Depot Maintenance
DOD's Report to Congress on Its Public-Private Partnerships at Its Centers of Industrial and Technical Excellence (CITEs) Is Not Complete and Additional Information Would Be Useful Gao ID: GAO-08-902R July 1, 2008For several years, the Department of Defense (DOD) and Congress have encouraged the defense logistics support community to pursue partnerships with the private sector to combine the best commercial processes and practices with DOD's extensive maintenance capabilities. These public-private partnerships can combine the resources, risks, and rewards of public agencies and private companies and are intended to provide greater efficiency, better access to capital, and improved compliance with a range of government regulations. Although DOD has collected information on depot-level partnering arrangements for several years, DOD first issued a policy encouraging the use of public-private depot maintenance partnerships to improve the efficiency and viability of its depots in January 2002. DOD expects these improvements to depot operations to ultimately improve support for the warfighter. Public-private partnerships for depot-level maintenance are cooperative arrangements between a depot-level maintenance activity and one or more private sector entities to perform DOD or defense-related work, to utilize DOD depot facilities and equipment, or both. Pursuant to Section 2474 of Title 10, Unites States Code, the secretaries of the military departments (and the Secretary of Defense in the case of defense agencies) designated their depot-level maintenance activities (other than facilities approved for closure or major realignment under the Defense Base Closure and Realignment Act of 1990) as Centers of Industrial and Technical Excellence (CITE) in their core competencies. Section 2474 states that the secretary concerned may authorize and encourage the head of a CITE to enter into public-private partnerships comprising of government and private sector employees to perform work related to the CITE's core competencies. The statute also permits private industry to use underutilized or unutilized facilities and equipment at the CITEs. House Conference Report 110-477 accompanying H.R. 1585 directed DOD to submit a report to the House and Senate Armed Services Committees on the public-private partnerships at its CITEs that describes the following six reporting elements: (1) common approaches and procedures for DOD CITEs to use in the implementation of partnerships; (2) consistent cost methodologies and reimbursement guidance applicable to maintenance and repair workload performed by federal personnel participating in public-private partnerships; (3) implementation procedures for completing contract negotiation for partnerships within 12 months of initiating negotiations; (4) the secretary's use of commercial practices in partnerships to replace existing inventory and component management, technical publication data, document management, equipment maintenance, and calibration requirements; (5) delegation during a partnership of Class 2 design authority based on commercial practices to maintain the form, fit, and function of a weapons system platform, major end item, component of a major end item, or article; and (6) plans to expand core capabilities through the use of partnerships at DOD CITEs. To assess the completeness of DOD's report, we determined (1) whether DOD's report described each of the six reporting elements as directed by the conference report and (2) for the reporting elements that were described, whether DOD could have included additional information in its report that would have made it more useful to the committees and other interested parties.
DOD's report on public-private partnerships at DOD's CITEs provided responses to all six reporting elements; however, it did not directly describe reporting element three, and did not describe reporting element six, as directed by H.R. Conf. Rep. 110-477. Specifically, DOD did not directly describe the implementation procedures for completing contract negotiations for public-private partnerships within 12 months of initiating negotiations, nor did it describe its plans to expand core capabilities through the use of public-private partnerships at DOD CITEs. Although DOD did not provide a description of the implementation procedures for completing contract negotiations for public-private partnerships within 12 months of initiating negotiations, it provided an explanation of why imposing such a time frame on contract negotiations would have an adverse impact on creating new partnerships. DOD could have provided examples in its report to the committees to support its conclusion that imposing a 12-month time frame on contract negotiations would have an adverse impact on its partnerships. DOD did not describe its plans to expand core capabilities through the use of public-private partnerships. According to DOD officials, they could not describe the plans to expand core capabilities through the use of public-private partnerships because they had no plans to implement such an initiative. However, DOD does not explicitly state in its report to the committees that it has no plans to expand its core capabilities through the use of partnerships. Although DOD provided responses for all six reporting elements, based on our review of DOD's report we concluded that DOD could have provided additional information to the committees and other interested parties for two of these reporting elements. For reporting element four--describe the commercial practices to replace existing inventory and component management, technical publication data, document management, and equipment maintenance and calibration requirements for public-private partnerships--DOD's report to the committees could have included a more clear and descriptive explanation regarding the methodology used for selecting public-private partnerships identified in the appendix of the report. For reporting element one--describe common approaches and procedures for implementing partnerships--DOD's report to the committees could have disclosed the fact that the Army has not yet implemented DOD's policy requiring each of the services to conduct a business case analysis prior to entering into partnership arrangements to ensure that the partnership is in the best interest of the government, and could have described the Army's plans to do so. Additionally, DOD's report could have included a description of the various authorities, regulations, and other methods used to establish public-private partnerships, the various types of partnerships, and the benefits of public-private partnerships.
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-08-902R, Depot Maintenance: DOD's Report to Congress on Its Public-Private Partnerships at Its Centers of Industrial and Technical Excellence (CITEs) Is Not Complete and Additional Information Would Be Useful
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Private Partnerships at Its Centers of Industrial and Technical
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July 1, 2008:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
Subject: Depot Maintenance: DOD's Report to Congress on Its Public-
Private Partnerships at Its Centers of Industrial and Technical
Excellence (CITEs) Is Not Complete and Additional Information Would Be
Useful:
For several years, the Department of Defense (DOD) and Congress have
encouraged the defense logistics support community to pursue
partnerships with the private sector to combine the best commercial
processes and practices with DOD's extensive maintenance capabilities.
These public-private partnerships can combine the resources, risks, and
rewards of public agencies and private companies and are intended to
provide greater efficiency, better access to capital, and improved
compliance with a range of government regulations. Although DOD has
collected information on depot-level partnering arrangements for
several years, DOD first issued a policy encouraging the use of public-
private depot maintenance partnerships to improve the efficiency and
viability of its depots in January 2002. DOD expects these improvements
to depot operations to ultimately improve support for the warfighter.
Public-private partnerships for depot-level maintenance are cooperative
arrangements between a depot-level maintenance activity and one or more
private sector entities to perform DOD or defense-related work, to
utilize DOD depot facilities and equipment, or both. Other government
organizations, such as program offices, inventory control points, and
materiel/systems/logistics commands, may also be parties to such
agreements. Pursuant to Section 2474 of Title 10, Unites States Code,
the secretaries of the military departments (and the Secretary of
Defense in the case of defense agencies) designated their depot-level
maintenance activities (other than facilities approved for closure or
major realignment under the Defense Base Closure and Realignment Act of
1990) as Centers of Industrial and Technical Excellence (CITE) in their
core competencies. Section 2474 states that the secretary concerned may
authorize and encourage the head of a CITE to enter into public-private
partnerships comprising of government and private sector employees to
perform work related to the CITE's core competencies. The statute also
permits private industry to use underutilized or unutilized facilities
and equipment at the CITEs.
