Deferred Maintenance Reporting

Federal agencies have taken initial steps to implement new disclosure requirements concerning deferred maintenance on government assets ranging from weapon systems to national parks. However, several challenges remain, including the lack of complete inventories of property, plants, and equipment. Accurate reporting of deferred maintenance is an important step toward more informed decisionmaking. By improving the validity of information on maintenance, the disclosure of deferred maintenance has the potential to improve both the allocation of federal resources and, ultimately, the condition of federal assets. Because agencies are most responsive to issues in which there is demonstrated interest, GAO believes that continued congressional and executive branch oversight would increase the chances of the disclosure requirement being implemented successfully and on time.

GAO noted that: (1) agency officials at the 9 agencies specifically required to implement the standard for fiscal year (FY) 1998 told GAO that they intend to comply with the deferred maintenance requirements of SFFAS No. 6; (2) if effectively implemented, the new federal accounting requirements will improve information on the maintenance of federal assets; (3) accurate reporting of deferred maintenance is an important step toward more informed decision-making; (4) by improving the validity of information on maintenance, the disclosure of deferred maintenance has the potential to improve both the allocation of federal resources and, ultimately, the condition of federal assets; (5) the federal requirement to disclose deferred maintenance amounts presents agencies with a new challenge for which they must adequately prepare; (6) some initial steps have been taken, but significant work remains to be done for all agencies to effectively implement the deferred maintenance requirements promptly; (7) 4 of the cognizant IGs expressed confidence that their respective agencies would implement the deferred maintenance requirements and 5 expressed reservations or were reluctant to assess agency progress; (8) although most agencies do not have experience generating agencywide estimates of deferred maintenance because historically they have not been required to do so, all agencies reported that they have estimated maintenance for ad hoc and budgetary purposes; (9) a critical step in generating a deferred maintenance estimate is a complete and reliable inventory of property, plant and equipment (PP&E) on which to assess maintenance needs; (10) the results of the FY 1996 financial audits show that 4 agencies are hampered in their efforts to report deferred maintenance because they have been unable to fully report PP&E reliably; (11) the Department of Defense holds about 80 percent of the federal government's PP&E, and it faces significant issues to implement the deferred maintenance requirements; (12) even for agencies where the independent audits indicated no report modifications that pertained to PP&E, the deferred maintenance requirements present a significant challenge; (13) the flexibility in SFFAS No. 6 increases the need for agencies to develop departmental policies and guidance that are compatible with agency mission and organizational structure; and (14) adequate data collection and tracking systems will be necessary to gather and verify information on deferred maintenance amounts.