis could be placed on determining the role
that public-private partnerships may play in establishing new depot
capabilities. However, it did not identify any specific action planned
to do so--we believe it is important for the department to identify
steps to be taken to give this increased emphasis.
Regarding our fourth recommendation to assess as part of planning, the
likelihood of private-sector investment in new systems capability in
military depots, the department stated that capital investment by the
private sector across the broad spectrum is unrealistic, stating that
it was never the department‘s intention for its public-private
partnership program to supplant the need for capital investment and
funding by the services. We did not intend to suggest that partnerships
supplant service funding but rather give visibility to a goal
established by the department in its public-private partnership policy
memorandum, which states that one objective of public-private
partnerships is ’leveraging private-sector investments such as
facilitates and equipment to contribute to re-capitalization of depot
maintenance activities.“ We continue to believe that the assessment
called for in our recommendation is important both to help assess the
contribution of partnerships in achieving this partnering objective as
well as to more clearly assess capital investment needs from other
sources.
Finally, we disagree with the department‘s statement that our
recommendations are not actionable as a practical matter. A key element
needed for the department to achieve its objective of more effective
military depot maintenance operations through public-private
partnerships is the ability to measure and assess the contribution of
partnerships toward meeting that objective. As a practical matter,
without establishing clear and
measurable goals for its partnering program, the department is limited
in its ability to assess whether the partnerships are working as
intended to produce positive results or, conversely, are having a
negative effect on military depot maintenance operations.
:
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Secretaries of the Army,
the Navy, and the Air Force; the Commandant of the Marine Corps; and
the Director, Office of Management and Budget. We will 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.
If you or your staff have questions regarding this report, please
contact me at (202) 512-8412 or holmanb@gao.gov. Other major
contributors to this report are listed in appendix VII.
Barry W. Holman
Director, Defense Capabilities and Management:
Signed by Barry W. Holman
Appendixes:
Appendix I: Scope and Methodology:
To determine the extent to which the Department of Defense (DOD) is
participating in public-private partnerships for depot maintenance; we
met with officials from the Office of the Secretary of Defense (OSD)
and from service logistics offices to identify recent, ongoing, and
planned partnerships within each service and identified the military
depots associated with these partnerships. We also reviewed partnership
data maintained in the Joint Depot Maintenance Activities Group
partnering database. We visited 14 of DOD‘s 20 major military depots
(see appendix II for the depots visited and the partnerships reviewed)
to examine in more depth the partnerships associated with these depots.
We selected depots that had the greatest volume of partnership
activity, also ensuring that we included each service. Of the six
depots we did not visit, four did not have any partnerships reported in
the Joint Depot Maintenance Activities Group partnering database--the
Marine Corps Maintenance Center Barstow, Barstow, California; the Naval
Surface Warfare Center, Crane Division, Crane, Indiana; the Naval
Undersea Warfare Center, Keyport Division, Keyport, Washington; and the
Aerospace Maintenance and Regeneration Center, Tucson, Arizona--the
other two depots--Pearl Harbor Naval Shipyard and Letterkenny Army
Depot--reported two partnerships and one partnership, respectively. We
did not assess why these sites had this low volume of partnership
activity. To collect information on the partnerships we reviewed, we
developed a data collection instrument for each depot to complete for
each partnership. The information collected on each partnership
included the type of partnership, reasons why the partnership was
formed, roles and responsibilities of each partner, and the legislative
authority or basis for the partnership. We did not, however, validate
the data provided by the depots or attempt to assess whether or not the
tasks and responsibilities assumed by the contractor and military depot
partners represented the best division of work for achieving success
within the partnership.
To calculate the growth in public-private partnerships, we used our
1998 work reviewing the use of public-private partnerships in DOD as a
baseline, tallied the number of partnerships by service, and compared
these numbers with the partnerships reported in the Joint Depot
Maintenance Activities Group partnering database as of December 4,
2002. To determine the relative size or scale of the partnership
efforts within DOD, we analyzed fiscal year 2002 data on (1) the
workload that each partnership brought to the each depot compared with
the total ongoing workload for each depot, (2) the total workload that
the partnerships brought to the depots compared to the total combined
workload for all depots visited, and (3) the total dollar value of
depot maintenance performed under the partnerships at the depots we
visited compared with the department‘s total depot maintenance
expenditures.
To determine the characteristics that need to be present to achieve
effective partnerships and where DOD is in its ability to measure
success, we met with OSD logistics officials, service logistics
officials, high-level contractor officials, and officials at each depot
visited. We discussed evaluating the effectiveness of ongoing
partnerships--measuring success against DOD‘s objective of improved
depot efficiency and viability--with these officials and collected
relevant data and also discussed the characteristics of successful
partnerships with the senior-level DOD and contractor officials. To
identify the characteristics of successful partnerships, we reviewed
the information collected through structured interviews with senior-
level DOD and contractor officials and grouped the characteristics into
categories based on the similarities of responses. We also discussed
the extent to which depot partnership managers expect these
characteristics to be present in current partnerships or will be
present in future partnerships. To determine whether DOD has developed
a sufficient framework for measuring success, we reviewed the metrics
that DOD has developed to gauge the performance of its partnerships and
assessed whether these metrics included measurable goals and outcomes
tying the partnerships‘ performance to DOD‘s public-private partnership
policy objective. We also assessed the relevance of the department‘s
metrics to DOD‘s public-private partnership policy objective. We did
not test or validate the accuracy of the reported performance data
related to the public-private partnerships but instead considered the
structure of the metrics to assess their relevance to DOD‘s partnership
policy objective. To analyze the sufficiency of data for evaluating the
extent to which partnerships improved the economy and efficiency of
depot operations and improved the viability of the depots, we compared
the relative volume of each depot‘s partnership workload with the
ongoing workload at each depot visited and assessed the age of the
partnerships to determine if enough data existed to make an evaluation.
To determine the amount of investments made by the private sector in
military-depot plant and equipment, we extracted information from a
database on partnerships developed by the Joint Depot Maintenance
Activities Group at OSD‘s request. We also used this database to
identify the expected annual value of depot work for each partnership
and presented this data in appendix II. When no annual estimate was
identified in the database, we calculated an annual work value by
dividing the total expected value for the partnership by the expected
partnership life, where possible. In those instances where this was not
possible, we presented the total revenue generated by the partnership
to date. We did not perform a reliability assessment on this Joint
Depot Maintenance Activities Group database. Through discussions with
depot officials and reviews of individual partnerships, we identified
instances where the partnering efforts produced promising outcomes as
related to DOD‘s objective of improved depot efficiency and viability.
To determine what future management challenges face DOD‘s planned
expansion of public-private partnerships, we relied on our discussions
with OSD logistics officials, service logistics officials, high-level
contractor officials, and officials at each depot visited to identify
challenges that may inhibit the department‘s expansion efforts. To
assess the potential impact of proposed legislative changes on limiting
DOD‘s planned expansion of public-private partnerships, we discussed
the impact of removing title 10 provisions that currently limit the
outsourcing of military depot maintenance and repair workload with OSD
maintenance policy officials, depot officials, and contractor officials
and discussed how these title 10 provisions affect contractors‘ and
military depots‘ decisions to form public-private partnerships. To
assess whether the opportunities for partnering are limited, we
reviewed the reasons why ongoing partnerships developed and then
discussed with these officials the services‘ ability to control or
create opportunities that can lead to successful partnerships. We also
discussed the relationship between the expansion of public-private
partnerships and DOD‘s implementation of performance-based logistics
with OSD officials and reviewed the services‘ performance-based
logistics implementation plans. To assess the potential impact of DOD‘s
new policy calling for private-sector investment in depots on
establishing and funding needed depot capabilities, we reviewed and
compared the new public-private partnership policy with DOD‘s
overarching acquisition policy, and discussed the partnering policy‘s
implementation with depot and OSD officials.
We conducted our review from February 2002 through February 2003 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Depot Maintenance Public-Private Partnerships Reviewed and
Depots Visited:
Depot/Partnership (year initiated): Anniston Army Depot: Stryker-1
(2001); Private-sector partner: General Dynamics Land Systems;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities and advantageous labor rates.; Expected annual value of
work in depot: $2 million; Partnership type--description of
partnership tasks: Direct sale/government-furnished resources--Depot
performs finishing operations, paints the vehicle and provides
production services. The contractor performs vehicle test and
acceptance and supplies all parts and material for the production of
the vehicle. Both the depot and the contractor perform vehicle
assembly.
Depot/Partnership (year initiated): Anniston Army Depot: Stryker-2
(2001); Private-sector partner: General Motors; Defense; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities
and advantageous labor rates.; Expected annual value of work in depot:
$40,000; Partnership type--description of partnership tasks:
Direct sale--Depot performs hull and component modification and repair.
The contractor performs vehicle assembly, test and acceptance, and
provides all parts and material.
Depot/Partnership (year initiated): Anniston Army Depot: Fox Vehicle
Upgrade-Services and Facility Use (1996); Private-sector partner:
General Dynamics Land Systems; Reason(s) for partnership: Contractor
sought out depot for its unique capabilities and advantageous labor
rates.; Expected annual value of work in depot: $1 million;
Partnership type--description of partnership tasks: Direct sale/lease-
-Depot performs vehicle hull upgrade, tail upgrade, paints vehicle,
disassembles engine, and removes asbestos. The contractor performs
vehicle disassembly and reassembly, sub assembly/component rework, and
systems integration and test.
Depot/Partnership (year initiated): Anniston Army Depot: Fox Vehicle
Maintenance-Facility Use (1996); Private-sector partner: General
Dynamics Land Systems; Reason(s) for partnership: Provided collocation
with related Fox vehicle upgrade partnership.; Expected annual value of
work in depot: $30,000; Partnership type--description of
partnership tasks: Lease--Depot provides use of a facility. Contractor
uses facility to receive, store, and issue Fox vehicle subassemblies,
components and parts for fielded vehicles.
Depot/Partnership (year initiated): Anniston Army Depot: Gunner‘s
Primary Sight Manufacturing (1997); Private-sector partner: General
Dynamics Land Systems; Reason(s) for partnership: Depot had available
production facilities needed by the contractor.; Expected annual value
of work in depot: $85,000; Partnership type--description of
partnership tasks: Lease--Depot provides use of a facility. Contractor
performs manufacture of a new gunner‘s primary site.
