Depot Maintenance
Key Unresolved Issues Affect the Army Depot System's Viability Gao ID: GAO-03-682 July 7, 2003The Army's five maintenance depots produced work valued at $1.5 billion in fiscal year 2002, with the remaining 49 percent of the Army's depot work performed by contractors. GAO was asked to assess (1) the trends in and the reliability of depot workload projections; (2) whether workloads are sufficient for efficient depot operations, initiatives are under way to improve efficiency, and additional workloads are possible; (3) whether the Army has identified depots' core capability and provided workload to support that capability; and (4) whether the Army has a long-range plan for a viable, efficient depot system.
The work assigned to Army maintenance depots has declined by 36 percent, although the cost of the Army's total maintenance program has increased since fiscal year 1987. Except for fiscal year 2003, projections for future work in the depots through fiscal 2008 show further decline. Depot work also changed from predominately overhauling Army end items to the increased repair of components. In addition, work from non-Army customers has increased from 6 to 26 percent. Army component and recapitalization work is projected to be the majority of depot work in the future. Depot planners generally do not have reliable projections of work requirements for non-Army customers. Because of this and other factors, including changing conditions, future projections have limitations. Potential increases in depot work resulting from the Iraq war are not yet clear. Various factors, including workload reductions and workload performance issues, have resulted in efficiency and productivity problems in Army depots. Such initiatives as facility and equipment rightsizing, depot maintenance partnerships, and "lean manufacturing" have been implemented. Trends in two metrics--capacity utilization and employee productivity--show that, while more needs to be done, efficiency and productivity improvements have been made. Additional workloads, particularly for new and upgraded systems, are essential for future depot viability. However, in the past most new work has gone to private contractors. Some new-systems work is being explored for depots, and depot managers believe that partnering with the private sector may be the best chance for getting such work. The Army has not identified its depots' core capability requirements using a revised DOD methodology meant to overcome weaknesses in the core process. At the same time, it is unclear whether the revised methodology, which is undergoing further changes, will correct weaknesses in the core process. Moreover, no one in the Army assesses the extent to which depot work compares with identified core capability requirements. Depot managers are concerned about the loss of work and the failure to obtain work necessary to support core capabilities. The Army does not have a comprehensive and current strategic plan for the depots and has not implemented the limited plan it developed. GAO concluded in a 1998 report that the Army had inadequate long-range plans for its depots and that such planning is essential if significant progress is to be made in addressing the complex, systemic problems facing the depots. Despite the time that has passed, the same issues remain. DOD has not implemented a comprehensive and current plan for resolving continuing issues about (1) reduced workloads being assigned to Army maintenance depots and (2) deficiencies in the process of quantifying both core depot maintenance capabilities and the workload needed to ensure cost efficiency and technical competence and to preserve surge capability. Without such a plan, the long-term viability of Army depots is uncertain.
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Report to the Ranking Minority Member, Subcommittee on Readiness,
Committee on Armed Services, House of Representatives:
United States General Accounting Office:
GAO:
July 2003:
Depot Maintenance:
Key Unresolved Issues Affect the Army Depot System's Viability:
Army Depot Maintenance:
GAO-03-682:
GAO Highlights:
Highlights of GAO-03-682, a report to Ranking Minority Member,
Subcommittee on Readiness, Committee on Armed Services, House of
Representatives
Why GAO Did This Study:
The Army‘s five maintenance depots produced work valued at $1.5
billion in fiscal year 2002, with the remaining 49 percent of the
Army‘s depot work performed by contractors. GAO was asked to assess
(1) the trends in and the reliability of depot workload projections;
(2) whether workloads are sufficient for efficient depot operations,
initiatives are under way to improve efficiency, and additional
workloads are possible; (3) whether the Army has identified depots‘
core capability and provided workload to support that capability; and
(4) whether the Army has a long-range plan for a viable, efficient
depot system.
What GAO Found:
The work assigned to Army maintenance depots has declined by 36
percent, although the cost of the Army‘s total maintenance program has
increased since fiscal year 1987. Except for fiscal year 2003,
projections for future work in the depots through fiscal 2008 show
further decline. Depot work also changed from predominately
overhauling Army end items to the increased repair of components. In
addition, work from non-Army customers has increased from 6 to 26
percent. Army component and recapitalization work is projected to be
the majority of depot work in the future. Depot planners generally do
not have reliable projections of work requirements for non-Army
customers. Because of this and other factors, including changing
conditions, future projections have limitations. Potential increases
in depot work resulting from the Iraq war are not yet clear.
Various factors, including workload reductions and workload
performance issues, have resulted in efficiency and productivity
problems in Army depots. Such initiatives as facility and equipment
rightsizing, depot maintenance partnerships, and ’lean manufacturing“
have been implemented. Trends in two metrics¾capacity utilization and
employee productivity¾show that, while more needs to be done,
efficiency and productivity improvements have been made. Additional
workloads, particularly for new and upgraded systems, are essential
for future depot viability. However, in the past most new work has
gone to private contractors. Some new-systems work is being explored
for depots, and depot managers believe that partnering with the
private sector may be the best chance for getting such work.
The Army has not identified its depots‘ core capability requirements
using a revised DOD methodology meant to overcome weaknesses in the
core process. At the same time, it is unclear whether the revised
methodology, which is undergoing further changes, will correct
weaknesses in the core process. Moreover, no one in the Army assesses
the extent to which depot work compares with identified core
capability requirements. Depot managers are concerned about the loss
of work and the failure to obtain work necessary to support core
capabilities.
The Army does not have a comprehensive and current strategic plan for
the depots and has not implemented the limited plan it developed. GAO
concluded in a 1998 report that the Army had inadequate long-range
plans for its depots and that such planning is essential if
significant progress is to be made in addressing the complex, systemic
problems facing the depots. Despite the time that has passed, the same
issues remain. DOD has not implemented a comprehensive and current
plan for resolving continuing issues about (1) reduced workloads being
assigned to Army maintenance depots and (2) deficiencies in the
process of quantifying both core depot maintenance capabilities and
the workload needed to ensure cost efficiency and technical competence
and to preserve surge capability. Without such a plan, the long-term
viability of Army depots is uncertain. questionable.
What GAO Recommends:
GAO makes two recommendations to improve the reliability of workload
projections from Army and other service acquisition communities and
from inter-service customers. GAO previously reported on the need for
improving the process for identifying core capabilities and improving
strategic and workforce planning. Without improvements in these areas,
the future viability of Army depots is questionable. In commenting on
a draft of this report, DOD concurred in part with our recommendations
to improve workload projections for Army depots, but stated that
needed actions involved more than the Army. GAO revised the two draft
report recommendations to address the broader need of improving
projections of inter-service work for all the services.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Trends in Historical and Future Workloads and Reliability of Future
Projections:
Workload Efficiency and Sufficiency Issues:
Core Capability Issues:
Strategic Planning Issues for Depots:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Tables:
Table 1: Army Depot Workload, Workload Value, and Civilian Employees in
Fiscal Year 2002:
Table 2: Depot Capacity Utilization for Fiscal Years 1999-2002:
Table 3: Employee Productivity for Fiscal Years 1999-2002:
Table 4: Comparison of Core Capability and Its Associated Workload with
Actual Work Performed for Fiscal Years 1999-2002:
Figures:
Figure 1: Location of the Five Army Maintenance Depots:
Figure 2: Dollar Value for the Total Army Maintenance Programs, Fiscal
Years 1987-2002:
Figure 3: Total Number of Hours for Maintenance Programs Completed in
Army Depots, Fiscal Years1987-2002:
Figure 4: Corpus Christi T700 Engine Repair Line:
United States General Accounting Office:
Washington, DC 20548:
July 7, 2003:
The Honorable Solomon P. Ortiz
Ranking Minority Member
Subcommittee on Readiness
Committee on Armed Services
House of Representatives:
Dear Mr. Ortiz:
Army maintenance depots were established to support Army fighting units
by providing repair and manufacturing capability, in concert with the
private sector, to meet peacetime and contingency operational
requirements. In recent years, we have identified deficiencies in the
Department of Defense's (DOD) planning for depot maintenance
operations. For example, in 1998 we reported, "Uncertainties exist
about the future of the Army's depots and arsenals and the extent to
which the functions they perform should be retained as government-owned
and -operated facilities or performed by private sector
contractors."[Footnote 1] We also said that recent experiences at the
Army's maintenance depots and arsenals indicate that the Army is facing
multiple, difficult challenges and uncertainties in determining
staffing requirements and in improving the efficiency and effectiveness
of its industrial activities. We pointed out that uncertainties about
the workload to be assigned to these facilities was a critical factor
that needed to be addressed, and we recommended that the Secretary of
the Army develop and issue a long-range plan for maximizing the
efficient use of depots and arsenals.
