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Report to the Subcommittee on Readiness, Committee on Armed Services, 

House of Representatives:



April 2003:



DEPOT MAINTENANCE:



Public-Private Partnerships Have Increased, but Long-Term Growth and 

Results Are Uncertain:



GAO-03-423:



GAO Highlights:



Highlights of GAO-03-423, a report to the Subcommittee on Readiness, 

Committee on Armed Services, House of Representatives



Why GAO Did This Study:



For several years, the Department of Defense (DOD) and the Congress 

have encouraged the defense logistics support community to pursue 

partnerships with the private sector to combine the best commercial 

processes and practices with DODís extensive maintenance capabilities. 

In January 2002, DOD issued policy encouraging the use of public-

private depot maintenance partnerships to improve the efficiency and 

viability of its depots. GAO reviewed these partnerships and assessed 

the extent that DOD is participating in these partnerships, the 

characteristics needed to achieve effective partnerships and where DOD 

is in its ability to measure success, and the management challenges to

DODís planned expansion of partnerships.



What GAO Found:



While the number of public-private partnerships that DOD is 

participating in has increased from 19 to 93 from fiscal year 1998 

through fiscal year 2002, the existing partnerships represented only 2 

percent of DODís fiscal year 2002 $19 billion depot maintenance 

program. Even with the small amount of expenditures and workload 

associated with partnerships, some partnerships that GAO reviewed 

either improved some aspects of repair performance or showed potential 

for doing so. On the other hand, 19 partnerships have generated no work 

thus far.



DOD and contractor officials have identified 14 characteristics that 

they believe over time will contribute to a partnershipís success in 

achieving DODís objective of improved depot efficiency and viability. 

However, DOD has a limited ability to measure the overall success of 

its partnering efforts because it has not yet developed measurable 

goals for the expected outcomes of the effort and the metrics that it 

has developed sometimes will not provide the data needed to fully 

assess the partnerships. Without initially establishing clear, 

measurable goals to define success in improving the efficiency and 

viability of its depots and metrics that provide the relevant data for 

the measurement, DOD has limited objective means to assess whether the 

partnerships are working as intended. 



Furthermore, DOD faces challenges in its efforts to expand its use of 

public-private partnerships. For example, opportunities available for 

DOD to expand its use of these partnerships may be limited by external 

factors that the services cannot replicate or create at will, such as 

one-time business opportunities. Also, while DOD is expecting private 

sector funding to support the establishment of capability for depot 

partnerships for new systems, the amount of private-sector investment 

to date is only $6.9 million, and the extent to which the private-

sector will make additional investments is uncertain.



What GAO Recommends:



GAO recommends that DOD:

* establish overarching goals for expected outcomes from its partnering 

initiative,

* refine current metrics for measuring partnership benefits, and

* require specific assessment and planning for new capability where 

partnerships are expected for new systems.



DOD partially concurred but indicated that it did not plan to implement 

these recommendations. Consequently, we are including matters for 

congressional consideration that address our recommendations.



www.gao.gov/cgi-bin/getrpt?GAO-03-423.



To view the full report, including the scope

and methodology, click on the link above.

For more information, contact Barry W. Holman at (202) 512-8412 or 

holmanb@gao.gov.



[End of section]



Letter:



Results in Brief:



Background:



Growing Number of Partnerships Involve a Relatively Small Portion of 

Depot Workload:



Characteristics for Effective Partnerships Identified, but 

DOD Is Limited in Its Ability to Measure Partnershipsí Overall Success:



Several Factors Could Affect DODís Planned Partnership

Expansion:



Conclusion:



Recommendations for Executive Action:



Matters for Congressional Consideration:



Agency Comments and Our Evaluation:



Appendixes:



Appendix I: Scope and Methodology:



Appendix I: Scope and Methodology:



Appendix II: Depot Maintenance Public-Private Partnerships Reviewed

and Depots Visited:



Appendix III: Summary Data Regarding the Reasons Cited and Approaches

Used for the 90 Partnerships Reviewed:



Appendix IV: Examples of Partnerships That Are Achieving Positive

Results:



Appendix V: Fourteen Characteristics Identified by DOD and Contractor

Officials Needed to Achieve Effective Partnerships:



Appendix VI: Comments from the Department of Defense:



Appendix VII: GAO Staff Acknowledgments:



Table:



Table 1: Characteristics That Partnerships Need to Achieve Success



Figures:



Figure 1: Number of Partnerships by Individual Service in Fiscal Year 

1998 and Fiscal Year 2002:



Figure 2: Percentage of Workload Performed under Partnerships in Fiscal 

Year 2002 at 14 Depots That GAO Visited:



Figure 3: Reasons Cited for Entering Public-Private Partnerships:



Figure 4: Types of Partnerships:



Figure 5: Frequency of Depotsí and Contractorsí Performance of 
Logistics 

Functions:



Figure 6: Depot and Industry Partnership Consultations at Corpus 
Christi 

Army Depot:



Figure 7: F/A-18 Auxiliary Power Unit Being Repaired Under a 
Partnership 

Between the Naval Aviation Depot Cherry Point and Honeywell:



Figure 8: The Nuclear-Powered Aircraft Carrier USS Enterprise Entering 

Norfolk Naval Shipyard:



Figure 9: Honeywellís M1 Tank Engine Recuperator Manufacturing Line at 

the Anniston Army Depot:



Figure 10: Depot and Contractor Employees Repairing and Testing LANTIRN 

System:



Figure 11: ICBM Global Positioning System Modification Showing 

Developmental Configuration Module:



BRAC: base realignment and closure:



CVN: nuclear aircraft carrier:



DOD: Department of Defense:



ICBM: intercontinental ballistic missile:



JSTARS: Joint Surveillance Target Attack Radar System :



LANTIRN: Low-Altitude Navigation and Targeting Infrared for Night:



NBCRS: nuclear, biological, chemical reconnaissance :



OSD: Office of the Secretary of Defense:



PDM: programmed depot maintenance:



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this material separately.

 

Letter April 10, 2003:



The Honorable Joel Hefley

Chairman

The Honorable Solomon P. Ortiz

Ranking Minority Member

Subcommittee on Readiness

Committee on Armed Services

House of Representatives:



For the past several years, the Department of Defense (DOD) and the 

Congress have encouraged the defense logistics support community to 

pursue partnerships with the private sector. These public-private 

partnerships are arrangements through which the combined resources, 

risks, and rewards of a public agency and a private company are 

intended to provide greater efficiency, better access to capital, and 

improved compliance with a range of government regulations. In January 

2002, DOD issued policy encouraging the use of such public-private 

partnerships in order to combine the best commercial processes and 

practices with DODís extensive depot maintenance capabilities with the 

objective of improving the efficiency and viability of DODís depots. 

DOD also expects these improvements to depot operations to ultimately 

improve support for war fighters.