Depot/Partnership (year initiated): Anniston Army Depot: M113 Family of
Vehicles Overhaul and Conversion (1997); Private-sector partner: United
Defense Limited Partnership; Reason(s) for partnership: Program manager
directed work share and contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: No annual
estimate available, but total revenue reported since partnership‘s
inception in January 1997 through March 2002--$15.9 million.;
Partnership type--description of partnership tasks: Work share/lease--
Depot performs vehicle disassembly, hull overhaul and conversion, and
provides the ’dismate“ power pack. The contractor overhauls
subassemblies and components, performs engine and suspension
modification, vehicle assembly, systems integration and test, and final
paint.
Depot/Partnership (year initiated): Anniston Army Depot: M1/M1A2
Upgrade (1994); Private-sector partner: General Dynamics Land Systems;
Reason(s) for partnership: Program manager directed work share.;
Expected annual value of work in depot: $15.3 million;
Partnership type--description of partnership tasks: Work share--This is
a partnership for the upgrade of the M1 tank to the M1A2 version. Depot
performs vehicle receipt, disassembly, hull rework and upgrade,
demilitarization of the turret, overhaul of major subassemblies and
components, and then ships tank parts to the contractor in Lima, Ohio.
Contractor performs vehicle reassembly, turret installation and systems
test and integration.
Depot/Partnership (year initiated): Anniston Army Depot: Partnership
for Reduced Operation and Support Cost--Engine (1999); Private-sector
partner: Honeywell; Reason(s) for partnership: Program developed by
program manager, contractor, and depot to enhance current depot engine
overhaul programs, and reduce operations and support costs.; Expected
annual value of work in depot: $31,000; Partnership type--
description of partnership tasks: Lease--Depot provides use of
underutilized facility to contractor. Contractor uses facility to
supply parts and material to support the depot‘s turbine engine repair/
overhaul line.
Depot/Partnership (year initiated): Anniston Army Depot: Recuperator
Plate Manufacturing (1998); Private-sector partner: Honeywell;
Reason(s) for partnership: Base realignment and closure (BRAC) process
closed a government-owned facility where contractor performed work.;
Expected annual value of work in depot: $200,000; Partnership
type--description of partnership tasks: Direct sale/lease--Depot
provides material handling and movement, and the contractor
manufactures recuperator plates.
Depot/Partnership (year initiated): Anniston Army Depot: Abrams
Integrated Management for the 21[ST] Century (1996); Private-sector
partner: General Dynamics Land Systems; Reason(s) for partnership:
Program manager directed work share.; Expected annual value of work in
depot: $47 million; Partnership type--description of
partnership tasks: Work share--This is a partnership for a
recapitalization of the M1A1 tank. Depot performs vehicle receipt,
disassembly; overhaul of hull, turret, and major subassemblies and
components; and ships the tank to contractor in Lima, Ohio. The
contractor performs vehicle reassembly and systems test and
integration.
Depot/Partnership (year initiated): Anniston Army Depot: Hercules
(1998); Private-sector partner: United Defense Limited Partnership;
Reason(s) for partnership: Program manager directed work share.;
Expected annual value of work in depot: No annual estimate available,
but total revenue reported since partnership‘s inception in January
1998 through March 2002--$9 million.; Partnership type--
description of partnership tasks: Work share--Depot performs vehicle
disassembly, structural repair of the hull and front blade repair.
Contractor performs modification, reassembly, and systems test and
integration.
Depot/Partnership (year initiated): Anniston Army Depot: Paladin
(1998); Private-sector partner: United Defense Limited Partnership;
Reason(s) for partnership: BRAC process closed a government-owned
facility where contractor performed work.; Expected annual value of
work in depot: No annual estimate available, but total revenue reported
since partnership‘s inception in January 1998 through March 2002--$1.6
million.; Partnership type--description of partnership tasks:
Work share--Depot performs overhaul and conversion of chassis assembly
and armament system, and provides turret kit components. Contractor
fabricates and assembles the new cab, performs vehicle reassembly and
systems test and integration.
Depot/Partnership (year initiated): Anniston Army Depot: Wolverine
(1998); Private-sector partner: General Dynamics Land Systems;
Reason(s) for partnership: Program manager directed work share.;
Expected annual value of work in depot: $1.6 million;
Partnership type--description of partnership tasks: Work share--Depot
performs vehicle disassembly, hull rework, demilitarization of turrets,
overhaul of major subassemblies and components, and ships the vehicles
to the contractor in Lima, Ohio. Contractor performs chassis assembly,
procures and installs bridge systems, and conducts inspections and
testing.
Depot/Partnership (year initiated): Anniston Army Depot: Opposing
Forces Surrogate Vehicle (1999); Private-sector partner: United Defense
Limited Partnership; Reason(s) for partnership: Contractor sought out
depot for its unique capabilities and advantageous labor rates.;
Expected annual value of work in depot: $8.2 million;
Partnership type--description of partnership tasks: Work share--Depot
fabricates unique parts and spares; disassembles vehicle; cleans,
machines, and repairs hull; repairs, converts and paints; and assembles
and integrates turret. Depot also performs program management
functions. Contractor overhauls subassemblies and components, modifies
engine and suspension, assembles and paints vehicle, and performs final
systems integration and testing.
Depot/Partnership (year initiated): Corpus Christi Army Depot:
T700 Engine
Overhaul and Repair (2000); Private-sector partner: General Electric;
Reason(s) for partnership: Desire to reduce repair turnaround time.;
Expected annual value of work in depot: Partnership involves
reengineering of ongoing workload that annually has a value of about
$87.7 million.; Partnership type--description of partnership
tasks: Teaming--Depot provides the labor, facilities and equipment for
the overhaul and repair of airframes and components. Contractor
provides technical, engineering and logistical support, and spare parts
to improve repair turn around time.
Depot/Partnership (year initiated): Corpus Christi Army Depot:
H-60 Overhaul
and Repair of Airframe and Structural Components (2000); Private-sector
partner: Sikorsky Aircraft Corporation; Reason(s) for partnership:
Desire to reduce repair turnaround time.; Expected annual value of work
in depot: Partnership is in initial phase of development and
implementation, and depot work has not yet begun--no annual estimate
yet available.; Partnership type--description of partnership
tasks: Teaming--Depot will provide the labor, facilities and equipment
for the overhaul and repair of airframe and components. Contractor will
provide technical, engineering and logistical support to improve repair
turn around time.
Depot/Partnership (year initiated): Corpus Christi Army Depot:
AH-64 Apache
and CH-47 Chinook; Overhaul and Repair of Airframe Structures and
Components (2000); Private-sector partner: Boeing; Reason(s) for
partnership: Desire to reduce repair turnaround time.; Expected annual
value of work in depot: Partnership is in initial phase of development
and implementation, and depot work has; not yet begun--no annual
estimate yet available.; Partnership type--description of
partnership tasks: Teaming--Depot will provide the labor, facilities
and equipment for the overhaul and repair of airframes and components.
Contractor will provide technical, engineering and logistical support,
and some parts on an emergency basis.
Depot/Partnership (year initiated): Corpus Christi Army Depot:
T55/T53
Engines Overhaul and Repair Activities (2000); Private-sector partner:
Honeywell; Reason(s) for partnership: Desire to reduce repair
turnaround time.; Expected annual value of work in depot: Partnership
is in initial phase of development and implementation, and depot work
has not yet begun--no annual estimate yet available.;
Partnership type--description of partnership tasks: Teaming--Depot
will provide the labor, facilities and equipment for the overhaul and
repair of engines. Contractor will provide technical, engineering and
logistical support, and some parts to depot workstations.
Depot/Partnership (year initiated): Red River Army Depot:
Bradley Fire
Support Team Vehicle (2000); Private-sector partner: United Defense
Limited Partnership; Reason(s) for partnership: Program manager
directed work share.; Expected annual value of work in depot: $17.5
million; Partnership type--description of partnership tasks:
Work share--Depot modifies and overhauls the A2 configuration of the
Bradley fighting vehicle and transports the vehicle to the contractor‘s
York, Pennsylvania facility. Contractor integrates the Bradley Fire
Support Team capability into the vehicle.
Depot/Partnership (year initiated): Red River Army Depot: Heavy
Expanded
Mobility Tactical Truck (2001); Private-sector partner: Oshkosh Truck
Center; Reason(s) for partnership: Program manager directed work
share.; Expected annual value of work in depot: $7.5 million;
Partnership type--description of partnership tasks: Work share--Depot
and contractor overhaul or recapitalize a complete vehicle and each
partner performs work on an equal number of vehicles.
Depot/Partnership (year initiated): Anniston Army Depot: Multiple
Launch Rocket System M270A1 (2000); Private-sector partner: Lockheed
Martin; Reason(s) for partnership: Program manager directed work
share.; Expected annual value of work in depot: $700,000;
Partnership type--description of partnership tasks: Work share--Depot
is overhauling vehicle chassis and components and transports completed
chassis to contractor‘s overhaul facility. Contractor integrates and
upgrades the Loader Launcher and its related components.
Depot/Partnership (year initiated): Red River Army Depot: Multiple
Launch Rocket System Hoist Assembly (2001); Private-sector partner:
Lockheed Martin; Reason(s) for partnership: Contractor sought out depot
for its unique capabilities.; Expected annual value of work in depot:
$347,200; Partnership type--description of partnership tasks:
Direct sale--Depot repairs the hoist assemblies and ships them to the
contractor‘s plant in East Camden, Arkansas. Contractor installs the
hoist on the vehicle.
Depot/Partnership (year initiated): Red River Army Depot: M915A4 Glider
Program (2001); Private-sector partner: Lear Sielgler; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: No annual estimate available
but total revenue reported; since partnership‘s inception in March 2001
through March 2002--$157,000.; Partnership type--description
of partnership tasks: Direct sale--Depot provides support for testing
qualifying and painting the engine and cleaning and painting the axel.
Depot/Partnership (year initiated): Red River Army Depot: Small
Emplacement Excavator (2002); Private-sector partner: Stewart &
Stevenson Tactical Vehicle Systems; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: Partnership is in initial phase of
development and depot work has not yet begun--no annual estimate yet
available.; Partnership type--description of partnership
tasks: Teaming--Depot and contractor have agreed to cooperate in
potential partnerships on mutually beneficial programs and
solicitations.
Depot/Partnership (year initiated): Red River Army Depot: Patriot
Missile Conduit Cover Shields (2001); Private-sector partner: Lockheed
Martin; Reason(s) for partnership: Contractor sought out depot for its
unique capabilities.; Expected annual value of work in depot:
Partnership completed and total revenue generated during the
partnership‘s 2 month period of performance--$4,600.;
Partnership type--description of partnership tasks: Direct sale--Depot
provides all raw material and labor to manufacture Patriot missile
conduit cover shields for the contractor. Contractor incorporates the
shields into the Patriot missile.