You requested that we review the following Army depot maintenance
issues:
* What are the trends in historical and future maintenance workloads
assigned to the depots, and are future projections reliable?
* Do the depots have sufficient workload to promote efficient
maintenance operations, are initiatives being implemented to improve
efficiency, and are additional workloads possible?
* Has the Army identified the depots' core capability requirements and
provided its depots with workload needed to ensure cost efficiency and
technical competence?
* Does the Army have a long-range plan for the future viability of an
efficient depot system?
We briefed your office on the preliminary results of our work on April
7, 2003. This report summarizes and updates the information presented
at that briefing. The scope and methodology for our work are discussed
in appendix I. We conducted our review from September 2002 through June
2003 in accordance with generally accepted government auditing
standards.
Results in Brief:
Work performed in Army depots declined by 36 percent from fiscal year
1987 through fiscal year 2002, while the total depot maintenance
program grew. With the exception of fiscal year 2003æwhich has seen
increased work, some of which is resulting from the Iraqi
conflictæfuture workload projections indicate further decline in the
work to be performed in military depots, but the full impact of the
Iraq conflict on future depot workload is not yet known. Although
future workload projections are important tools for managing depot
operations, they have limitations because some inputs are not reliable
and because operational and budget conditions change. However,
opportunities exist for improving future estimates.
A number of factors, including the decline in workload performed in
Army depots and changes in the type of work, have led to inefficient
operations. Initiatives have been implemented to improve depot
efficiency and productivity; and trends in two metricsæcapacity
utilization and employee productivityæshow that improvements have been
made. Additional workloads could play a key role in further improving
the cost-effectiveness of the Army depots, but other issues must also
be addressed. Nonetheless, without new work, the depots cannot continue
to be viable. While some new work is being explored, little work for
new or upgraded systems is going to the depots.
The Army has not yet identified current core capability requirements
that are based on a new methodology put forth by the Office of the
Secretary of Defense in January 2003. Moreover, the new methodology has
continued to be revised and has not yet been finalized. In the past,
the Army has not routinely assessed whether assigned workloads were
adequate for its depots to ensure cost efficiency and technical
competence and to preserve surge capability. Furthermore, Army depots
do not have sufficient workload to ensure they can either sustain or
establish identified core capabilities.
Neither the Office of the Secretary of Defense nor the Army has a
comprehensive and current depot maintenance strategic plan, which is an
essential aspect of ensuring future depot efficiency and viability. We
previously recommended that a strategic plan for DOD-owned depots be
developed,[Footnote 2] but the Office of the Secretary of Defense has
not done so, and the Army's depot plan is neither current nor
comprehensive and has not been implemented. Without the implementation
of an effective plan to provide a vision for resolving past problems
with the depot system, continuing issues about (1) reduced workloads
being assigned to Army maintenance depots and (2) deficiencies in the
process of quantifying both core depot maintenance capabilities and the
workload needed to ensure cost efficiency and technical competence and
to preserve surge capability raise significant questions about the
long-term viability of Army depots.
We are making two new recommendations to improve the quality of
maintenance workload projections, and we continue to believe that DOD's
implementation of our prior recommendations is essential for
maintaining a viable Army depot system in the future. In commenting on
a draft of this report, DOD partially concurred with the two
recommendations in our draft report. The Department's response stated
that the lack of workload projection data for inter-service depot
workloads should be addressed across all the military services. We
modified the two recommendations in the draft report to respond to the
Department's comments.
Background:
The Army maintains maintenance depots for overhauling, upgrading, and
maintaining missiles, combat vehicles, tactical vehicles, and
communication and electronic equipment for the Army, other military
services, and foreign countries. These depots, which were established
from 1941 through 1961, repair end itemsæsuch as ground combat systems,
communication systems, and helicoptersæand reparable secondary
itemsævarious assemblies and subassemblies of major end items,
including helicopter rotor blades, circuit cards, pumps, transmissions,
and thousands of other components.[Footnote 3] The number of these
facilities has been reduced from 10 in 1976 to the existing 5 as of
June 2003, and 2 of the remaining 5 were significantly downsized and
realigned as a result of implementing the 1995 Base Realignment and
Closure (BRAC) decisions. Figure 1 shows the locations of the remaining
five Army maintenance depots.
Figure 1: Location of the Five Army Maintenance Depots:
[See PDF for image]
[End of figure]
In fiscal year 2002, the depots reported that the total value of work
performed was $1.5 billion. In a separate report on the distribution of
depot maintenance funds between the public and private sector, the Army
stated that DOD employees performed about 51 percent of the work
included in the Army's fiscal year 2002 depot maintenance program.
Table 1 provides the name and location of each of the five Army depots,
the primary work performed in each, the hours of work performed in
fiscal year 2002, the value of that work, and the number of civilian
personnel employed at each depot in fiscal year 2002.
Table 1: Army Depot Workload, Workload Value, and Civilian Employees in
Fiscal Year 2002:
Depot: Anniston Army Depot, Anniston, Alabama; Principal work: This
depot performs maintenance on heavy-and light-tracked combat vehicles
and components and is the designated center of technical excellence for
the M1 Abrams tank.; FY 2002 workload[A,B]: 2.5; FY 2002 value of
workload executed[C,D]: $421.6; FY 2002 number of civilian depot
employees: 2,429.
Depot: Corpus Christi Army Depot, Corpus Christi, Texas; Principal
work: As the Army's only aviation facility, the depot overhauls and
repairs DOD rotary wing aircraft and components, such as the AH-64
Apache, CH-47 Chinook, and UH-60 Blackhawk.; FY 2002 workload[A,B]:
2.9; FY 2002 value of workload executed[C,D]: $500.2; FY 2002 number of
civilian depot employees: 2,869.
Depot: Letterkenny Army Depot, Chambersburg, Pennsylvania; Principal
work: This depot provides repair and overhaul support for air defense
and tactical missiles such as the Patriot, Hawk, Avenger, Multiple
Launch Rocket System, and Sidewinder.; FY 2002 workload[A,B]: 0.9; FY
2002 value of workload executed[C,D]: $108.0; FY 2002 number of
civilian depot employees: 1,082.
Depot: Red River Army Depot, Texarkana, Texas; Principal work: For
combat and tactical systems, the depot supports systems such as the
Bradley Fighting Vehicle, Multiple Launch Rocket System, and vehicles
for the Patriot and Hawk missiles.; FY 2002 workload[A,B]: 1.2; FY 2002
value of workload executed[C,D]: $236.7; FY 2002 number of civilian
depot employees: 1,478.
Depot: Tobyhanna Army Depot, Tobyhanna, Pennsylvania; Principal work:
From handheld radios to satellite communication, the depot provides
repair of or overhaul support for hundreds of communications and
electronic systems.; FY 2002 workload[A,B]: 2.6; FY 2002 value of
workload executed[C,D]: $251.3; FY 2002 number of civilian depot
employees: 2,237.
Sources: U.S. Army data (data); GAO (presentation).
[A] Maintenance mission direct labor hours not including overtime.
[B] Hours in millions.
[C] Value of the workload executed for all customers, or total revenue.
[D] Dollars in millions.
[End of table]
Trends in Historical and Future Workloads and Reliability of Future
Projections:
Depot maintenance work performed in Army depots has declined
significantly since fiscal year 1987. However, the total depot
maintenance program, of which the work assigned to the depots is a
part, has grown in dollar value by 72 percent from $1.55 billion to
$2.66 billion over that period. The decline in the amount of work
performed in Army depots reflects the downsizing in the number of
systems that followed the end of the Cold War, the trend toward greater
reliance on the private sector, and the use of regional repair
activities at Army active installations and Army National Guard
activities for depot-level maintenance.
The type of work performed in the depots also changed from fiscal year
1987 through fiscal year 2002. While workloads were once predominately
the overhaul of Army end items, the percentage of work for non-Army
customers[Footnote 4] and for repair of Army secondary items has
increased over the last 16 years. Projections of future work indicate
further decline, except that 2003 is likely to have a slight increase
at least partially because of support for Operation Iraqi Freedom (the
recently completed conflict in Iraq). The extent to which Operation
Iraqi Freedom will result in increases in future years is not clear.
