Depot Maintenance
Army Needs Plan to Implement Depot Maintenance Report's Recommendations Gao ID: GAO-04-220 January 8, 2004Each year, the U.S. Army spends about $3 billion on depot-level maintenance and repair work for weapons systems and other equipment. However, because its data gathering and reporting processes have been limited, the Army historically has been unable to fully identify how much depotlevel maintenance takes place outside its five public depots. As a result, it has not been able to determine with precision how well it was meeting statutory requirements to limit contracted depot-level maintenance work to 50 percent of the program budget. In the House report on the Fiscal Year 2001 Defense Authorization Act, Congress directed the Army to report on the proliferation of depot-level maintenance work at nondepot facilities and asked GAO to review that report. GAO examined the extent to which (1) the Army's report identifies the amount of depot-level maintenance work done outside public depots; (2) the Army can account for its depot-level maintenance workload, as required by statute; and (3) the corrective actions in the report are likely to address the proliferation issue and enhance the Army's reporting.
The Army's proliferation report, issued in September 2003, did not fully identify the extent of depot-level maintenance work performed outside the Army's public depots. The report estimated that the Army underreported its fiscal year 2001 $2.7 billion depot-level maintenance program by $188.6 million but indicated that this was a rough estimate and that further analysis is needed. It attributed this underreporting largely to work performed in two categories--work that met the criteria for depot-level maintenance work but was not reported as such and work at nondepot field facilities that involved depot-level maintenance tasks. GAO's prior reviews also identified these categories as key contributors to underreporting. While the report noted that the Army has an extensive maintenance infrastructure with redundant capabilities, it did not address the extent of this redundancy. The lack of complete information on the extent of depot-level maintenance workloads limits the Army's ability to fully account for this work in the Department of Defense's (DOD) annual report to Congress on the allocation of public- and private-sector depot-level maintenance spending. The 2003 proliferation report identified key Army limitations, including inconsistencies in applying the congressionally mandated definition of "depot maintenance," weaknesses in its management information systems, and the failure to follow established policies and procedures for authorizing depot-level maintenance work at nondepot facilities. GAO's current analysis and prior work confirmed that these limitations make it difficult for the Army to fully account for its maintenance workload as it moves closer to the 50 percent ceiling for work performed by contractors. GAO's most recent report on the Army's 50-50 reporting for fiscal year 2002 showed that, after adjustments for known underreporting, the percentage of private-sector work increased to 49 percent. If implemented, the 29 recommendations in the 2003 report could enhance the Army's ability to report on its 50-50 data and to evaluate the proliferation of depot-level maintenance work at nondepot facilities. The recommendations, which are consistent with those that GAO has previously made, are focused on key problem areas, such as the need for an improved understanding about the 50-50 rule and for compliance with reporting policies and procedures. Efforts have been undertaken to address some of the problem areas. However, the Army has not yet developed an action plan that identifies priorities, time frames, roles and responsibilities, evaluation criteria, and resources for managing the implementation of the recommendations. Until the Army does this, it will be difficult to assess to what extent the Army is likely to meet its desired objectives. While improvements should be accomplished, the complexity and vastness of the Army's maintenance system and continuing questions about such issues as the definition of "depot maintenance" and changing maintenance strategies could continue to present challenges in fully recording all maintenance work that should be captured.
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-04-220, Depot Maintenance: Army Needs Plan to Implement Depot Maintenance Report's Recommendations
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Report to Congressional Committees:
United States General Accounting Office:
GAO:
January 2004:
DEPOT MAINTENANCE:
Army Needs Plan to Implement Depot Maintenance Report's
Recommendations:
GAO-04-220:
GAO Highlights:
Highlights of GAO-04-220, a report to Senate and House Armed Services
Committees
Why GAO Did This Study:
Each year, the U.S. Army spends about $3 billion on depot-level
maintenance and repair work for weapons systems and other equipment.
However, because its data gathering and reporting processes have been
limited, the Army historically has been unable to fully identify how
much depot-level maintenance takes place outside its five public
depots. As a result, it has not been able to determine with precision
how well it was meeting statutory requirements to limit contracted
depot-level maintenance work to 50 percent of the program budget. In
the House report on the Fiscal Year 2001 Defense Authorization Act,
Congress directed the Army to report on the proliferation of depot-
level maintenance work at nondepot facilities and asked GAO to review
that report. GAO examined the extent to which (1) the Army‘s report
identifies the amount of depot-level maintenance work done outside
public depots; (2) the Army can account for its depot-level
maintenance workload, as required by statute; and (3) the corrective
actions in the report are likely to address the proliferation issue
and enhance the Army‘s reporting.
What GAO Found:
The Army‘s proliferation report, issued in September 2003, did not
fully identify the extent of depot-level maintenance work performed
outside the Army‘s public depots. The report estimated that the Army
underreported its fiscal year 2001 $2.7 billion depot-level
maintenance program by $188.6 million but indicated that this was a
rough estimate and that further analysis is needed. It attributed this
underreporting largely to work performed in two categories”work that
met the criteria for depot-level maintenance work but was not reported
as such and work at nondepot field facilities that involved depot-
level maintenance tasks. GAO‘s prior reviews also identified these
categories as key contributors to underreporting. While the report
noted that the Army has an extensive maintenance infrastructure with
redundant capabilities, it did not address the extent of this
redundancy.
The lack of complete information on the extent of depot-level
maintenance workloads limits the Army‘s ability to fully account for
this work in the Department of Defense‘s (DOD) annual report to
Congress on the allocation of public- and private-sector depot-level
maintenance spending. The 2003 proliferation report identified key
Army limitations, including inconsistencies in applying the
congressionally mandated definition of ’depot maintenance,“ weaknesses
in its management information systems, and the failure to follow
established policies and procedures for authorizing depot-level
maintenance work at nondepot facilities. GAO‘s current analysis and
prior work confirmed that these limitations make it difficult for the
Army to fully account for its maintenance workload as it moves closer
to the 50 percent ceiling for work performed by contractors. GAO‘s
most recent report on the Army‘s 50-50 reporting for fiscal year 2002
showed that, after adjustments for known underreporting, the
percentage of private-sector work increased to 49 percent.
If implemented, the 29 recommendations in the 2003 report could
enhance the Army‘s ability to report on its 50-50 data and to evaluate
the proliferation of depot-level maintenance work at nondepot
facilities. The recommendations, which are consistent with those that
GAO has previously made, are focused on key problem areas, such as the
need for an improved understanding about the 50-50 rule and for
compliance with reporting policies and procedures. Efforts have been
undertaken to address some of the problem areas. However, the Army has
not yet developed an action plan that identifies priorities, time
frames, roles and responsibilities, evaluation criteria, and resources
for managing the implementation of the recommendations. Until the Army
does this, it will be difficult to assess to what extent the Army is
likely to meet its desired objectives. While improvements should be
accomplished, the complexity and vastness of the Army‘s maintenance
system and continuing questions about such issues as the definition of
’depot maintenance“ and changing maintenance strategies could continue
to present challenges in fully recording all maintenance work that
should be captured.
What GAO Recommends:
GAO recommends that the Secretary of the Army develop an action plan
to implement the recommendations in the Army‘s 2003 maintenance
proliferation report. DOD concurred with GAO‘s recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-04-220.
To view the full product, 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]
Contents:
Letter:
Results in Brief:
Background:
Army's 2003 Proliferation Report Did Not Fully Identify Depot-Level
Maintenance Performed outside Public Depots:
Army Cannot Provide Congress with a Complete Accounting of Its Depot-
Level Maintenance Work:
Army Needs Action Plan to Address Proliferation and Reporting Issues:
Conclusions:
Recommendation:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Army Maintenance Sites:
Appendix III: Army Report's Issues and Recommendations:
Appendix IV: Comments from the Department of Defense:
Related GAO Products:
Tables:
Table 1: Categories in Which Depot-Level Maintenance Work Was Not
Identified in Fiscal Year 2001:
Table 2: Capacity and Capability Information on 17 Sites That
GAO Visited:
Figures:
Figure 1: Army Maintenance Structure:
Figure 2: Various Army Maintenance Facilities:
Abbreviations:
DOD: Department of Defense:
GAO: General Accounting Office:
United States General Accounting Office:
Washington, DC 20548:
January 8, 2004:
The Honorable John W. Warner:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Duncan L. Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
Each year the Department of Defense (DOD) submits a report to Congress
showing that billions of dollars have been spent on depot maintenance
and repairs for Army weapons systems and support equipment.[Footnote 1]
In recent years, depot-level maintenance and repair work has expanded
from the traditional fixed-location public depots to numerous nondepot
repair facilities in the field. This shifting of depot-level
maintenance workload to field facilities has contributed to uncertainty
about the magnitude of depot-level maintenance capabilities and the
distribution of work between public and private facilities. In October
1999, we reported on the Army's first congressionally directed report
on the proliferation of depot-level maintenance activities at nondepot
facilities, noting that the Army faced a number of continuing
challenges in attempting to address the fragmentation of depot-level
maintenance work and the proliferation of depot-level maintenance
facilities. We noted that the Army's report did not sufficiently
identify the extent of depot-level maintenance work performed at
nondepot facilities.[Footnote 2]
In the House Armed Services Committee's report on the fiscal year 2001
defense authorization act,[Footnote 3] Congress directed the Secretary
of the Army to provide a report that identifies the proliferation of
depot-level maintenance performed outside of the five public depots.
The Army formally submitted its report in September 2003. The
committee's report also requested that we provide a review of the
Army's report, including an assessment of the Army's ability to comply
with 10 U.S.C. 2466, which governs the distribution of depot-level
maintenance funds between public and private facilities. Our review
addresses the extent to which (1) the Army's report identifies the
amount of depot-level maintenance work performed outside the public
depots, (2) the Army can account for its depot-level maintenance
workload as required by 10 U.S.C. 2466, and (3) the corrective actions
in the Army report are likely to address the proliferation of depot-
level maintenance activities and enhance the accuracy and completeness
of 50-50 reporting.
To address these objectives, we drew largely from the body of work we
have done in the past on the Army's depot-level maintenance issues. In
addition, we interviewed officials at Army headquarters, Army major
commands, and maintenance facilities at selected field installations to
gain a better understanding of the implications of the Army report's
findings and recommendations. A detailed description of our scope and
methodology is included in appendix I.