Depot/Partnership (year initiated): Tobyhanna Army Depot:
Communications Security Cryptographic Equipment (2002); Private-sector
partner: Titan Systems; Reason(s) for partnership: Contractor sought
out depot for its unique capabilities.; Expected annual value of work
in depot: No annual estimate available, but total revenue reported
since partnership‘s inception in June 2002 through December 2002--
$4,900.; Partnership type--description of partnership tasks:
Direct sale--Depot repairs circuit cards, which contractor uses in
repair of communications security cryptographic equipment.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Brackets and
Racks, Local Area Network Box and Panel Display (2001); Private-sector
partner: TRW; Reason(s) for partnership: Contractor sought out depot
for its unique capabilities.; Expected annual value of work in depot:
Partnership ended but total revenue reported for partnership‘s; 6-month
period--August 2001 to February 2002--$137,000; Partnership
type--description of partnership tasks: Direct sale--Depot fabricated
six items--Local Area Network Box Assembly, Remote TAU Radio Box
Assembly, Flat Panel Display Assembly, V1 RWS Rigid Kit, and Router
Adapter Plate Assembly. Contractor installed these parts in
communications shelters as part of retrofit program.
Depot/Partnership (year initiated): Tobyhanna Army Depot: FIREFINDER
Block II Program (1999); Private-sector partner: Raytheon; Reason(s)
for partnership: Contractor sought out depot for its unique
capabilities and advantageous labor rates.; Expected annual value of
work in depot: $305,000; Partnership type--description of
partnership tasks: Direct sale/teaming--Depot designed, manufactured,
and tested two engineering development model Prime Power groups for the
program; and provided cabling and interfaces needed to mount Portable
Operations Suite in vehicles and power transfer boxes, as well as
integration, test and logistics support at the system level. Contractor
is responsible for overall design and manufacture of the weapon
system.
Depot/Partnership (year initiated): Tobyhanna Army Depot: FIREFINDER
AN/
TPQ-37 Radar (2001); Private-sector partner: Raytheon; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities
and advantageous labor rates.; Expected annual value of work in depot:
$300,000; Partnership type--description of partnership tasks:
Teaming--Depot produces modular azimuth positioning system kits.
Contractor incorporates kits into AN/TPQ-37 FIREFINDER radars.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Prophet Block
I Cable Assemblies (2001); Private-sector partner: Titan Systems;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: No annual
estimate available, but total revenue reported since partnership‘s
inception in June 2001 through March 2002--$209,000.;
Partnership type--description of partnership tasks: Teaming--Depot
manufactures cable assemblies. Contractor is prime for electronic
warfare system that uses these cable assemblies.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Area Common
User System Program (1998); Private-sector partner: CMC Electronics;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $500,000;
[Empty]; Partnership type--description of partnership tasks: Direct
sale/teaming--Depot designed and manufactures modification
installation kits that are installed by Laguna Industries at the depot
and Fort Hood. The contractor provides the radio that is connected to
existing systems using the depot‘s installation kit.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Weapon
Systems
Omnibus-1 (1999); Private-sector partner: Blackhawk Management, Inc.;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: No annual
estimate available, but total revenue reported since partnership‘s
inception in December 1999 through March 2002--$941,000.;
Partnership type--description of partnership tasks: Direct sale/
teaming--Depot participated in program to secure repair workload on
critical systems in order to help maintain critical capabilities and
skills at the depot. The contractor markets the team‘s capabilities to
potential customers and provides depot and other subcontractors with
components for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: AN/PRC-112
Modernization (2001); Private-sector partner: EPS; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities
and to meet new weapon system title 10 core depot maintenance
requirements.; Expected annual value of work in depot: $100,000;
[Empty]; Partnership type--description of partnership tasks: Direct
sale/teaming--Depot assembles and warrants the field radio. Contractor
manages overall contract and provides depot components needed to
assemble the radio.
Depot/Partnership (year initiated): Tobyhanna Army Depot: CECOM Field
Support Services-1 (2000); Private-sector partner: EPS; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities
and advantageous labor rates.; Expected annual value of work in depot:
Although depot initially expected workload from this partnership, none
has materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets its team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: CECOM Field
Support Services-2 (2000); Private-sector partner: Logistics,
Engineering & Environmental Support Services, Inc.; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities
and advantageous labor rates.; Expected annual value of work in depot:
Although depot initially expected workload from this partnership, none
has materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets the team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid
Response
to Critical System Requirements (1998); Private-sector partner: ARINC;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: Although depot
initially expected workload from this partnership, none has
materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets its team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid
Response
to Critical System Requirements (1998); Private-sector partner: Lear
Siegler; Reason(s) for partnership: Contractor sought out depot for its
unique capabilities.; Expected annual value of work in depot: Although
depot initially expected workload from this partnership, none has
materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets its team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid
Response
to Critical System Requirements (1998); Private-sector partner:
Lockheed Martin; Reason(s) for partnership: Contractor sought out depot
for its unique capabilities.; Expected annual value of work in depot:
No annual estimate available, but total revenue reported since
partnership‘s inception in October 1998 through March 2002--$2,600.;
[Empty]; Partnership type--description of partnership tasks: Direct
sale/teaming--Depot participated in program to secure repair workload
on critical systems in order to help maintain critical capabilities and
skills at the depot. The contractor markets its team‘s capabilities to
potential customers and provides depot and other subcontractors with
components for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Navy Tri-
Service (1999); Private-sector partner: ARINC; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: Although depot initially
expected workload from this partnership, none has materialized and none
is currently expected.; Partnership type--description of
partnership tasks: Direct sale/teaming--Depot participated in program
to secure repair workload on critical systems in order to help maintain
critical capabilities and skills at the depot. The contractor markets
its team‘s capabilities to potential customers and provides depot and
other subcontractors with components for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Weapon
Systems
Omnibus-2 (1999); Private-sector partner: Information System Support
Inc.; Reason(s) for partnership: Contractor sought out depot for its
unique capabilities.; Expected annual value of work in depot: Although
depot initially expected workload from this partnership, none has
materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets the team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Tobyhanna Army Depot: Satellite
Communications Equipment (2002); Private-sector partner: Signal
Corporation; Reason(s) for partnership: Contractor sought out depot for
its unique capabilities.; Expected annual value of work in depot:
Although depot initially expected workload from this partnership, none
has materialized and none is currently expected.; Partnership
type--description of partnership tasks: Direct sale/teaming--Depot
participated in program to secure repair workload on critical systems
in order to help maintain critical capabilities and skills at the
depot. The contractor markets its team‘s capabilities to potential
customers and provides depot and other subcontractors with components
for repair.
Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point:
P-3, S-3, C-2,
and F/A-18 Auxiliary Power Units (2000); Private-sector partner:
Honeywell; Reason(s) for partnership: To satisfy title 10 core depot
maintenance requirements for the workload involved and contractor
sought out depot for its unique capabilities.; Expected annual value of
work in depot: $5.3 million; Partnership type--description of
partnership tasks: Direct sale/teaming--Depot repairs power units
providing repair facilities, skilled labor, support equipment,
production engineering, and logistics support. Contractor provides
failed power units, spare parts, engineering support, inventory
management, and packaging and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point:
F/A-18E/F
Integrated Readiness Support Teaming (2001); Private-sector partner:
Boeing; Reason(s) for partnership: To meet new weapon system title 10
core depot maintenance requirements.; Expected annual value of work in
depot: $885,000; Partnership type--description of partnership
tasks: Direct sale/teaming--Depot repairs components providing touch
labor and depot maintenance logistics support. Contractor provides
overall program execution, and customer and engineering support.
Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point:
AV-8B
Remanufacture Program (1996); Private-sector partner: Boeing;
Reason(s) for partnership: Program manager directed work share.;
Expected annual value of work in depot: $6.5 million;
Partnership type--description of partnership tasks: Work share--Depot
disassembles the AV-8B aircraft, repairs and/or modifies 287
components, and ships repaired components to contractor. Contractor
installs components into new fuselage and delivers remanufactured
aircraft to the Navy.
Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point:
SR-61/AS-61
Blades (1999); Private-sector partner: Aviation Blade Services;
Reason(s) for partnership: Program manager directed work share.;
Expected annual value of work in depot: $22,000; Partnership
type--description of partnership tasks: Work share--Depot dynamically
balances turbine engine blades providing facilities, skilled labor, and
logistics support. Contractor provides unbalanced blades.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
LAU-7, PP-
2581A/A Power Supply (2000); Private-sector partner: Associated
Aircraft Manufacturing & Sales, Inc.; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: Partnership began in July 2000, ended in
August 2001 and generated total revenue of $7,000.;
Partnership type--description of partnership tasks: Direct sale--Depot
repaired components providing repair facilities, skilled labor, support
equipment, spare parts, and technical data. Contractor provided failed
components and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
Test and
Repair Components on P-3, F/A-18, H-3 and H-60 (2002); Private-sector
partner: Aeronautical Systems, Inc.; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: $27,042; Partnership type--
description of partnership tasks: Direct sale--Depot repairs components
providing repair facilities, skilled labor, support equipment, and
technical data. Contractor provides failed components, packaging, and
shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
AN/ALQ126B
Countermeasures Set (2002); Private-sector partner: BAE Systems;
Reason(s) for partnership: To satisfy title 10 core depot maintenance
requirements for the workload involved and contractor sought out depot
for its unique capabilities.; Expected annual value of work in depot:
$771,428; Partnership type--description of partnership tasks:
Direct sale--Depot repairs components providing repair facilities,
skilled labor, support equipment, and technical data; and collects and
provides contractor with failure data. Contractor provides total asset
management, failed components, repair parts, configuration management,
technical and engineering support, and packaging and shipping; and
investigates and incorporates reliability improvements.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
CF-18
Boresight (2002); Private-sector partner: Boeing; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: $12,000; Partnership
type--description of partnership tasks: Direct sale--Depot responsible
for boresight calibration, shipment preparation, maintenance of
inspection and test records, and reporting schedule and funding
expenditures. Contractor responsible for inventory and asset tracking,
preparation for shipping, repair parts, and technical support.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
F/A-18E/F
Integrated Readiness Support Teaming (2001); Private-sector partner:
Boeing; Reason(s) for partnership: To meet new weapon system title 10
core depot maintenance requirements.; Expected annual value of work in
depot: $130,600; Partnership type--description of partnership
tasks: Direct sale--Depot repairs components providing repair
facilities, skilled labor, and support equipment; and collects and
provides contractor with failure data. Contractor provides total asset
management, failed components, repair parts, configuration management,
technical and engineering support, and packaging and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
F404 High
Pressure Turbine Rotors (2001); Private-sector partner: General
Electric; Reason(s) for partnership: Contractor sought out depot for
its unique capabilities.; Expected annual value of work in depot:
$350,000; Partnership type--description of partnership tasks:
Direct sale--Depot repairs components providing repair facilities,
skilled labor, support equipment, and technical data; and collects and
provides contractor with failure data. Contractor provides failed
components, repair parts, and packaging and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
J52 Engines
(2000); Private-sector partner: General Electric; Reason(s) for
partnership: Contractor made business decision to close facility where
work was previously done; Expected annual value of work in depot:
$66,667; Partnership type--description of partnership tasks:
Direct sale--Depot repairs engines providing repair facilities, skilled
labor, support equipment, spare parts, and technical data. Contractor
provides failed engines and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
Calibration,
Metal Processing, and Engineering Support (2001); Private-sector
partner: Logistic Services International; Reason(s) for partnership:
Contractor sought out depot for unique its capabilities.; Expected
annual value of work in depot: $61,111; Partnership type--
description of partnership tasks: Direct sale--Depot calibrates test
stands, and provides metal processing and engineering support services.