Your subcommittee has supported the use of public-private depot 

maintenance partnerships with its support of enabling legislation and 

interest in DODís use of such partnerships. This report addresses 

the following questions: (1) to what extent is DOD participating in 

public-private partnerships for depot maintenance; (2) what are the 

characteristics that need to be present to achieve effective 

partnerships, and where is DOD in its ability to measure success; and 

(3) what factors could affect DODís planned expansion of public-private 

partnerships?



As part of our work, we reviewed 90 of the 93 partnerships DOD 

identified as ongoing during fiscal year 2002. We also visited 14 of 

DODís 20 major maintenance depots where these partnerships are ongoing. 

A more complete discussion of our scope and methodology is included in 

appendix I. A listing of the servicesí partnerships we reviewed with 

relevant information about each is included in appendix II. We 

conducted our review from February 2002 through February 2003 in 

accordance with generally accepted government auditing standards.



Results in Brief:



DOD has engaged in a growing number of public-private partnerships 

for depot maintenance, but to date, the number of such partnerships 

involves a relatively small portion of DODís depot workload. 

Specifically, the number of such partnerships increased from 19 

partnerships (13, Army; 3, Air Force; 2, Navy; and 1, Marine Corps) in 

fiscal year 1998 to 93 partnerships for all services in fiscal year 

2002.[Footnote 1] The Army still had the greatest number of ongoing 

partnerships in fiscal year 2002--42, a 3-fold increase from the 13 it 

had in 1998. In fiscal year 2002, the Navy had a total of 31 ongoing 

partnerships--a 15-fold increase, the Air Force had 19 ongoing 

partnerships--a 6-fold increase, and the Marine Corps still had 1 

partnership. While the number of DODís public-private partnerships for 

depot maintenance has increased since 1998, these partnerships 

represented only 2.2 percent of DODís total depot maintenance program 

expenditures in fiscal year 2002. The partnerships at the depots we 

visited typically accounted for a small portion of each depotís total 

workload--0.01 to 2.5 percent of the hours worked in fiscal year 2002-

-or generally did not increase the workload to be performed at the 

depots. Nineteen--or about one fifth--of the 90 partnerships we 

reviewed had generated no workload for the depots, although many were 

expected to do so at some point. However, even with the small amount of 

expenditures and workload associated with partnerships, some 

partnerships provided promising results or good potential, such as 

reduced repair time or better parts availability.



DOD and contractor officials have identified 14 characteristics that 

they believe over time will contribute to a partnershipís success in 

achieving DODís objective of improved depot efficiency and viability; 

however, DOD has not developed a baseline and measurable goals for the 

expected outcomes needed to measure the overall success of its 

partnership initiative. Almost all of these officials cited long-term 

commitment, shared vision and objectives, and the right metrics as key 

elements for successful partnering. While the 14 characteristics are 

not in place in all partnerships, many depot partnership managers 

stated that they are working toward pursuing the characteristics in 

their partnerships and that, over time partnerships should evolve to 

include these characteristics. At the same time, the depot partnership 

managers agreed on the importance of having the right metrics (a key 

characteristic) in place early in the partnership to measure success. 

However, DOD has a limited ability to measure the overall success of 

its partnering efforts because it has not yet developed a baseline and 

measurable goals for expected outcomes for the effort and because the 

metrics that it has developed sometimes will not provide the data 

needed to fully assess the partnerships.



While DOD plans to expand its use of public-private partnerships, 

several factors could affect the departmentís expansion efforts. First, 

opportunities available for DOD to expand its use of public-private 

partnerships may be limited by various external factors that led to 

partnering arrangements in the past but that the services cannot 

necessarily replicate or create at will, such as one-time business 

opportunities. Second, while DOD is expecting private-sector partners 

to fund the establishment of capability to repair new or upgraded 

systems at military depots, it is uncertain to what extent the private-

sector will make such investments. For example, the amount 

of partnership-related private-sector investment in military depots 

through fiscal year 2002 was $6.9 million, which, based on a commercial 

sector benchmark for such investments, is only about 1 percent of the 

$621 million investment needed by DOD to improve and maintain its depot 

infrastructure in fiscal year 2002. Finally, much publicity has been 

given to a recently considered DOD proposal to change provisions of 

title 10, United States Code, that currently limit the departmentís 

ability to outsource depot maintenance workloads. According to DOD and 

depot officials, these title 10 provisions currently provide the key 

impetus for the expansion of public-private partnerships.



We are making a number of recommendations to improve DODís management, 

direction, potential for success, and assessment of its public-private 

partnerships.



In commenting on a draft of this report, DOD agreed with the reportís 

information, findings and conclusions, and partially concurred with the 

reportís recommendations; however, DODís comments indicated that it 

does not plan to implement the recommendations. Consequently, we are 

including matters for congressional consideration that address the 

reportís recommendations. DODís comments and our evaluation of them are 

discussed in the agency comments section later in this report.



Background:



DOD spends about $19 billion annually on depot maintenance, which 

includes repairing, rebuilding, and overhauling weapon systems such as 

ships, tanks, and aircraft. DOD estimates that approximately 53 percent 

of its fiscal year 2002 depot-level workload will be performed in DOD-

owned facilities, and that the remainder will be performed by the 

private sector, mostly in private-sector facilities. DOD has 20 major 

depots:[Footnote 2] 9 in the Navy (3 aviation depots, 4 shipyards, and 

2 warfare centers), 5 in the Army, 4 in the Air Force (3 air logistics 

centers and 1 aircraft storage center), and 2 in the Marine Corps. The 

private sector operates numerous facilities where depot-level 

maintenance is performed on military and private (or nonmilitary) 

equipment and systems. Some of these facilities are manufacturing 

facilities where maintenance work is also performed, while others are 

used only for maintenance.



For many years, debate has occurred between the Congress and various 

administrations over who should perform depot work and where it should 

be performed. Central to this debate has been the interplay between 

DODís efforts to rely more on the private sector for depot maintenance 

and title 10 provisions that (1) limit private-sector workloads to 50 

percent of available funding in a fiscal year,[Footnote 3] (2) require 

the government to maintain certain core capabilities in military 

depots,[Footnote 4] and (3) require public-private competitions for 

certain workloads.[Footnote 5] The public-private partnership concept 

for improving government operations provides a cooperative approach for 

resolving this debate.



The use of public-private partnerships to improve government operations 

was recently endorsed in 2002 by the report of the congressionally 

mandated Commercial Activities Panel chaired by the Comptroller General 

of the United States.[Footnote 6] One sourcing principle adopted by the 

panel related to the need to create incentives and processes to foster 

high-performing, efficient, and effective organizations throughout the 

federal government. Commentary surrounding that principle stated that:



This principle recognizes that historically it has primarily been when 

a government entity goes through a public-private competition that the 

government creates a ďmost efficient organizationĒ (MEO). Since such 

efforts can lead to significant savings and improved performance, they 

should not be limited to public-private competitions. Instead, the 

federal government needs to provide incentives for its employees, its 

managers, and its contractors to constantly seek to improve the 

economy, efficiency, and effectiveness of the delivery of government 

services through a variety of means, including competition, public-

private partnerships, and enhanced worker-management cooperation.