Future projections may not be a reliable indicator, since they change
with changing conditions. The reliability of the estimates decreases
with an increase in the projection beyond the current year.
Dollar and Labor Hour Trends:
Comparing the amount of maintenance work accomplished in the Army
depots with the Army's total maintenance program shows that the total
program has increased, while the amount of work assigned to the depots
has declined. Figure 2 shows the dollar value of the total Army depot
maintenance program from fiscal year 1987 through fiscal year 2002. The
dollar value of the total Army depot maintenance program grew by 72
percent from fiscal year 1987 through fiscal year 2002.[Footnote 5]
Figure 2: Dollar Value for the Total Army Maintenance Programs, Fiscal
Years 1987-2002:
[See PDF for image]
[End of figure]
As reflected in figure 3 the labor hours for maintenance programs
completed in each of the fiscal years from 1987 to 2002 at the five
current Army depots show a significant overall decline in work during
much of this period, with a slight upturn from fiscal year 2000 to
fiscal year 2002. The total number of hours for depot maintenance
programs completed in Army depots in fiscal year 2002 was 11.0 million-
--36 percent less than the 17.3 million hours for maintenance programs
completed in fiscal year 1987.
Figure 3: Total Number of Hours for Maintenance Programs Completed in
Army Depots, Fiscal Years 1987-2002:
[See PDF for image]
[End of figure]
Figure 3 indicates that in fiscal year 2000, the number of hours for
maintenance programs completed in Army depots were the lowest since
1987. In fiscal year 1999, the Army completed the transfer of
operational command and control of Army depots to the depots' major
customers, the Army Materiel Command's (AMC) subordinate
commands,[Footnote 6] which are also the coordinating inventory control
points for the depots' products. In making these realignments, the Army
has tasked AMC to pay more attention to the amount of work assigned to
the depots, since these commands are now responsible for the depots'
budgets and operations.
Workload Type and Customer Trends:
The type of work performed in Army depots has changed significantly
from fiscal year 1987 through fiscal year 2002. While Army depot work
in fiscal year 1987 predominately involved the overhaul of Army end
items (such as tanks, helicopters, and wheeled vehicles), in fiscal
year 2002, the percentage of work for repairing Army secondary items
(reparable components such as engines, transmissions, and rotor blades)
was greater than that for end item repair. Our analysis of the labor
hours for maintenance programs completed in fiscal years 1987 through
2002 showed that the overhaul of Army end items steadily decreased from
68 to 26 percent of the total workload over that period, while the
repair of Army secondary items increased from 4 to 31 percent of the
workload total.[Footnote 7]
In addition, the percentage of work performed for non-Army customers
increased from fiscal year 1987 through fiscal year 2002 from 6 to 26
percent of the total hours for maintenance programs completed in those
years. At the Tobyhanna depot, which now has the largest amount of non-
Army work, Air Force work accounted for only 4 percent of the hours of
all maintenance programs completed at the depot from fiscal year 1987
through fiscal year 1997. However, from fiscal year 1998 through fiscal
year 2002, repair work on Air Force systems was 23 percent of the total
amount of work completed at this depot. At Corpus Christi, labor hours
for Navy work accounted for 9 percent of the hours for all programs
completed from fiscal year 1987 through fiscal year 1995. The hours
spent for Navy work grew to 22 percent of the hours for all programs
completed from fiscal year 1996 through fiscal year 2002. However,
since the Navy withdrew some of its helicopter work from Corpus Christi
in fiscal year 2003, that level of Navy work is not likely to continue
unless new Navy workloads are designated for repair at Corpus Christi.
At the Letterkenny depot, labor hours for foreign military sales
accounted for 4 percent of the hours for all programs completed from
fiscal year 1987 through fiscal year 1999. For fiscal years 2000
through 2002, foreign military sales work at that depot increased to 15
percent of the total hours of work completed.
Workload Projections:
Workload projections suggest that in fiscal year 2003, the small upward
trend begun in fiscal year 2001 will continue for another year, but
another period of decline may occur from fiscal year 2004 through
fiscal year 2008. Army component and recapitalization workload is
projected to be the majority of the depots' work. These projections are
an April 2003 estimate from the Army Workload and Performance System
(AWPS), an analytically based workload-forecasting system that projects
future workloads and coordinates personnel requirements.[Footnote 8]
This projection includes some recent increases in prior estimates for
fiscal year 2003 to reflect revised estimates for reparable components
to support Operation Iraqi Freedom. Officials at several depots said
they are working overtime and have hired some temporary employees to
support this increased requirement, but an official at one depot said
it is not likely to be able to produce the amount of work currently
estimated for fiscal year 2003 in AWPS because it does not have enough
people. Depot officials said they do not know if
reconstitution[Footnote 9] requirements following Operation Iraqi
Freedom will result in increases in depot workload in fiscal year 2004
and beyond, and AWPS does not reflect increases in the out-years
resulting from Operation Iraqi Freedom. According to an AMC official,
the Army does not yet have a plan for managing the reconstitution, but
one is being developed.
Army officials said and we have confirmed that out-year estimates are
not always reliable predictors of the specific work that will be
performed in a future year. These projections are only as good as the
knowledge of the personnel preparing them about future requirements. As
we have reported in the past, workload estimates for Army maintenance
depots vary substantially over time owing to the reprogramming of
operations and maintenance appropriation funding and unanticipated
changes in customer orders. Workload estimates are subject to much
uncertainty and to frequent fluctuations with changing circumstances.
For example, as previously noted, fiscal year 2003 requirements in AWPS
have increased during the year as Operation Iraqi Freedom's demands
have generated more work than previously expected. On the other hand,
reductions to future requirements frequently occur. For example, to
fund other priorities, the Army has been considering reducing
recapitalization work,[Footnote 10] which is forecasted to be about 29
percent of the depots' future workload. Furthermore, the impact that
reconstitution requirements could have on the Army depots following
Operation Iraqi Freedom is unclear. Additionally, according to Army
officials, AWPS does not receive actual programs planned for the out-
years of all depot customers. Customers whose actual programs are
entered into AWPS vary by subordinate command. Out-year workload for
customers that are not based on actual programs must be estimated by
the subordinate commands on the basis of past history and discussions
with their customers about workload planned for the depots. Thus, these
estimated workloads may not represent future workloads. Moreover, since
work from other customers has become a much more substantial share of
the total Army depot workload, the impact of these estimates' accuracy
will be more significant.
Finally, future workloads that Army acquisition officials might have
planned for the depots are difficult to identify, and AWPS will not
accurately reflect these workloads unless acquisition officials provide
the subordinate commands with such information. The Army acquisition
community is primarily responsible for establishing future capability
at the depots on the basis of the results of source-of-repair decisions
and other factors such as core requirements. However, as discussed
later, the amount of such work likely to be assigned to the depots is
unclear. Army officials explained that the acquisition community does
not enter these workloads into AWPS and that no central database exists
of systems undergoing source-of-repair decisions to help the
subordinate commands identify planned workloads and adjust AWPS
projections accordingly.[Footnote 11] For these reasons, depot managers
do not consider workload projections from AWPS reliable beyond 2 years,
and they recognize that changes will occur even in the first 2 years.
As previously discussed, the reliability of out-year projections in
AWPS is affected by a number of factors such as changing requirements,
funding limitations, and the work that may be planned but has not been
identified and included in AWPS. While requirements and funding changes
are expected occurrences, the Army is faced with the possibility that
incomplete projections in AWPS regarding the size of the direct labor
force required in the future can occur. This is because the Army's
current capability to identify maintenance workloads that are being
planned for its depots is limited. Specifically, officials stated that
the Army has no standard business rules or procedures for identifying
the work that the Army acquisition community and non-Army customers may
be planning for Army depots. They said that, at best, the current
process is a hit-or-miss situation, depending on how aggressive the
Army commands are in requesting such customers to identify their
forecasted workloads, if it is done at all. Moreover, an Army official
told us that the Army does not have a mechanism in place to adjust
these estimates when it becomes clear that such forecasts are
inaccurate. Improvements in this area could increase the reliability of
future depot workload projections, as well as depot planners' ability
to manage depot operations efficiently. In its comments on a draft of
this report, DOD officials stated that the lack of workload projection
data for inter-service depot workloads should be addressed across all
the military servicesænot just at Army depots. Consequently the
Department will initiate a study to examine how the identification and
reporting of depot inter-service workload projections across all the
military services can be improved.