Contractor provides access to test stands requiring calibration and
items requiring metal processing, and shipping to and from the depot.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
Various F-14,
EA-6B, AH-1 and F-22 Antenna and Radome Testing (2000); Private-sector
partner: Neptune Technical Services, Inc.; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: This partnership; began in December 2000
and ended in October 2001 but did not produce any workload.;
Partnership type--description of partnership tasks: Direct sale--Depot
was to provide antenna and radome testing, autoclave processing,
coordination of measuring machine inspection, and technical data.
Contractor was to provide components for testing and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
LAU-7, AN/APG-
65, and AN/ARA-48 (2002); Private-sector partner: S&K Technologies,
Inc.; Reason(s) for partnership: Contractor sought out depot for its
unique capabilities.; Expected annual value of work in depot: $81,081;
[Empty]; Partnership type--description of partnership tasks: Direct
sale--Depot repairs components providing repair facilities, skilled
labor, support equipment, and technical data. Contractor provides
failed components, and packaging and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville:
AN/AWG-9 Fire
Control Radar Components (1999); Private-sector partner: System &
Electronics, Inc.; Reason(s) for partnership: Contractor sought out
depot for its unique capabilities.; Expected annual value of work in
depot: No annual estimate available, but total revenue reported since
partnership‘s inception in February 1999 through November 2002--
$19,000.; Partnership type--description of partnership tasks:
Direct sale--Depot repairs components providing repair facilities,
skilled labor, support equipment, and technical data. Contractor
provides failed components and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot North Island:
F/A-18E/F
Integrated Readiness Support Teaming (2001); Private-sector partner:
Boeing; Reason(s) for partnership: To meet new weapon system title 10
core depot maintenance requirements.; Expected annual value of work in
depot: $10 million; Partnership type--description of
partnership tasks: Direct sale/teaming--Depot repairs components
providing touch labor, facilities, equipment, production engineering,
technical data, and packaging. Contractor provides failed components,
repair parts, obsolescence management, and shipping.
Depot/Partnership (year initiated): Naval Aviation Depot North Island:
Aircraft
Painting (2002); Private-sector partner: San Diego Aircraft Carrier
Museum; Reason(s) for partnership: Contractor sought out depot for its
unique capabilities.; Expected annual value of work in depot: $150,000;
[Empty]; Partnership type--description of partnership tasks: Direct
sale--Depot will paint aircraft providing touch labor, facilities and
equipment. Contractor will provide ready-for-paint aircraft,
specifications, and paint.
Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS
Enterprise
Nuclear Aircraft Carrier (CVN 65) FY02 Extended Drydock Selected
Restricted Availability (2001); Private-sector partner: Northrop
Grumman Newport News; Reason(s) for partnership: Contractor sought out
depot for its unique capabilities.; Expected annual value of work in
depot: $4.5 million; Partnership type--description of
partnership tasks: Direct sale/government-furnished resources--Depot
is providing a drydock and related facilities, and skilled labor.
Contractor is providing skilled labor and overall management
responsibility for this overhaul.
Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS Nimitz
(CVN 68) and USS Ronald Reagan (CVN 76) Production Services (2000);
Private-sector partner: Northrop Grumman Newport News; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: $1.8 million;
Partnership type--description of partnership tasks: Direct sale--Depot
sold general production services--including pipefitting, sheet metal,
and insulation--to contractor for these two overhauls. Contractor had
overall responsibility for these overhauls.
Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS Dwight
D.
Eisenhower (CVN 69) and USS Ronald Reagan (CVN 76) Production Services
(2001); Private-sector partner: Northrop Grumman Newport News;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $440,000;
[Empty]; Partnership type--description of partnership tasks: Direct
sale--Depot sold general production services--including pipefitting,
sheet metal, electrician, and machinist--to contractor for these two
overhauls. Contractor had overall responsibility for these overhauls.
Depot/Partnership (year initiated): Portsmouth Naval Shipyard: USS
Memphis
(SSN 691) FY02 Selected Restricted Availability/ Restricted
Availability (2002); Private-sector partner: General Dynamics;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: Partnership
expected to generate a total of $28.9 million between January 2002 and
December 2002.; Partnership type--description of partnership
tasks: Work share/teaming--Depot is providing manpower (60 percent) and
has overall responsibility for submarine overhaul. Contractor is
providing manpower (40 percent) and facilities--including a drydock.
Depot/Partnership (year initiated): Portsmouth Naval Shipyard: High
Performance; Brush (2000); Private-sector partner: Noesis, Inc.;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $486,487;
[Empty]; Partnership type--description of partnership tasks: Direct
sale--Depot provides equipment, technical support, and knowledge for
testing services. Contractor provides program management, technical
data, engineering expertise, and research and development expertise.
Depot/Partnership (year initiated): Portsmouth Naval Shipyard: Lease of
Portsmouth Naval Shipyard Former Prison (1999); Private-sector partner:
Seavey Island, L.L.C.; Reason(s) for partnership: Contractor sought out
depot for its unique facility.; Expected annual value of work in depot:
Partnership has terminated without producing revenue for the depot.;
[Empty]; Partnership type--description of partnership tasks: Lease--
Depot provided facility. Contractor‘s intent was to refurbish facility
and sublet as office space. Lease termination negotiations in process
because of death of lessee.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Nuclear
Aircraft Carrier Maintenance Benchmarking (2001); Private-sector
partner: Todd Pacific Shipyards Corporation; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: The sharing of processes under this
partnership will not produce workload or revenue for the partners,
instead the partners are benefiting from improved repair processes.;
[Empty]; Partnership type--description of partnership tasks: Teaming--
The partnership‘s intent is to study (benchmark) similar depot and
contractor processes associated with nuclear aircraft carrier
overhauls, which will contribute to a mutually beneficial goal of
achieving the most timely and cost effective ship repair processes.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Nuclear
Aircraft Carrier Maintenance Work Resource Sharing; (1999); Private-
sector partner: Todd Pacific Shipyards Corporation; Reason(s) for
partnership: Partnership established to gain consistent planned and
anticipated workload on nuclear aircraft carriers.; Expected annual
value of work in depot: This partnership establishes a framework for
resource sharing that will be used for carrier overhaul partnerships--
resulting revenue to the depot will be reported under these resulting
partnerships; however, depot has not reported any revenue to date.;
[Empty]; Partnership type--description of partnership tasks: Direct
sale/government-furnished resources--Depot subcontracts segments of
its aircraft carrier to contractor owing to resource shortfalls.
Contractor also does this in reverse. Depot supports contractor by
accomplishing work in propulsion spaces owing to security
classification. Contractor supports depot by providing resources such
as painters, welders, and pipe fitters.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard: USS
John C.
Stennis (CVN 74) Planned Incremental Availability (2000); Private-
sector partner: Northrop Grumman Newport News; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: Partnership completed and
between partnership‘s inception in October 2000 and November 25, 2002
generated total revenue of $156,000.; Partnership type--
description of partnership tasks: Direct sale--Depot performed work in
propulsion plant owing to security classification. Contractor was
responsible for overhaul.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard:
Explosion
Bulge Plate Testing Services (2000); Private-sector partner: Northrop
Grumman Newport News; Reason(s) for partnership: Contractor sought out
depot for its unique capabilities.; Expected annual value of work in
depot: Partnership completed between partnership‘s inception in October
2000 and January 2001 generated total revenue of $31,000.;
Partnership type--description of partnership tasks: Direct sale/
government-furnished resources--Depot provided explosion bulge testing
services. Contractor provided high-strength-low-alloy plates for
testing.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Puget
Sound
and Pacific Railway Contract (1944); Private-sector partner: Puget
Sound; and Pacific Railway; Reason(s) for partnership: 1944 triggering
event is unknown.; Expected annual value of work in depot: $375,000;
[Empty]; Partnership type--description of partnership tasks:
Government-furnished resources--Contractor allowed use of Navy owned
railway in exchange for normal maintenance to rails and roadbed. Depot
provides funding for major maintenance and capital improvements.
Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Guided
Missile
Attack Submarine (Nuclear Powered) Design Conversion (2001); Private-
sector partner: Electric Boat Corporation; Reason(s) for partnership:
Contractor sought out depot for its unique capabilities.; Expected
annual value of work in depot: No annual estimate available, but total
revenue reported since partnership‘s inception in October 2001 through
November 2002--$67,000.; Partnership type--description of
partnership tasks: Teaming--Depot will develop work packages for
installation on submarine on the basis of contractor provided
conversion drawings. Contractor will also provide all standard
material, engineered components, and manufactured assemblies.
Depot/Partnership (year initiated): Ogden Air Logistics Center:
Composites
Umbrella Agreement (2002); Private-sector partner: Alliant
Techsystems; Reason(s) for partnership: Contractor sought out depot for
its unique capabilities.; Expected annual value of work in depot:
Partnership is in initial phase of development and depot work has not
yet begun--no annual estimate yet available.; Partnership
type--description of partnership tasks: Direct sale/work share/lease--
Depot provides touch labor, non-destructive inspection, and support
equipment operators. Contractor provides engineering, supply chain
management, and oversight.
Depot/Partnership (year initiated): Ogden Air Logistics Center: Digital
Analog
Test Station (2002); Private-sector partner: Westest Engineering;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $10 million;
[Empty]; Partnership type--description of partnership tasks: Work
share--Test station design is a joint engineering effort between depot
and contractor. Contractor will fabricate test stations. Depot and
contractor will share effort to rehost software test programs on new
test station.