In early 1998, we reviewed DODís use of public-private depot 

maintenance partnering arrangements and concluded that contractors had 

become more interested in sharing repair and maintenance workloads with 

depots and depots were willing to enter into partnering arrangements 

with the private sector in an effort to reduce overhead costs and 

retain core capabilities.[Footnote 7] We also reported that the Army 

had 13 partnerships ongoing at four of its depots, the oldest of which 

was initiated in fiscal year 1994. While we did not report any 

partnerships for the Air Force, Navy, or Marine Corps at the time of 

our review, by the end of 1998, the Air Force had three partnerships 

ongoing, the Navy had two, and the Marine Corps had one.



Historically, DOD has used public-private partnering arrangements for 

depot maintenance, such as work-share agreements and facility-use 

partnerships, under various legal authorities--although these 

arrangements generally were not referred to as ďpartnerships.Ē 

Partnering with the private sector to (1) help sustain core depot 

maintenance capabilities, (2) use underutilized public facilities, and 

(3) leverage private-sector investment in these military facilities is 

a relatively new concept that the department is pursuing on the basis 

of congressional direction under 10 USC 2474. The objectives of public-

private partnerships under section 2474 are to:



* maximize capacity use at depots,



* reduce or eliminate the depotsí ownership costs in areas such as 

operations and maintenance and environmental remediation,



* reduce the cost of products made or maintained at depots,



* leverage private-sector investments in plant and equipment and 

promote commercial business ventures at depots, and:



* foster cooperation between the military and private industry.



In response to section 2474, DOD issued policy governing the formation 

of public-private partnerships and incorporated the concept of these 

partnerships into its current departmentwide logistics reengineering 

initiative.



In January 2002, the Deputy Under Secretary of Defense (Logistics and 

Materiel Readiness) issued a policy memorandum on public-private depot 

maintenance partnerships. The memorandum outlined policy, provided a 

definition and directed the services to pursue partnerships to 

strengthen DODís depot maintenance operations and, ultimately, to 

improve support to war fighters. The DOD policy focuses on using 

partnerships to improve the efficiency and viability of its depots. The 

policy memorandum noted that partnering can contribute to more 

effective DOD maintenance operations, to the introduction of innovative 

processes and technologies, and to the economical sustainment of depot 

capabilities. The department defines a public-private partnership as 

ďan agreement between an organic [military] depot maintenance activity 

and one or more private industry or other entities to perform work or 

utilize facilities and equipment.Ē According to DOD policy, depot 

maintenance public-private partnering arrangements generally include 

(but are not restricted to) one or more of the following forms:



* Use of public-sector facilities, equipment, and employees to perform 

work or produce goods for the private sector.



* Private-sector use of public-sector equipment and facilities to 

perform work for the public sector.



* Work-share agreements, using both public-and private-sector 

facilities and/or employees.



DOD included public-private partnerships in its June 2002 logistics 

reengineering initiative[Footnote 8] to meet war fightersí sustainment 

needs and operational requirements of the National Defense Strategy. 

The initiative states that public-private partnerships should help 

address the many challenges facing military depots, which include 

facilities and equipment that have become severely degraded because of 

limitations in funds for recapitalization and an aging workforce that 

has shrunk by 51 percent in the past 10 years. The departmentís desired 

goal, according to this initiative, is a dramatic increase in public-

private depot maintenance partnerships. The initiative reinforces the 

departmentís effort to improve the efficiency and viability of its 

depots, stating that partnerships will result in creating greater 

private-sector investment in facilities and equipment, better facility 

utilization, reduced costs of ownership, workforce integration, more 

efficient business processes, greater credibility, and a more collegial 

working relationship with the Congress.



DODís public-private partnership policy is intended to help the 

services implement the departmentís performance-based logistics 

initiative for its weapon systems sustainment policy and still comply 

with title 10 provisions constraining the outsourcing of depot 

maintenance workload. The 2001 Quadrennial Defense Review mandated the 

implementation of performance-based logistics in order to improve 

readiness for major weapon systems and commodities. DODís resulting 

performance-based logistics initiative seeks to achieve these 

improvements by using predetermined performance or readiness goals in 

evaluating a weapon systemís logistics support provider. While 

performance-based logistics does not require the use of a contractor as 

the logistics provider, according to DOD officials, all of the 

performance-based arrangements thus far have used a contractor as the 

logistics provider, and they expect that this trend will continue. DOD 

officials anticipate that as the department implements more 

performance-based logistics arrangements with contractors as 

integrators, the contractors will have to partner with military depots 

for the services to comply with title 10 requirements, thus increasing 

the use of public-private partnering.



Growing Number of Partnerships Involve a Relatively Small Portion of 

Depot Workload:



DODís public-private partnerships for depot maintenance increased from 

19 to 93 from fiscal year 1998 through fiscal year 2002 and involved 

2.2 percent of DODís total depot maintenance program expenditures in 

fiscal year 2002. The Army had the largest number--42 partnerships in 

fiscal year 2002. The partnerships at the depots we visited typically 

accounted for a small portion of each depotís total workload--0.01 to 

2.5 percent--or generally did not increase the workload to be performed 

at the depots. Two partnership arrangements resulted in large growth in 

workload at individual depots although service officials do not 

consider one of them as a typical increase because it was due to the 

closure of another depot.[Footnote 9] Furthermore, about one-fifth of 

the partnerships have not yet produced any workload for the depots, 

although future workload is expected in many of these cases. However, 

even with the small amount of new workload generated and the 

partnershipsí newness, some partnerships provided promising results or 

good potential.



Services Expanding Use of Partnerships:



The departmentís emphasis on the use of public-private partnerships for 

depot maintenance has resulted in increases in their use--from 19 in 

fiscal year 1998 to 93 in fiscal year 2002, an overall 4-fold increase. 

The partnerships were formed for a variety of reasons, such as the 

contractors seeking a depotís unique capabilities. According to depot 

officials, a key underlying factor for the increased use of 

partnerships has been the legislative requirement to use at least 50 

percent of available funding for depot maintenance work in DOD depots. 

Simultaneously, long-term logistics support contracts with the private 

sector are being pursued as the preferred DOD support arrangement.