House Conference Report 110-477 accompanying H.R. 1585 directed DOD to
submit a report to the House and Senate Armed Services Committees
(hereafter referred to as, "the committees") on the public-private
partnerships at its CITEs that describes the following six reporting
elements: (1) common approaches and procedures for DOD CITEs to use in
the implementation of partnerships; (2) consistent cost methodologies
and reimbursement guidance applicable to maintenance and repair
workload performed by federal personnel participating in public-private
partnerships; (3) implementation procedures for completing contract
negotiation for partnerships within 12 months of initiating
negotiations; (4) the secretary's use of commercial practices in
partnerships to replace existing inventory and component management,
technical publication data, document management, equipment maintenance,
and calibration requirements; (5) delegation during a partnership of
Class 2 design authority[Footnote 1] based on commercial practices to
maintain the form, fit, and function of a weapons system platform,
major end item, component of a major end item, or article; and (6)
plans to expand core capabilities through the use of partnerships at
DOD CITEs. In its report accompanying H.R. 1585,[Footnote 2] the House
Armed Services Committee explained that it was concerned that DOD CITEs
are not using consistent approaches for public-private partnerships,
and that it understood that a lack of uniform standards had created an
environment where these partnerships take from 2 to 4 years to
implement. The committee believed that without a standard approach for
the military departments, the CITEs would not be able to adopt best
business practices, maintain core competency requirements, maximize
existing facility capacity, decrease the cost of services and products,
or lower the cost of maintaining the logistics infrastructure. The
conference report also directed that we review DOD's report for
completeness. We agreed with committee officials to submit our report
on July 1, 2008.[Footnote 3] To assess the completeness of DOD's
report, we determined (1) whether DOD's report described each of the
six reporting elements as directed by the conference report and (2) for
the reporting elements that were described, whether DOD could have
included additional information in its report that would have made it
more useful to the committees and other interested parties.
Scope and Methodology:
To determine if DOD's report to the committees on its public-private
partnerships at its CITEs was complete, we reviewed each of the six
elements contained in the conference report and examined whether DOD's
report described these six elements as directed. We also reviewed the
policies, guidance, and regulations that DOD and the services have
developed for establishing, implementing, and managing public-private
partnerships. We compared and analyzed the content of DOD's report with
the data submitted by each of the military services to DOD that address
the four of the six reporting elements in the conference report. DOD
did not ask the military services to provide data on two of the
reporting elements. We also interviewed appropriate DOD and service
officials to understand and document the extent to which DOD has
adequately reported on the six reporting elements. During this audit
engagement, we met with officials from the Office of the Assistant
Deputy Under Secretary of Defense for Maintenance Policy and Programs,
Washington D.C; the Army Materiel Command, Fort Belvoir, Virginia; the
Tank and Automotive Command, Warren, Michigan, and Rock Island,
Illinois; the Anniston Army Depot, Anniston, Alabama; and the
Department of the Air Force, Washington, D.C.
To determine whether there was additional information available to DOD
that would have made DOD's report more useful to the committees and
other interested parties, we examined DOD's public-private partnership
reports for fiscal year 2005[Footnote 4] and fiscal year 2006[Footnote
5] to obtain a complete listing of all DOD partnerships and other
relevant information. We also obtained a copy of DOD's public-private
partnership database, which is managed by the Joint Depot Maintenance
Activities Group located at Wright Patterson Air Force Base, Ohio, and
queried the database to identify the benefits derived from each of
DOD's public-private partnerships. In addition, we reviewed an April
2003 GAO report on DOD partnerships that recommended that DOD establish
overarching goals for expected outcomes from its partnering
initiatives, refine current metrics for measuring partnership benefits,
and require specific assessment and planning for new capability where
partnerships are expected for new systems.[Footnote 6] Further, we
reviewed a February 2008 Army Audit Agency report that examined the
benefits of public-private partnerships within the Army.[Footnote 7] We
also met with officials from the Joint Depot Maintenance Activities
Group located at Wright Patterson Air Force Base, Ohio, and officials
from the Army Audit Agency, located at Redstone Arsenal, Alabama.
We conducted this performance audit from May 2008 through July 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
DOD's report on public-private partnerships at DOD's CITEs provided
responses to all six reporting elements; however, it did not directly
describe reporting element three, and did not describe reporting
element six, as directed by H.R. Conf. Rep. 110-477. Specifically, DOD
did not directly describe the implementation procedures for completing
contract negotiations for public-private partnerships within 12 months
of initiating negotiations, nor did it describe its plans to expand
core capabilities through the use of public-private partnerships at DOD
CITEs. Although DOD did not provide a description of the implementation
procedures for completing contract negotiations for public-private
partnerships within 12 months of initiating negotiations, it provided
an explanation of why imposing such a time frame on contract
negotiations would have an adverse impact on creating new partnerships.
While we believe this explanation is useful, DOD could have provided
examples in its report to the committees to support its conclusion that
imposing a 12-month time frame on contract negotiations would have an
adverse impact on its partnerships. For example, DOD could have
included case studies illustrating the factors that can increase the
duration and complexity of partnership negotiations, and quantitative
information showing how long contract negotiations take involving
public-private partnerships at DOD's depot maintenance activities.
Additionally, while we believe DOD's description of "core capability"
and how core capabilities are managed and fostered at DOD's depot
maintenance activities provides useful information, DOD did not
describe its plans to expand core capabilities through the use of
public-private partnerships. According to DOD officials, they could not
describe the plans to expand core capabilities through the use of
public-private partnerships because they had no plans to implement such
an initiative. However, DOD does not explicitly state in its report to
the committees that it has no plans to expand its core capabilities
through the use of partnerships.
Although DOD provided responses for all six reporting elements, based
on our review of DOD's report we concluded that DOD could have provided
additional information to the committees and other interested parties
for two of these reporting elements. For example:
* For reporting element four--describe the commercial practices to
replace existing inventory and component management, technical
publication data, document management, and equipment maintenance and
calibration requirements for public-private partnerships--DOD's report
to the committees could have included a more clear and descriptive
explanation regarding the methodology used for selecting public-private
partnerships identified in the appendix of the report. This appendix
was included in DOD's report in order to identify specific public-
private partnerships that employ these commercial practices. However,
we found that the methodology used by DOD in developing this appendix
was inconsistent. For example, although DOD planned to include only
partnerships related to one of the four benefits attributed to
partnering--improved business processes or updated technology--we found
that this was not the case.[Footnote 8] In fact, many of the
partnerships included in its appendix were related to two other
benefits--product support or performance improvement and an
identifiable increase in facility utilization--rather than improved
business processes or updated technology, as DOD intended. We believe
this additional information could have provided the committees with a
better understanding of the commercial practices used in DOD public-
private partnerships to improve the efficiency and effectiveness of the
depots' operations and the related benefits of those partnerships.