Depot/Partnership (year initiated): Ogden Air Logistics Center: F-16
Block 40
Avionics Software Maintenance/Upgrade (2001); Private-sector partner:
Lockheed Martin; Reason(s) for partnership: Contractor sought out depot
for its unique capabilities.; Expected annual value of work in depot:
$610,169; Partnership type--description of partnership tasks:
Work share/government-furnished resources--Depot performs software
maintenance tasks. Contractor integrates products associated with these
tasks into the avionics system.
Depot/Partnership (year initiated): Ogden Air Logistics Center: Global
Positioning System Metric Tracking Program (2002); Private-sector
partner: Boeing and TRW; Reason(s) for partnership: Contractor sought
out depot for its unique capabilities and advantageous labor rates.;
Expected annual value of work in depot: $1.2 million;
Partnership type--description of partnership tasks: Work share/
government-furnished resources--Depot provides labor for program
installation, and share responsibility for the development of program
hardware and software requirements with the contractors. Contractor
provides program management and engineering support.
Depot/Partnership (year initiated): Ogden Air Logistics Center:
Sacramento
Competition Workload for KC-135 Programmed Depot Maintenance (PDM) and
A-10 PDM and Commodities (1998); Private-sector partner: Boeing;
Reason(s) for partnership: BRAC process closed a government-owned
facility where work was performed.; Expected annual value of work in
depot: Because this partnership is terminated, there is no continuing
annual workload expected.; Partnership type--description of
partnership tasks: Teaming--Depot performed analytical inspection and
painted A-10 aircraft, overhauled components and subcontracted KC-135
PDM workload to contractor. Contractor overhauled KC-135 aircraft. The
Air Force transferred the contract management out of the depot;
therefore, the depot no longer considers this a partnering effort--
there is no ongoing partnering interaction between the depot and the
contractor.
Depot/Partnership (year initiated): Ogden Air Logistics Center:
Intercontinental Ballistic Missile Automatic Test Systems (2001);
Private-sector partner: TRW; Reason(s) for partnership: Program manager
directed work share.; Expected annual value of work in depot: $4.1
million; Partnership type--description of partnership tasks:
Work share--Depot provides labor to replace antiquated automatic test
station. Contractor maintains overarching ICBM system integration
responsibilities and oversight.
Depot/Partnership (year initiated): Ogden Air Logistics Center: B-2
Advanced;
Composite (1998); Private-sector partner: Northrop Grumman; Reason(s)
for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $3.0 million;
[Empty]; Partnership type--description of partnership tasks: Direct
sale/work share/government-furnished resources--Depot provides
maintenance and repair for 413 different B-2 bomber panels, doors, and
surfaces. Contractor provides engineering services and technical
assistance.
Depot/Partnership (year initiated): Oklahoma City Air Logistics Center:
B-2 Defensive
Management System Tools Program Set (1999); Private-sector partner:
Northrop Grumman; Reason(s) for partnership: Contractor sought out
depot for its advantageous labor rates.; Expected annual value of work
in depot: $800,000; Partnership type--description of
partnership tasks: Work share/lease--Depot performs specified
development and software maintenance tasks. Contractor maintains total
system performance responsibility for this support effort.
Depot/Partnership (year initiated): Oklahoma City Air Logistics Center:
Propulsion
Business Area partnership (1999); Private-sector partner: Lockheed
Martin; Reason(s) for partnership: BRAC process closed a government-
owned facility where work was performed.; Expected annual value of work
in depot: $270 million; Partnership type--description of
partnership tasks: Teaming--Depot performs overhaul and repair of F100
engines, modules, components, and fuel accessories. Contractor performs
overhaul and repair of T56 and TF59 engines, modules, components, and
fuel accessories.
Depot/Partnership (year initiated): Oklahoma City Air Logistics Center:
F100 Engine
Test Cell (2002); Private-sector partner: Pratt and Whitney; Reason(s)
for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $276,933;
[Empty]; Partnership type--description of partnership tasks: Direct
sale--Depot performs jet engine testing. Contractor provides jet
engines.
Depot/Partnership (year initiated): Oklahoma City Air Logistics Center:
F100 Eddy
Current Workload (2002); Private-sector partner: Pratt and Whitney;
Reason(s) for partnership: Contractor sought out depot for its unique
capabilities.; Expected annual value of work in depot: $697,894;
[Empty]; Partnership type--description of partnership tasks: Work
share--Depot inspects and polishes F100 engine parts. Contractor
provides F100 engine parts.
Depot/Partnership (year initiated): Oklahoma City Air Logistics Center:
F100 Special
Technologies Coating Facility (2002); Private-sector partner: Pratt and
Whitney; Reason(s) for partnership: Contractor made business decision
to close facility where work was previously done.; Expected annual
value of work in depot: $57,000; Partnership type--description
of partnership tasks: Lease--Depot provides depot space and support to
contractor. Contractor performs proprietary spray coating processes in
depot spray booth.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
C-130
Integrated Weapon System Support Program (2001); Private-sector
partner: Boeing; Reason(s) for partnership: To meet new weapon system
title 10 core depot maintenance requirements and contractor sought out
depot for its unique capabilities.; Expected annual value of work in
depot: $397,000; Partnership type--description of partnership
tasks: Work share/government-furnished resources--Depot provides
software development and integration support for new components being
added to aircraft, which increases the depot‘s software capabilities.
Contractor maintains its overarching C-130 system integration
responsibilities and oversight under the Air Force‘s Total Systems
Support Responsibility contract; therefore, specific contractor tasks
will vary depending on the specific subsystem.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
C-17
Analytical Condition Inspection (1999); Private-sector partner:
Boeing; Reason(s) for partnership: To meet new weapon system title 10
core depot maintenance requirements and contractor sought out depot for
its advantageous labor rates.; Expected annual value of work in depot:
$1.6 million; Partnership type--description of partnership
tasks: Direct sale--Depot identifies hidden defects, deteriorating
conditions, corrosion, fatigue, overstress, and other conditions that
affect structure of C-17 aircraft. Contractor provides the depot with
engineering, parts, and equipment support.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
Flexible
Acquisition and Sustainment Tool (2001); Private-sector partner:
Boeing, Lockheed Martin, MTC Inc., SSAI, and SAIC; Reason(s) for
partnership: Contractor sought out depot for its unique capabilities.;
Expected annual value of work in depot: No workload has materialized
yet and because of the; variable and unpredictable frequency of task
orders no annual estimate of workload value is available.;
Partnership type--description of partnership tasks: Work share--Depot
will provide labor to support delivery or task orders issued to one of
five contractors under the Air Force‘s flexible acquisition sustainment
tool contract. Contractor will manage the delivery or task orders to
ensure performance, however, the specific contractor tasks will vary
depending on the specific delivery or task order.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
Low Altitude
Navigation Targeting Infrared for Night (LANTIRN) Phase I (1997);
Private-sector partner: Lockheed Martin; Reason(s) for partnership:
Contractor made business decision to close facility where work was
previously done.; Expected annual value of work in depot: $123,000;
[Empty]; Partnership type--description of partnership tasks: Lease--
Depot provides facility where contractor repairs LANTIRN components.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
LANTIRN Phase
II (2001); Private-sector partner: Lockheed Martin; Reason(s) for
partnership: Contractor made business decision to close facility where
work was previously done, and contractor sought out depot for its
unique capabilities and advantageous labor rates.; Expected annual
value of work in depot: $796,000; Partnership type--
description of partnership tasks: Direct sale--Depot repairs 155
different components and delivers repaired components to contractor.
Contractor provides failed components for repair.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
C-130 Avionics
Modernization Program (2001); Private-sector partner: Boeing;
Reason(s) for partnership: To meet new weapon system title 10 core
depot maintenance requirements and contractor sought out depot for its
unique capabilities and advantageous labor rates.; Expected annual
value of work in depot: $1.4 million; Partnership type--
description of partnership tasks: Work share--Depot upgraded two
laboratories to accommodate testing of upgraded avionics, and provides
software engineering support to rehost operational flight software into
upgraded avionics. Contractor provides upgraded avionics components for
testing and rehosting.
Depot/Partnership (year initiated): Warner Robins Air Logistics Center:
Joint
Surveillance Target Attack Radar System (JSTARS) Total Systems Support
Responsibility Partnership (2000); Private-sector partner: Northrop
Grumman; Reason(s) for partnership: To satisfy title 10 core depot
maintenance requirements for the workload involved.; Expected annual
value of work in depot: $9.7 million; Partnership type--
description of partnership tasks: Work share--Depot performs prime
mission equipment repair, system and ground support software
maintenance, and various backshop functions. Contractor determines
depot‘s work requirements, and provides depot with sustaining
engineering and other support functions.
Depot/Partnership (year initiated): Marine Corps Maintenance Center--
Albany: Amphibious
Assault Vehicle Reliability, Availability, and Maintainability/Rebuild
to Standard (1998); Private-sector partner: United Defense Limited
Partnership; Reason(s) for partnership: Program manager directed work
share.; Expected annual value of work in depot: $22 million;
Partnership type--description of partnership tasks: Work share/lease--
Depot disassembles and reassembles vehicle; rebuilds transmission,
electronics, generators, and other components; installs new engine; and
blasts and paints vehicle. Contractor provides labor expertise and
equipment to modify vehicle hulls.
Source: DOD.
[End of table]
[End of section]
Appendix III: Summary Data Regarding the Reasons Cited and Approaches
Used for the 90 Partnerships Reviewed:
Partnerships were formed for a variety of reasons such as to allow
industry to take advantage of depots‘ unique capabilities and
advantageous labor rates, to take advantage of industry‘s engineering
capabilities and accessibility to spare and repair parts, and to help
meet title 10 requirements while increasingly relying on the private
sector for logistics support activities. Depending on the specific
circumstances surrounding the work to be performed, the services used
various arrangements--such as work share and teaming--to form their
partnerships. Although the partnerships involve many logistics
functions performed in various combinations by both public-and private-
sector partners, in general, contractors perform more spare parts,
engineering, and technical data functions, while the military depots
provide more repair labor, facilities, and equipment.
Reasons for Partnering:
Partnerships between military depots and contractors were formed for a
variety of reasons. Service depot officials identified nine reasons for
entering into partnerships as indicated in figure 3.
Figure 3: Reasons Cited for Entering Public-Private Partnerships:
[See PDF for image]
Notes: Figures represent the number of partnerships citing a particular
reason for partnering.
More than one reason may have been cited for each partnership.