Results in Brief:
The Army's 2003 report does not fully identify the extent of depot-
level maintenance work performed at nondepot facilities and, thus, is
not fully responsive to the mandate's requirement that the Army
identify the proliferation of these types of facilities. The report's
identification of proliferation was limited to an estimated $188.6
million that the Army might have underreported in its $2.7 billion
depot-level maintenance program for fiscal year 2001. This amount was
said to be a preliminary rough estimate that needed further validation
and, in our view, is not fully indicative of all the depot-level
maintenance work being done at nondepot facilities. The report
indicated that this underreporting was largely due to the performance
of depot-level maintenance tasks by nondepot facilities in such areas
as (1) programs that did not identify depot-level maintenance work
tasks but met the criteria for depot-level maintenance work and
(2) field-level maintenance involving depot-level tasks. From our prior
work and current analysis, we agree that these two areas are major
contributors to the Army's underreporting of its depot-level
maintenance work. Although the report pointed out that the Army has an
extensive maintenance infrastructure with redundant capabilities and
capacities, it did not provide any information on the extent of this
redundancy or the types of maintenance facilities that could be
consolidated. Otherwise, the Army's report was consistent with our
findings in recent years and our work for this engagement.
The lack of complete information on the extent of depot-level
maintenance work performed in nondepot facilities limits the accuracy
and completeness of DOD's annual report to Congress on the allocation
of depot-level maintenance funds between the public and private
sectors. In our analysis of the Army's 50-50 reporting, we have said
that underreporting depot work at nondepot facilities is one of the
limitations affecting the Army's ability to fully account for its
depot-level maintenance work. Consistent with our prior work in this
area, the Army's report identified several key factors affecting the
Army's ability to precisely capture and report its depot-level
maintenance data at nondepot facilities. These factors include (1) the
inconsistent application of the congressionally mandated definition of
"depot maintenance" and related guidance, (2) weaknesses in management
information systems for collecting and reporting workload data, and (3)
the failure to follow established policies and procedures for
authorizing depot-level work at field-level facilities and outsourcing
depot-level maintenance workloads. Our current analysis and our prior
work identify these factors as underlying causes affecting the Army's
determination that it has complied with the 50-50 depot-funding
requirement. While neither the Army nor we can precisely quantify the
extent of depot-level maintenance work that should have been included
in the 50-50 analysis, this information is key for the Army to
effectively manage its depot-level maintenance program and for ensuring
the accurate and complete reporting of where depot-level maintenance is
being performed as required by the 50-50 legislation. Such data become
even more significant as the Army moves closer to the ceiling permitted
for work performed by contractors. For example, the Army's depot-level
maintenance data for fiscal year 2002 indicated that funding in the
private sector for depot-level maintenance was below the 50 percent
limit. However, our adjustments for known errors in reporting increased
the percentage of private-sector work to 49 percent from the 46.5
percent reported by the Army. An increase of more than 1 percent in the
use of the private sector to perform more depot-level maintenance in
the future could cause the Army to exceed its statutory limitation and
thereby be required to seek a national security waiver and notify
Congress as provided for in 10 U.S.C. 2466.
If fully implemented, the recommendations in the Army's report could
improve the identification of additional depot-level maintenance work
in nondepot facilities, resulting in improving the accuracy and
completeness of the 50-50 reporting. The Army's proliferation report
generally addressed key problem areas, and the recommendations were
consistent with recommendations we have made in the past. Efforts have
been undertaken to address some of the problem areas; however, no
action plan to manage the implementation has been developed. Evaluating
the success of the proposed 29 recommendations will be difficult until
the Army develops an action plan with priorities, time frames,
responsible organizations, and evaluation criteria, and until the
resources required have been identified. At the same time, while
improvements should be accomplished, the complexity and vastness of the
Army's maintenance system and continuing questions about such issues as
the definition of "depot maintenance" and changing maintenance
strategies could continue to present challenges in fully recording all
depot-level maintenance work that should be captured.
In this report, we are recommending that the Army establish a plan to
manage the implementation of the recommendations in the depot
proliferation report. In commenting on a draft of this report, DOD
concurred with our recommendation, noting that the Army is establishing
an integrated product team to develop an action plan. The response
stated that some of the recommendations in the Army's report would
require modification.
Background:
The Army uses maintenance capabilities in both the public and private
sectors to maintain, overhaul, and repair its military weapons systems,
such as missiles, combat vehicles, tactical vehicles, aircraft, and
communication and electronic equipment. The level at which maintenance
work is performed depends largely on authorized capability, worker
skills, and predefined work requirements. Legislative
requirements: which play an important role in managing the allocation of
depot-level maintenance work: mandate that DOD provide Congress with
annual reports on the distribution of funding for depot-level
maintenance workloads in the public and private sectors.
The Army assigns maintenance work to four categories--unit support,
direct support, general support, and depot-level support.[Footnote 4]
Unit and direct support workloads, which are limited to routine or
recurring requirements, such as oil changes and the removal and
replacement of components, are performed at military units in field
locations and funded by direct appropriations for operations and
maintenance.
General support, which consists of the repair and overhaul of parts and
assemblies and some end items such as trucks, is generally performed at
fixed (nonmobile) industrial facilities located on Army posts, camps,
and stations, and it is funded by direct appropriations for operations
and maintenance.[Footnote 5] Military personnel, government-employed
civilians, or contractor employees may perform this maintenance.
Depot-level support, which includes the overhaul; upgrading; and
rebuilding of parts, assemblies, and subassemblies; and testing and
reclamation of equipment, is the most intensive category of maintenance
and requires the highest level of skilled workers and more
sophisticated test and plant equipment. It traditionally has been
performed by (1) government-employed civilians working at government-
owned industrial facilities under the command and control of the Army
Materiel Command (currently five public depots) or (2) contractor
personnel working in contractor owned and operated facilities
performing work specified by Army Materiel Command-managed maintenance
contracts. The Army's five government-operated maintenance
depots[Footnote 6] are managed within the Army Working Capital
Fund.[Footnote 7] Contract depot-level maintenance work is not managed
under the working capital fund.
Figure 1: Army Maintenance Structure:
[See PDF for image]
[End of figure]
The Army has two categories of depot-level maintenance activities:
* Activities that have been designated and organized by design and
purpose to primarily perform depot-level maintenance and repair tasks.
These activities would include the Army Materiel Command's public
depots; the Army's forward deployed maintenance depots; and contractor
depots, primarily located at both the national and installation levels.
* Activities below the depot level that have been granted approval to
perform specific depot-level tasks through a special or one-time
authorization or that have been designated as a source of repair.
These activities include Army National Guard Readiness Sustainment
Maintenance Sites and Aviation Classification Repair Activity Depots,
Army Reserve Installation Materiel Maintenance Activities, and Army
Forces Command Contract Maintenance Facilities. These activities are
primarily located at the installation level, and the work may be done
by either government or contractor personnel.
Operations of the Army depots are guided by legislative requirements
that divide the amount of depot work between the public and private
sectors and add specificity to how such work is to be defined. For
example, 10 U.S.C. 2464 provides for a government owned and operated
core logistics capability that is sufficient to ensure an effective and
timely response to a mobilization or other national emergency. Also, 10
U.S.C. 2466 generally prohibits the use of more than 50 percent of the
funds made available in a fiscal year for depot-level maintenance and
repair by nonfederal personnel.
In addition, 10 U.S.C. 2460 defines depot-level maintenance to
encompass material maintenance or repair requiring the overhaul,
upgrading, or rebuilding of parts, assemblies, or subassemblies and the
testing and reclamation of equipment, regardless of the source of funds
for the maintenance or repair or the location where maintenance or
repair work is performed. Depot-level maintenance also encompasses
software maintenance, interim contractor support,[Footnote 8] and
contractor logistics support[Footnote 9] to the extent that work
performed in these areas is depot-level maintenance. The statute
excludes from depot-level maintenance the nuclear refueling of an
aircraft carrier, the procurement of major modifications or upgrades of
weapons systems that are designed to improve program performance, and
the procurement of parts for safety modifications, although the term
"depot maintenance" does cover the installation of parts for safety
modifications. Congress has made changes to various depot-level
maintenance requirements over the years. For example, the 1998 Defense
Authorization Act established a statutory definition of depot-level
maintenance and repair and increased DOD's authority to use its depot-
level maintenance funds for the private sector's performance of the
work from 40 to 50 percent.[Footnote 10]
On the basis of statutory language defining depot-level maintenance,
the Office of the Secretary of Defense issues annual guidance to the
military departments for reporting their public-private workload
allocations. The military departments also issue internal instructions
to manage the data collection and reporting process tailored to their
individual organizations and operating environments.
As we have reported in recent years in examining DOD's compliance with
its so-called "50-50 requirement" under 10 U.S.C. 2466, all of the
military departments have continuing data errors and inconsistencies in
reporting and problems in documenting and independently validating
their annual reports. We also have recognized the limitations of their
financial systems, operations, and controls, as well as their
continuing inability to capture and report the full costs of depot-
level maintenance programs. Some of our most recent reports on depot-
level maintenance issues are listed in the Related GAO Products section
of this report.
We previously reported that the Army had not sufficiently identified
the extent of depot-level maintenance work performed at nondepot
facilities in its April 14, 1999, report to the House Committee on
Armed Services on depot proliferation.[Footnote 11] While the Army's
report indicated that 40 staff years of depot-level maintenance work
was performed outside of the formal depot system by nondepot
maintenance providers operating under specialized repair authorities,
it also recognized that the figure was likely understated for a variety
of reasons to include limitations in systems and procedures to fully
quantify such work. We agreed. We also noted that in July 1999 the Army
designated its Army Materiel Command as its National Maintenance
Manager with responsibility for overseeing the Army's logistics and
maintenance support programs and managing maintenance facilities. In
doing so, we noted then that while the Army recognized that it needed
to modify and standardize Army data systems to fully account for depot-
level maintenance work at all locations, it had not established clear
action plans, milestones, and funding requirements for doing so.
Our September 2003 report on DOD's compliance with the 50-50
requirement found that the Army's latest reporting on depot-level
workloads for fiscal years 2001 and 2002 had utilized a new, more
centralized financial system to collect 50-50 data that corrected some
of the transcription errors we had found the previous year but that we
continued to find errors, omissions, and inconsistencies in its
data.[Footnote 12] Moreover, we reported that, as in prior years, the
Army underreported public-and private-sector depot-level maintenance
work at field locations as it continues unfinished efforts to
consolidate maintenance activities and better control the proliferation
of depot-level tasks at nondepot facilities.