Workload Efficiency and Sufficiency Issues:
Army depots have had some efficiency problems, caused by several
factors, including the loss of work to the private sector and field-
level maintenance activities. Initiatives such as facility and
equipment downsizing, depot partnerships, and "lean
manufacturing"[Footnote 12] have been implemented to address depot
inefficiencies. Trends in two key metrics--capacity utilization and
employee productivity---show that progress has been made in recent
years, although further improvements are still desirable. Additional
workloads could play a key role in further improving the cost-
effectiveness of the Army depots, and acquiring work for new systems is
essential for long-term depot viability. Whether new systems work will
be assigned to the depots is unclear, but depot officials believe that
partnerships may offer the best potential for new systems work. Whether
depot-level work that gravitated to field-level activities will return
to the depots is also unclear.
Factors Resulting in Depot Efficiency Problems:
Depot maintenance operations have not been as efficient as Army depot
managers would like them to be. This is, in part, due to a host of
factors, including the impact of workload reductions, the changing
nature of the work assigned, and workload performance issues such as
less-than-expected employee productivity and work slow-downs caused by
a lack of required spare and repair parts or inefficient repair
processes. We have identified several issues that adversely affected
depot efficiency and productivity, including DOD's policy for greater
reliance on the private sector for depot support of new weapon systems
and major upgrades, the increased reliance on the use of regional
repair activities and private-sector contractors for work that
otherwise might be done in the depots, cost and schedule overruns,
excess capacity, and difficulties in effectively using depot
personnel.[Footnote 13] In August 2002, an Army task force identified
problems with depot efficiency and productivity at the Corpus Christi
depot. The task force pointed to the following as key problem areas:
the use of inaccurate data to price maintenance programs, schedule and
cost overruns caused by work performed against wrong standards and
beyond the statement of work, and the use of direct workers to perform
indirect tasks.
Initiatives to Improve Depot Efficiency and Productivity:
Initiatives that have been implemented to improve depot efficiency and
productivity include "rightsizing" at realigned depots, depot
partnerships designed to improve the efficiency and performance of
depot operations, and lean manufacturing initiatives. The 1995 base
realignment and closure process significantly realigned two of the
remaining five Army depots. Significant efforts were made to rightsize
the workforce, property, plant, and equipment on the basis of assigned
and projected workloads at the Letterkenny and Red River depots, which
had the benefit of BRAC funding to support their realignment
activities. The other depots have attempted to improve their efficiency
as well.
Various partnering initiatives have been undertaken to improve depot
performance. In fiscal year 2002, the Army had 42 depot maintenance
partnerships, the largest number in any of the military
services.[Footnote 14] One of the most successful has been the
partnership initiative implemented at Corpus Christi for the T700
engine. Wanting to reduce the repair time and improve the reliability
of the Army's T700 helicopter engine, the Corpus Christi Depot entered
into a partnership with General Electric to achieve these improvements.
Under the partnership, Corpus Christi provides the facilities and
equipment and repairs the engine. General Electric provides spare parts
as well as technical, engineering, and logistics services. According to
depot officials, this effort has introduced General Electric's best
practices at the depot, which has resulted in a 26-percent reduction in
engine turnaround time in the T700 engine repair line and a 40-percent
increase in test cell pass rates for the repaired engines. Depot and
contractor officials both attribute improved depot repair times for the
T700 engine 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
4 shows the repair line for the T700 engine.
Figure 4: Corpus Christi T700 Engine Repair Line:
[See PDF for image]
[End of figure]
Other initiatives are also being implemented to improve efficiency and
productivity in Army depot maintenance operations under the umbrella of
lean manufacturing. Most of these initiatives are in the early phases
of implementation, but some progress is being reported. Anniston
officials report that they have identified a more efficient
reciprocating-engine process. Corpus Christi officials reported
improvements for other maintenance processes as a result of their lean-
manufacturing initiatives. Depot managers at Letterkenny set a goal to
reduce the repair time for the Patriot missile launcher and report that
they have already reduced the number of technicians by three and the
floor space by 70 percent. Red River officials reported that process
improvements have allowed them to increase monthly maintenance
production for a truck engine from 17 to 40. A Tobyhanna official
stated that, because of its process improvements, unit costs for the
Sidewinder missile's guidance and control system have decreased
substantially. Furthermore, with planned improvements on the Sidewinder
and two other systems, Tobyhanna officials expect major reductions in
overhaul and recapitalization timelines, reduced customer costs, gains
in customer satisfaction, and greater employee satisfaction, as depot
workers take the lead in transforming their work.
Progress Trends in Two Key Metrics:
Trends in two key metrics---capacity utilization and employee
productivity---show that progress has been made in recent years,
although improvements are still desirable. DOD measures capacity
utilization by considering the amount of work produced relative to the
work that could potentially be produced on a single shift operation
using the number of personnel on board. Table 2 shows capacity
utilization in each of the five Army depots from fiscal year 1999
through fiscal year 2002.
Table 2: Depot Capacity Utilization for Fiscal Years 1999-2002:
Depot capacity in percent.
Depot.
Anniston; Depot capacity in percent: Depot capacity for fiscal year:
1999: 68; Depot capacity in percent: Depot capacity for fiscal year:
2000: 66; Depot capacity in percent: Depot capacity for fiscal year:
2001: 69[A]; Depot capacity in percent: Depot capacity for fiscal year:
2002: 76[A].
Corpus Christi; Depot capacity in percent: Depot capacity for fiscal
year: 1999: 60; Depot capacity in percent: Depot capacity for fiscal
year: 2000: 70; Depot capacity in percent: Depot capacity for fiscal
year: 2001: 77[A]; Depot capacity in percent: Depot capacity for fiscal
year: 2002: 83[A].
Letterkenny; Depot capacity in percent: Depot capacity for fiscal year:
1999: 81; Depot capacity in percent: Depot capacity for fiscal year:
2000: 66; Depot capacity in percent: Depot capacity for fiscal year:
2001: 75; Depot capacity in percent: Depot capacity for fiscal year:
2002: 82.
Red River; Depot capacity in percent: Depot capacity for fiscal year:
1999: 81; Depot capacity in percent: Depot capacity for fiscal year:
2000: 83; Depot capacity in percent: Depot capacity for fiscal year:
2001: 75; Depot capacity in percent: Depot capacity for fiscal year:
2002: 79.
Tobyhanna; Depot capacity in percent: Depot capacity for fiscal year:
1999: 61; Depot capacity in percent: Depot capacity for fiscal year:
2000: 72; Depot capacity in percent: Depot capacity for fiscal year:
2001: 78; Depot capacity in percent: Depot capacity for fiscal year:
2002: 76.
Sources: Army depots and headquarters, Army Materiel Command (data);
GAO (presentation).
[A] Indicates that the number provided by Headquarters, Army Materiel
Command, was used when there was a difference in the numbers provided
by it and the depot. Headquarters' numbers were used because they had
been reported by the depots to headquarters in official command
documents. In the four instances where numbers from these two sources
were different, the difference ranged from 2 to 14 percent, and the
average difference was 7.75 percent.
[End of table]
Compared to a DOD goal of 75 percent utilization, capacity utilization
for the five Army depots has fluctuated from fiscal year 1999 through
fiscal year 2002, but generally has improved. In fiscal year 1999,
three of the five depots were below the goal by an average of 12
percent while two depots exceeded the goal by an average of 6 percent.
In contrast, by fiscal year 2002, all five depots exceeded the goal by
an average of 4 percent. At 83 percent utilization, the Corpus Christi
depot showed the highest capacity utilization in fiscal year 2002, and
Letterkenny and Red River had utilization rates of 82 and 79 percent,
respectively. The higher-capacity utilization was largely achieved by
decreasing the physical layout or "footprint" of the maintenance depot.
Downsized by decisions of the 1995 BRAC process, Letterkenny and Red
River received BRAC funds to support their realignment activities.
While the capacity utilization of these two depots for fiscal year 2002
was relatively high, they have the smallest workloads of the five
depots.