[End of figure]
In some instances, a combination of these reasons motivated the parties
to form a partnership. As shown by figure 3, the largest category
involved contractors seeking out a depot for its unique capabilities--
57 times for the partnerships we reviewed. Other reasons frequently
cited were contractors seeking out a depot for its advantageous labor
rates--13 times, program mangers directing work share arrangements--12
times, and meeting title 10 requirements that limit the outsourcing of
depot maintenance--10 times.[Footnote 15] As discussed in the body of
the report, DOD expects these title 10 requirements to increasingly
become an important driver to expanding partnerships as the department
increases contractors‘ involvement in logistics support for weapon
systems because the contractors will often be required to partner with
depots in order to satisfy title 10 provisions that limit the
outsourcing of depot workload.
Partnership Approaches Used Vary:
The reasons for partnering discussed above and the circumstances
surrounding a depot‘s workload shape how the services develop the
approach used for each of their partnerships, including the selection
of a partnership type and how they divide responsibilities for the
performance of logistics functions. The depot maintenance partnerships
we reviewed used one or a combination of five partnering approaches:
work share, direct sale, lease, government-furnished resources, and
teaming. Figure 4 illustrates how frequently the five partnership types
were used for the partnerships we reviewed.
Figure 4: Types of Partnerships:
[See PDF for image]
[End of figure]
As indicated by figure 4, ’direct sale“ was the most frequently used
approach. According to DOD officials, that approach is expected to
increase in number with the expansion of contractor-managed logistics-
support arrangements for weapon systems. The five public-private
partnership approaches are described below.
1. Direct sale. An arrangement whereby military and commercial entities
enter into a contractual relationship for the use of military depot
maintenance facilities and employees to provide the private sector with
articles and/or services. Forty-eight--53 percent--of the 90
partnerships we reviewed used the direct sale approach, making it the
most frequently used partnering arrangement. DOD expects the use of
direct sale arrangements to increase as DOD expands contractor
involvement in logistics support for weapon systems in order to comply
with title 10 provisions that limit the outsourcing of depot
maintenance. The Navy‘s F-18 Integrated Readiness Support Team and the
Air Force‘s B-2 Advanced Composite partnerships are examples of the
direct sale approach to partnering. These examples each involve one
partner--the depot--performing work directly for, and receiving payment
from, the other partner--the contractor. (See appendix II for more
detail on these and other partnerships.):
2. Work share. An arrangement whereby a combination of military and
commercial facilities and/or employees is used to execute a program
manager‘s work package--including tasks such as weapon systems
remanufacture, modification, or upgrade. Under the work share
arrangement, the program manager issues a work order to the military
participant and a contract to the private-sector participant. The
relationship between the participants to accomplish the work package is
usually coordinated with a memorandum of understanding or memorandum of
agreement instead of a contract. Twenty-six--29 percent--of the 90
partnerships we reviewed used the work share approach, and this
approach was typically used to form the services‘ larger partnerships.
The Army‘s M1/M1A2 Abrams Tank upgrade partnership and the Navy‘s
Harrier Aircraft remanufacturing partnership are examples of work
shares. These examples involve each partner‘s performing its designated
share of the workload directly for the weapon system‘s program office
and the paying of each partner by the program manager.
3. Teaming. An arrangement whereby military and commercial entities
enter into a contractual relationship to accomplish a deliverable
stipulated in a contract. The relationship between the participants is
usually initially outlined in a teaming agreement during the proposal‘s
preparation and then formalized as a contractor/subcontractor
relationship subsequent to contract award. Twenty-seven--or 30 percent-
-of the 90 partnerships we reviewed used the teaming approach. Most of
the teaming arrangements occurred in the Army--19, with the Navy using
the teaming approach for six of its partnerships and the Air Force
using teaming for two of its partnerships.
4. Lease. An arrangement whereby military and commercial entities enter
into a contractual relationship for the private sector‘s use of public
depot maintenance facilities and/or its equipment to perform work for
either the public or private sector. Twelve--13 percent--of the 90
partnerships we reviewed used the lease approach, often in conjunction
with other partnering approaches. For example, the upgrade partnership
for the Army‘s Fox Nuclear, Biological, Chemical Reconnaissance System
vehicle uses a lease arrangement in conjunction with a direct sale
arrangement. The lease portion of the Fox partnership involves the
depot‘s providing underutilized facilities at Anniston Army Depot and
the contractor‘s paying for facility upkeep and utilities. The Air
Force‘s partnership for the F100 aircraft engine special technologies
coating facility is an example of a stand-alone lease arrangement not
involving other partnering arrangements. In this example, the Air
Force‘s Oklahoma City depot provides underutilized facilities, while
the contractor pays the depot for the use of the facilities, provides
facility upkeep, and pays utilities.
5. Government-furnished resources. An arrangement whereby military and
commercial entities enter into an agreement for private-sector use of
public depot maintenance facilities and/or its equipment and employees
at no cost in connection with and under the terms of a contract. Nine-
-10 percent--of the 90 partnerships we reviewed used the government-
furnished resources approach, which was also often used in conjunction
with other partnering approaches. The Air Force‘s F-16 block 40
avionics software maintenance/upgrade and the Navy‘s Puget Sound
railway partnerships are examples of the government-furnished resources
approach to partnering. Under the F-16 partnership, the government
performs F-16 component software maintenance tasks for the contractor
without charge as a government-furnished resource, while the contractor
performs final software integration. In the railway partnership, the
government provides the contractor with access to a Navy-owned railway
in exchange for the contractor‘s performing normal maintenance on the
railway.
According to DOD and contractor officials, the type of partnership
selected is based on what approach or combination of approaches best
served the objectives of the partnership. For example, in the case of
the Army‘s Fox vehicle upgrade partnership, the Army contracted with
General Dynamics to upgrade its Fox vehicle. To improve the economy and
efficiency of the upgrade, the contractor elected to partner with the
Army‘s Anniston depot for a portion of the work and to colocate its
segment of the upgrade with Anniston‘s segment at the Anniston depot.
Consequently, the contractor‘s approach used a combination of two
partnership types--direct sale and lease.
Functions Performed Vary between Public-and Private-Sector Partners:
Depot maintenance involves not only the application of labor to repair
and maintain military equipment but also several other logistics
elements or functions such as supply support, production engineering,
facilities, and equipment. For the partnerships we reviewed, these
logistics elements or functions were performed or provided by both
public-and private-sector partners in various combinations on the basis
of the characteristics of the workload and the abilities of the
partners. In the case of the Navy‘s auxiliary power unit repair effort,
for example, the depot was repairing power units but did not have all
the spare parts needed to complete repairs in a timely manner. To
improve the availability of overhauled power units, the Navy awarded a
contract for the power unit program‘s overall system support and
performance. As a condition of the contract, the contractor partnered
with a Navy depot to perform depot repairs to comply with title 10
requirements that limit the outsourcing of depot maintenance. The
partnership that developed for this workload involved the depot‘s
providing labor, facilities, and equipment, while the contractor
provides technical data and spare parts. Figure 5 compares the
frequency with which logistics functions are performed by depots and
contractors for the partnerships we reviewed. As indicated by figure 5,
the contractors‘ contribution to the partnerships consisted of
performing or providing more of the spare parts, engineering, and
technical data functions than the other functions; and the depots‘
contribution to partnerships consisted more of providing repair labor,
facilities, and equipment.
Figure 5: Frequency of Depots‘ and Contractors‘ Performance of
Logistics Functions:
[See PDF for image]
Note: The numbers in the figure represent how many of the 90
partnerships involved the depot‘s or the contractor‘s providing the
indicated logistics function.
[End of figure]
[End of section]
Appendix IV: Examples of Partnerships That Are Achieving Positive
Results:
Some partnerships provide promising results or good potential for
results related to improvements in parts availability, reduced repair
time, reduced back orders, or reduced support costs. These improvements
align with some of the partnership approaches included as a part of
DOD‘s logistics reengineering initiative--more efficient business
processes, better facility utilization, workforce integration, and
reduced cost of ownership--and may therefore contribute to enhancing
depot efficiency and viability. The following examples provide
illustrations of some of the improvements the partnerships achieved:
T700 Engine. Corpus Christi Army Depot wanted to reduce the repair time
and improve reliability for the Army‘s T700 helicopter engine.
Consequently, it entered into a partnership with General Electric to
achieve these improvements. (See fig. 6 on p. 53.) Under the
partnership, Corpus Christi provides the needed facilities and
equipment and repairs the engine. General Electric provides spare
parts, and technical, engineering, and logistics services. According to
depot officials, this effort has resulted in the introduction of
General Electric‘s best practices at the depot, which in turn has
resulted in the T700 engine repair line‘s realizing a 26 percent
reduction in engine turnaround time and a 40 percent increase in test
cell pass rates. Depot and contractor officials both attribute the T700
engine‘s improved depot repair times to better parts availability and
improvements to the depot‘s repair processes, although they also
recognize that the related T700 recapitalization effort begun shortly
after the formation of the partnership may also be a factor influencing
these improvements.
Figure 6: Depot and Industry Partnership Consultations at Corpus
Christi Army Depot:
[See PDF for image]
[End of figure]
Auxiliary Power Unit. Cherry Point Naval Aviation Depot was repairing
auxiliary power units for four aircraft[Footnote 16] but was
experiencing production delays owing to poor spare parts support. To
improve the availability of overhauled power units, the depot formed a
partnership with Honeywell--the auxiliary power units‘ manufacturer.
(See fig. 7 on p. 54.) Under the partnership, the depot provides labor,
facilities, and equipment, while the contractor provides production
engineering and spare parts. According to depot officials, the number
of units‘ awaiting depot repair because of lack of parts went from 118
when the partnership began in July 2000 to zero in October 2002.
According to the auxiliary power units users in the fleets, the
resulting improvement in support has been outstanding. For example, the
back orders for the power units were reduced from 125 in July 2000 to
26 in October 2002. Depot officials attribute these improvements to
better parts support and the introduction of more efficient business
practices to the repair process that include replacing rather than
repairing worn components.
Figure 7: F/A-18 Auxiliary Power Unit Being Repaired Under a
Partnership Between the Naval Aviation Depot Cherry Point and
Honeywell:
[See PDF for image]
[End of figure]
USS Enterprise. Northrop Grumman Newport News shipyard was scheduled to
overhaul the nuclear-powered aircraft carrier USS Enterprise in fiscal
year 2002 but lacked the necessary capacity at its facility to perform
the work as scheduled. (See fig. 8 on p. 55.) Consequently, Northrop
Grumman formed a partnership with the Navy wherein the Norfolk Naval
Shipyard provided drydock space and the Navy‘s four shipyards provided
108,000 man-days of labor to augment Northrop Grumman‘s overhaul of the
aircraft carrier, which resulted in the overhaul‘s completion as
scheduled. Northrop Grumman retained overall responsibility for the
overhaul and also contributed labor, equipment, production engineering,
and technical data. According to shipyard officials, this partnership
allowed the contractor and the shipyards to share their labor
resources, which along with the drydock space, increased the
Navy‘s maintenance ability and therefore increased its production,
making carriers available to the fleet sooner than would otherwise have
been feasible.