Army's 2003 Proliferation Report Did Not Fully Identify Depot-Level
Maintenance Performed outside Public Depots:
Although the mandate directed the Army to identify the proliferation of
depot-level maintenance performed outside the public depots, the Army's
report on depot-level maintenance proliferation did not fully identify
the extent of depot-level maintenance work performed at nondepot
facilities. Instead, the report estimated that depot-level maintenance
work valued at $188.6 million for fiscal year 2001 was not included in
the Army's depot-level maintenance data and that further validation of
this amount was needed. While this estimate may not be fully indicative
of depot-level maintenance work being performed outside the public
depots, it indicates underreporting in this area that is consistent
with the observations we have made in our prior work. Although the
report recognized that the Army has redundant capabilities and
capacities, it did not provide any information on the extent of this
redundancy or the extent of maintenance activities that could be
consolidated. We also have previously reported the existence of this
problem.[Footnote 13]
Estimate of Work outside Depots Is Incomplete:
While the Army's report provided an estimate of depot-level maintenance
work that was not appropriately identified as such in fiscal year 2001,
it acknowledged that the amount was incomplete and needed further
validation. The report listed seven specific areas where depot-level
maintenance work performed by nondepot facilities was not identified
and estimated this amounted to be $188.6 million. As illustrated by
table 1, most of the unidentified amount occurred in field-level
facilities that perform depot-level maintenance tasks. According to the
report, two categories of work accounted for about 75 percent of the
$188.6 million. These were facilities that performed field-level
maintenance under the National Maintenance Program[Footnote 14] with
embedded depot tasks and those under One-Time Repair
authorizations.[Footnote 15] The report pointed out that some of the
unidentified depot-level maintenance work resulted from
a misunderstanding between the Army Materiel Command and its
subordinate commands over which organization would report this type
of work.
Table 1: Categories in Which Depot-Level Maintenance Work Was Not
Identified in Fiscal Year 2001:
Category of work not identified: 1. The overhaul, upgrading, and
rebuilding of equipment that met the definition of depot-level
maintenance; Amount: $3.3; Percent: 1.8.
Category of work not identified: 2. Reimbursable depot support at the
installation level; Amount: 22.4; Percent: 11.9.
Category of work not identified: 3. Maintenance covered by warranty
associated with the purchase price of equipment; Amount: 4.0; Percent:
2.1.
Category of work not identified: 4. Field-level maintenance under the
National Maintenance Program with embedded depot-level tasks; Amount:
75.9; Percent: 40.2.
Category of work not identified: 5. Contract support at a public
depot; Amount: 10.4; Percent: 5.5.
Category of work not identified: 6. Maintenance tasks performed under
Specialized Repair Authority; Amount: 7.6; Percent: 4.0.
Category of work not identified: 7. Maintenance tasks performed under
One-Time Repair authorization at field-level facilities; Amount: 65.0;
Percent: 34.5.
Category of work not identified: Total; Amount: $188.6; Percent: 100.0.
Source: U.S. Army's 2003 Proliferation Report.
[End of table]
The report's identification of unidentified depot-level maintenance
work performed by nondepot facilities is consistent with our prior
reviews of the Army's annual 50-50 data. For example, in our most
recent report, we identified work categories such as unreported one-
time repair actions and unreported work by commands that did not
receive Army reporting guidance, which contributed to the Army's
inability to fully account for its depot-level maintenance work in
2002.[Footnote 16] We noted that, as in past years, the Army did not
fully identify public-and private-sector depot-level maintenance work
at field locations as it continued unfinished efforts to consolidate
maintenance activities and better control the proliferation of depot-
level tasks at nondepot locations. While neither we nor the Army can
precisely identify the amount of depot-level maintenance work being
performed in nondepot maintenance facilities, our prior work and the
Army's latest report suggest that the $188.6 million estimate should
not be construed as fully representing the amount of depot-level
maintenance work performed at nondepot facilities.
Army Has an Extensive Maintenance Infrastructure, but Capacity for
Depot Maintenance Activities at Nondepot Locations Has Not Been Fully
Addressed:
The Army's proliferation report pointed out that the Army's maintenance
infrastructure has redundant capabilities and capacities that could be
consolidated and streamlined to be more cost-effective. While the
active Army, Army National Guard, and Army Reserve operate extensive
maintenance facilities, some of which have the capability and capacity
to perform depot-level maintenance work, the report did not provide
any data to quantify the extent of redundancy or identify any possible
candidates for consolidation. It did suggest that the Army further
study the issue for opportunities to streamline its current expansive
depot-level maintenance infrastructure. Moreover, the Army's full
implementation of its National Maintenance Program: another report
recommendation: is also intended to address streamlining the Army's
maintenance infrastructure.
While we did not attempt to identify the full extent of this
maintenance infrastructure as part of this review, our analysis
supports the Army report's contention that the Army has extensive
nondepot facilities, some of which have the capability and capacity for
depot-level maintenance tasks and are performing depot-level
maintenance work. At the Army sites we visited, we observed maintenance
activities involved with all levels of maintenance for ground and
aviation systems. Similar to the Army's public depots, these activities
occupied large facilities that included machine shops, automobile and
heavy-equipment repair shops, paint and body shops, and sandblasting
areas. The pictures in figure 2 show some contrast and similarities in
maintenance facilities at depot and nondepot locations.
Figure 2: Various Army Maintenance Facilities:
[See PDF for image]
[End of figure]
Some of the activities had the capability and capacity for depot-level
maintenance activities and were performing depot-level maintenance
work. For example, the Readiness Business Center at Fort Campbell,
Kentucky, has been authorized to perform depot-level maintenance tasks
to repair components for tactical wheeled vehicles, radios, and
helicopters. Of the total $27.1 million maintenance work performed by
the Business Center in fiscal year 2002, about $4.5 million, or about
17 percent, was identified as depot-level maintenance. Also maintenance
officials at several facilities at Fort Riley, Kansas: three of them
operated by the National Guard, one by the Fort Riley Directorate of
Logistics, one by the Forces Command, and one by the Army
Reserve: estimated that their maintenance work for fiscal year 2002
totaled about $58.5 million. The National Guard performed about $35
million worth of depot-level maintenance in fiscal year 2002 and
expects this workload to significantly increase. More details on the
Army's maintenance infrastructure are provided in appendix II.
We have previously reported on the Army's proliferation of facilities
that perform depot-level maintenance work and the lack of a strategic
plan for depots to guide its decisions on this issue. In an October
1999 report, we pointed out that the Army's April 1999 study of the
proliferation of depot-level maintenance activities at nondepot
facilities did not sufficiently identify the extent of this type
work.[Footnote 17] We also highlighted that the Army's study, citing
inadequate data on the subject of proliferation, did not make any
recommendations for consolidating depot-level maintenance facilities.
We noted that a key challenge that the Army faced was determining and
overseeing the amount of depot-level maintenance capabilities
controlled by major commands in the active Army and the Army National
Guard. For various reasons, these commands were reluctant to reduce
their present capability for performing depot-level maintenance
workloads. For example, Reserve and National Guard Bureau officials
said that having local maintenance facilities capable of performing
some depot-level tasks was a readiness issue in that such facilities
allowed their units more rapid turnaround time on equipment requiring
this type of repair.
In July 2003 we reported that work performed in the Army's public
depots had declined by 36 percent from fiscal year 1987 through fiscal
year 2002, while the total depot-level maintenance program
grew.[Footnote 18] We pointed out that future workload projections
indicated further decline but that the full impact of the Iraq conflict
on future depot-level workload was largely unknown. Among the host of
factors that contributed to this decline were (1) DOD's policy for
greater reliance on the private sector for depot-level support of new
weapons systems and major upgrades and (2) its increased reliance on
the use of regional repair activities and private-sector contractors
for work that might otherwise be done in the depots. We noted that
neither DOD nor the Army had a comprehensive and current depot-level
maintenance strategic plan, which was an essential aspect of ensuring
future depot efficiency and viability.
Army Cannot Provide Congress with a Complete Accounting of Its Depot-
Level Maintenance Work:
Without complete information on the extent of depot-level maintenance
work performed in nondepot facilities, DOD's annual report to Congress
cannot fully account for the allocation of depot-level maintenance
funds between the public and private sectors. In our analysis of DOD's
50-50 reporting, we have said that underreporting depot work in
nondepot facilities is one of the limitations affecting the Army's
ability to fully account for its depot-level maintenance work.
Consistent with our work in this area, the Army's report on
proliferation identifies a number of factors that preclude the Army
from fully capturing and reporting its depot-level maintenance data at
nondepot facilities. These factors include (1) inconsistent application
of the congressionally mandated definition of "depot maintenance" and
related guidance, (2) weaknesses in the management information systems
for collecting and reporting data, and (3) the failure to follow
established policies and procedures for authorizing depot-level work at
field-level facilities and outsourcing work. Our current analysis and
our prior work identify these factors as underlying causes affecting
the Army's determination that it has complied with the 50-50 rule.
Furthermore, these limitations will become more significant as the Army
approaches the statutory ceiling on the performance of depot-level
maintenance work by contract.
Underreported Depot-Level Work Performed by Nondepot Maintenance
Facilities Affects Accuracy of 50-50 Report:
We have reported in the past that by not having complete information on
the amount of depot-level maintenance work being performed in nondepot
facilities, DOD cannot provide Congress with an accurate and complete
report regarding the allocation of depot-level maintenance between the
public and private sectors as required by 10 U.S.C. 2466. For example,
our September 2003 report stated that our prior 50-50 reports have
documented continuing problems and shortcomings in accurately and
consistently reporting depot-level maintenance accomplished by both
public-and private-sector sources at nondepot locations.[Footnote 19]
For example, one-time depot repair actions at unit-level facilities
went unreported. Other nondepot work was not reported because some
commands did not receive 50-50 instructions and others misapplied the
guidance. Contractors performed some of this work, and military or
civilian government employees performed some of it. While neither the
Army nor we know the extent of unreported work nor the amount performed
by public-and private-sector employees, the impact effectively limits
the accuracy and completeness of DOD's report to Congress on the
allocation of depot-level maintenance funds between the public and
private sectors. Additionally, as discussed below, both the Army and we
have identified three key factors inhibiting the Army's ability to
accurately and completely report depot-level maintenance work performed
at nondepot facilities.
Inconsistent Application of Depot-Level Maintenance Definition and 50-
50 Guidance:
A key factor inhibiting the Army's ability to accurately and completely
identify all depot-level maintenance work performed in nondepot
facilities in DOD's 50-50 report is that Army military activities
inconsistently apply the congressionally mandated definition of "depot
maintenance." The Army's proliferation report concluded that the
congressionally mandated definition of depot-level maintenance is not
widely known below the major command headquarters. In addition, the
definition is open to interpretation, and the reporting guidance is not
always well defined.