While the department has experienced an increase in the use of 

partnerships, just over one-half of these were initiated during the 

last 2 fiscal years. In 1998 we reported that the Army had 13 ongoing 

partnerships, a number that expanded to 42 during fiscal year 2002--a 

3-fold increase. The Navyís use of partnerships increased from 2 in 

1998 to 31 in fiscal year 2002--a 15-fold increase. Similarly, the Air 

Forceís use of partnerships increased from 3 in fiscal year 1998 to 19 

in fiscal year 2002--a 6-fold increase. The Marine Corpsí usage has 

remained constant with one partnership in fiscal year 1998 and the same 

one in fiscal year 2002.[Footnote 10] Overall, partnership growth in 

the department represents a 4-fold increase from fiscal year 1998 to 

fiscal year 2002. Figure 1 shows the number of total partnerships by 

individual military service for fiscal years 1998 and 2002.



Figure 1: Number of Partnerships by Individual Service in Fiscal Year 

1998 and Fiscal Year 2002:



[See PDF for image]



[End of figure]



These partnerships were formed for a variety of reasons and used 

differing approaches on the basis of the circumstances surrounding the 

specific partnering effort. For example, in a number of cases, the 

contractor sought out the depot for its unique capabilities or for its 

advantageous labor rates. In other cases partnerships formed to meet 

title 10 requirements to maintain military depot capabilities for key 

weapon systems.[Footnote 11] Depot officials stated that a key 

underlying factor driving the use of partnerships has been the 

legislative requirement for at least 50 percent of available funds to 

be used for depot maintenance work in DOD depots.[Footnote 12] At the 

same time long-term logistics support contracts with the private sector 

are being pursued as the preferred DOD support arrangement. The lease 

of underutilized depot facilities to a contractor and the sale of depot 

repair services to a contractor are examples of the approaches used to 

form partnerships. (See appendix II for summary data regarding the 

reasons cited and approaches used for the 90 partnerships we 

reviewed.):



Partnerships Account for a Small Portion of DODís Depot Maintenance 

Expenditure and of Depotsí Workload:



While DOD has not established goals for the depot maintenance 

expenditures or workload it expects to be involved in public-private 

partnerships, currently, partnerships represent a small part of DODís 

overall in-house depot maintenance expenditures and workload. Some 

partnerships had not yet resulted in work to be performed at their 

depot, but depot officials anticipate some in the future.



Maintenance performed in fiscal year 2002 by the depots under 

partnerships accounted for only $435 million--or 2.2 percent--of the 

$19.4 billion dollars that DOD reported spending on depot maintenance 

in that year. Within the services, the amount of depot maintenance 

expenditures involved in public-private partnerships varies from about 

3.0 percent in the Army and 3.8 percent in the Air Force to about 

0.5 percent for the Navy and Marine Corps combined.



Furthermore, in fiscal year 2002, the total of all depotsí partnership 

workload was 4.6 percent of DODís total military depot workload. 

However, as indicated by figure 2, the partnershipsí workload at the 

14 service depots we visited varied widely from 0.01 percent to nearly 

26.0 percent.



Figure 2: Percentage of Workload Performed under Partnerships in Fiscal 

Year 2002 at 14 Depots That GAO Visited:



[See PDF for image]



[End of figure]



Partnerships at 9 of the 14 depots we visited--which have 59 

partnerships in total--involved workload that ranged from 0.01 to 2.53 

percent of the depotís total workload. In addition, while partnership 

activity at the other 5 depots we visited--which have 31 partnerships 

in total--ranged from 7.5 to 26.0 percent of the depotsí workload, the 

partnerships themselves were not always the reason why this workload 

was placed at the depots. According to depot officials, with two 

exceptions, the placement of most of the partnership workload at these 

depots was based on program managersí decisions that occurred prior to 

the formation of the associated partnership. The program managersí 

decisions were based on reasons such as maintaining repair capability 

in military depots, using the most cost-effective maintenance source, 

or sustaining the viability of the industrial base.



The two instances where partnerships resulted in significant new 

workloads for a depot were the Armyís Abrams Integrated Management XXI 

partnership--which accounts for about half of the Anniston workload 

shown in figure 2--and the Air Forceís Propulsion Business Area 

partnership---which accounts for most of the Oklahoma City workload 

shown in figure 2. The propulsion workload at the Oklahoma City depot 

resulted from the closure of a major Air Force depot, and according to 

DOD officials, this workload volume does not represent the typical 

workload that a depot can expect as a result of a partnership.



In addition, as of December 2002, 19--or 21 percent--of the 90 

partnerships we reviewed had generated no workload for the depot. For 

example, seven partnerships at Tobyhanna Army Depot created from fiscal 

year 1999 and through fiscal year 2001 for the depot to repair 

electronic equipment for a contractor have not resulted in workload at 

the depot, although workload was expected. Other partnering efforts, 

such as the Air Forceís Flexible Acquisition and Sustainment Tool 

partnership and the Armyís H-60 Helicopter Engineering Logistical 

Services and Supplies partnership, are too new to have generated 

workload, but the depots anticipate that workload will be forthcoming.



Experience Is Limited at This Time, but Some Partnerships Show Promise 

for Achieving Positive Results:



While the small amount of workload and expenditures attributed to 

partnerships and the newness of many of the partnerships limited the 

availability of data to assess DOD partnershipsí impact on the 

efficiency and viability of depots, some partnerships provide promising 

results or good potential for improving some aspects of repair 

performance. Of the 90 partnerships we reviewed, 28 either improved 

some aspects of repair performance or showed potential for doing so. 

Improvements from these partnerships included better parts 

availability, reduced repair time, reduced backorders, or reduced depot 

support costs. These improvements relate to DODís objective of 

enhancing greater depot efficiency and viability. For example, reducing 

repair time results in improved business processes--one approach for 

enhancing depot operations. Reducing depot support cost can result in 

reduced ownership costs of weapon systems--another approach for 

enhancing depot operations. Appendix IV provides six examples of 

partnerships that are achieving these improvements. On the other hand, 

19 partnerships thus far have generated no work for the depots.



Characteristics for Effective Partnerships Identified, but 

DOD Is Limited in Its Ability to Measure Partnershipsí Overall Success:



DOD and contractor officials have identified 14 characteristics that 

they believe over time will contribute to a partnershipís success in 

achieving DODís objective of improved depot efficiency and viability, 

but DOD has not developed sufficient data and goals for assessing its 

partnering initiative. Many depot partnership managers stated that they 

are working toward pursuing these 14 characteristics in their 

partnerships, including having the right metrics in place early in the 

partnership to measure success. However, DODís ability to measure the 

partnershipsí overall success is limited because it has not yet 

developed baseline data and measurable goals for assessing the outcomes 

of its partnering efforts and the metrics that it has developed 

sometimes will not provide the clear data needed to fully assess the 

partnerships.



Characteristics Identified by DOD and Contractor Officials Needed to 

Achieve Effective Partnerships:



While DOD continues to gain experience in partnering, senior-level DOD 

and contractor officials have identified 14 characteristics, or best 

practices, that they believe over time may be important for a 

partnershipís success in contributing toward achieving DODís objective. 