* For reporting element one--describe common approaches and procedures
for implementing partnerships--DOD's report to the committees could
have disclosed the fact that the Army has not yet implemented DOD's
policy requiring each of the services to conduct a business case
analysis prior to entering into partnership arrangements to ensure that
the partnership is in the best interest of the government, and could
have described the Army's plans to do so. Additionally, DOD's report
could have included a description of the various authorities,
regulations, and other methods used to establish public-private
partnerships, the various types of partnerships, and the benefits of
public-private partnerships. This information is included in the annual
internal report on public-private partnerships of the Office of the
Deputy Under Secretary of Defense for Logistics and Material Readiness,
which was not referenced in DOD's report to the committees. DOD uses
this internal report to help track the progress of its public-private
partnerships on an individual basis. It does not, however, have
overarching goals and measures to assess the overall effectiveness of
its partnerships--a key component in strategic planning. In our April
2003 report, we recommended that DOD establish baseline data and
measurable goals to assess the collective effects of its public-private
partnerships on depot operations, and develop or refine its metrics for
measuring partnership benefits.[Footnote 9] However, because DOD
disagreed with our recommendations, we brought this issue to the
attention of Congress.
We continue to believe that our former matter for congressional
consideration--that Congress consider requiring DOD to develop
measurable goals for improving the future operations of its depot
maintenance activities and assess how public-private partnerships at
DOD CITEs are helping to meet those goals--is still valid and would
help DOD and the committees to determine the relative impact of
partnerships on depot operations and efficiency. In addition, we
believe Congress should consider having DOD provide the committees with
information on the timing and challenges in implementing these
partnerships and its ongoing and planned use of public-private
partnerships to sustain elements of its core capabilities.
In oral comments on a draft of this report, DOD officials acknowledged
that they could have provided a more comprehensive detailed description
of the factors involved in expanding and sustaining core capabilities
at its CITEs. However, the officials felt that they adequately
responded to reporting element three, explaining that to require a
partnership agreement to be completed within 12 months would have an
adverse impact on creating new partnering alliances and would be
especially detrimental for efforts to create more complex partnering
agreements. While we understand DOD's position, we believe that DOD
could have provided additional data to support the variance in the time
needed and the specific steps required to complete contract
negotiations for public-private partnerships. With regard to asking the
committees to reconsider our earlier matter to have DOD establish
overarching goals and measures for assessing its partnerships, DOD
officials reiterated DOD's position stating that it assesses its
partnerships individually based on their stated goals and that to
assess the effects at a DOD-wide level would have little meaning. Given
that an assessment at the DOD-wide level is in concert with key
strategic planning guidance, we continue to believe our matter to
Congress is still valid. DOD's comments are discussed in more detail at
the end of this report. DOD also provided technical comments and we
have incorporated them where appropriate.
Background:
DOD must operate its logistics activities within the framework of
various legislative provisions and regulatory requirements. Various
legislative provisions govern the size, composition, and allocation of
depot repair workloads between the public and private sectors. For
example, pursuant to Section 2466 of Title 10, not more than 50 percent
of the funds made available for depot-level maintenance and repair can
be used to contract for performance by nonfederal government personnel.
Other statutes that affect the extent to which depot-level workloads
can be converted to private sector performance include (1) Section 2469
of Title 10, which provides that the Secretary of Defense ensure that
DOD-performed depot maintenance and repair workloads valued at not less
than $3 million not be changed to contractor performance without using
merit-based selection procedures for competitions among all depot-level
activities or competitive procedures for competitions among private and
public sector entitie[Footnote 10]s, and (2) Section 2464 of Title 10,
which provides, in part, that it is essential for the national defense
that DOD maintain a government-owned, government-operated logistics
capability to ensure a ready and controlled source of technical
competence and resources necessary to ensure effective and timely
response to a mobilization, national defense contingency, and other
emergency requirements.
For many years, Congress and various administrations have debated the
issue of who should perform depot work and where it should be
performed. Central to this debate has been the interplay between DOD's
efforts to rely more on the private sector for depot maintenance and
these Title 10 provisions. The public-private partnership concept for
improving government operations provides a cooperative approach to
resolving this debate. Historically, DOD has used public-private
partnering arrangements for depot maintenance, such as work-share
agreements and facility-use partnerships, under various legal
authorities--although these arrangements generally were not referred to
as partnerships. Based on requirements in Section 2474 of Title 10,
DOD's goals for partnering with the private sector are to (1) help
sustain elements of core depot maintenance capabilities, (2) increase
utilization of public facilities, and (3) leverage private sector
investment in these military facilities. The objectives of public-
private partnerships under Section 2474 are to (1) maximize capacity
use at depots, (2) reduce or eliminate the depots' ownership costs in
areas such as operations and maintenance and environmental remediation,
(3) reduce the cost of products made or maintained at depots, (4)
leverage private-sector investments in plant and equipment and promote
commercial business ventures at depots, and (5) foster cooperation
between the military and private industry.
Prior GAO Work on DOD Public-Private Partnerships:
In April 2003, we reviewed DOD's public-private partnerships to assess
the extent that DOD is participating in these partnerships, the
characteristics needed to achieve effective partnerships, and DOD's
ability to measure success and the management challenges. We concluded
that DOD had limited ability to measure overall success of the
partnerships. Consequently, we recommended that DOD establish
overarching goals for expected outcomes from its partnering initiative,
refine current metrics for measuring partnership benefits, and require
specific assessment and planning for new capability where partnerships
are expected for new systems. DOD partially concurred with these
recommendations, stating that our recommendations were not actionable
as a practical matter. We disagreed, stating that we believe a key
element needed for the department to achieve its objective of more
effective military depot maintenance operations through public-private
partnerships is the ability to measure and assess the contribution of
partnerships to meeting that objective. Consequently, in the report we
included a matter for congressional consideration that Congress
consider requiring DOD to develop measurable goals for improving the
future operations of its depot operations at its CITEs and periodically
assess and report on its progress on these goals. To date Congress has
not taken any action on this matter.
DOD's Public-Private Partnership Report to the Committees Does Not
Describe Two of the Reporting Elements:
DOD's report to the committees on public-private partnerships at its
CITEs provided responses to all six reporting elements; however, it did
not directly describe reporting element three, and did not describe
reporting element six, as directed by H.R. Conf. Rep. 110-477.
Specifically, DOD did not directly describe the implementation
procedures for completing contract negotiations for public-private
partnerships within 12 months of initiating negotiations; nor did DOD
describe its plans to expand core capabilities through the use of
public-private partnerships at DOD CITEs. In our review of DOD's data
call provided to the military services requesting input addressing the
key elements of the conference report, we found that DOD elected not to
ask the military services to provide data or comments on these two
reporting elements.