At most of the commands and installations we visited, maintenance
officials said that, in determining whether a maintenance task is
depot-level maintenance, they follow the guidance found in the
Army's Maintenance Allocation Charts; technical manuals; and source,
maintainability, and recovery codes for reparable components rather
than apply the congressionally mandated definition. They expressed
concerns that the congressional definition is not always consistent
with this guidance, is too broad, and is subject to too much
interpretation over what maintenance tasks should be counted as depot-
level tasks. For example, officials at the National Guard Bureau said
that applying the definition to repair work performed by direct support
and general support activities caused uncertainty in that the bureau
considered most of the work at these levels to be nondepot-level work
and to identify what work should be considered depot-level work
required subjective decisions. Officials at the Reserve Command said
that, while only maintenance work defined by the Army's technical
manuals as depot-level work should be reported as such, under the
expanded definition of depot-level maintenance, some work defined as
below depot-level could involve depot-level tasks such as changing and
swapping out engines and transmissions for wheeled vehicles. Officials
at the installation maintenance sites we visited made similar comments.
In commenting on the proliferation report, the Army Materiel Command
said that the application of the definition of depot-level maintenance
contributed to the report's findings that depot-level maintenance tasks
at nondepot facilities were being underreported. The command added that
tasks performed by these facilities were not distinguished as depot-
level tasks in the Army guidance but, in the aggregate, these tasks may
be equivalent to depot-level maintenance. Finally, the command said
that the Army could only approximate the extent of work performed at
nondepot facilities because it currently does not have a system to
precisely capture information on maintenance work for DOD's 50-50
report.
In prior reports, we have concluded that the Army had not revised its
maintenance policies and technical manuals to reflect the expanded
definition of depot-level maintenance and, as a result, any attempt to
estimate its extent at local facilities would be misleading.[Footnote
20] We also recently reported that some Army commands did not receive
50-50 instructions and that others misapplied the guidance.[Footnote
21] The Army's 2003 report indicates that the Army will have to make
these changes in its maintenance policies and technical manuals. For
example, in recognizing that the Army had not yet incorporated the
expanded definition into its policies and procedures for 50-50
reporting, the Army's report suggested that the Army (1) provide more
explicit guidance for 50-50 reporting to help ensure that its commands
better understood reporting requirements and (2) develop an easy-to-use
reference guide to help the commands better determine what maintenance
work should be included in the 50-50 report.
Army's Management Information Systems Are Inadequate:
Inadequate Army management information systems are a second key factor
inhibiting the Army's ability to fully capture depot-level maintenance
work performed in nondepot facilities. The Army's problems with its
management information systems are longstanding. In a December 2000
report, the Army Logistics Transformation Agency concluded that the
Army's maintenance environment was characterized by many "stovepipe"
information systems and application programs that are predominately fed
data manually by maintainers and operators. It also concluded that a
wide range of maintenance-related information does not exist, is not
adequate, or is not accessible. In our prior reviews, we also have
reported weaknesses in the Army's management information system. For
example, in our 1999 report, we concluded that deficiencies in
management information systems contributed to the Army's inability to
develop accurate and consistent estimates of its depot-level
maintenance work.[Footnote 22] In our September 2003 report on DOD's
compliance with the 50-50 requirement, we found that the Army's latest
reporting on depot-level workloads for fiscal years 2001 and 2002 had
utilized a new, more centralized financial system to collect 50-50
data.[Footnote 23] This new system helped correct some of the
transcription errors we had found the previous year, but we continued
to find errors, omissions, and inconsistencies in the Army's data.
The Army's proliferation report concluded that current management
information systems for capturing depot-level maintenance work at the
installation level are inadequate for collecting and reporting 50-50
data. According to the report, the systems cannot, among other things,
(1) archive the data in a readily accessible manner or (2) allow for
the separate counting of multiple maintenance actions associated with a
single work order. (A work order may include three different levels
of maintenance, including depot-level maintenance, but only one
maintenance code can be assigned to the order.) Also the report pointed
out that collecting and reporting depot-level maintenance work outside
the Army's five public depots was a convoluted and manual process.
Policies and Procedures for Authorizing Work Are Not Always Being
Followed:
Another factor inhibiting the accuracy and completeness of the 50-50
report is that policies and procedures for authorizing depot-level work
in nondepot facilities are not always followed. The Army's
proliferation report made the same conclusion and identified several
areas where reporting officials did not believe that maintenance
facilities were following policies and procedures for authorizing and
reporting depot-level maintenance work. For example, the report noted
that maintenance facilities at the installation level were undertaking
depot-level maintenance work without having higher command
authorization and that some authorized one-time repairs were not being
reported. The report also concluded that some weapons systems managers
were not following current DOD and Army guidance in determining sources
for providing depot-level maintenance support.
In a prior report related to DOD's process for determining depot-level
maintenance repair strategies for its new weapons systems and major
upgrades, we noted that many weapons systems managers, including those
in the Army, were not following existing guidance regarding such tasks
as adequately performing required cost comparisons between public and
private facilities and coordinating maintenance support decisions
between acquisition and logistics officials.[Footnote 24] We noted that
service officials attributed these problems, in large part, to
weaknesses in guidance, which they believed was inadequate, unclear,
and sometimes contradictory.
Limitations More Significant for Future Assessment of 50-50 Compliance:
As the Army moves closer to the statutory ceiling for the funding for
depot-level maintenance work performed in the private sector, the
limitations in the Army's ability to precisely capture its depot-level
maintenance work will become more significant. For fiscal year 2002,
the Army's reported data ($2.7 billion for the total program) indicated
that its funding in the private sector for depot-level maintenance
remained below the 50-percent limit. However, our adjustments for known
errors in reporting for that year increased the percentage of private-
sector work to 49 percent from the 46.5 percent reported by the
Army.[Footnote 25] An increase of more than 1 percent in the use of the
private sector to perform more depot-level maintenance in the future,
could cause the Army to exceed its statutory limitation. Consequently,
the Army would be required to seek a national security waiver and
notify Congress as provided for in 10 U.S.C. 2466(b).[Footnote 26]
With regard to estimates of future compliance, the Army's report noted
that the Army might exceed the 50 percent ceiling for contractor
support by fiscal year 2006. More recently, an official from the Army
Materiel Command said that, for fiscal years 2002 and 2003, the Army
experienced a 3 to 5 percent increase in its contract requirements for
depot-level maintenance because increased operational requirements
made the public depots unable to meet the total demand for depot-level
maintenance work. She pointed out that, if this trend were to continue,
the Army might have to seek a waiver from the Secretary of Defense,
possibly as early as fiscal year 2004, to exceed the 50 percent
limitation for work performed by the private sector. Another official
at the Army Materiel Command said that the Army's depot-level
maintenance work in 2004 might increase by about $2.5 billion because
of operational requirements for Army equipment deployed in the Middle
East. He also said that, in an effort to keep up with maintenance
demands, the Army's five public depots have used extensive overtime,
added second work shifts, hired temporary employees, and allowed some
retirees to return to work. In his view, the public depots could not
meet the demands of the increased maintenance work and the Army would
have to use more contractors.
Army Needs Action Plan to Address Proliferation and Reporting Issues:
The Army report's recommendations are focused on key problem areas and
are consistent with recommendations we have made in the past. If fully
implemented, the recommendations in the Army's proliferation report
could improve the identification of additional depot-level maintenance
work in nondepot facilities, and the accuracy and completeness of 50-50
reporting. Efforts have been undertaken to address some of the problem
areas; however, no action plan to manage the implementation has been
developed. Evaluating the success of the proposed 29 recommendations
will be difficult until the Army develops an action plan with
priorities, time frames, responsible organizations, evaluation
criteria, and the resources required to implement these
recommendations. If actions are not implemented in a timely way, the
Army will not likely have the comprehensive information that it needs
in the near term to comply with the 50-50 reporting requirements or to
effectively manage the existing excess maintenance capabilities and
infrastructure. On the other hand, the extent of improvements likely to
be achieved in the long term is uncertain, given previous delays and
the significant challenges that the Army faces in instituting solutions
to ensure the consistent application of 50-50 reporting criteria.
Recommendations Are Focused on Key Problem Areas:
The Army report's recommendations present an array of corrective
measures that are focused on four key areas in which the Army could
better evaluate the proliferation of depot-level maintenance facilities
and manage its depot-level maintenance program. Appendix III lists the
29 recommendations. Basically, the key areas represent a need for
the following:
* Improved communication and emphasis for the 50-50 requirement. The 14
recommendations in this area address improving the 50-50 process. They
include conducting annual 50-50 workshops, issuing clear guidance for
50-50 reporting, publicizing information about the depot-level
maintenance program in professional publications, ensuring that
compliance with the 50-50 rule becomes a priority, and developing an
easy-to-use reference guide to help reporting activities better
identify depot-level maintenance work that should be reported.
* Improved management information systems. The three recommendations in
this area address continuing efforts to develop a single integrated
management information system capable of capturing and reporting depot-
level maintenance work at nondepot facilities.
* Enhanced compliance with policies and procedures for depot-level
maintenance operations. The nine recommendations in this area address
revising policies to ensure consistency in compliance with all
applicable legislation, regulations, and policies; developing a policy
requiring the acquisition of access to system technical data for use by
government or other contract maintenance activities; and developing and
implementing a plan for documenting baseline data to compare contractor
and public depot support costs.
* Develop the National Maintenance Program and consolidate maintenance
activities. The three recommendations in this area address efforts to
develop the National Maintenance Program and to conduct further
analyses to identify opportunities for consolidating depot-level
maintenance facilities.
Of the Army proliferation report's 29 recommendations to improve the
identification and reporting of depot-level maintenance data, 3 were
specifically directed toward managing the proliferation of depot-level
maintenance at nondepot facilities. One of the recommendations
identified the need for additional study and identification.
Recommendations Consistent with Our Prior Work:
The proliferation report's recommendations are consistent with our
prior recommendations regarding the Army's proliferation of depot-level
maintenance facilities and the 50-50 reporting process. For example, in
September 2003, we recommended that the 50-50 reporting guidance be
appropriately disseminated to reporting organizations and individuals
and that staff be properly trained in a timely way to apply the
guidance.[Footnote 27] In October 1999, we recommended that the Army
address the following challenges:[Footnote 28]
* Improving its management information systems. Our recommendation was
that the Army identify requisite action items, time frames, and funding
requirements for improving the Army's information management systems to
fully identify the magnitude and cost-effectiveness of depot-level
maintenance work at various locations within the Army.