Almost all officials cited three characteristics as key--long-term 

relationship and commitment, shared vision and objectives, and the 

right metrics. The other 11 attributes were cited less frequently but, 

according to the identifying officials, will nonetheless improve the 

potential for success if present in a partnership. Table 1 summarizes 

the 14 characteristics cited by DOD and contractor officials as 

important to the success of partnerships.



Table 1: Characteristics That Partnerships Need to Achieve Success:



Success characteristic: Long-term relationship and commitment; Reason 

for/Benefit of partnership: A long-term relationship and commitment (1) 

permits both contractors and depots to better plan future workload 

requirements and create a better business case for the contractor to 

make investments to improve depot repair capability and (2) allows the 

contractor to help manage parts obsolescence.



Success characteristic: Shared partnership vision and objectives; 

Reason for/Benefit of partnership: Having partners share the same 

partnership vision and objectives helps ensure that the partners will 

not be working at cross-purposes.



Success characteristic: The right metrics and incentives; Reason for/

Benefit of partnership: The right metrics and incentives are needed to 

effectively measure that progress is being made and ensure that the 

partners are effectively motivated to achieve partnership goals 

and objectives.



Success characteristic: Early acquisition community involvement; 

Reason for/Benefit of partnership: Developing the partnership with 

acquisition community involvement during the early phases of a weapon 

systemís acquisition helps to ensure that any additional depot 

maintenance capability development needed is fully planned and 

funded.[A].



Success characteristic: Complementary skills and abilities; Reason for/

Benefit of partnership: Each partner should bring complementary skills 

and abilities to the partnership because if each partnerís capabilities 

are the same, the relationship may result in a competitive and 

potentially adversarial relationship, not the cooperative synergistic 

relationship hoped for in a partnership.



Success characteristic: Senior-level advocacy and support; Reason for/

Benefit of partnership: DOD and contractor senior management support 

for a partnership is necessary to ensure that the effort receives the 

focus and resources needed to achieve success.



Success characteristic: Sound business case analysis; Reason for/

Benefit of partnership: A comprehensive business case analysis, 

including expected outcomes, should be conducted as part of the 

decision process for entering a partnership to ensure a sound result 

benefiting both the depot and the private-sector partners.



Success characteristic: Mutual trust and shared risk; Reason for/

Benefit of partnership: The partnership should be firmly grounded in 

mutual trust, open communications, and balanced risk among partners.



Success characteristic: Flexibility to change partnership scope; Reason 

for/Benefit of partnership: To ensure the ability to adapt to changing 

circumstances or factors, the partnerships should have the flexibility 

to change the partnership scope.



Success characteristic: Balanced workload; Reason for/Benefit of 

partnership: Workload should be balanced among the partners to ensure 

meaningful involvement for each partner and ensure that one partner 

does not receive only low-skilled work or no work at all.



Success characteristic: Independent review and oversight; Reason for/

Benefit of partnership: Independent review and oversight provides an 

objective assessment of whether each partnership is achieving the 

expected benefits and that each partner performs as expected. Such a 

review also provides a basis for correcting or redirecting partnership 

efforts if expectations are not being met.



Success characteristic: Enforce partnership decisions and 

requirements; Reason for/Benefit of partnership: To ensure successful 

partnering efforts, the partnersí senior management must provide a 

mechanism for enforcing compliance with partnership decisions and 

requirements.



Success characteristic: Full coordination with all stakeholders; Reason 

for/Benefit of partnership: Public-private partnership efforts should 

include steps to get feedback from all stakeholders on planned efforts 

and adjust the partnering strategies to reflect legitimate concerns of 

these stakeholders.



Success characteristic: Clearly documented objectives in partnering 

agreement; Reason for/Benefit of partnership: Once clear mutual 

partnering objectives are determined, they should be documented into a 

formal partnering agreement. The documentation can provide for dispute 

mediation and resolution, and also help delineate each partnerís 

liability.



Sources: DOD and contractors.



[A] Recently, we reported that reducing the logistics costs for a 

weapon system is enhanced with early involvement among the acquisition 

and logistics community--see U.S. General Accounting Office, Best 

Practices: Setting Requirements Differently Could Reduce Weapon 

Systemís Total Ownership Costs, GAO-03-57 (Washington, D.C.: Feb. 11, 

2003).



[End of table]



While we observed the presence of these characteristics in some of the 

partnerships we reviewed, we did not attempt to validate the extent to 

which the characteristics were present in all partnerships reviewed, 

given the newness of many of the partnerships. (See appendix V for 

examples of how some of the partnerships we reviewed exhibited these 

characteristics.) Nonetheless, many of the depot officials responsible 

for managing partnerships stated that the characteristics identified by 

senior-level contractor and DOD officials will contribute to making 

partnership efforts successful. They also stated that while the 

characteristics are not currently present in all partnerships, over 

time, more partnerships will evolve to include these characteristics. 

The officials agreed that the characteristic of having long-term 

commitment should permit both contractors and depots to better plan 

future workload requirements and create a better business case for the 

contractor to make investments to improve depot repair capability. The 

officials agreed that the characteristic of sharing the same 

partnership vision and objective helps ensure that the partners will 

not be working at cross-purposes. Additionally, these officials pointed 

out that another of the characteristics--having the right metrics--is 

critical to develop early in a partnership. Without establishing sound 

metrics for partnerships early, the services cannot effectively measure 

that progress is being made toward achieving the partnershipsí goals 

and objectives. The officials added that in such instances a 

partnership risks making no progress toward its goal or possibly even 

having an impact that is counter to the partnershipís goals and 

objectives.



DODís Ability to Measure Success Is Limited by Lack of Measurable Goals 

for Outcomes and Unclear Metrics:



DOD is limited in its ability to measure the overall success of its 

partnering efforts because it has not yet developed baseline data and 

measurable goals for the expected outcomes of the effort. Furthermore, 

the metrics that DOD has developed sometimes will not provide the data 

needed to assess the partnershipsí results.



While some partnerships have produced positive results, such as reduced 

repair time, DOD has neither established a baseline regarding 

efficiency and viability for where the depots are today nor developed 

measurable goals for the expected outcomes that would define success 

for achieving improved depot efficiency and viability. Such goals could 

include measurable targets for the amount of reductions in general and 

administrative expenses, degree of increased utilization of depot 

capacity, number of jobs created at depots, and amount of private-

sector investment in depot infrastructure and equipment. Establishing 

such goals would provide DOD and the Congress with a measuring stick 

against which to determine the progress that DODís partnering 

initiative is making toward improved depot efficiency and viability.