Implementation Procedures for Completing Contract Negotiations within
12 Months Were Not Included in DOD's Report to the Committees:
DOD did not directly describe the implementation procedures for
completing contract negotiations for public-private partnerships within
12 months of initiating negotiations as directed by the conference
report for reporting element three. Instead, DOD's report stated that
imposing a requirement that all negotiations for potential depot
maintenance public-private partnerships must be completed within a
specified period of time, such as 12 months, would have an adverse
impact on creating new partnership alliances. According to DOD's
report, the Office of the Secretary of Defense, and service-level and
depot-level officials, contract negotiations involving public-private
partnerships can be very complex and can vary depending on the number
of parties involved in the negotiations, the type of partnering
arrangements, and whether the two parties have previously partnered
together. While we believe this explanation is useful, DOD could have
provided additional information to the committees and other interested
parties to support its conclusion that imposing a 12-month time frame
on contract negotiations would have an adverse impact on its
partnerships. For example, DOD could have provided case studies
illustrating the factors that can increase the duration and complexity
of partnership negotiations, and quantitative information showing how
long contract negotiations take involving public-private partnerships
at DOD's depot maintenance activities. These case studies could have
included a description of the step-by-step procedures taken by DOD and
private sector companies, and a description of the various factors
involved with the completion of the partnership negotiations. For
example, during our visit to Anniston Army Depot, officials provided us
with a detailed diagram that included the step-by-step process followed
before a contract is signed. In addition, after reviewing previously
signed contracts, these officials were able to provide us with the
dates negotiations began and when the corresponding contracts were
signed, which provided us with a frame of reference regarding how long
it took to finalize various contract negotiations associated with six
of its partnership efforts. Based on our analysis of the limited data
provided, the time required to complete contract negotiations for the
public-private partnerships at Anniston Army Depot varied from a few
days to a maximum of 2 years. Quantitative information of this type,
which was not included in DOD's report, could have provided the
committees with more insight into how long contract negotiations
involving public-private partnerships at DOD's CITEs take and could
have provided stronger support for DOD's position that the duration of
partnership negotiations should not be limited to a specified period of
time.
DOD's Plans to Expand Core Capabilities Were Not Included in DOD's
Report to the Committees:
DOD did not describe its plans to expand core capabilities through the
use of public-private partnerships as directed by the conference report
for reporting element six. Instead, DOD provided a brief overview of
the definition of a "core capability" and how core capabilities are
managed and fostered at DOD's depots. DOD also outlined some of the
circumstances that may initiate a partnership between DOD and private
sector companies, such as the requirement for additions or revisions to
capabilities at particular CITEs to reflect changes in technology or
force structure. While we believe DOD's description of core capability
and how core capabilities are managed and fostered at DOD's depot
maintenance activities was useful information, DOD did not describe
plans to expand core capabilities through the use of public-private
partnerships. According to DOD officials, they did not describe the
plans to expand core capabilities through the use of public-private
partnerships because they had no plans to implement such an initiative.
DOD and service officials told us that partnerships are used to help
sustain elements of a depot's core capability, and that core
capabilities, by definition, are government-owned and government-
operated (involving government personnel and government-owned and
government-operated equipment and facilities). Thus, according to the
officials, simply increasing the number of public-private partnerships
would not automatically expand core capabilities at its CITEs, but
rather increase the level of production at the CITEs. In addition,
according to DOD officials, there are other factors involved in
increasing a CITE's core capabilities that must be considered and are
beyond the control of partnerships. These factors involve complex
workload requirements, the capacity of a CITE to perform work related
to its core capabilities, and the current skills and capabilities of
the CITE's workforce. According to DOD officials, without a careful
consideration of these factors, increasing a CITE's core capabilities
would not be possible. However, DOD's report does not provide support
for its position nor does it provide a detailed description of the
factors related to expanding DOD's core capabilities. Including such a
description in DOD's report to the committees could have provided
additional information helpful to Congress in gaining an understanding
of DOD's position with respect to the feasibility of utilizing
partnerships in order to expand a CITE's core capabilities.
DOD's Public-Private Partnerships Report to the Committees Lacks
Additional Information That Could Have Made It More Useful:
Although DOD provided responses for all six reporting elements as
directed by the conference report, based on our assessment of DOD's
report to the committees we concluded that DOD could have also provided
additional information for two of the reporting elements in order to
provide the committees with a more useful report. Specifically, DOD's
report to the committees could have provided more detailed information
for (1) reporting element four, the use in a public-private partnership
of commercial practices to replace existing inventory and component
management, technical publication data, document management, and
equipment maintenance and calibration requirements, and (2) reporting
element one, the common approaches and procedures for implementing
public-private partnerships at DOD CITEs. On the basis of our work, we
did not identify additional information that would have been helpful
with regard to (1) reporting element two, consistent cost methodologies
and reimbursement guidance applicable to the maintenance and repair
workload performed by federal government personnel participating in
public-private partnerships, and (2) reporting element five, delegation
during public-private partnerships of Class 2 design authority based on
commercial practices to maintain the form, fit, and function of a
weapon system platform, major end item, component of a major end item,
or article.
Use of Commercial Practices in DOD Public-Private Partnerships:
Although DOD described, as required by reporting element four, the
commercial practices to replace existing inventory and component
management, technical publication data, document management, and
equipment maintenance and calibration requirements for public-private
partnerships, it could have provided a more clear and descriptive
explanation regarding its methodology for selecting public-private
partnerships identified in the appendix of its report. This appendix
was included in DOD's report in order to identify specific public-
private partnerships that employ the commercial practices described in
reporting element four. DOD has identified four categories of benefits
provided to its depot maintenance activities that are attributed to
partnering: explicit product support performance improvement, improved
business practices or updated technology, identifiable cost avoidance,
and identifiable increase in facility utilization. DOD officials
determined that only those depot maintenance public-private
partnerships that showed improved business practices or updated
technology as a benefit would be included in its report to address this
reporting element. Thus, according to DOD officials, they selected the
public-private partnerships by querying DOD's public-private
partnership database, which is maintained by the Joint Depot
Maintenance Activities Group, and by asking the services to provide a
listing of the public-private partnerships that they believed addressed
this reporting element. However, the public-private partnerships
identified in the report resulted in a misrepresentation of DOD's
original intent to include only a listing of partnerships that reported
an improved business practice. For example, many of the partnerships
identified by the services that DOD included in its report to the
committees reported a product support or performance management
benefit, increased facility utilization benefit, or both derived from
the partnerships, rather than an improved business practice or updated
technology benefit. The inclusion of these partnerships with various
types of benefits in the appendix of DOD's report was the result of an
inconsistent methodology used by DOD to develop its list. In addition,
the body of DOD's report stated that there were 48 of these
partnerships, while the appendix listed 76 partnerships. This is
because the number identified in the body of the report represented
only partnerships taken from the partnership database and the appendix
listed those as well as those submitted by the services. We also found
that the appendix excluded some other partnerships that reported
improved business practices or an updated technology benefit and
contained one Air Force partnership that was listed twice.
We also found that some of the service-and depot-level officials we met
with thought that DOD could have provided additional information to the
committees with regard to reporting element four by listing all of the
public-private partnerships that cite 2474 of Title 10, United States
Code, as partnering authority, which provides, in part, that the
secretary concerned may authorize and encourage the CITEs to enter into
public-private partnerships to perform work within their core
competencies and for private industry to use underutilized or
unutilized facilities and equipment at the CITEs. These officials
believe that the inclusion of these additional partnerships would have
provided the committees with a more complete and comprehensive view of
current public-private partnerships that resulted in various kinds of
benefits and that to have done so would have been an appropriate and
relevant response to the direction identified in the conference report.