* Finding opportunities to consolidate maintenance activities. We
recommended that the Army establish (1) clear time frames and action
plans for assessing requirements for the various types of depot-level
maintenance facilities and (2) plans for achieving necessary
consolidations and reductions of excess capabilities.
* Enhancing the National Maintenance Program. We recommended that the
Army incorporate the depot-level maintenance capabilities of both
active and reserve components under the National Maintenance Program
and assign the national maintenance manager with requisite
responsibility and authority for depot-level maintenance capabilities
in active and reserve facilities.
While we made these recommendations 4 years ago, they continue to be
essential to addressing the problems of the proliferation of depot-
level maintenance facilities and inaccuracies in 50-50 reporting.
Although Some Efforts Are Ongoing, Action Plan Not Yet Developed to
Ensure Implementation of Recommendations in a Timely Manner:
The Army's 2003 report noted that the Army had taken numerous steps
since 1999 to improve its management of the proliferation of depot-
level maintenance facilities and its 50-50 data. However, the report
pointed out that the Army needed to implement the report's
recommendations before it can claim with complete confidence that it is
meeting the 50-50 requirement. Headquarters officials responsible for
the report told us that the Army maintenance organizations concurred
with the report's recommendations. The Army has already begun
implementing some of its report's recommendations such as holding
annual workshops and revising its guidance to include the congressional
definition of depot-level maintenance. However, it has not yet
developed an overall action plan for managing the implementation of all
of the recommendations and, in particular, for setting priorities for
the more-critical recommendations.
As the report indicates, corrective actions are essential to improving
the Army's ability to better manage the proliferation of maintenance
facilities and capture data for 50-50 reporting. Some of the critical
recommendations, such as the need to identify opportunities for
consolidating depot-level maintenance facilities, set up a single
integrated management information system capable of capturing all
depot-level maintenance data, and develop a National Maintenance
Program to better manage depot-level maintenance work have been in
process for several years. Thus, the identification of specific actions
would appear necessary to help the Army accomplish the implementation
of these recommendations more timely. A plan would include (1) the
Army's priority for implementing the recommendations, (2) the Army
organizations accountable for implementation, (3) the specific time
frames for accomplishment, (4) whether the benefits of accomplishment
support the cost of implementation, (5) the funding required and the
source of funds, and (6) the criteria to determine the effectiveness of
the recommendations once they are implemented.
Officials at the Army Communications-Electronics Command said that
streamlining maintenance facilities is a good idea, but they do not
have the tools that would enable the command to fully implement the
proliferation report's recommendations in this area. They said that
updating Army Regulation 750-1 (Army Materiel Maintenance Policy) and
conducting 50-50 workshops were a step in the right direction, but that
both actions need to be more comprehensive in educating field-level
personnel on policy and requirements. For example, they pointed out
that just reiterating the congressional definition of depot-level
maintenance in Army Regulation 750-1 did little to add clarity to the
definition. Additionally, the last two workshops were spent largely on
training for the Depot Maintenance Operations Planning System, a new
system to be used by all Army major commands and acquisition managers
to capture and report annual 50-50 workload data. According to these
personnel, this system appears extremely complex and training should be
aimed at those who are actually responsible for reporting maintenance
data. Officials at the National Guard Bureau generally disagreed that
the Army report's recommendations will ensure accurate 50-50 reporting-
-especially in view of the apparent disconnect between the
recommendations and the Army's maintenance transformation process, and
the Army's plans for moving to two-level maintenance.[Footnote 29]
Army Communications-Electronics Command officials also suggested
that, for timely and effective implementation, the Army establish a
working group of representatives with subject matter expertise from all
levels within the Army to oversee the implementation. Officials at Army
headquarters who were responsible for the report told us that they did
not yet have a formal action plan established. They said they were
planning to establish a working group in December 2003 to review the
recommendations and determine what actions needed to be taken.
Long-term Improvements in 50-50 Reporting May Remain Problematic:
As previously discussed the Army has taken steps to improve its
management of the proliferation of depot-level maintenance facilities
and its 50-50 reporting. The Army's 2003 report and our analysis
indicate that some of the key actions related to improving the Army's
long-standing issues in effectively identifying the proliferation of
depot-level maintenance facilities and improving its 50-50 reporting
have been in process for several years. The magnitude of long-term
improvements likely to be realized remains uncertain, given prior
delays in instituting solutions and the inconsistent understanding and
application of 50-50 reporting criteria.
During our review, we observed that several actions related to the
recommendations had been under way for a number of years but that
completion dates had slipped and funding had become uncertain. For
example, the recommendation that the Army continue efforts to establish
a fully integrated national maintenance requirements determination
process that includes all depot-level maintenance requirements refers
to a program known as the National Maintenance Program. The Army
initiated the program in July 1999 and planned to implement it by
fiscal year 2004. However, full implementation has slipped to fiscal
year 2006. Additionally, required funding to complete the program is
uncertain. Army Materiel Command officials said that the program's goal
is to centrally coordinate and control depot-level maintenance work by
developing standards for items being repaired at qualified repair
sources. They said that (1) the program is helping to better identify
and manage facilities that perform depot-level maintenance outside the
public depots; (2) the number of maintenance facilities in the program
has declined from 60 in fiscal year 2000 to 45 in fiscal year 2003, and
these are expected to further decline to 25 in fiscal year 2005 as the
Army decides which facilities will be qualified to perform depot-level
maintenance work; and (3) the command was working with other commands
to reduce the number of nondepot maintenance facilities.
Full implementation of the National Maintenance Program appears to be
a key initiative in addressing the proliferation of depot-level
maintenance facilities. At the same time, our analysis indicates that,
although the concept of the National Maintenance Program could help
improve future annual reporting and eliminate some of the current
fragmented and duplicative depot-level maintenance workload
assignments, it is too early to assess the program's full impact. The
extent to which the program can resolve all the problems related to the
proliferation and inaccurate and incomplete identification of depot-
level maintenance work performed in nondepot facilities is unclear. The
Army's 2003 report noted that the Army's schedule for completing the
implementation of the National Maintenance Program has slipped to
fiscal year 2006. During our review, we noted that, as of October 2003,
the Army had completed standards for only 737: about 18 percent: of the
4,148 candidates for the program. While an estimated development cost
of about $120 million has already been spent, the Army is a long way
from having the required standards that are needed for the program. An
Army Materiel Command official said that the Army was not planning to
provide any additional funding for the further development of these
standards.
In a prior report, we observed that, while the program is intended to
consolidate and distribute overhaul work for components returned to the
supply system, the evolving management framework will continue to allow
local maintenance facilities to repair items returned directly to using
organizations--maintenance-to-maintenance transactions that could meet
the statutory definition of depot-level maintenance.[Footnote 30]
Additionally, the program did not include some other depot-level
maintenance work. For example, it does not address the allocation of
depot-level maintenance requirements for overhauling, rebuilding, or
upgrading major end items such as tactical wheeled vehicles that are
currently being overhauled in field-level maintenance facilities or by
contracts managed by field-level organizations even though this work
meets the statutory definition of depot-level maintenance work.
With regard to resolving deficiencies in management information
systems, it is uncertain when the required changes that will be capable
of capturing and reporting depot-level maintenance workloads performed
in nondepot facilities will be operational. In October 2003, the Army
began testing the transition of its database for Specialized Repair
Authority and One-Time Repair authorizations into an automated system
referred to as the Joint Computer-Aided Acquisition and Logistic
Support system.[Footnote 31] The Army's 2003 report described this as
an interim initiative to capture and report on maintenance work
performed under these two types of authorizations. While this
initiative will automate the capturing of this work, it will not
identify all depot-level maintenance work that may be performed in
field-level facilities. For example, it will not capture depot-level
maintenance actions performed on equipment that will be returned
directly to the user without going through the Army's supply system. A
single integrated management information system is hoped for when the
Army's evolving Logistics Modernization Program is fully implemented.
Testing at the first site, the Tobyhanna Army Depot, is ongoing, but
problems have occurred. Earlier estimates of completion are about 18 to
24 months, but some delays are expected.[Footnote 32] Additionally, to
what extent it will resolve all the deficiencies in the current systems
is uncertain.
Conclusions:
We believe that the Army's implementation of our prior recommendations,
as well as the recommendations made in the Army's proliferation report,
are essential to providing the Army with more precise information for
crucial decisions in the area of the Army's depot-level maintenance
infrastructure. Their timely and effective implementation depends
largely on the necessary emphasis from senior Army leadership. If
actions are not implemented in a timely manner, the Army will unlikely
have the comprehensive information that it needs to determine the
extent of proliferation and effectively manage its excess capabilities
and the infrastructure it has--key data needed for complying with the
existing reporting statute, identifying excess infrastructure and
making appropriate consolidations, and making appropriate decisions for
an additional round of base realignments and closures that has been
authorized for 2005.
The Army has not yet developed a plan for implementing the
recommendations in the Army proliferation report. We believe it is
essential that the Army have such a plan to help ensure the timely and
effective implementation of the recommendations. Such a plan would
include evaluating the priority for implementation and identifying the
time frame for implementing the recommendations, the responsible
organizations, and the criteria for measuring the desired results.
While improvements should be accomplished, the complexity and
vastness of the Army's maintenance system and continuing questions
about such issues as the definition of depot-level maintenance and
changing maintenance strategies could continue to present challenges
in fully recording all depot-level maintenance work.
Recommendation:
To ensure the timely and effective implementation of the
recommendations in the Army's 2003 proliferation report to help the
Army improve its management of maintenance operations, including the
proliferation of depot-level maintenance facilities, and more precisely
capture and report depot-level maintenance data, we recommend that the
Secretary of the Defense direct the Secretary of the Army to establish
a specific plan to manage the implementation of the 29 recommendations
identified in the 2003 proliferation report. The plan should include
the priority and time frames for implementation, the responsible
organizations for implementing the plan, and the criteria for measuring
success.