It is important to remember that DOD's capacity-utilization computation
somewhat understates the depots' full potential for producing work. The
capacity-utilization computation assumes operations during an 8-hour
workday and a 5-day workweek. However, all the depots have some
overtime and some shift work and, if needed, could increase the amount
of overtime and shift work.
Another metric---employee productivity---also indicates that Army
depot operations are improving. Employee productivity measures the
average number of productive hours worked in a year by depot workers
after leave, holidays, training, and other time away from the job are
excluded. Table 3 shows average employee productivity at each of the
five Army depots from fiscal year 1999 through fiscal 2002.
Table 3: Employee Productivity for Fiscal Years 1999-2002:
Depot: Anniston; Average work hours per year per direct employee for
fiscal year: 1999: 1,534; Average work hours per year per direct
employee for fiscal year: 2000: 1,549; Average work hours per year per
direct employee for fiscal year: 2001: 1,551[A]; Average work hours per
year per direct employee for fiscal year: 2002: 1,608.
Depot: Corpus Christi; Average work hours per year per direct employee
for fiscal year: 1999: 1,434; Average work hours per year per direct
employee for fiscal year: 2000: 1,516; Average work hours per year per
direct employee for fiscal year: 2001: 1,478[A]; Average work hours per
year per direct employee for fiscal year: 2002: 1,560[A].
Depot: Letterkenny; Average work hours per year per direct employee for
fiscal year: 1999: 1,421; Average work hours per year per direct
employee for fiscal year: 2000: 1,504; Average work hours per year per
direct employee for fiscal year: 2001: 1,471[A]; Average work hours per
year per direct employee for fiscal year: 2002: 1,593[A].
Depot: Red River; Average work hours per year per direct employee for
fiscal year: 1999: 1,534; Average work hours per year per direct
employee for fiscal year: 2000: 1,494; Average work hours per year per
direct employee for fiscal year: 2001: 1,549[A]; Average work hours per
year per direct employee for fiscal year: 2002: 1,614.
Depot: Tobyhanna; Average work hours per year per direct employee for
fiscal year: 1999: 1,599; Average work hours per year per direct
employee for fiscal year: 2000: 1,622; Average work hours per year per
direct employee for fiscal year: 2001: 1,635; Average work hours per
year per direct employee for fiscal year: 2002: 1,625.
Sources: Army depots and Headquarters, Army Materiel Command (data);
GAO (presentation).
[A] Indicates that the number provided by Headquarters, Army Materiel
Command, was used when there was a difference between the numbers
reported by it and the depot. Headquarters numbers were used because
they had been reported by the depots to headquarters in official
command documents. In the six instances where the numbers from these
two sources were different, the difference ranged from 1 to 51 hours,
and the average difference was 13.2 hours.
[End of table]
The Army depot average of 1,600 hours for fiscal year 2002 was
significantly higher than it was a few years ago and is progressing
toward the DOD standard of 1,615 hours.[Footnote 15] In fiscal year
1999, none of the depots were at the standardæ averaging 1,504 hours
and ranging from a low of 1,421 hours to a high of 1,599 hours. In
fiscal year 2002, the number of employee productive hours at the
Tobyhanna depot was 1,625 and 1,614 at Red River. The employee
productivity of all of the Army depots has improved since 1999. Depot
managers said they were successful in improving worker productivity by
emphasizing to direct workers the need for reducing the amount of time
spent in nonproductive areas.
Additional Workloads Possible and Essential for Depot Viability:
Additional workloads could play a key role in further improving the
cost-effectiveness of the Army depots and are essential for the depots'
long-term viability. As the systems currently being repaired in the
depots age, they will be withdrawn from the Army's inventory and
replaced with new and/or upgraded systems. If repair and overhaul for
the new and upgraded systems go to the private sector, workload in the
depots will continue to diminish. In considering additional workloads
for its depots, the Army has several options: (1) move work that the
private sector is performing either by reassignment at contract renewal
time or establishing a partnership arrangement with the private sector,
(2) assign new work from the source-of-repair process the Army uses to
identify where the work will be performed, (3) and move work from
field-level activities that now perform depot tasks. In considering
additional workload, an essential issue for the Army is whether its
depots have the capability or whether establishing capability is
affordable to take on work that is being performed by other sources.
Acquiring new systems work will be the key to the survivability of the
depots in the long term. In recent years, the depots have received very
little new and upgraded systems work. As older systems are withdrawn
from the inventory, the repair work on systems currently assigned to
the depots will continue to decline. Unless new systems work is
identified for the depots, they will become more and more inefficient
as their workload declines. With regard to the potential for additional
workloads for the depots from new systems, Army acquisition officials
told us that establishing new capability at the depots has become more
difficult with the Army's implementation of performance-based
logistics[Footnote 16] because the Army is not buying the technical
data or the rights to use the data in establishing repair capability at
its depots. This could adversely affect the Army's ability to realign
existing work from the private sector to government-owned depots. An
internal Army study found that weapon systems program officials make
decisions to outsource the repair of new and upgraded systems without
considering the impact of these decisions on the requirement to
maintain core capability for essential systems in military depots.
Depot managers believe that partnership arrangements are an effective
means for improving the efficiency and productivity of depot
operations[Footnote 17] and are the best opportunity to bring
additional workloads into the depots. Among potential partnerships
being explored for new workload are the following: Anniston, for the
M1A2 tank service extension program; Corpus Christi, for the Comanche
helicopter; Letterkenny, for the Javelin missile; and Red River, for
the Heavy Expanded Mobility Tactical Truck.
With regard to moving work from field-level activities that now perform
depot tasks, the Army has taken some initiative to get control over
this problem, but the extent that it has dealt with proliferation of
depot work in field-level activities is unclear. The Report of the
House Committee on Armed Services on the Floyd D. Spence National
Defense Authorization Act for Fiscal Year 2001 said that the Army has
yet to account accurately for depot-level maintenance workloads
performed by organizations outside the depot system.[Footnote 18] That
report directed the Army to provide a report identifying the
proliferation of depot-level maintenance in these activities by
February 1, 2001, and directed us to review the Army's report and
provide the Congress with an analysis, including an assessment of the
Army's ability to comply with 10 U.S.C. 2466, the requirement that not
more than 50 percent of funds made available for depot-level
maintenance be used to contract for performance by nonfederal
personnel. The Army has not yet reported to the Congress, but Army
officials stated that as of July 3, 2003, the report was being reviewed
internally. We will analyze the report when it is completed.
Core Capability Issues:
Beginning in November 1993, the Army did biennial identification of
core capability requirements and the workloads necessary to sustain
those depot maintenance core capabilities. The most recent core
identification, however, was in December 1999 for fiscal year 2001 and
showed that 10.8 million work hours were associated with maintaining
core capability requirements for the five depots. An updated core
identification is overdue, but in January 2003 the Deputy Under
Secretary of Defense for Logistics and Materiel Readiness issued a new
core identification methodology and, at the time of our review, had
additional revisions under way to the methodology. Thus, the Army has
not yet computed core capability requirements based on this new
methodology. Furthermore, the Army does not routinely assess whether
the work performed by its five depots is adequate to sustain their core
capabilities; and workloads performed by the five depots have not been
at the level identified by the 1999 core identification as necessary to
maintain core capabilities.
The identification of core logistics capability involves a complex
process that has been evolving over the past 10 years. This process is
based on a requirement contained in 10 U.S.C. 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. Specifically, the
Secretary of Defense is to identify the workloads required to maintain
core logistics capabilities and assign to government facilities
sufficient workload to ensure cost efficiency and technical competence
in peacetime, while preserving capabilities necessary to fully support
national defense strategic and contingency plans. To accomplish this
requirement, beginning in November 1993, the Office of the Deputy
Secretary of Defense for Logistics outlined a standard multi-step
method for determining core capability requirements and directed the
services to use this method in computing biennial core capability and
associated workload requirements. In November 1996, the core
methodology was revised to include (1) an assessment of the risk
involved in reducing the core capability requirements as a result of
having maintenance capability in the private sector and (2) the use of
a best-value comparison approach for assigning workload not associated
with maintaining a core capability to the public and private sectors.
The core methodology provided a computational framework for quantifying
core depot maintenance capabilities and the workload needed to sustain
these capabilities. It included three general processes:
1. The identification of the numbers and types of weapon systems
required to support the Joint Chief of Staff's wartime-planning
scenarios.