We believe this additional information could have provided the
committees with a better understanding of the commercial practices used
in DOD public-private partnerships to improve the efficiency and
effectiveness of the depots' operations and the related benefits of
those partnerships.
Common Approaches and Procedures Used in Implementing Public-Private
Partnerships:
Although DOD described reporting element one as directed by the
conference report, DOD could have provided additional information to
the committees and other interested parties by providing more detail
about the common approaches and procedures used in the implementation
of public-private partnerships. For example, DOD's report to the
committees could have disclosed the fact that the Army had not yet
implemented the DOD guidance requiring each of the services to conduct
a business case analysis to support decisions to enter into partnership
arrangements to ensure that the partnership is in the best interest of
the government, as was reported by the Army Audit Agency, and it could
have described the Army's plans to do so. Additionally, this report
could have included a description of the various authorities,
regulations, and other methods used to establish public-private
partnerships, the various types of partnerships, an explanation of the
services' differing views of what constitutes these various partnership
arrangements, and the benefits of public-private partnerships. This
information is included in the annual internal report on public-private
partnership of the Office of the Deputy Under Secretary of Defense for
Logistics and Material Readiness, which was not referenced in DOD's
report to the committees. According to DOD officials, this report is
used internally to assess the progress of their partnering efforts and
is not provided to Congress, unless it is requested. In this report,
DOD also identifies the anticipated benefits that are expected and
realized through the development of public-private partnerships and
recaps the services' progress in implementing partnerships by providing
summary-level information on its public-private partnership
arrangements. Although DOD uses this internal public-private
partnership report to help track the progress of its partnerships on an
individual basis, our prior work demonstrates the importance of
establishing overarching goals and measures in order for an agency to
assess the overall effectiveness of a program, which DOD still has not
done.
Army Has Not Yet Implemented DOD's Policy to Conduct a Business Case
Analysis:
DOD's report could have provided useful information to the committees
pertaining to reporting element one by disclosing that the Army has not
yet implemented the DOD guidance requiring each of the services to
conduct a business case analysis to support decisions to enter into
partnership arrangements to ensure that the partnership is in the best
interest of the government, and describing the Army's plans to do so.
DOD Instruction 4151.21 states that the decision to enter into a
partnership must be supported by a business case analysis considering
costs, benefits, and best use of public and private sector capabilities
that demonstrates that it is in the best interest of the government.
However, while DOD's report to the committees references DOD
Instruction 4151.21, the report does not provide an overview of this
particular requirement of a business case analysis, nor does it
specifically mention this requirement as a common approach or procedure
used in the implementation of public-private partnerships, although
CITEs are required to produce such an analysis before a partnership is
formed. According to a February 2008 Army Audit Agency report,[Footnote
11] the Army has not implemented this DOD requirement. In response to
DOD's data call to the military services to obtain information that
addresses this reporting element, the Army notified DOD that it was in
the process of updating its policies to reinforce this DOD requirement
as a result of this internal Army audit; however, DOD did not include
this information in its report to the committees.
Public-Private Partnership Authorities:
DOD could have provided additional information to the committees and
other interested parties pertaining to element one by including a
description of the authorities pertaining to public-private
partnerships. Depot maintenance public-private partnerships take many
forms. According to DOD's report, entitled Public Private Partnerships
for Depot-Level Maintenance Through the End of Fiscal Year 2006, some
partnerships have been established by contract under statutory
authority, while others are work-share arrangements pursuant to
memorandums of understanding (MOU) or similar agreements. The services
have used a number of authorities to establish these public-private
partnerships. See enclosure I for a brief description of the principal
statutory and regulatory authorities. Although there are several
authorities and regulations used to establish public-private
partnerships, DOD's 2006 report indicated that the most widely cited
authority used is that contained in 10 U.S.C. 2474.[Footnote 12] As of
the end of fiscal year 2006, DOD reported that it had 348 partnerships
(active and closed), of which 222 or 64 percent cited Section 2474 of
Title 10. Of these 348 public-private partnerships through the end of
fiscal year 2006, DOD reported that 182 are Army, 104 are Navy, 53 are
Air Force, and 9 are Marine Corps. Additionally, according to DOD,
there are two authorities, 10 U.S.C. 2471 and 10 U.S.C. 2469a, that are
no longer valid for new public-private partnering arrangements,
although they were cited in DOD partnerships arrangements established
prior to 2001. Aspects of the provisions of the former were
incorporated into 10 U.S.C. 2474, while 10 U.S.C. 2469a, which dealt
with workloads that were realigned because of base realignment and
closure actions, was eliminated as obsolete by the Fiscal Year 2003
National Defense Authorization Act.
Types of Public-Private Partnerships:
DOD's report could have provided additional information to the
committees and other interested parties pertaining to reporting element
one by including a description of all of the various types of public-
private partnerships. The circumstances surrounding a depot maintenance
activity's workload shape how the services develop the approach used
for each of their partnerships, including the selection of a
partnership type and dividing responsibilities for the performance of
logistics functions. According to DOD, the military services have
differing interpretations of what constitutes a particular type of
partnering agreement. The types of agreements that are viewed
differently by the services include work-share arrangements, facilities-
use agreements, and arrangements that provide government nondepot
maintenance services to on-site contractors performing depot
maintenance. However, according to DOD, the public-private partnership
definition in DOD Instruction 4151.21 encompasses all of the services'
interpretations. As described in our April 2003 report,[Footnote 13]
public-private partnerships can be formed through various types of
arrangements such as:
* Work share: An arrangement whereby a combination of military and
commercial facilities, employees, or both is used to execute a program
manager's work package--including tasks such as weapon systems
remanufacture, modification, or upgrade. Under the work-share
arrangement, the program manager issues a work order to the military
participant and a contract to the private sector participant. The
relationship between the participants to accomplish the work package is
usually coordinated with an MOU or memorandum of agreement instead of a
contract.
* Direct sale: An arrangement whereby military and commercial entities
enter into a contractual relationship for the use of military depot
maintenance facilities and employees to provide the private sector with
articles, services, or both.
* Lease: An arrangement whereby military and commercial entities enter
into a contractual relationship for the private sector's use of public
depot maintenance facilities, its equipment to perform work for either
the public or private sector, or both.
* Government-furnished resources: An arrangement whereby military and
commercial entities enter into an agreement for private sector use of
public depot maintenance facilities, its equipment and employees, or
both at no cost in connection with and under the terms of a contract.
* Teaming: An arrangement whereby military and commercial entities
enter into a contractual relationship to accomplish a deliverable
stipulated in a contract. The relationship between the participants is
usually initially outlined in a teaming agreement during the proposal's
preparation and then formalized as a contractor/subcontractor
relationship subsequent to contract award.