Agency Comments and Our Evaluation:
The Department of Defense provided written comments (see app. IV) on a
draft of this report. In commenting on the draft, the Office of the
Deputy Undersecretary of Defense for Logistics and Materiel Readiness
concurred with our recommendation that the Army establish a plan to
manage the implementation of the 29 recommendations identified in the
2003 depot maintenance proliferation report. The Department noted that
the Army is in the process of establishing an integrated product team
to develop an action plan to address the 29 recommendations to include
reevaluating the validity and modifying the recommendations where
appropriate. The Department also stated that the Army expects to have
an action plan in place no later than March 31, 2004. The Department's
response noted specifically that the recommendation contained in the
Army's report related to the designation of core work needs to be
revised. We recognize that some adjustment to the recommendations may
be necessary as the implementation plan is developed. Whether some
recommendations require modification for implementation is not as
significant for the Army as is the need for timely action and follow
through to address the issues identified in the Army's depot
maintenance proliferation report.
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 Nancy Benco, Wayne Gilliam, and Bobby
Worrell.
Barry W. Holman:
Director, Defense Capabilities and Management:
Signed by Barry W. Holman:
[End of section]
Appendix I: Scope and Methodology:
To answer the Senate and House Committees on Armed Services mandate
contained in Report of the Committee on Armed Services, House of
Representatives, Floyd D. Spence National Defense Authorization Act for
Fiscal Year 2001, we reviewed the Army's Fiscal Year 2002 Study of the
Proliferation of Depot Maintenance-Type Activities Phase II Report,
dated July 31, 2003. We interviewed Army officials and analyzed
pertinent information regarding that report at (1) Army Headquarters in
the Washington, D.C., area; (2) Headquarters, Army Materiel Command in
Alexandra, Virginia; (3) three subordinate 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; (4) Headquarters, National Guard
Bureau, Arlington, Virginia; (5) Headquarters, Army Forces Command,
Atlanta, Georgia; and (6) Headquarters, Army Reserve Command, Atlanta,
Georgia. Also, we interviewed managers and reviewed pertinent
information regarding maintenance facilities located at Fort Campbell,
Kentucky; Fort McCoy, Wisconsin; Fort Riley, Kansas; and Fort Rucker,
Alabama. We made extensive use of our prior work related to Army depot-
level maintenance.
To determine the extent to which the Army's report identified the total
amount of depot-level maintenance work performed at nondepot
facilities, we examined the requirements of section 2466 of title 10,
U.S. Code, and Army regulatory provisions for 50-50 reporting. We
analyzed the report's scope and methodology, findings, and disclosure
of the amount it identified and compared these data with our prior work
done on the Army's annual 50-50 reporting process. We interviewed the
study group manager, Army officials, and maintenance managers about the
nature of maintenance work performed by nondepot facilities and about
whether it was being reported as required. Because the Army has no
central database or readily available data, we did not attempt to
determine the Army's universe of facilities that perform depot-level
maintenance.
To answer whether the Army can accurately account for its depot-level
maintenance workloads and the key issues that preclude accurate
reporting, we examined the report's findings to determine what areas
were identified as contributing problems. We used our prior work on the
Army's depot-level maintenance program to correlate, compare, and test
the consistency of the identified problems with the ones we had
previously reported. We interviewed the study group manager, Army
officials, and maintenance personnel about the relevancy of the
findings and the application to the Army's depot-level maintenance
operations.
To answer whether the corrective actions identified in the Army's
report are likely to address the proliferation issue and enhance the
Army's reporting, we examined the recommendations to determine how
effectively they were linked to the identified problems. We also
compared the recommendations with those that we had previously made to
test for consistency. Finally, we discussed the relevancy of the
recommendations with the study group manager, Army officials, and
maintenance representatives.
We conducted our analysis of the Army's report from July through
October 2003 in accordance with generally accepted government
auditing standards.
[End of section]
Appendix II: Army Maintenance Sites:
The Army operates a number of maintenance facilities and has an
extensive infrastructure for the maintenance of its military weapons
systems and support equipment. For example, as we reported in April
2003, the Army employs about 10,000 personnel at its five public depots
to overhaul, repair, and upgrade its ground and air combat systems,
subsystems, and assemblies.[Footnote 33] The Army also has a vast
number of other maintenance facilities operated by U.S. government-
employed civilians and contractors. For example, we reported in October
1999 that the Army had another 102 maintenance facilities that were
potential providers of depot-level maintenance services within the
continental United States--28 active Army, 2 Army Reserve, and 72 Army
National Guard.[Footnote 34]
In addition, the Army operates maintenance activities that provide
maintenance below the depot level. For example, as of August 2003,
the Forces Command reported that it had maintenance facilities at
10 installations that provide direct support for vehicle maintenance;
the Army reserve had about 160 maintenance facilities located
throughout the United States that perform unit, direct, and general
maintenance support; the National Guard had additional maintenance
facilities performing unit and direct support maintenance; and Army
installations had a number of maintenance facilities that perform
various levels of maintenance.
We visited 17 of the Army, Army Reserve, and Army National Guard
maintenance sites. These 17 sites performed maintenance work valued
at more than $500 million during fiscal year 2002; employed more than
4,700 military, civilian, and contractor personnel; and occupied
facilities with more than 2 million square feet. Table 2 provides
summary capacity and capability information about the sites.
Table 2: Capacity and Capability Information on 17 Sites That
GAO Visited:
Dollars in millions.
Installation: Fort Campbell, Kentucky;
Organization: Readiness Business Center;
Government and contractor staff: 308;
Facility size in square feet: 195,249;
Fiscal year 2002 maintenance: $27.1;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: $4.5[A].
Organization: Forces Command CMF;
Government and contractor staff: 188;
Facility size in square feet: 8,000;
Fiscal year 2002 maintenance: 10.0;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Organization: National Guard UTES;
Government and contractor staff: 19;
Facility size in square feet: 14,675;
Fiscal year 2002 maintenance: .9;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Installation: Fort McCoy, Wisconsin;
Organization: Reserve IMMA;
Government and contractor staff: 202;
Facility size in square feet: 140,000;
Fiscal year 2002 maintenance: 4.9;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: .7[B].
Organization: Reserve ECS;
Government and contractor staff: 113;
Facility size in square feet: 198,656;
Fiscal year 2002 maintenance: 1.8;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Organization: National Guard MATES;
Government and contractor staff: 31;
Facility size in square feet: 92,000;
Fiscal year 2002 maintenance: .5;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: .05[B].
Installation: Fort Riley, Kansas;
Organization: DOL;
Government and contractor staff: 112;
Facility size in square feet: 255,000;
Fiscal year 2002 maintenance: 12.4;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: 2.4[C].
Organization: Forces Command CMF;
Government and contractor staff: 71;
Facility size in square feet: 53,716;
Fiscal year 2002 maintenance: 2.1;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Organization: National Guard RSMS;
Government and contractor staff: 142;
Facility size in square feet: 88,612;
Fiscal year 2002 maintenance: 14.1;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: 14.1.
Organization: National Guard ATEAM;
Government and contractor staff: 90;
Facility size in square feet: 75,070;
Fiscal year 2002 maintenance: 20.9;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: 20.9[D].
Organization: National Guard MATES;
Government and contractor staff: 89;
Facility size in square feet: 123,000;
Fiscal year 2002 maintenance: 6.7;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: .6[B].
Organization: Reserve ECS;
Government and contractor staff: 78;
Facility size in square feet: 14,040;
Fiscal year 2002 maintenance: 2.3;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Installation: Fort Rucker, Alabama;
Organization: ACLC;
Government and contractor staff: 3,217;
Facility size in square feet: 732,224;
Fiscal year 2002 maintenance: 418.5;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: 16.8[E].
Organization: DEL;
Government and contractor staff: 22;
Facility size in square feet: 3,000;
Fiscal year 2002 maintenance: 2.5;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Organization: ATSCOM;
Government and contractor staff: 52;
Facility size in square feet: 41,000;
Fiscal year 2002 maintenance: 2.4;
Capability to perform depot maintenance: Yes;
Fiscal year 2002 depot maintenance: .4.
Organization: National Guard UTES;
Government and contractor staff: 14;
Facility size in square feet: 16,664;
Fiscal year 2002 maintenance: 1.5;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Organization: Reserve ECS;
Government and contractor staff: 15;
Facility size in square feet: 4,000;
Fiscal year 2002 maintenance: .5;
Capability to perform depot maintenance: No;
Fiscal year 2002 depot maintenance: None.
Sources: Fort Campbell, Kentucky: Readiness Business Center, Forces
Command CMF, National Guard UTES; Fort McCoy, Wisconsin: Reserve IMMA,
Reserve ECS, National Guard MATES; Fort Riley, Kansas: Forces Command
CMF, National Guard RSMS, National Guard ATEAM, National Guard MATES,
Reserve ECS; and Fort Rucker, Alabama: ACLC, DEL, ATSC, National Guard
UTES, Reserve ECS.
[A] Data represent National Maintenance Program and Specialized Repair
Authority.
[B] Data represent National Maintenance Program.
[C] Data include National Maintenance Program and One-Time Repairs.
[D] Data include Specialized Repair Authority.
[E] Data include National Maintenance Program, Specialized Repair
Authority, and One-Time Repairs.
Legend:
ACLC: (Aviation Center Logistics Command): This organization, which
reports to the Aviation and Missile Command, performs all levels of
aviation maintenance in support of Fort Rucker's flight-training
program. A contractor performs this maintenance work.
ATSCOM: (Air Traffic Services Command), a newly formed organization,
provides worldwide direct, general, and limited depot-level maintenance
for air traffic control systems. The maintenance data reported
represents two components--F Company of the 58th Aviation Regiment and
the Air Traffic Control Activity.
CSMS: (Combined Support Maintenance Shop): Army National Guard
facilities that provide direct support and general support levels of
maintenance for National Guard surface equipment (trucks, tanks,
etc.).
DEL: (Directorate of Engineering and Logistics): A Fort Rucker
organization that performs organizational support, direct support, and
general support for vehicles, construction equipment, and fire-fighting
equipment. A contractor performs this maintenance work.
DOL: (Directorate of Logistics): Fort Riley organization that performs
general support maintenance for tanks, trucks, construction equipment,
small arms, etc. It also provides limited organizational and aviation
intermediate maintenance. A contractor performs this maintenance work.
Forces Command CMF: (Forces Command Contractor Maintenance
Facility): These maintenance facilities report to Forces Command and
perform organizational and direct support maintenance on items such as
trucks, trailers, tracked vehicles, vans, and generators. Contractors
perform the maintenance work.
National Guard ATEAM: (Advanced Turbine Engine Army Maintenance): This
Army National Guard facility rebuilds M1A1 tank engines. Its work,
which is considered depot-level maintenance, is limited to National
Guard assets.