Without the goals, DODís existing metrics--the data that DOD is 

collecting to measure individual partnership performance--do not 

provide the clear information needed to assess a partnershipís progress 

in improving a depotís performance. DOD is collecting data to measure 

individual partnership performance--revenue generated, capital 

investment, jobs created, cost avoidance, increased facility 

utilization, improved business processes, and improved responsiveness 

to customers. However, these metrics are not tied to overarching goals 

for DODís partnership initiative. Consequently, DOD does not have a 

clear means for assessing the accomplishments of its individual 

partnerships toward meeting its overarching objective and therefore 

risks not achieving the improvements to depot operations expected from 

public-private partnership efforts. For example, investments made by 

the private sector in military depots to date have been about $6.9 

million in total at all DOD depots. However, without an established 

goal for such investments based on each depotís strategic capital 

investment needs, DOD does not have a means of evaluating how effective 

these investments are toward improving a depotís viability 

or efficiency.



Furthermore, in some cases, the metrics that DOD has developed may not 

indicate whether improvements in depot performance are due to a 

partnership or to other factors. This is because some partnerships 

coincide with changes to a weapon system program (such as adopting a 

new repair approach) that may cloud the serviceís ability to measure 

whether the partnership is responsible for any of the measured impacts. 

For example, metrics for the Armyís T700 helicopter engine partnership 

will measure changes in an engineís reliability. However, the Army 

began a recapitalization effort shortly after the start of the 

partnership, and according to a program management official, the 

recapitalization effort will affect the reliability of the metrics. An 

Army depot official stated that it is not possible to separate the 

impact of the recapitalization from the impact of the partnership, 

since the two initiatives were implemented concurrently. Eleven of the 

partnerships we reviewed involved similar recapitalization or other 

major weapon system modifications and improvements that likewise have 

the potential for distorting the metrics for these partnerships.



Several Factors Could Affect DODís Planned Partnership Expansion:



While DOD plans to expand its use of public-private partnerships to 

improve the efficiency and viability of its depots, several factors 

could affect the departmentís expansion efforts. The opportunities for 

increased partnering may be limited by external factors that the 

services cannot create at will, and uncertainties over the extent to 

which the private sector will invest to improve or develop new 

capabilities at DOD depots to support partnerships. In addition, should 

the Congress change title 10 provisions pertaining to depot 

maintenance, the changes could affect the impetus for public-private 

partnerships.



Partnering Opportunities May Be Limited by External Factors:



The opportunities available for DOD to expand its use of public-private 

partnerships may be limited by external factors that the services 

cannot replicate or create at will. Indeed, the creation of some 

partnerships resulted from the occurrence of one-time business 

opportunities arising from external factors, such as contractorsí 

decisions to divest themselves of repair capabilities.



Such one-time opportunities may be critical to developing successful 

partnerships, but their occurrence is unpredictable. For example, 

Northrop Grumman made a business decision to discontinue its in-house 

composite repair capability for B-2 aircraft flight control surfaces. 

This created an opportunity for the Air Forceís Ogden depot to develop 

repair capability for the flight control surfaces and enter into a 

partnership with Northrop Grumman, which retained the overarching 

contract responsibility for the B-2ís airframe maintenance. This 

partnering opportunity between the Ogden depot and Northrop Grumman was 

wholly contingent on the contractorís decision to divest itself of this 

repair capability.



Expected Private-Sector Investments to Establish New Capabilities Are 

Uncertain:



Expanding the use of partnerships to new or upgraded systems where 

depots do not currently have the capability to accomplish the work will 

require investment directly from system program offices or from the 

private-sector partner to develop new system capabilities in the depot. 

Although DOD expects private-sector partners to contribute to 

developing these capabilities, the extent to which the private sector 

will make such investments is uncertain.



The departmentís January 2002 partnership policy encourages public-

private partnerships to be structured to improve the deteriorating 

condition of depot facilities and equipment by ďleveraging private-

sector investments, such as facilities and equipment, to contribute to 

re-capitalization of depot maintenance activities.Ē However, DODís data 

on the investments made by the private sector in military depots to 

support partnership as of the end of fiscal year 2002 show only about 

$6.9 million in private-sector investment at all DOD depots. Ninety-six 

percent of this total occurred at one depot--the Armyís Anniston depot-

-and the remaining 4 percent occurred at one other depot--the Air 

Forceís Warner Robins depot. For fiscal year 2002, DOD invested about 

$330 million in the depots through its defense working capital fundís 

capital investment program. This funding was for equipment replacement, 

productivity improvements, environmental compliance, computer 

equipment and software, and minor construction. Additional investments 

are made in depots by program management offices for establishing new 

system capabilities, and while DOD does not quantify the amount of this 

investment, we reported in 2001 that program management offices had 

invested $403 million over a 10-year period ending in 2000--about $40 

million annually.[Footnote 13] The department recognizes that adequate 

funding has not been made available to revitalize the depots and 

incorporate new systems capabilities, and is looking to private-sector 

investments by its partners to mitigate this shortfall.



In its recently issued depot maintenance strategy plan, the Air Force 

states that a commercial-sector benchmark for adequate investment 

levels in depots is from 6 to 7 percent of revenue per year. Assuming 

that this represents a reasonable target for the services, investments 

in depotsí infrastructure would equate to about $621 million for fiscal 

year 2002. However, at its fiscal year 2002 level, private-sector depot 

investments resulting from partnerships equated to about 1 percent of 

this investment level. While the department has not established 

specific goals for the share of private-sector investments, the extent 

to which DOD will be able to rely on the private-sector investments is 

uncertain.



Changes to Title 10 Could Limit Impetus for Expanding Use of 

Partnerships:



Recently, DOD considered proposing changes to title 10 provisions 

that limit the outsourcing of depot maintenance workloads. Should 

the Congress make such changes, the impetus for expanded use of 

public-private partnerships could be reduced.



While DOD recognizes that some of its partnerships have resulted from 

external factors beyond the servicesí control, the department expects 

that its initiative to expand contractorsí involvement in logistics 

support for weapon systems will increase partnering opportunities for 

depots. According to DOD officials, this will occur because the 

services will require contractors to partner with depots for some depot 

maintenance work to satisfy title 10 provisions that limit the amount 

of depot maintenance work that can be performed by the private sector. 

Recently, however, much publicity has surrounded discussions within DOD 

over its tentative proposal to change title 10 by repealing six 

provisions in order to create greater flexibility in determining the 

most effective and efficient sources for depot maintenance.[Footnote 

14] At the time we completed our review, DOD had discontinued this 

current effort to repeal these provisions, but the department has 

proposed repeal of depot-related provisions in the past and could again 

in the future. If the Congress were to repeal these provisions, 

private-sector contractors might not consider public-private 

partnering as an attractive alternative to performing the work 

themselves or to subcontracting the work to another private-sector 

entity.