Benefits of Public-Private Partnerships:
DOD could have provided additional information to the committees and
other interested parties pertaining to reporting element one by
including a description of all of the benefits derived from public-
private partnerships. According to DOD, its goals for depot maintenance
partnerships are more responsive product support, better facility
utilization, reduced cost of ownership, and more efficient business
processes. The benefits DOD identified in support of its partnership
goals are (1) explicit product support and performance improvement, (2)
improved business practices or updated technology, (3) identifiable
cost avoidance, and (4) identifiable increase in facility utilization.
DOD's annual internal public-private partnership report identifies
these common benefits derived from its partnerships and summarizes the
specific benefits that are included in these four categories. It also
identifies the number of partnerships that provided each of the
benefits and how many reported two or more of these benefits. For
fiscal year 2006, DOD cited the following examples as benefits derived
from its public-private partnerships:
* Improved business practices or updated technology: increased depot
efficiency, improved schedule conformance, quicker turnaround time, and
additional capabilities or processes resulting from application of new
technologies.
* Product support and performance improvement: a reduction in the
amount of time associated with the maintenance, repair, or overhaul of
items or systems; reduction in the amount of time for related
material/parts support; a reduction in product support/logistics costs;
improved weapon system availability, reliability, and maintainability;
and enhanced performance of the weapon system for the warfighter.
Additionally, DOD cited performance improvement benefits: improved
aircrew training, more efficient use of labor, improved quality, and
enhanced testing, diagnostics, or inspection.
* Identifiable cost avoidance: resulted from contractors using existing
capability at a DOD CITE rather than having to establish additional
capability, reduction or elimination of shipping and transportation
costs, or the implementation of specific process improvements for
production and repair.
* Identifiable increase in facility utilization: resulted from
additional workload accomplished directly by federal government
workers, contractor personnel, or a combination of the two.
DOD Tracks Progress of Its Public-Private Partnerships, but Has Not
Established Overarching Goals and Measures to Collectively Assess Its
Partnerships:
While DOD uses its internal public-private partnership report to help
track the progress of its public-private partnerships on an individual
basis, it has not established overarching goals and measures to
collectively assess its partnerships. In our assessment of DOD's April
2008 report to the committees, we asked DOD officials about their
strategic goals for managing DOD public-private partnerships and
discovered that they do not plan to analyze partnership performance
data to measure the degree to which the partnerships are meeting the
goals of more responsive product support, better facility utilization,
reduced cost of ownership, and more efficient business processes. DOD
officials stated that it would be difficult to develop overarching
goals and measures because of the differences in the nature and
employment of each public-private partnership. However, our prior work
demonstrates the importance of establishing overarching goals and
measures in order for an agency to assess the overall effectiveness of
a program--a key component in strategic planning and a common approach
that an agency employs when establishing or implementing its programs.
Given this principle, we continue to believe DOD should establish
overarching goals and measures to assess the collective effects of its
public-private partnerships on depot operations and develop or refine
its metrics for measuring partnership benefits, as we recommended in
our April 2003 report.[Footnote 14] However, because DOD disagreed with
our recommendations, we raised this issue to the attention of Congress.
Without these data, DOD cannot assess whether it is achieving its
public-private partnerships goals as outlined in DOD guidance. Further,
without this data, DOD, the committees and other interest parties
cannot assess whether the overall costs and benefits support DOD's use
of partnerships.
The need for these data was reaffirmed by the February 2008 Army Audit
Agency report on the benefits of public-private partnerships, which
recommended that the Army, among other things, issue partnering
guidance for establishing baseline data and standard metrics for
tracking its partnerships and collect and monitor data to determine if
intended partnering benefits are being achieved. The report stated that
without metrics and these relevant data, Army managers lacked the
information needed to assess options to continue, expand, or reduce
these partnerships. In its response to the report, the Army stated that
it plans to start measuring the benefits of its partnerships.
Conclusion:
As we discussed earlier, Congress provided legislation to establish
public-private partnerships at DOD's CITEs to provide greater
efficiency, better access to capital, and improved compliance with
government regulations. While DOD tracks the progress of its public-
private partnerships on an individual basis, it has not established
overarching goals and measures to collectively assess its partnerships.
Our prior work demonstrates that establishing overarching goals and
measures are key components to strategic planning when assessing the
overall effectiveness of a program. Consistent with our 2003 report, we
still believe that Congress should consider having DOD establish
overarching goals and measures for public-private partnerships at DOD
CITEs. The Army Audit Agency also had similar findings in its February
2008 report on the benefits of public-private partnerships. Without
such data, DOD, the committees, and other interested parties cannot
assess whether the partnerships are meeting DOD's stated goals for its
public-private partnerships and whether their costs and benefits
support DOD's use of partnerships. Thus, we believe our previous matter
for congressional consideration--that Congress consider requiring DOD
to develop measurable goals for improving the future operations of its
depot maintenance activities and assess how public-private partnerships
at DOD CITEs are helping to meet those goals--is still valid and would
help DOD and the committees to determine the relative impact of
partnerships on depot operations and efficiency.
Matter for Congressional Consideration:
In order to provide congressional decision makers with information on
the challenges of implementing public-private partnerships at CITEs and
the progress in meeting its intended goals of more responsive product
support, better facility utilization, reduced cost of ownership, and
more efficient business processes, in addition to reiterating our
former matter, we also believe Congress should consider having DOD
provide the committees with information on the timing and challenges in
implementing these partnerships, and its ongoing and planned use of
public-private partnerships to sustain elements of core capabilities,
which were not directly described in DOD's April 2008 public-private
partnership report to the committees.
Agency Comments and Our Evaluation:
Officials from the Office of the Assistant Deputy Under Secretary of
Defense for Maintenance Policy and Programs provided oral comments on a
draft of this report. In commenting on our conclusion that DOD did not
directly describe reporting element three, and did not describe
reporting element six, as directed by H.R. Conf. Rep. 110-477, the
officials acknowledged that DOD could have used this opportunity to
provide a more comprehensive detailed description of the factors
involved in expanding and sustaining core capabilities at its CITEs.
However, the officials felt that they adequately responded to reporting
element three--explaining that to require a partnership agreement to be
completed within 12 months would have an adverse impact on creating new
partnering alliances and would be especially detrimental for efforts to
create more complex partnering agreements. While we understand DOD's
position, we believe that DOD could have provided additional data to
support the variance in the time needed and the specific steps required
to complete contract negotiations for public-private partnerships.
Providing such information could have provided the committees with more
insight into how long contract negotiations take involving public-
private partnerships at DOD's CITEs, and provided stronger support for
DOD's position that the duration of partnership negotiations should not
be limited to a specified period of time.
With respect to the two reporting elements the common approaches and
procedures used in the implementation of public-private partnerships,
and the use of commercial practices in public-private partnerships--we
concluded that DOD could have provided additional information in its
public-private partnership report to the committees. DOD officials said
that the committee report did not direct DOD to provide this additional
information and therefore it was not included in the DOD public-private
partnership report to the committees. However, the DOD officials
acknowledged that some of our observations were insightful and valid.