National Guard MATES (Maneuver Area Training Equipment Site): Army
National Guard maintenance facilities that provide unit, direct
support, and general support maintenance for assigned equipment. These
sites are established to preposition selected items of equipment and
are located at or near a training area.
National Guard RSMS (Readiness Sustainment Maintenance Site): This
National Guard facility at Fort Riley rebuilds 5-ton cargo trucks and
trailers. Its work, which is considered depot-level maintenance, is
generally limited to National Guard assets. Employees of the state of
Kansas perform the work.
National Guard UTES (Unit Training and Equipment Site): A National
Guard facility that stores and performs organizational maintenance on
tracked and wheeled vehicles for National Guard units within a
specific geographic area.
Readiness Business Center: A Fort Campbell organization that performs
general support maintenance for wheeled vehicles and intermediate and
limited depot-level maintenance for helicopters. Contractors perform
the maintenance work.
Reserve ECS (Equipment Concentration Site): Army Reserve facilities
that store and maintain selected equipment for Army Reserve units in a
specific geographic area. The maintenance work is performed by both
government and contractor employees.
Reserve IMMA (Army Reserve Installation Materiel Maintenance
Activity): The facility provides organizational, direct, and general
support maintenance for tactical vehicles--High Mobility Multi-purpose
Wheeled Vehicles, trucks, trailers--for Army Reserve units located at
or near Fort McCoy. For the most part, contractor employees perform the
maintenance work.
[End of table]
[End of section]
Appendix III: Army Report's Issues and Recommendations:
The Army's Fiscal Year 2002 Study of the Proliferation of Depot
Maintenance-Type Activities identified 7 issues and made
29 recommendations for the following improvements to enhance the Army's
ability to (1) evaluate the proliferation of nondepot facilities
that perform depot-level maintenance and (2) identify and report on
its 50-50 data. These recommendations were consistent with our
prior recommendations--noted in referenced GAO products.
Issue 1: Title 10 Definition of Depot Maintenance and 50-50 Reporting
Policy Guidance Recommendations:
* Post the new Army Regulation 750-1 as soon as possible to the Army
Publications Agency Web site. Posting the regulation will contribute to
the education of Army activities on the congressional definition of
"depot maintenance" and the 50-50 reporting process.
* Continue to conduct annual 50-50 workshops and issue clear guidance
regarding depot maintenance policies to major commands, program
executive officers, and program managers.
* Use Headquarters, Department of the Army, senior-level maintenance
boards to communicate depot maintenance policies.
* Publish depot maintenance information articles in professional
publications.
[See also GAO-03-1023; U.S. General Accounting Office, Depot
Maintenance: Key Unresolved Issues Affect the Army Depot System's
Viability, GAO-03-682 (Washington, D.C.: July 7, 2003); and U.S.
General Accounting Office, Depot Maintenance: Change in Reporting
Practices and Requirements Could Enhance Congressional Oversight, GAO-
03-16 (Washington, D.C.: Oct. 18, 2002).]
Issue 2: Accuracy of Army's Current 50-50 Reports Recommendations:
* The Army Deputy Chief of Staff (G-4) should ensure that compliance
with the 50-50 rule becomes an Army priority and that command emphasis
is applied to correct all reporting problems.
* Army G-4 should submit an amended 50-50 report for fiscal year 2002.
* Army G-4 should include all Army major commands, program executive
offices, and separate commands in the 50-50 reporting process.
[See also GAO-03-1023; U.S. General Accounting Office, Depot
Maintenance: Workload Allocation Reporting Improved, but Lingering
Problems Remain, GAO/NSIAD-99-154 (Washington, D.C.: July 13, 1999);
and U.S. General Accounting Office, Depot Maintenance: Management
Attention Required to Further Improve Workload Allocation Data, GAO-02-
95 (Washington D.C.: Nov. 9, 2001).]
Issue 3: Specialized Repair Authority and One-Time Repair Workload
Reporting Requirements Recommendations:
* Army G-4 should provide applicable major commands with immediate and
specific guidance to reinforce compliance with current Specialized
Repair Authority and One-Time Repair policies. Strong emphasis should
be placed on collecting One-Time Repair data for 50-50 reporting
purposes.
* Current policy and procedures regarding the approval and tracking of
One-Time Repair should be expanded in Army Regulation 750-1.
* Major commands should appoint an installation or local Specialized
Repair Authority coordinator to ensure that (1) all major command
facilities at an installation are provided the most current information
on Specialized Repair Authority and One-Time Repair policies and
(2) the appropriate Specialized Repair Authority and One-Time Repair
production data are submitted properly through the installation or
local regional major command Specialized Repair Authority coordinator
to the major command headquarters. Similarly, the National Guard Bureau
should appoint Specialized Repair Authority coordinators for each
state, territory, and the District of Columbia.
* Army G-4, in coordination with the Army Materiel Command (AMC),
should direct the Aviation and Missile Command to terminate the
existing Aviation Repair Authority process and immediately comply with
all Headquarters, Department of Army, Specialized Repair Authority
policies.
[See also U.S. General Accounting Office, Depot Maintenance: Change in
Reporting Practices and Requirements Could Enhance Congressional
Oversight, GAO-03-16 (Washington D.C.: Oct. 18, 2002).]
Issue 4: Army G-4 Guidance Regarding Depot Maintenance Reporting
Procedures Recommendations:
* Army G-4 should revise the 50-50 standard operating procedures to
provide the major commands, program executive officers, and program
managers with more explicit guidance regarding those 50-50 reporting
requirements that are still causing confusion,
* Army G-4 should coordinate with major commands, program executive
officers, and program managers to ensure that the standard operating
procedure revisions are clearly understood and that the 50-50 standard
operating procedures address the upgrade and modification programs.
* Army G-4 should develop a "decision tree" (an easy-to-use reference
guide) to better distinguish between those programs that should be and
should not be reported.
[See also GAO-02-95 and GAO/NSIAD-99-154.]
Issue 5: Impact of National Maintenance Program on 50-50 Reporting
Processes Below Public Depot Level Recommendations:
* AMC should continue efforts to establish a fully integrated national
maintenance requirements determination process that includes all depot
maintenance requirements.
* The Army should complete the implementation of the National
Maintenance Program by fiscal year 2006 as currently planned.
* The Army should conduct further analyses to identify opportunities
for consolidating depot-level maintenance activities.
[See also GAO/NSIAD-00-20.]
Issue 6: Management Information System Requirements for Improving
Current Methods of Capturing and Reporting 50-50 Data Recommendations:
* The Army should develop an integrated management information system
capable of capturing and reporting depot maintenance workloads below
the organic depot level. AMC should consider replacing the interim
Specialized Repair Authority business system: the combined Joint
Computer-Aided Logistics Support System/Logistics Integrated Database/
Army Electronic Product Support Systems: with a single integrated
Specialized Repair Authority tracking and workload system through the
development of the Logistics Modernization Program and as the various
major command feeder systems are either replaced or consolidated by way
of the development of the Global Combat Support System-Army.
* Army G-4 should query AMC's Logistics Integrated Database monthly to
ensure that major command activities are using the new Department of
the Army Pamphlet 738-750 maintenance codes for inputting workload data
into automated systems to account for Specialized Repair Authority and
One-Time Repair tasks embedded in maintenance workloads at the
installation level.
* Army G-4 should continue to support AMC's efforts to develop a
Maintenance Contract Database under the National Maintenance Program.
[See also GAO-02-95 and GAO/NSIAD-00-20.]
Issue 7: DOD and Army Policies Affecting Army's Ability to Manage the
Proliferation of Depot Maintenance Activities Recommendations:
* New weapons systems should be designated as core or non-core up front
in the system's life cycle at Milestone C (Production and Deployment).
The system's Logistics Support Plan should be revised accordingly on
the basis of core depot assessment and presented at Milestone C for
approval.
* The Army should adopt a new core depot assessment process for weapons
systems that have not yet undergone core determination analyses.
* The Army should continue to revise/replace flawed Department of the
Army policies that apply to the Depot Source of Repair (DSOR) decision
process. The primary objectives of this effort should be the consistent
compliance of all applicable legislation, regulations, and policies,
and to ensure that the organic depots are not excluded from the DSOR
decision process.
* The Army should audit/review program executive officer, program
manager, and AMC activities to ensure that they are following guidance
on core logistics requirements, weapons system support strategies, and
the DSOR decision process in accordance with the Assistant Secretary of
the Army for Acquisition, Logistics, and Technology [ASA (ALT)]
memorandum dated January 9, 2003, entitled Depot Considerations in
Acquisition.
* The ASA (ALT) should develop an Army acquisition policy that requires
program executive officers and program managers to acquire access to
system technical data owned by the original equipment manufacturer for
use by appropriate organic or contractor maintenance facilities during
the performance of system logistical support.
* The ASA (ALT), Army G-4, and AMC should establish a partnership with
an approved memorandum of agreement to integrate acquisition weapons
system requirements with traditional end item and secondary item
overhaul requirements to (1) assist AMC in maximizing the capabilities
of the five organic depots to meet core requirements and (2) seek a
renewed commitment from all parties that the depots will not be
excluded from the DSOR process without the required analyses being
conducted.
* Army G-4, ASA (ALT), and AMC should work closely together to develop
and implement a plan for documenting baseline data to compare
contractor costs with organic support costs.
* Army G-4, ASA (ALT), AMC, and AMC's major subordinate commands should
work closely with Headquarters, Department of the Army ASA (ALT) staff
to market the depots with the program executive officers and program
managers at every opportunity.
* Army G-4, ASA (ALT), and AMC should work closely together to explore
future opportunities to expand the number of public/private
partnerships as part of the Army's overall industrial base strategy.
[See also 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) 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).]
[End of section]
Appendix IV: Comments from the Department of Defense:
DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS
3500 DEFENSE PENTAGON
WASHINGTON, DC 20301-3500:
DEC 12 2003:
Mr. Barry W. Holman:
Director, Defense Capabilities and Management
U.S. General Accounting Office, Room 4440B 441 G Street, N W:
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: "Army Needs
Plan to Implement Depot Maintenance Report's Recommendations," (GAO
Code 350413/GAO 04-220). The Department concurs with the report's
recommendation with qualifications. GAO recommended the Secretary of
Defense direct the Secretary of the Army to establish a specific plan
to manage the implementation of the 29 recommendations in the Army's
2003 proliferation report. While the Department agrees with this
recommendation in concept, some of the 29 recommendations in the Army
Report will require modification, as discussed in our detailed response
to the draft report's recommendation.