2. The computation of depot maintenance core capability workload
requirements measured in direct labor hours to support the weapon
systems' expected wartime operations as identified in the wartime-
planning scenarios.
3. The determination of industrial capabilities (including the
associated personnel, technical skills, facilities, and equipment) that
would be needed to accomplish the direct labor hours identified above
that were generated from the planning scenarios. That determination is
adjusted to translate those capabilities into peacetime workloads
needed to support them. These peacetime workloads represent the
projected workload necessary to support core capability requirements
for the next program year in terms of direct labor hours.
To conclude the process, the services then identify specific repair
workloads and allocate the core work hours needed to accomplish the
maintenance work that will be used to support the core capabilities at
the public depots.
We previously reported that the DOD depot maintenance policy was not
comprehensive and that the policy and implementing procedures and
practices provided little assurance that core maintenance capabilities
were being developed as needed to support future national defense
emergencies and contingencies.[Footnote 19] Some of the weaknesses were
that (1) the existing policy did not provide a forward look at new
weapon systems and associated future maintenance capability
requirements, (2) the existing policy did not link the core
identification process to source-of-repair policies and procedures for
new and upgraded systems, and (3) the various procedures and practices
being used by the services to implement the existing policy, such as
using "like" workloads to sustain core capabilities, were affecting the
ability of the depots to establish core capabilities. In October 2001,
DOD revised the methodology by dividing the core methodology into two
distinct parts to more clearly distinguish between core capability
requirements and the depot maintenance workloads needed to satisfy
those requirements. Detailed core capability and associated workload
computations would be performed on a biennial basis in conjunction with
the planning, programming, and budgeting system in order to address
both the requirements for new systems and changes to existing systems.
Also, core computations would be reviewed annually to assess the impact
of unanticipated budgetary adjustments. Regarding the new methodology
issued in January 2003, DOD officials told us that some revisions are
being made and the methodology has not yet been finalized. Thus, we
have not reviewed the methodology in detail and cannot be sure whether
the new methodology will correct the weaknesses we identified in the
core process.
The Army's identification of core capabilities and workloads required
to sustain them in December 1999 showed that the five depots had a
total workload requirement of 10.8 million work hours associated with
its core capability requirements. As shown in table 4, work performed
by the depots for the 4-year period, fiscal years 1999 to 2002, was
generally below the amount identified for total core capability
requirements.
Table 4: Comparison of Core Capability and its Associated Workload with
Actual Work Performed for Fiscal Years 1999-2002:
Hours in millions.
Anniston; 1999 core capability assessment: 2.3;
Fiscal years: 1999: 2.0; Fiscal years: 2000: 2.0;
Fiscal years: 2001: 2.1; Fiscal years: 2002: 2.5.
Corpus Christi; 1999 core capability assessment:
3.5; Fiscal years: 1999: 2.3; Fiscal years: 2000: 2.5;
Fiscal years: 2001: 2.6;
Fiscal years: 2002: 2.9.
Letterkenny; 1999 core capability assessment: 1.1;
Fiscal years: 1999: 0.9; Fiscal years: 2000: 0.7;
Fiscal years: 2001: 0.8; Fiscal years: 2002: 0.9.
Red River; 1999 core capability assessment: 0.9;
Fiscal years: 1999: 1.2; Fiscal years: 2000: 1.1;
Fiscal years: 2001: 0.9; Fiscal years: 2002: 1.2.
Tobyhanna; 1999 core capability assessment: 3.0;
Fiscal years: 1999: 2.4; Fiscal years: 2000: 2.7;
Fiscal years: 2001: 2.6; Fiscal years: 2002: 2.6.
Total; 1999 core capability assessment: 10.8[A];
Fiscal years: 1999: 8.8[A]; Fiscal years: 2000: 9.0[A];
Fiscal years: 2001:
9.0[A]; Fiscal years: 2002: 10.1[A].
Sources: Army (data); GAO (presentation).
[A] Excludes overtime hours.
[End of table]
Depot officials stated that for the core identification process, the
depots identify the skills required by job series to support the core
capability. However, Army officials said that neither the depots nor
the Army routinely assess the extent to which work performed by the
depots compares with the identification of core capability requirements
and associated workloads. Thus, they do not have the information needed
to determine whether the level and nature of the work performed in the
depots is sufficient to ensure cost efficiency and technical competence
and to preserve core capability.
When we discussed identification of core capability and associated
workloads with depot managers, they said that ensuring appropriate
workloads are going to the depots is essential to their being able to
maintain required core skills to support combat readiness. They also
expressed concern that the definition of core capability workload
requirements seems to constantly fluctuate and that maintenance
workloads that once were identified as required for core capabilities
were being transferred to the private sector. For example, depot
managers at the Red River Army Depot pointed out that workload
associated with the Heavy Expanded Mobility Tactical Truck was a
significant factor in the depot's ability to maintain the necessary
core capabilities. However, the truck workload was lost in October 2001
when the Army decided to stop recapitalization work at the depot and to
use a contractor to perform an extended service life program for the
truck. They said that other systems, such as the Bradley Fighting
Vehicle, are headed in the same direction. Depot managers also pointed
out that the depots are not always assigned work sufficient to ensure
cost efficiency and technical competence and to preserve surge
capability. Additionally, the depots are not capable of providing some
core capabilities. For example, the depots do not have capability to
repair key components of the M1A2 tank, the Apache helicopter, and the
Bradley Fighting Vehicle for which core capability requirements were
identified. More specifically, Anniston does not have the capability to
support unique electronic components for the M1A2 tank, Corpus Christi
does not have the capability to support Apache Longbow unique
components, and Red River does not have the capability to support
electronic components for the Bradley A3 model. Our October 2001 report
identified a number of the same concerns with the fluctuations in core
capability identification and the loss of work required to sustain
depot core capabilities.[Footnote 20] DOD's latest policy on core,
which was released in January 2003, requires the services to develop an
assessment of what specific workload is necessary to achieve its core
goals at the DOD, service, and facility levels. However, the services
have not yet been tasked by DOD to recompute core capability
requirements based on the new policy. Officials said some changes to
the revised policy are expected to occur.
Strategic Planning Issues for Depots:
Although we previously recommended that a strategic plan for DOD-owned
depots be developed, neither the Office of the Secretary of Defense nor
the Department of the Army has implemented comprehensive or strategic
plans for defense maintenance to revitalize or protect the future
viability of its depot facilities and equipment and its depot
workers.[Footnote 21] The Army has taken steps to develop a strategic
plan for its depots, but it is not comprehensive or current and the
Army has not yet implemented it. The Office of the Secretary of Defense
has undertaken a depot planning study, but still has no depot strategic
plan.
Our prior reports have demonstrated that a strategic plan is critical
to the future viability of the defense depot system. For example, in
our October 2001 report, we pointed out that logistics activities
represent a key management challenge and that depot maintenance is an
important element of those activities.[Footnote 22] As such, we noted
that DOD was at a critical point with respect to the future of its
maintenance programs and that the future role for the military depots
in supporting the department's future maintenance programs was unclear.
Finally, we pointed out that before DOD can know the magnitude of the
challenge of revitalizing its depot facilities and equipment and its
depot workforce, it must first know what its future workloads will be;
what facility, equipment, and technical capability improvements will be
required to perform that work; and what personnel changes will be
needed to respond to retirements and workload changes. We recommended,
among other things, that the Secretary of Defense direct the Under
Secretary of Defense for Acquisition, Technology, and Logistics, in
conjunction with the military services, to establish expedited
milestones for developing strategic and related implementation plans
for the use of military depots that would identify desired short-and
long-term core capabilities and associated capital investments and
human capital needs. However, although the Department is conducting a
study that could lead to the development of a depot strategic plan, as
of July 2003, DOD still has no strategic plan that provides required
direction to shape the future of the depots if they are expected to
remain viable for the future. We again addressed the issue of the need
for strategic planning in our recent report on strategic workforce
planning for the DOD industrial workforce, noting that DOD has not
implemented our prior recommendations regarding the need for a DOD
depot strategic plan. [Footnote 23] However, absent a DOD depot plan,
the services have laid out a framework for strategic depot planning in
varying degrees, but this is not comprehensive.
While the Army has taken some actions regarding the development of a
strategic depot plan, its plan is not comprehensive, and implementation
of the plan was suspended. In January 2000, the Army Deputy Chief of
Staff for Logistics published Army Depot Maintenance Enterprise
Strategic Plan, a plan that provided mission and vision statements for
the Army depots and identified five strategic issues for which they
began developing action plans:
1. Identification and management of all depot maintenance requirements
for Army systems throughout all phases of their life cycles in the
Planning, Programming, and Budget Execution System.