Our work found that these provisions have fostered the use of 

partnerships. For example, 11 percent of the 90 partnerships we 

reviewed cited compliance with title 10 provisions as the reason for 

partnering (see fig. 3 in app. III), and depot officials indicated it 

was an underlying factor influencing the decisions to form other 

partnerships. According to depot officials, these title 10 provisions 

currently provide the key impetus for the expansion of public-private 

partnerships and removal of these title 10 provisions could have an 

adverse impact on partnering opportunities.



Conclusion:



Even with the significant increase in the number of DODís public-

private partnerships from fiscal year 1998 through fiscal year 2002, 

the existing partnerships represent only 2.2 percent of DODís $19 

billion depot maintenance program. DOD does plan to greatly expand the 

use of public-private partnerships to help achieve the partnership 

initiativeís objective of improving the efficiency and viability of its 

military depots. However, it has neither established a baseline 

regarding depotsí efficiency and viability for where they are today nor 

developed measurable goals for expected outcomes to define the degree 

of the improved depot efficiency and viability desired. Additionally, 

the metrics that DOD has developed will not, in certain circumstances, 

provide the relevant data needed to assess individual partnership 

results. Without initially establishing both clear and measurable goals 

to define success in improving the efficiency and viability of its 

depots and the metrics that provide the relevant data for the 

measurement, DOD has limited objective means to assess whether the 

partnerships are working as intended. Furthermore, while DOD is 

expecting private-sector investment in public depots to support the 

creation of capability to support new systems the extent to which this 

investment is likely to occur is uncertain. Absent additional planning, 

this situation could result in capability shortfalls or lead to delays 

in establishing needed capabilities.



To improve DODís management, direction, potential for success, and 

assessment of its public-private partnerships, we provided DOD with a 

number of recommendations in a draft of this report. In commenting on 

the draft, DOD indicated that it does not plan to implement our 

recommendations because it found them to be too general and thus not 

actionable. However, the departmentís reluctance to establish overall 

goals for partnerships makes it unclear as to the overall role that DOD 

envisions for partnerships in its depots--even though DODís focus on 

partnering was intended as one means of fostering improvements in 

government owned and operated depot facilities. We have long reported 

on weaknesses in DODís processes for identifying core capabilities to 

be accomplished in government-owned depot maintenance facilities, 

continuing deterioration in depot facilities with inadequate 

recapitalization plans, and a smaller but aging workforce with 

inadequate human capital plans in place to preserve depot capabilities 

for the future. Such conditions place at risk the role of these 

facilities in ensuring the existence of a ready and controlled source 

of in-house technical competence and resources so that the military can 

respond to mobilizations, national defense emergencies, and 

contingencies. Clear goals for partnership arrangements are important 

if they are expected to play a role in improving depot operations.



Recommendations for Executive Action:



To improve the management, direction, potential for success, and 

assessment of its public-private partnerships, we recommend that the 

Secretary of Defense direct the Under Secretary of Defense for 

Acquisition, Technology and Logistics to:



* establish baseline data and overarching goals for expected outcomes 

of partnership efforts, including the partnership initiativeís desired 

improvements to depot operations and:



* develop or refine metrics as needed to provide a more complete basis 

to assess the results of the depot partnering arrangements as well as 

ensuring that they differentiate between improvements to a weapon 

systemís support resulting from partnering and from other factors or 

changes affecting the weapon system.



To support the expansion of partnership arrangements for new systems, 

we recommend that the Secretary of Defense require the Under Secretary 

of Defense for Acquisition, Technology and Logistics:



* to require specific assessment and planning for new capability in 

military depots where partnership arrangements for new systems are 

expected and:



* as part of this planning, assess the likelihood of private-sector 

investment in new systems capability in military depots and other 

alternatives as needed.



Matters for Congressional Consideration:



To encourage the Department of Defense to more clearly identify its 

long-term goals for its depot facilities and the role of public-private 

partnerships in meeting those goals, the Congress should consider 

requiring DOD to develop measurable goals for improving future 

operations of its depot facilities to include (1) facilities 

recapitalization, (2) retention of specific depot capabilities, and (3) 

human capital plans for preserving a viable workforce. In doing so, the 

Congress should also consider requiring DOD to establish time frames 

against which it will periodically assess and report to the Congress on 

progress in each of these areas, including the contribution of 

partnering arrangements to those goals.



Agency Comments and Our Evaluation:



In commenting on a draft of this report, the Deputy Under Secretary of 

Defense for Logistics and Material Readiness agreed with the reportís 

information, analysis and conclusions but only partially concurred with 

the reportís recommendations. Overall, he expressed the view that the 

recommendations were so generally drawn that they are not actionable as 

a practical matter. We disagree and continue to believe that they are 

needed actions. The departmentís comments are included in this report 

in appendix VI.



With regard to our first recommendation to establish baseline data and 

overarching goals for expected outcomes of partnerships, DOD stated 

that it has already established baseline data and goals. However, these 

baselines and goals relate to individual partnerships rather than to 

the partnership program as a whole. We agree that baseline data and 

goals are needed to measure the progress of individual partnership 

initiatives; however, our intent was to have the department establish 

overarching goals with measurable outcomes to help gauge the success of 

DODís overall partnership initiative toward strengthening DODís depot 

maintenance operations. Such goals would be key to measuring progress 

toward achieving the expectation identified in DODís partnership policy 

memorandum, which was to have partnerships ďcontribute to more 

effective depot maintenance operations, the introduction of innovative 

processes or technologies, and the economical sustainment of organic 

capabilities.Ē We do not agree that the goals stated in the policy 

memorandum in and of themselves are specific enough to provide 

measurable outcomes against which to assess the collective 

effectiveness of the departmentís efforts to improve depot efficiency 

and viability.



Regarding our second recommendation to develop or refine metrics as 

needed to provide a more complete basis to assess the results of depot 

partnering arrangements, DOD said it will be difficult, if not 

impossible, to differentiate between improvements solely resulting from 

partnering versus other factors. While we agree that it may be 

difficult, we nonetheless believe that it will be critical in assessing 

the departmentís partnering initiative. Unless the department develops 

meaningful metrics that reasonably determine relative contributions of 

various factors contributing to changed conditions in weapon system 

support, it will not be in a position to determine the results of 

ongoing partnerships and the conditions under which additional 

partnerships should be undertaken.



Regarding our third recommendation to require specific assessment and 

planning for new capability in military depots where partnership 

arrangements for new systems are expected, the department stated that 

it currently requires assessment and planning for new weapon systems 

but agreed that more emphasis could be placed on determining the role 

that public-private partnerships may play in establishing new depot 

capabilities. However, it did not identify any specific action planned 

to do so--we believe it is important for the department to identify 

steps to be taken to give this increased emphasis.