While we agree that DOD was not asked to provide the additional
information, given the availability of this information, we believe
that DOD could have provided the committees with a more comprehensive
view of the issues surrounding the implementation of public-private
partnerships at DOD CITEs, which could assist the committees in
conducting its oversight responsibilities.
Lastly, with regards to asking the committees to reconsider our earlier
matter to have DOD establish overarching goals and measures for
assessing its partnerships, DOD officials reiterated DOD's position
that the department has metrics which it uses to monitor the general
health of the depot maintenance public-private partnership initiatives
at DOD CITEs. Furthermore, these officials stated that it is far more
practical to assess individual partnerships based on their stated goals
than it is to assess the effects at a DOD-wide level. According to
these officials, this task would be difficult because of the
differences in the missions and character of each depot, and the unique
scope and goals of individual partnerships. In addition, these
officials stated that each public-private partnership is unique and is
assessed at the depot level to determine if the partnership is moving
in a positive direction. Therefore, according to these officials,
assessing its public-private partnerships on a DOD-wide level would
have little meaning. While we recognize that information is collected
on each partnership individually, without overarching goals and
measures it would be difficult to determine whether the costs and
benefits support use of partnerships on a broader DOD-wide level.
Furthermore, given that establishing overall goals and measures on a
broader DOD-wide level is in concert with key strategic planning
guidance, we continue to believe our matter to Congress is still valid
and is an important step toward gauging the overall success of DOD's
public-private initiative. DOD also provided technical comments and we
have incorporated them where appropriate.
We are sending copies of this report to the appropriate congressional
committees. We are also sending copies to the Secretary of Defense, the
Secretaries of the Army, the Navy, and the Air Force; the Commandant of
the Marine Corps; and the Director, Office of Management and Budget.
Copies will be made available to others upon request.
In addition, this report will be available at no charge on GAO's Web
site at [hyperlink, http://www.gao.gov]. If you or your staff have any
questions regarding this report, please contact me at (202) 512-8365 or
solisw@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made key contributions to this report are Marilyn
Wasleski, Assistant Director; Jason Jackson; Katherine Lenane;
Jacqueline McColl; John Strong; and Karen Werner.
Signed by:
William M. Solis, Director:
Defense Capabilities and Management:
Enclosure - 1:
Enclosure I: Principal Authorities Cited for Public-Private
Partnerships:
Authority: 10 U.S.C. 2208(j);
Brief description[A]: Permits the secretary of a military department to
authorize an industrial facility financed through working capital funds
to sell articles and manufacturing, remanufacturing, and engineering
services outside DOD if the purchaser is fulfilling a DOD contract or
subcontract and the solicitation for the contract or subcontract is
open to public-private competition or if the secretary would advance
the objectives of Section 2474(b)(2) of Tile 10 by authorizing the
facility to do so. The Secretary of Defense may waive these conditions
for a particular sale under certain circumstances.
Authority: 10 U.S.C. 2474;
Brief description[A]: Requires the secretaries of the military
departments (or the Secretary of Defense in the case of defense
agencies) to designate depot maintenance activities (other than
facilities approved for base realignment and closure) as CITEs,
authorizes and encourages public-private partnerships at CITES to
provide for the performance of work related to depot maintenance core
competencies and private sector use of facilities and equipment not
fully utilized by DOD, and permits amounts received by a CITE for work
performed under a public-private partnership to be credited to the
appropriation or fund that incurs the cost of performing the work.
Authority: 10 U.S.C. 2539[B];
Brief description[A]: Authorizes the sale of services of any government
laboratory, center, range or other testing facility for the testing of
materials, equipment, models, computer software, and other items.
Authority: 10 U.S.C. 2563;
Brief description[A]: Authorizes the sale of articles or services
manufactured or performed by any armed forces working capital-funded
industrial facility to a person outside DOD (excluding sales of those
articles and services authorized under 10 U.S.C. 4543) that are not
available from any U.S. commercial source under specified conditions.
Authority: 10 U.S.C. 2667;
Brief description[A]: Allows leasing of nonexcess facilities and
equipment in accordance with specified rules and conditions.
Authority: 10 U.S.C. 4543;
Brief description[A]: Specifies that the regulations under Section
2208(h) of Title 10 shall authorize Army working capital-funded
industrial facilities that manufacture cannons, gun mounts, and so
forth to sell articles or services outside DOD under specified
conditions.
Authority: 10 U.S.C. 4544;
Brief description[A]: Authorizes Army working capital-funded industrial
facilities to enter into a contract or other cooperative arrangement
with a non-Army entity to carry out a variety of specified activities
under specified conditions. This authority may be used to enter into
not more than eight contracts or cooperative agreements.
Authority: 10 U.S.C. 7300;
Brief description[A]: Authorizes naval shipyard sales of articles or
services to private shipyards that are made at the request of private
shipyard in order to facilitate the private shipyards' fulfillment of
DOD contracts for nuclear ships without the conditions set forth in
Section 2208(j)(1)(B) of Title 10 and Subsections (a)(1) and (c)(1)(A)
of Section 2563 of Title 10 applying.
Authority: 22 U.S.C. 2754;
Brief description[A]: Requires that the sale or lease of articles or
services under chapter 22 of the U.S. Code be made to friendly
countries solely for certain specified reasons and under certain
conditions.
Authority: 22 U.S.C. 2770;
Brief description[A]: Allows the President to sell defense articles and
services to a U.S. company for incorporation into end items (and for
concurrent or follow-on support) to be sold by such company either on a
direct commercial basis to a friendly foreign country pursuant to a
specified export license or approval, or in the case of specified
ammunition parts, using commercial practices that restrict actual
delivery directly to a friendly foreign country or international
organization under specific conditions.