2. Restructuring the process for determining the source of depot repair
to ensure that appropriate approval authorities are utilized for
decisions to rebuild, overhaul, upgrade, and repair decisions above a
certain threshold (e.g., dollar value).
3. Ensuring that the Army depot workforce is capable of meeting future
depot maintenance requirements.
4. Managing materiel/supplies (parts) used by the depots to provide for
more efficient depot operations.
5. Making Army depots more competitive with private-sector depot
maintenance providers.
Identifying these broad strategic issues, along with some objectives,
measures, and action plans, was a step in the right direction. However,
the Army did not finalize or implement its action plans. Army planners
told us that implementing the strategic plan was put on hold, pending
an effort to reassess depot capabilities and requirements as part of
the Army's effort to identify the depot capabilities that had
proliferated in field-level activities. The plan did not address depot
maintenance that is being performed in field-level activities. The
Army's assessment of depot proliferation was supposed to result in a
report to the Congress on this subject, but as previously discussed,
the Army has not yet provided this report. Furthermore, Army officials
stated that there has been no update to modify the strategic plan to
address how the Army will manage this category of depot work.
Conclusions:
Continuing issues about (1) the assignment of reduced workloads to Army
maintenance depots, (2) deficiencies in the process of quantifying both
core depot maintenance capabilities and the workload needed to ensure
cost efficiency and technical competence and to preserve surge
capability, and (3) strategic planning for depots raise significant
questions about the long-term viability of Army depots. We have
discussed these issues in the past, but they remain unresolved. It will
be important for the Congress and the Department of Defense to clarify
these issues to ensure the continued performance of required support
resources in the future.
In addition to the issues discussed in the past, we identified another
area where action would improve data reliability for Army depotsæthe
development and implementation of procedures for identifying and
reporting depot workload projections from the Army acquisition
community and from non-Army customers. By addressing both the
identification and reporting of initial forecasts as well as subsequent
changes to the forecasts, greater reliability should be achievable for
the Army Workload and Performance System. Furthermore, as DOD has
observed, improved projections of interserviced maintenance work would
benefit all depots, not just those of the Army.
Recommendations for Executive Action:
To improve the reliability of future maintenance workload projections
in all DOD maintenance depots, we recommend that the Secretary of
Defense through the Under Secretary of Defense for Acquisition,
Technology, and Logistics,
² require the Army Materiel Command in conjunction with the Army
acquisition community to develop and implement standard business rules
and procedures for identifying and reporting Army depot workload
projections from the Army acquisition community and:
² require the DOD depot maintenance community to develop and implement
ways to improve the identification and reporting of depot inter-service
workload projections across all the military services using standard
business rules and procedures.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, the Department partially
concurred with our recommendations to improve the reliability of future
workload projections. Appendix II contains the text of DOD's comments.
The Department partially concurred with the recommendation in our draft
report that the Army Materiel Command develop standard business rules
and procedures for identifying and reporting Army depot workload
projections. While agreeing that this could be done for work coming
from the Army acquisition community, the response noted that the
Department did not believe that the Army Materiel Command alone could
establish standard business rules and procedures for identifying and
reporting Army depot workload projections from the non-Army customers.
However, the Department agreed with us that a need exists for Army
Depots to have valid workload projections from the Army acquisition
community and non-Army customers and that standard business rules and
procedures are required. Moreover, the Department's response stated
that since the lack of workload projection data for inter-service depot
workloads should be addressed across all the military services, the
Department planned to initiate a study to examine how the
identification and reporting of depot inter-service workload
projections across all the military services can be improved.
Consequently, we modified our recommendation to address the
Department's comments.
The Department partially concurred with a second recommendation in the
draft report requiring the Army acquisition community and non-Army
customers to report depot workload projections for Army depot work
through the Army Workload and Performance System using the standard
business rules and procedures. The Department stated that it agreed in
concept that Army customers should provide Army depots with workload
projections, but that it currently does not appear feasible for all
non-Army customers to report depot workload projections for Army depots
through the Army Workload and Performance System. Therefore, we dropped
the reference to the Army Workload and Performance System from our
recommendation. The Department stated also that, as with the first
recommendation, it plans to address this recommendation with a study to
examine how the identification and reporting of inter-service workload
projections across the military services can be improved.
The Department also provided some technical comments for our draft
report that were incorporated where appropriate.
We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Secretary of the Army; 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 or Julia Denman,
Assistant Director, at (202) 512-4290 or denmanj@gao.gov. Other major
contributors to this report were Bobby Worrell, Janine Prybyla, Jane
Hunt, and Willie Cheely.
Sincerely yours,
Barry W. Holman
Director, Defense Capabilities and Management:
Signed by Barry W. Holman:
[End of section]
Appendix I: Scope and Methodology:
To answer the specific questions posed by the Ranking Minority Member,
Subcommittee on Military Readiness, House Committee on Armed Services,
we interviewed Army officials and analyzed pertinent information at
Army headquarters in the Washington, D.C., area; Headquarters, Army
Materiel Command in Alexandria, Virginia; and three subordinate Army
commands--the Army Aviation and Missile Command, Huntsville, Alabama;
Communications-Electronics Command, Fort Monmouth, New Jersey; and the
Tank-automotive and Armaments Command, Warren, Michigan. Additionally,
we interviewed depot managers and reviewed pertinent information at the
Army's five depots: Anniston Army Depot, Anniston, Alabama; Corpus
Christi Army Depot, Corpus Christi, Texas; Letterkenny Army Depot,
Chambersburg, Pennsylvania; Red River Army Depot, Texarkana, Texas; and
Tobyhanna Army Depot, Tobyhanna, Pennsylvania. We also made extensive
use of our prior work and ongoing work related to Army depot
maintenance.
To assess the trends in historical and future workloads assigned to the
Army depots, we analyzed workload information from the Army's automated
databases. Specifically, for historical workloads, we evaluated the
trend in workload hours for closed maintenance programs from the Army
Headquarters Application System for fiscal years 1987 through 2002. For
trends in future workloads, we used workload hours from the Army
Workload and Performance System for fiscal years 2003 through 2008. For
the reliability of future workload projections, we used our prior work
showing that Army depot workload estimates are subject to frequent
changes because of factors such as fluctuations in requirements and
funding levels. We also questioned Army officials and depot managers
about the reliability of the workload estimates as shown by the Army
Workload and Performance System.
In determining whether the depots have sufficient workload to promote
efficient maintenance operations, we compared metric data that others
and we have previously identified with data on the Army's current
operations. We examined data on key metrics to determine how well the
depots performed assigned workloads against key metrics and standards
such as depot-level capacity utilization and employee productivity. We
obtained metric data from the Army depots and from Headquarters, Army
Materiel Command. Since Headquarters, Army Materiel Command, could not
provide the data prior to 2001, the data for fiscal years 1999 and 2000
are from the depots. In those instances where the reported data for
fiscal years 2001 and 2002 differed, we used the data reported by
Headquarters, Army Materiel Command, because the headquarters data were
reported by the depots. To identify whether additional workloads are
possible, we relied upon our prior and ongoing work, which shows that
the Army had contracted with the private sector for maintenance
workloads that its depots had previously performed and that upgrades
and modifications of older systems and new weapon systems were a
potential source of work for the depots. We also questioned acquisition
and logistics officials at the subordinate commands with responsibility
for workloads for the depots about workloads that were being considered
for the Army depots and the limitations to bringing these workloads to
the depots. To identify whether initiatives are being implemented to
improve efficiency, we examined the plans and projects that the depots
had under the umbrella of lean manufacturing to improve maintenance
operations. In addition, we reviewed depot reports on the extent to
which these initiatives were improving operations.
To answer whether the Army has identified the depots' core capability
and provided its depots with workload to use that capability, we
reviewed the Department of Defense and Army guidance for computing core
capability requirements and associated workloads in December 1999 for
fiscal year 2001 and compared the results with workloads assigned to
the depots since fiscal year 1999. We also examined the department's
new methodology issued in January 2003 for computing core capability
requirements and questioned department and Army officials about the
schedule for implementing the new methodology. We also questioned depot
officials about the adequacy of workloads assigned and the extent to
which the work allows the depots to maintain necessary capabilities.