Figure 8: The Nuclear-Powered Aircraft Carrier USS Enterprise Entering
Norfolk Naval Shipyard:
[See PDF for image]
[End of figure]
AGT1500 Recuperator.[Footnote 17] The Abrams Tank Recuperator
production was formerly located at the Army‘s Stratford Engine Plant in
Connecticut, which was closed by BRAC in 1995. Honeywell relocated the
capability to Anniston Army Depot in 1998 and entered a partnership
with the depot at that time. (See fig. 9 on p. 57.) According to depot
officials, this partnership is an example of a ’pure“ facility lease
arrangement in which production has been colocated with its primary
user--Anniston‘s M1 tank engine repair line. The production operation
benefits from base operations support provided by the depot. On-site
production eliminates the need for a parts manager at the depot. It
also eliminates the need for the Defense Logistics Agency to stock and
issue recuperators, which means Anniston avoids Defense Logistics
Agency surcharges. The minimal supply chain also reduces the need for
raw material inventory and on-hand finished-goods inventory. Production
is adjusted to meet customer demand on a near ’just-in-time“ basis.
According to depot officials, these benefits resulted from Honeywell‘s
recuperator production operation‘s proximity to the depot.
Figure 9: Honeywell‘s M1 Tank Engine Recuperator Manufacturing Line at
the Anniston Army Depot:
[See PDF for image]
[End of figure]
LANTIRN Phase II. Lockheed Martin was under contract for the depot
maintenance and repair of the Air Force‘s LANTIRN[Footnote 18] system,
but its vendors were not providing timely turnaround on the repair of
certain LANTIRN components. To improve component support, Lockheed
Martin and the Air Force‘s Warner Robins depot negotiated a direct sale
agreement for the depot to repair various quantities of 155 LANTIRN
components. (See fig. 10 on p. 58.) According to Warner Robins
officials, since the start of partnership in August 2001, the depot‘s
performance in repairing the components has been very good. For
example, the depot‘s average component repair turnaround time of 18
days under the partnership is much better than the average turnaround
time of 93 days under Lockheed Martin‘s prior vendors and also better
than the negotiated turnaround time of 45 days agreed to under the
partnership. Depot officials attributed these improvements to (1)
Lockheed Martin‘s colocation at the depot, which reduced the shipping
time between Lockheed Martin and its vendors--some of which were
overseas--and (2) ongoing Warner Robins‘ operations that historically
were more efficient in the repair of the LANTIRN components than were
Lockheed Martin‘s prior vendors.
Figure 10: Depot and Contractor Employees Repairing and Testing LANTIRN
System:
[See PDF for image]
[End of figure]
ICBM Global Positioning System. As the Air Force‘s intercontinental
ballistic missile (ICBM) logistics integrator, TRW Inc. had a
requirement to arrange for the modification of ICBMs to add satellite
global positioning capability. (See fig. 11.) However, TRW‘s component
manufacturing subcontractor‘s estimate for the modification was too
costly. To achieve the required modification at less cost, TRW Inc.
formed a partnership with the Air Force‘s Ogden depot to replace the
old tracking system with the required global positioning system
capability. Under the partnership, Ogden provides the labor for the
modification installation, while TRW Inc. performs its integration and
engineering support responsibilities. As a result of the partnership,
the depot estimates that the program will save about $11 million in 4
years, thereby reducing the overall support cost of ICBMs. According to
depot officials, the savings will result from the depot‘s ability to
produce and install the guidance modification for less than the
original equipment manufacturer.
Figure 11: ICBM Global Positioning System Modification Showing
Developmental Configuration Module:
[See PDF for image]
[End of figure]
[End of section]
Appendix V: Fourteen Characteristics Identified by DOD and Contractor
Officials Needed to Achieve Effective Partnerships:
DOD and contractor officials have identified 14 characteristics that
they believe over time will contribute to a partnership‘s success in
achieving DOD‘s objective of improved depot efficiency and viability.
The following describes these characteristics and provides examples of
how some of the partnerships we reviewed exhibited these
characteristics.
1. Long-term relationship and commitment. A long-term relationship and
commitment (1) permits both contractors and depots to better plan
future workload requirements and create a better business case for the
contractor to make investments to improve depot repair capability and
(2) allows the contractor to help manage parts obsolescence. For
example, the F/A-18 partnership involves a long-term relationship
between the Navy and Boeing to provide logistics support for the F/A-
18E/F aircraft over the life cycle of the weapon system. Boeing and the
depots are projecting partnering workloads for the Navy depots for the
next 30 years, allowing the partners to create a phased plan to move
from providing maintenance and repair on limited aircraft components to
eventually encompass the entire weapon system.
2. Shared partnership vision and objectives. Having partners share the
same partnership vision and objectives helps ensure that the partners
will not be working at cross-purposes. The Navy ship depot maintenance
partnerships involving shipyard work and workforce sharing--USS
Memphis, USS Enterprise, and USS John C. Stennis--exemplify this
characteristic. With the downsizing of the Navy, a corresponding
decrease in the Navy and contractor shipyard workforces occurred. To
manage the resulting downsized workforces and avoid the unnecessary
duplication of skills, Navy and private shipyard officials developed
and implemented a workforce-sharing initiative whereby shipyard workers
are assigned to public or private workloads depending on the skills
needed to perform the work and the Navy‘s ship maintenance priorities.
The partners view the shipyards as a shared resource that needs to be
effectively managed in order to provide the Navy with the needed
overhaul capability and cost and schedule performance while minimizing
the collective workforce requirements.
3. The right metrics and incentives. The right metrics and incentives
are needed to effectively measure that progress is being made and that
the partners are effectively motivated to achieve partnership goals and
objectives. For example, the prime reason why the Navy entered into its
auxiliary power unit partnership at its Cherry Point depot was the
shortage of power units within the fleets. To ensure that this problem
was addressed by the partnership, the metrics that the Navy uses to
evaluate the partners are the same metrics used to assess the quality
of auxiliary power unit support to the fleet--e.g., depot turnaround-
time, testing acceptance rates, and system availability.
4. Early acquisition community involvement. Developing the partnership
with acquisition community involvement during the early phases of a
weapon system‘s acquisition helps to ensure that any additional depot
maintenance capability development needed is fully planned and funded.
The C-17 partnership efforts under way at Air Force depots illustrate
that not building the partnership concept into the acquisition process
early enough can lead to funding challenges. Until the Air Force
recently determined that a significant portion the C-17 depot
maintenance was core under 10 USC 2464 and would involve a public-
private partnership, the system acquisition strategy was focused on
contractor-provided depot maintenance. Consequently, the acquisition
community had not planned or budgeted for the development of depot
capability to support the currently planned partnering efforts. The Air
Force is exploring ways of dealing with the potential shortfall.
5. Complementary skills and abilities. Each partner should bring
complementary skills and abilities to the partnership because if each
partner‘s capabilities are the same, the relationship may result in a
competitive and potentially adversarial relationship, not the
cooperative synergistic relationship hoped for in a partnership. The
Air Force‘s Low Altitude Navigation Targeting Infrared for Night
(LANTIRN) partnering approach provides an example in which each partner
brought complementary abilities to the effort. The contractor managed
the repair of the LANTIRN system but did not have the ability within
its supplier network to repair subcomponents in a timely manner. The
Air Force‘s Warner Robins depot already had an ongoing repair line for
these components and was able to easily supply the contractor‘s
requirements for maintaining the LANTIRN system.
6. Senior-level advocacy and support. DOD and contractor senior
management support for a partnership is necessary to ensure that the
effort receives the focus and resources needed to achieve success. The
Air Force‘s Joint Surveillance Target Attack Radar System (JSTARS)
partnership, for example, illustrates the value of this characteristic.
Senior Air Force and contractor leaders endorsed the partnership,
requiring their managers to be innovative in overcoming the obstacles
created by years of competitiveness and the associated tension. The
partners responded by putting the right people in place with the
mindset and leaderships skills necessary to make the partnership work.
7. Sound business case analysis. A comprehensive business case
analysis, including expected outcomes, should be conducted as part of
the decision process for entering a partnership to ensure a sound
result benefiting both the depot and the private-sector partners. The
Air Force‘s ICBM Automatic Test Systems partnership, for example, was
formed after the Air Force conducted an analysis to assess the cost-
benefit of the effort. As a result, the Air Force documented its
expected savings of approximately $30 million over the 5-year
partnership.
8. Mutual trust and shared risk. The partnership should be firmly
grounded in mutual trust, open communications, and balanced risk among
partners. For example, according to the business development office at
the Corpus Christi Army Depot, the T700 partnership involved both
parties‘ investing the necessary time to understand each other‘s goals
and develop a level of trust so that both parties were willing to share
risks in order to make their partnering effort successful.
9. Flexibility to change partnership scope. To ensure the ability to
adapt to changing circumstances or factors, the partnerships should
have the flexibility to change the partnership scope. The Air Force‘s
F100 partnership illustrates this characteristic. For example, the
partnership currently involves two types of F100 workload--the
inspections of selected engine components and engine testing--but the
partnership agreement provides for adding additional F100 workloads and
other engine workloads.
10. Balanced workload. Workload should be balanced among the partners
to ensure meaningful involvement for each partner and ensure that one
partner does not receive only low-skilled work or no work at all. The
AV-8B Harrier Remanufacturing partnership demonstrates a balanced
division of workload among the partners. Both the depot and the
contractor were responsible for segments of the remanufacturing effort
that involved challenging tasks requiring highly skilled labor. For
example, the depot partner modified and rewired the aircraft wing and
rebuilt complex aircraft components, while the contractor built and
provided new aircraft components and then incorporated these components
along with the wing and components from the depot into the
remanufactured aircraft. The division of tasks helped each partner
maintain and improve its respective technical expertise.
11. Independent review and oversight. Independent review and oversight
provides an objective assessment of whether each partnership is
achieving the expected benefits and that each partner performs as
expected. Such a review also provides a basis for correcting or
redirecting partnership efforts if expectations are not being met. To
this end, OSD has begun a process to provide review and oversight of
depot maintenance partnering efforts throughout the department. For
example, OSD has directed its Joint Depot Maintenance Analysis
Group[Footnote 19] to collect and maintain data on the conduct and
performance of service partnerships. OSD plans to use these data to
redirect and improve partnering efforts toward achieving DOD‘s goals
and objective.