Authority: FAR[A] Subpart 45.3;
Brief description[A]: Permits the secretary of a military department to
authorize an industrial facility financed through working capital funds
to sell articles and manufacturing, remanufacturing, and engineering
services outside DOD if the purchaser is fulfilling a DOD contract or
subcontract and the solicitation for the contract or subcontract is
open to public-private competition or if the secretary would advance
the objectives of Section 2474(b)(2) of Tile 10 by authorizing the
facility to do so. The Secretary of Defense may waive these conditions
for a particular sale under certain circumstances.: Requires the
secretaries of the military departments (or the Secretary of Defense in
the case of defense agencies) to designate depot maintenance activities
(other than facilities approved for base realignment and closure) as
CITEs, authorizes and encourages public-private partnerships at CITES
to provide for the performance of work related to depot maintenance
core competencies and private sector use of facilities and equipment
not fully utilized by DOD, and permits amounts received by a CITE for
work performed under a public-private partnership to be credited to the
appropriation or fund that incurs the cost of performing the work.:
Authorizes the sale of services of any government laboratory, center,
range or other testing facility for the testing of materials,
equipment, models, computer software, and other items.: Authorizes the
sale of articles or services manufactured or performed by any armed
forces working capital-funded industrial facility to a person outside
DOD (excluding sales of those articles and services authorized under 10
U.S.C. 4543) that are not available from any U.S. commercial source
under specified conditions.: Allows leasing of nonexcess facilities and
equipment in accordance with specified rules and conditions.: Specifies
that the regulations under Section 2208(h) of Title 10 shall authorize
Army working capital-funded industrial facilities that manufacture
cannons, gun mounts, and so forth to sell articles or services outside
DOD under specified conditions.: Authorizes Army working capital-funded
industrial facilities to enter into a contract or other cooperative
arrangement with a non-Army entity to carry out a variety of specified
activities under specified conditions. This authority may be used to
enter into not more than eight contracts or cooperative agreements.:
Authorizes naval shipyard sales of articles or services to private
shipyards that are made at the request of private shipyard in order to
facilitate the private shipyards' fulfillment of DOD contracts for
nuclear ships without the conditions set forth in Section 2208(j)(1)(B)
of Title 10 and Subsections (a)(1) and (c)(1)(A) of Section 2563 of
Title 10 applying.: Requires that the sale or lease of articles or
services under chapter 22 of the U.S. Code be made to friendly
countries solely for certain specified reasons and under certain
conditions.: Allows the President to sell defense articles and services
to a U.S. company for incorporation into end items (and for concurrent
or follow-on support) to be sold by such company either on a direct
commercial basis to a friendly foreign country pursuant to a specified
export license or approval, or in the case of specified ammunition
parts, using commercial practices that restrict actual delivery
directly to a friendly foreign country or international organization
under specific conditions.: Prescribes the policies and procedures for
contractor use and rental of government property.
Authority: FAR Subpart 45.4;
Brief description[A]: Permits the secretary of a military department to
authorize an industrial facility financed through working capital funds
to sell articles and manufacturing, remanufacturing, and engineering
services outside DOD if the purchaser is fulfilling a DOD contract or
subcontract and the solicitation for the contract or subcontract is
open to public-private competition or if the secretary would advance
the objectives of Section 2474(b)(2) of Tile 10 by authorizing the
facility to do so. The Secretary of Defense may waive these conditions
for a particular sale under certain circumstances.: Requires the
secretaries of the military departments (or the Secretary of Defense in
the case of defense agencies) to designate depot maintenance activities
(other than facilities approved for base realignment and closure) as
CITEs, authorizes and encourages public-private partnerships at CITES
to provide for the performance of work related to depot maintenance
core competencies and private sector use of facilities and equipment
not fully utilized by DOD, and permits amounts received by a CITE for
work performed under a public-private partnership to be credited to the
appropriation or fund that incurs the cost of performing the work.:
Authorizes the sale of services of any government laboratory, center,
range or other testing facility for the testing of materials,
equipment, models, computer software, and other items.: Authorizes the
sale of articles or services manufactured or performed by any armed
forces working capital-funded industrial facility to a person outside
DOD (excluding sales of those articles and services authorized under 10
U.S.C. 4543) that are not available from any U.S. commercial source
under specified conditions.: Allows leasing of nonexcess facilities and
equipment in accordance with specified rules and conditions.: Specifies
that the regulations under Section 2208(h) of Title 10 shall authorize
Army working capital-funded industrial facilities that manufacture
cannons, gun mounts, and so forth to sell articles or services outside
DOD under specified conditions.: Authorizes Army working capital-funded
industrial facilities to enter into a contract or other cooperative
arrangement with a non-Army entity to carry out a variety of specified
activities under specified conditions. This authority may be used to
enter into not more than eight contracts or cooperative agreements.:
Authorizes naval shipyard sales of articles or services to private
shipyards that are made at the request of private shipyard in order to
facilitate the private shipyards' fulfillment of DOD contracts for
nuclear ships without the conditions set forth in Section 2208(j)(1)(B)
of Title 10 and Subsections (a)(1) and (c)(1)(A) of Section 2563 of
Title 10 applying.: Requires that the sale or lease of articles or
services under chapter 22 of the U.S. Code be made to friendly
countries solely for certain specified reasons and under certain
conditions.: Allows the President to sell defense articles and services
to a U.S. company for incorporation into end items (and for concurrent
or follow-on support) to be sold by such company either on a direct
commercial basis to a friendly foreign country pursuant to a specified
export license or approval, or in the case of specified ammunition
parts, using commercial practices that restrict actual delivery
directly to a friendly foreign country or international organization
under specific conditions.: Prescribes the rules pertaining to the
title to government-furnished property and the title to contractor-
acquired property. For example, under fixed price type contracts, the
contractor retains title to all property acquired by the contractor for
use on the contract, except for property identified as a deliverable
item.
Sources: DOD's Fiscal Year 2006 Public-Private Partnerships for Depot
Level Maintenance Report and GAO analysis.
[A] The descriptions of these authorities are not intended to be
exhaustive; rather, they describe particular aspects of the authorities
pertinent to public-private partnerships at CITEs.
[B] Federal Acquisition Regulation.
[End of table]
Footnotes:
[1] A Class 2 design change is a change in a project or system that
does not affect safety or change the form, fit, or function of the
weapon system, end item, component, or article to which it applies.
[2] H.R. Rep. No. 110-146, pg. 313 (2007).
[3] H.R. Conf. Rep. 110-477 directed that DOD submit its report by
March 1, 2008, and that GAO submit its review of the report by May 1,
2008. However, because DOD's report was submitted 60 days after the
deadline on April 30, 2008, the committee agreed that we would submit
our report on July 1, 2008.
[4] Office of the Secretary of Defense, Public-Private Partnerships for
Depot-Level Maintenance Through the End of Fiscal Year 2005
(Washington, D.C.: Apr. 2006).
[5] Office of the Secretary of Defense, Public-Private Partnerships for
Depot-Level Maintenance Through the End of Fiscal Year 2006
(Washington, D.C.: July 2007).
[6] GAO, Depot Maintenance: Public-Private Partnerships Have Increased,
but Long-Term Growth and Results Are Uncertain, GAO-03-423 (Washington,
D.C.: Apr. 10, 2003).
[7] Army Audit Agency, Benefits of Public-Private Partnerships, A-2008-
0058-ALM (Alexandria, Va.: Feb. 7, 2008).
[8] The four categories of benefits attributed to partnering are
explicit product support and performance improvement, improved business
practices or updated technology, identifiable cost avoidance, and
identifiable increase in facility utilization.
[9] GAO-03-423.
[10] Section 2469(c) of Title 10 provides that these requirements may
be waived in the case of a depot-level maintenance and repair workload
that is performed at a CITE by a public-private partnership entered
into under Section 2474 of Title 10 consisting of a depot-level
activity and a private entity.
[11] Army Audit Agency, Benefits of Public-Private Partnerships.
[12] This report also noted that a single partnership may cite two or
more authorities.
[13] GAO-03-423.
[14] GAO-03-423.
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