For the question of whether the Army has a long-range plan for the
future viability of an efficient depot system, we relied upon prior
work that shows that neither the department nor the Army had a
comprehensive defense maintenance strategic plan.
We conducted our review from September 2002 through June 2003 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Defense:
DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS
3500 DEFENSE PENTAGON WASHINGTON, DC 20301-3500:
JUN 17 2003:
Mr. Barry W. Holman:
Director, Defense Capabilities and Management U.S. General Accounting
Office, Room 4440B 441 G Street, NW:
Washington, D.C. 20548:
Dear Mr. Holman,
This is the Department of Defense (DoD) response to the General
Accounting Office (GAO) draft report, "DEPOT MAINTENANCE: Key
Unresolved Issues Affect The Viability Of The Army Depot System," (GAO
Code 03-682). The Department partially concurs with the report's
recommendations. For Army customers, the Department concurs with the
GAO recommendation that the Army Materiel Command should develop
standard business rules and procedures for identifying and reporting
Army depot workload projections from the Army acquisition community.
For non-Army customers, however, the Department does not agree with the
recommended method to obtain these outcomes, as explained in the
Department's enclosed response to the draft report's recommendations.
The Department agrees that there exists a need for Army depots to have
valid workload projections from the Army Acquisition community and non-
Army customers and that standard business rules and procedures are
required. The Army, and all other Services that perform inter service
workloads, require projections from their respective customers. These
projections are used by the performing facilities to match workforce to
workload and to develop the rates necessary to recoup operating
expenses. The Department believes that the lack of workload projection
data for inter-service depot workloads should be addressed across all
the Military Services, not just at Army depots. Consequently, the
Department will initiate a study to examine how the identification and
reporting depot inter-service workload projections across all the
Military Services can be improved.
The detailed DoD comments on the draft GAO report recommendations are
provided in the enclosures. Additionally, we have also enclosed
technical issues for your consideration to improve its accuracy and
clarity of the final report. The DoD appreciates the opportunity to
comment on the draft report.
Sincerely,
Allen W. Beckett
Principal Assistant:
Signed by Allen W. Beckett:
Enclosure: As stated:
GAO DRAFT REPORT (GAO CODE 03-682):
"DEPOT MAINTENANCE: KEY UNRESOLVED ISSUES AFFECT THE VIABILITY OF THE
ARMY DEPOT SYSTEM":
DEPARTMENT OF DEFENSE COMMENTS TO THE GAO RECOMMENDATIONS:
RECOMMENDATION 1: To improve the reliability of future workload
projections in the Army Workload and Performance System, the GAO
recommends that the Under Secretary of Defense for Acquisition,
Technology, and Logistics require the Army Materiel Command to develop
standard business rules and procedures for identifying and reporting
Army depot workload projections from the Army acquisition community and
non-Army customers in the Army Workload and Performance System. (p. 25/
GAO Draft Report):
DOD RESPONSE: Partially Concur. The Department of Defense concurs with
the GAO recommendation that the Army Materiel Command should develop
standard business rules and procedures for identifying and reporting
Army depot workload projections from the Army acquisition community.
However, the Department does not agree that the Army Materiel Command
alone can establish standard business rules and procedures for
identifying and reporting Army depot workload projections from the non-
Army customers.
The Department believes that the lack of workload projection data for
inter-service depot workloads should be addressed across all the
Military Services. Consequently, the Department will initiate a study
to examine how the identification and reporting depot inter-service
workload projections across all the Military Services can be improved.
RECOMMENDATION 2: The GAO recommended that the Under Secretary of
Defense for Acquisition, Technology, and Logistics require the Army
acquisition community and non-Army customers report depot workload
projections for Army depot work through the Army Workload and
Performance System using the standard business rules and procedures.
(p. 25/GAO Draft Report):
DOD RESPONSE: Partially Concur. The Department agrees in concept that
Army customers should provide workload projections to Army depots. For
Army customers, the Department believes that the Army should determine
the required systems that will be used for reporting depot workload
projections using the standard business rules and procedures.
Currently it does not appear feasible for all non-Army customers to
report depot workload projections for Army depot work through the Army
Workload and Performance System. As indicated in response to the first
recommendation, the Department also believes that the lack of workload
projection data for inter-service depot workloads should be addressed
across all the Military Services, not just at Army depots. Therefore,
the Department will initiate a study to examine how the identification
and reporting depot inter-service workload projections across all the
Military Services can be improved.
FOOTNOTES
[1] See U.S. General Accounting Office, Army Industrial Facilities:
Workforce Requirements and Related Issues Affecting Depots and
Arsenals, GAO/NSIAD-99-31 (Washington, D.C.: Nov. 30, 1998).
[2] 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).
[3] Several of the depots also do some manufacturing but generally for
small quantities of individual items needed in support of depot
overhaul and repair programs.
[4] For our analyses, non-Army customers include the Air Force, Navy,
Marine Corps, Defense Logistics Agency, foreign militaries, and
unspecified DOD and non-DOD agencies.
[5] For our analysis, we characterized the total maintenance program by
dollar value since the private sector does not report the work it does
in terms of the amount of time spent.
[6] The Army Tank-automotive and Armaments Command manages the Anniston
and Red River depots; the Army Aviation and Missile Command manages the
Corpus Christi and Letterkenny depots; and the Army Communications-
Electronics Command manages the Tobyhanna depot.
[7] This analysis did not include all of the depots' work, since the
data we analyzed did not break out the repair category for non-Army
customers and for a small amount of Army work.
[8] We reviewed the status of the AWPS development as required by the
Congress. See U.S. General Accounting Office, Army Logistics: Report on
Manpower and Workload System Inadequate and System Interface Untested,
GAO-03-21 (Washington, D.C.: Oct. 30, 2002).
[9] Reconstitution is the process, after a contingency/surge operation,
of making a unit or activity available again for steady-state
operational commitments. Reconstitution planning begins during the
initial stages of surge operations, and actual reconstitution of the
forces continues beyond the end of the contingency operation. Factors
to be considered in reconstitution planning include the maintenance of
equipment, restoring levels of consumables, lost training, an
examination of the impact of operations on personnel and attrition
rates, and post-contingency steady-state operational requirements.
[10] Recapitalization is the rebuilding and upgrading of currently
fielded systems to ensure operational effectiveness and a like-new
condition.
[11] The Air Force has such a database.
[12] Lean manufacturing is an industry best practice that is being
implemented in the five Army depots. Lean manufacturing focuses on
cutting costs while also shortening production lead times and time-to-
market; improving quality; and providing customers with what they want,
precisely when they want it.
[13] See GAO/NSIAD-99-31 and U.S. General Accounting Office, Defense
Depot Maintenance: DOD Shifting More Workload for New Weapon Systems to
the Private Sector, GAO/NSIAD-98-8 (Washington, D.C.: Mar. 31, 1998).
[14] See U.S. General Accounting Office, Depot Maintenance: Public-
Private Partnerships Have Increased, but Long-Term Growth and Results
Are Uncertain, GAO-03-423 (Washington, D.C.: Apr. 10, 2003).
[15] This factor represents the amount of work that a direct labor
employee is estimated to be able to accomplish in 1 fiscal year.
[16] Performance-based logistics is the preferred support concept for
DOD systems. According to the department, it is an integrated
acquisition and logistics process for buying weapon system capability
that is designed to delineate outcome performance goals of weapon
systems; ensure that responsibilities are assigned; provide incentives
for attaining these goals; and facilitate the overall life-cycle
management of system reliability, supportability, and total ownership
costs. Performance-based logistics contracts were negotiated by system
program offices for systems such as the C-17 Globemaster cargo
aircraft.
[17] See GAO-03-423.
[18] Report 106-616 (May 12, 2000) p. 340.
[19] See GAO-02-105.
[20] See GAO-02-105.
[21] See U.S. General Accounting Office, Defense Maintenance:
Sustaining Readiness Support Capabilities Requires a Comprehensive
Plan, GAO-01-533T (Washington, D.C.: Mar. 23, 2001).
[22] See GAO-02-105.
[23] See U.S. General Accounting Office, DOD Civilian Personnel:
Improved Strategic Planning Needed to Help Ensure Viability of DOD's
Civilian Industrial Workforce, GAO-03-472 (Washington, D.C.: Apr. 30,
2003).
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