12. Enforce partnership decisions and requirements. To ensure
successful partnering efforts, the partners‘ senior management must
provide a mechanism for enforcing compliance with partnership decisions
and requirements. The Air Force‘s JSTARS partnership effort, for
example, incorporates the partnership agreement and requirements into
the overarching system logistics support contract. According to depot
officials, the contract is the most effective means for compelling
partner compliance with partnership decisions and requirements.
13. Full coordination with all stakeholders. Public-private partnership
efforts should include steps to get feedback from all stakeholders on
planned efforts and adjust the partnering strategies to reflect the
legitimate concerns of these stakeholders. The Army‘s Multiple Launch
Rocket System Hoist Assembly partnership exemplifies full coordination
among the depot; the contractor; and the major command‘s general
counsel, business operations office, and acquisition community.
14. Clearly documented objectives in partnering agreement. Once clear
mutual partnering objectives are determined, they should be documented
into a formal partnering agreement. For example, the Army‘s Tobyhanna
depot follows a standard procedure of documenting all partnering
arrangements with formal agreements. This documentation typically
includes a nondisclosure agreement, which protects shared information
that is proprietary or otherwise business sensitive, and a partnering
agreement that includes the partnership‘s objectives, a statement of
work to be performed, the partners‘ roles and responsibilities, and
other terms and conditions as needed.
[End of section]
Appendix VI: Comments from the Department of Defense:
DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS
3500 DEFENSE PENTAGON WASHINGTON, DC 20301-3500:
MAR 31 2003:
Mr. Barry W. Holman:
Director, Defense Capabilities and Management Issues U.S. General
Accounting Office:
Washington, DC 20548:
Dear Mr. Holman:
This is the Department of Defense (DoD) response to the GAO draft
report, ’DEPOT MAINTENANCE: Public-Private Partnerships Have
Increased, but Long-Term Growth and Results Are Uncertain,“ dated March
7, 2003 (GAO Code 350160).
The Department has reviewed the draft report and agrees with the
information, analysis and conclusions. However, we believe the
recommendations are so generally drawn that they are not actionable as
a practical matter. An explanation of the DoD position is enclosed.
Sincerely,
Allen W. Beckett:
Signed by Allen W. Beckett:
Enclosure: As stated:
GAO DRAFT REPORT DATED MARCH 7, 2003 GAO-03-423 (GAO CODE 350160):
’DEPOT MAINTENANCE: PUBLIC-PRIVATE PARTNERSHIPS HAVE INCREASED BUT
LONG-TERM GROWTH AND RESULTS ARE UNCERTAIN“:
DEPARTMENT OF DEFENSE COMMENTS TO THE GAO RECOMMENDATIONS:
RECOMMENDATION 1: To improve the management, direction, potential for
success, and assessment of its public-private partnerships, the GAO
recommended that the Secretary of Defense direct the Under Secretary of
Defense for Acquisition, Technology and Logistics to establish baseline
data and overarching goals for expected outcomes of partnership
efforts, including the partnership initiative‘s desired improvements to
depot operations. (p. 24/GAO Draft Report):
DOD RESPONSE: Partially concur.
The Department believes that it has already substantially established
baseline data and overarching goals for expected outcomes of
partnership efforts. Baseline data has been collected and published for
depot maintenance public-private partnering through fiscal year 2001.
The data base reflects, for each partnership, expected benefits to
include capital investment by both private and public sectors, revenue
to the depot, workforce impacts, business process improvements, cost
avoidance, and facility utilization. Efforts are now underway to
collect data for fiscal year 2002. In our policy memorandum of January
30, 2002, Public-Private Partnerships for Depot Maintenance, we believe
that our overarching goals have been stated.
We agree with the GAO in the report that there needs to be clearly
documented objectives in individual partnering agreements and the right
metrics and incentives needed to measure progress. This does not
translate into the ability to set overall detailed overarching
departmental goals beyond those that have already been set. The GAO
acknowledges that partnerships are formed for a variety of reasons and
using differing approaches on the basis of the circumstances
surrounding the specific partnering effort. These may include lease and
use agreements for facilities and equipment, direct sales of articles
or services, teaming arrangements, subcontractor relationships, base
operations support relationships, and performance based logistics
arrangements. There is also a significant difference in the nature and
employment of partnerships based on the commodities and technologies
involved. For example, a partnership involving a nuclear shipyard is
dramatically different than one involving an aviation depot.
We believe it is far more practical to assess individual partnerships
based on their stated goals and metrics than it would be to go beyond
the currently established goals and measures in place for the overall
DoD program.
RECOMMENDATION 2: To .improve the management, direction, potential for
success, and assessment of its public-private partnerships, the GAO
recommended that the Secretary of Defense direct the Under Secretary of
Defense for Acquisition, Technology and Logistics to develop or refine
metrics as needed to provide a more complete basis to assess the
results of the depot partnering arrangements as well as ensuring that
they differentiate between improvements to a weapon system‘s support
resulting from partnering and from other factors or changes affecting
the weapon system. (p. 24/GAO Draft Report):
DOD RESPONSE: Partially concur. We agree that refinements can be made
to the Department‘s data gathering efforts. While we agree we must
identify and track metrics to assess the results of depot partnering
arrangements, it will be difficult if not impossible to differentiate
between improvements solely resulting from partnering and other
factors. Industrial operations are complex and the numerous
interrelationships are difficult to untangle. It may never be possible
to differentiate between improvements resulting from partnering and
from other factors or changes effecting the weapon system. Partnerships
are part of complex business relationships, not controlled situations
where direct cause and effect relationships may be established.
RECOMMENDATION 3: To support the expansion of partnership arrangements
for new systems, the GAO recommended that the Secretary of Defense
require the Under Secretary of Defense for Acquisition, Technology and
Logistics to require specific assessment and planning for new
capability in military depots where partnership arrangements for new
systems are expected. (p. 24/GAO Draft Report):
DOD RESPONSE: Partially concur. The Department currently requires
assessment and planning for new capability in military depots for new
weapon system, whether or not partnering arrangements are expected. We
agree that more emphasis can be placed on determining the role that
depot maintenance public-private partnerships may play in this
planning.
RECOMMENDATION 4: To support the expansion of partnership arrangements
for new systems, the GAO recommended that the Secretary of Defense
require the Under Secretary of Defense for Acquisition, Technology and
Logistics as part of planning, assess the likelihood of private sector
investment in new systems capability in military depots and other
alternatives as needed. (p. 24/GAO Draft Report):
DOD RESPONSE: Partially concur. It was never the intention of the depot
maintenance public-private partnership program to supplant the need for
the services to conduct planning and funding for required capital
investment. Partnerships may create unique opportunities in certain
circumstances that result in private sector investment, but these
instances tend to result from unique situations. Expecting capital
investment by the private sector across the broad spectrum is
unrealistic. A capital investment made as the result of a partnership
is a secondary effect. As any potential for private sector investment
depends on conducting a business case analysis for a specific
situation, these assessments must be made on a system-by-system basis
at the appropriate phase of acquisition planning, not on an across-the-
board basis as recommended by GAO.
[End of section]
Appendix VII: GAO Staff Acknowledgments:
Acknowledgments:
Julia Denman, Larry Junek, Robert Malpass, M. Jane Hunt, Jack Edwards,
Robert Ackley, and John Strong also made significant contributions to
this report.
(350160):
:
FOOTNOTES
[1] We compared current depot partnerships with those in place in 1998,
the last time we reviewed such arrangements.
[2] DOD defines ’major depots“ as those having 400 or more employees.
[3] 10 USC 2466.
[4] DOD is required under 10 USC 2464 to identify and maintain within
government owned and operated facilities a core logistics capability,
including the equipment, personnel, and technical competence required
to maintain weapon systems identified as necessary for national defense
emergencies and contingencies.
[5] 10 USC 2469.
[6] Section 832 of the Floyd D. Spence National Defense Authorization
Act for Fiscal Year 2001 required the Comptroller General to convene a
panel of experts to study the policies and procedures governing the
transfer of commercial activities for the federal government from
government to contractor personnel. The Commercial Activities Panel‘s
report entitled Improving the Sourcing Decisions of the Government
(CAP-02-01) was issued on April 30, 2002.
[7] See U.S. General Accounting Office, Defense Depot Maintenance: Use
of Public-Private Partnering Arrangements, GAO/NSIAD-98-91
(Washington, D.C.: May 7, 1998).
[8] The initiative is called the Future Logistics Enterprise and
comprises six elements: (1) depot maintenance partnerships, (2)
condition-based maintenance, (3) total life-cycle systems management,
(4) end-to-end distribution, (5) executive agents, and (6) enterprise
integration--see Deputy Under Secretary of Defense (Logistics and
Material Readiness), Future Logistics Enterprise: The Way Ahead
(Washington, D.C.: June 3, 2002).
[9] In 1995, the Base Realignment and Closure process resulted in the
closure of the Air Force‘s San Antonio depot. The Air Force conducted a
public-private competition for the placement of much of the depot‘s
engine workload. The Air Force‘s Oklahoma City depot teamed with a
contractor to compete for a combined workload package, which once
awarded, resulted in each partner working independently on different
aircraft engine workloads at their own respective locations--an
atypical partnering arrangement according to DOD officials.
[10] The work being done as a result of the Marine Corps‘ partnership
is scheduled to be completed in December 2003, although according to
depot officials, the Marine Corps is looking for additional
opportunities to partner.
[11] 10 USC 2464.
[12] 10 USC 2466.
[13] See U.S. General Accounting Office, Defense Logistics: Actions
Needed to Overcome Capability Gaps in the Public Depot System, GAO-02-
105 (Washington, D.C.: Oct. 12, 2001).
[14] The sections DOD considered proposing for repeal were 2460, 2464,
2466, 2469, 2470, and 2472.
[15] While specifically mentioned 10 times by depot officials, title10
requirements are generally recognized by DOD and service officials as
providing a major impetus for partnering.
[16] The four aircraft are the C-2, F/A-18, S-3 and P-3.
[17] The recuperator is a heat exchanger for the Abrams tank used for
warming inlet air for the engine.
[18] The LANTIRN system--Low-Altitude Navigation and Targeting Infrared
for Night--is used on the Air Force‘s F-15E and F-16C aircraft for
targeting enemies.
[19] The Joint Depot Maintenance Activities Group is a DOD organization
created to support the department‘s Joint Depot Maintenance Program by
providing DOD with staff support in depot maintenance areas such as
studies and analyses, business planning and evaluation, and performance
metrics development and tracking.
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