The Army is in the process of establishing an Integrated Product Team
(IPT) to revalidate the 29 recommendations in its proliferation report
and to develop an action plan to address them. The Army expects to have
a final action plan in place not later than March 31, 2004.
The Department's detailed response to the GAO recommendation is in the
enclosure. The DoD appreciates the opportunity to comment on the draft
report.
Sincerely,
Signed for:
Diane K. Morales:
GAO CODE 350413/GAO-04-220:
"DEPOT MAINTENANCE: ARMY NEEDS PLAN TO IMPLEMENT DEPOT MAINTENANCE
REPORT'S RECOMMENDATIONS":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATION:
RECOMMENDATION: The GAO recommended that the Secretary of Defense
direct the Secretary of the Army to establish a specific plan to manage
the implementation of the 29 recommendations identified in the 2003
proliferation report. The plan should include the priority and time
frames for implementation, the responsible organizations, and the
criteria for measuring success. (Page 21/Draft Report):
DoD RESPONSE: Concur with qualifications. The Department agrees in
concept that the Secretary of the Army should establish a specific plan
to manage the implementation of the 29 recommendations in the 2003
proliferation report. However, some of the recommendations in the
report will require modification. For example, under issue seven in the
proliferation report, the first recommendation states "New weapon
systems should be designated as core or non-core up front in the
system's life cycle at Milestone C (Production and Deployment).":
The recommendation is in error since weapon systems are not core. Core
consists of skills, equipment and facilities that must be sustained.
The required decision to be made by Milestone C is whether workload
from a system will be used to sustain core capability requirements.
The Army is in the process of establishing an Integrated Product Team
(IPT) to develop an action plan to address the 29 recommendations. As
part of its review, the IPT will reevaluate the validity of the 29
proliferation report recommendations and modify them where appropriate.
It is anticipated that this IPT will conduct its initial meeting before
the end of the calendar year with an initial draft action plan
available for staffing not later than January 31, 2004. The Army
expects to have a final action plan in place no later than March 3I,
2004.
[End of section]
Related GAO Products:
Depot Maintenance: DOD's 50-50 Reporting Should Be Streamlined. GAO-03-
1023. Washington, D.C.: September 15, 2003.
Depot Maintenance: Key Unresolved Issues Affect the Army Depot System's
Viability. GAO-03-682. Washington, D.C.: July 7, 2003.
Department of Defense: Status of Financial Management Weaknesses and
Progress Toward Reform. GAO-03-931T. Washington, D.C.: June 25, 2003.
Depot Maintenance: Change in Reporting Practices and Requirements Could
Enhance Congressional Oversight. GAO-03-16. Washington D.C.: October
18, 2002.
Depot Maintenance: Management Attention Needed to Further
Improve Workload Allocation Data. GAO-02-95. Washington D.C.: November
9, 2001.
Defense Logistics: Actions Needed to Overcome Capability Gaps in the
Public Depot System. GAO-02-105. Washington, D.C.: October 12, 2001.
Defense Maintenance: Sustaining Readiness Support Capabilities
Requires a Comprehensive Plan. GAO-01-533T. Washington, D.C; March 23,
2001.
Depot Maintenance: Key Financial Issues for Consolidations at Pearl
Harbor and Elsewhere Are Still Unresolved. GAO-01-19. Washington, D.C.:
January 22, 2001.
Depot Maintenance: Action Needed to Avoid Exceeding Ceiling on Contract
Workloads. GAO/NSIAD-00-193. Washington, D.C.: August 24, 2000.
Depot Maintenance: Air Force Waiver to 10 U.S.C. 2466. GAO/NSIAD-00-
152R. Washington, D.C.: May 22, 2000.
Depot Maintenance: Air Force Faces Challenges in Managing to 50-50
Ceiling. GAO/T-NSIAD-00-112. Washington, D.C.: March 3, 2000.
Depot Maintenance: Future Year Estimates of Public and Private
Workloads Are Likely to Change. GAO/NSIAD-00-69. Washington, D.C.:
March 1, 2000.
Depot Maintenance: Army Report Provides Incomplete Assessment of Depot-
Type Capabilities. GAO/NSIAD-00-20. Washington, D.C.: October 15,
1999.
Depot Maintenance: Status of the Navy's Pearl Harbor Project. GAO/
NSIAD-99-199. Washington, D.C.: September 10, 1999.
Depot Maintenance: Workload Allocation Reporting Improved, but
Lingering Problems Remain. GAO/NSIAD-99-154. Washington, D.C.:
July 13, 1999.
Navy Ship Maintenance: Allocation of Ship Maintenance Work in
the Norfolk, Virginia, Area. GAO/NSIAD-99-54. Washington, D.C.:
February 24, 1999.
Defense Depot Maintenance: Public and Private Sector Workload
Distribution Reporting Can Be Further Improved. GAO/NSIAD-98-175.
Washington, D.C.: July 23, 1998.
Defense Depot Maintenance: DOD Shifting More Workload for New Weapon
Systems to the Private Sector. GAO/NSIAD-98-8. Washington, D.C.: March
31, 1998.
Defense Depot Maintenance: Information on Public and Private
Sector Workload Allocations. GAO/NSIAD-98-41. Washington, D.C.:
January 20, 1998.
Defense Depot Maintenance: Uncertainties and Challenges DOD Faces
in Restructuring Its Depot Maintenance Program. GAO/T-NSIAD-97-112.
Washington, D.C.: May 1, 1997. Also, GAO/T-NSIAD-97-111. Washington,
D.C.: March 18, 1997.
Defense Depot Maintenance: DOD's Policy Report Leaves Future Role
of Depot System Uncertain. GAO/NSIAD-96-165. Washington, D.C.: May 21,
1996.
Defense Depot Maintenance: More Comprehensive and Consistent Workload
Data Needed for Decisionmakers. GAO/NSIAD-96-166. Washington, D.C.: May
21, 1996.
Defense Depot Maintenance: Privatization and the Debate Over
the Public-Private Mix. GAO/T-NSIAD-96-148. Washington, D.C.:
April 17, 1996. Also, GAO/T-NSIAD-96-146. Washington, D.C.:
April 16, 1996.
Depot Maintenance: Issues in Allocating Workload Between the Public and
Private Sectors. GAO/T-NSIAD-94-161. Washington, D.C.: April 12, 1994.
FOOTNOTES
[1] According to 10 U.S.C. 2460, depot maintenance workloads include
(1) materiel maintenance and repair requiring the overhaul, upgrading,
or rebuilding of parts, assemblies, or subassemblies and (2) testing
and reclamation of equipment as necessary, regardless of the source of
funds or the location where the work is performed. 10 U.S.C. 2466
requires annual reports of public-and private-sector expenditures for
depot maintenance services and stipulates that no more than 50 percent
of annual depot maintenance funding provided for military departments
and defense agencies can be used for work accomplished by contractors.
These reports are generally referred to as "50-50 reports."
[2] See U.S. General Accounting Office, Depot Maintenance: Army Report
Provides Incomplete Assessment of Depot-Type Capabilities, GAO/NSIAD-
00-20 (Washington, D.C.: Oct. 15, 1999).
[3] House Report 106-616 (May 12, 2000).
[4] The Army's maintenance structure for aircraft and components has
only three categories: unit, intermediate, and depot.
[5] One key exception is the cost of military personnel involved in
this category of work, which is accounted for in a separate, centrally
managed, Military Personnel appropriations account.
[6] The five public depots are located at Anniston, Ala; Corpus
Christi, Tex; Chambersburg, Pa; Texarkana, Tex; and Tobyhanna, Pa.
[7] Using working capital funds, organizations sell goods and services
to customers on the basis of rates designed to recoup the full cost of
operations.
[8] Interim contractor support is designed to be an interim arrangement
in which a contractor provides depot-level maintenance (and sometimes
other logistics support) as part of the acquisition strategy for new
systems.
[9] Contractor logistics support is designed to be a lifetime support
concept in which a contractor provides most or all elements of
logistics support, including depot-level maintenance.
[10] Pub. L. No. 105-85 (Nov. 18, 1997) sections 355 and 357.
[11] See GAO/NSIAD-00-20.
[12] See U.S. General Accounting Office, Depot Maintenance: DOD's 50-50
Reporting Should Be Streamlined, GAO-03-1023 (Washington, D.C.: Sept.
5, 2003).
[13] See GAO/NSIAD-00-20.
[14] The National Maintenance Program is the Army's ongoing action to
establish a fully integrated national maintenance requirements process
that includes all depot-level maintenance requirements, regardless of
the location of the work in a field facility or a maintenance depot.
[15] One-Time Repair actions are depot repairs that are accomplished at
nondepot locations following an organization's request and approval to
do this work on a limited basis.
[16] See GAO-03-1023.
[17] See GAO/NSIAD-00-20.
[18] See U.S. General Accounting Office, Depot Maintenance: Key
Unresolved Issues Affect the Army Depot System's Viability, GAO-03-682
(Washington, D.C.: July 7, 2003).
[19] See GAO-03-1023.
[20] See GAO/NSIAD-00-20.
[21] See GAO-03-1023.
[22] See GAO/NSIAD-00-20.
[23] See GAO-03-1023.
[24] See 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).
[25] See GAO-03-1023.
[26] 10 U.S.C. 2466(b) provides that the Secretary of Defense may waive
the 50 percent limitation if the Secretary determines that a waiver is
necessary for reasons of national security and notifies Congress
regarding the reasons for the waiver.
[27] See GAO-03-1023.
[28] See GAO/NSIAD-00-20.
[29] The Army plans to reduce the size of its logistics infrastructure
by combining the current levels of maintenance into two levels: field-
level, which will be "repair and return to user," and sustainment-
level, which will be "repair and return to supply."
[30] See GAO/NSIAD-00-20.
[31] The Joint Computer-Aided Acquisition and Logistic Support system
is a multiservice program for developing the infrastructure to
logistically support weapons systems throughout their life cycle.
[32] In July 2002, the Army changed the name of this program from the
Wholesale Logistics Modernization Program to the Logistics
Modernization Program. This is a new information system that is
intended to help manage the Army's supply, maintenance, and
transportation functions. Beginning in July 2003, the Logistics
Modernization Program will replace many of the Army's old logistics
information systems.
[33] See U.S. General Accounting Office, DOD Civilian Personnel:
Improved Strategic Planning Needed to Help Ensure Viability of DOD's
Civilian Workforce, GAO-03-472 (Apr. 30, 2003).
[34] See GAO/NSIAD-00-20.
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