Regarding our fourth recommendation to assess as part of planning, the 

likelihood of private-sector investment in new systems capability in 

military depots, the department stated that capital investment by the 

private sector across the broad spectrum is unrealistic, stating that 

it was never the departmentís intention for its public-private 

partnership program to supplant the need for capital investment and 

funding by the services. We did not intend to suggest that partnerships 

supplant service funding but rather give visibility to a goal 

established by the department in its public-private partnership policy 

memorandum, which states that one objective of public-private 

partnerships is ďleveraging private-sector investments such as 

facilitates and equipment to contribute to re-capitalization of depot 

maintenance activities.Ē We continue to believe that the assessment 

called for in our recommendation is important both to help assess the 

contribution of partnerships in achieving this partnering objective as 

well as to more clearly assess capital investment needs from other 

sources.



Finally, we disagree with the departmentís statement that our 

recommendations are not actionable as a practical matter. A key element 

needed for the department to achieve its objective of more effective 

military depot maintenance operations through public-private 

partnerships is the ability to measure and assess the contribution of 

partnerships toward meeting that objective. As a practical matter, 

without establishing clear and

measurable goals for its partnering program, the department is limited 

in its ability to assess whether the partnerships are working as 

intended to produce positive results or, conversely, are having a 

negative effect on military depot maintenance operations.



:



We are sending copies of this report to interested congressional 

committees; the Secretary of Defense; the Secretaries of the Army, 

the Navy, and the Air Force; the Commandant of the Marine Corps; and 

the Director, Office of Management and Budget. We will make copies 

available to others upon request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov.



If you or your staff have questions regarding this report, please 

contact me at (202) 512-8412 or holmanb@gao.gov. Other major 

contributors to this report are listed in appendix VII.



Barry W. Holman

Director, Defense Capabilities and Management:



Signed by Barry W. Holman



Appendixes:



Appendix I: Scope and Methodology:



To determine the extent to which the Department of Defense (DOD) is 

participating in public-private partnerships for depot maintenance; we 

met with officials from the Office of the Secretary of Defense (OSD) 

and from service logistics offices to identify recent, ongoing, and 

planned partnerships within each service and identified the military 

depots associated with these partnerships. We also reviewed partnership 

data maintained in the Joint Depot Maintenance Activities Group 

partnering database. We visited 14 of DODís 20 major military depots 

(see appendix II for the depots visited and the partnerships reviewed) 

to examine in more depth the partnerships associated with these depots. 

We selected depots that had the greatest volume of partnership 

activity, also ensuring that we included each service. Of the six 

depots we did not visit, four did not have any partnerships reported in 

the Joint Depot Maintenance Activities Group partnering database--the 

Marine Corps Maintenance Center Barstow, Barstow, California; the Naval 

Surface Warfare Center, Crane Division, Crane, Indiana; the Naval 

Undersea Warfare Center, Keyport Division, Keyport, Washington; and the 

Aerospace Maintenance and Regeneration Center, Tucson, Arizona--the 

other two depots--Pearl Harbor Naval Shipyard and Letterkenny Army 

Depot--reported two partnerships and one partnership, respectively. We 

did not assess why these sites had this low volume of partnership 

activity. To collect information on the partnerships we reviewed, we 

developed a data collection instrument for each depot to complete for 

each partnership. The information collected on each partnership 

included the type of partnership, reasons why the partnership was 

formed, roles and responsibilities of each partner, and the legislative 

authority or basis for the partnership. We did not, however, validate 

the data provided by the depots or attempt to assess whether or not the 

tasks and responsibilities assumed by the contractor and military depot 

partners represented the best division of work for achieving success 

within the partnership.



To calculate the growth in public-private partnerships, we used our 

1998 work reviewing the use of public-private partnerships in DOD as a 

baseline, tallied the number of partnerships by service, and compared 

these numbers with the partnerships reported in the Joint Depot 

Maintenance Activities Group partnering database as of December 4, 

2002. To determine the relative size or scale of the partnership 

efforts within DOD, we analyzed fiscal year 2002 data on (1) the 

workload that each partnership brought to the each depot compared with 

the total ongoing workload for each depot, (2) the total workload that 

the partnerships brought to the depots compared to the total combined 

workload for all depots visited, and (3) the total dollar value of 

depot maintenance performed under the partnerships at the depots we 

visited compared with the departmentís total depot maintenance 

expenditures.



To determine the characteristics that need to be present to achieve 

effective partnerships and where DOD is in its ability to measure 

success, we met with OSD logistics officials, service logistics 

officials, high-level contractor officials, and officials at each depot 

visited. We discussed evaluating the effectiveness of ongoing 

partnerships--measuring success against DODís objective of improved 

depot efficiency and viability--with these officials and collected 

relevant data and also discussed the characteristics of successful 

partnerships with the senior-level DOD and contractor officials. To 

identify the characteristics of successful partnerships, we reviewed 

the information collected through structured interviews with senior-

level DOD and contractor officials and grouped the characteristics into 

categories based on the similarities of responses. We also discussed 

the extent to which depot partnership managers expect these 

characteristics to be present in current partnerships or will be 

present in future partnerships. To determine whether DOD has developed 

a sufficient framework for measuring success, we reviewed the metrics 

that DOD has developed to gauge the performance of its partnerships and 

assessed whether these metrics included measurable goals and outcomes 

tying the partnershipsí performance to DODís public-private partnership 

policy objective. We also assessed the relevance of the departmentís 

metrics to DODís public-private partnership policy objective. We did 

not test or validate the accuracy of the reported performance data 

related to the public-private partnerships but instead considered the 

structure of the metrics to assess their relevance to DODís partnership 

policy objective. To analyze the sufficiency of data for evaluating the 

extent to which partnerships improved the economy and efficiency of 

depot operations and improved the viability of the depots, we compared 

the relative volume of each depotís partnership workload with the 

ongoing workload at each depot visited and assessed the age of the 

partnerships to determine if enough data existed to make an evaluation. 

To determine the amount of investments made by the private sector in 

military-depot plant and equipment, we extracted information from a 

database on partnerships developed by the Joint Depot Maintenance 

Activities Group at OSDís request. We also used this database to 

identify the expected annual value of depot work for each partnership 

and presented this data in appendix II. When no annual estimate was 

identified in the database, we calculated an annual work value by 

dividing the total expected value for the partnership by the expected 

partnership life, where possible. In those instances where this was not 

possible, we presented the total revenue generated by the partnership 

to date. We did not perform a reliability assessment on this Joint 

Depot Maintenance Activities Group database. Through discussions with 

depot officials and reviews of individual partnerships, we identified 

instances where the partnering efforts produced promising outcomes as 

related to DODís objective of improved depot efficiency and viability.



To determine what future management challenges face DODís planned 

expansion of public-private partnerships, we relied on our discussions 

with OSD logistics officials, service logistics officials, high-level 

contractor officials, and officials at each depot visited to identify 

challenges that may inhibit the departmentís expansion efforts. To 

assess the potential impact of proposed legislative changes on limiting 

DODís planned expansion of public-private partnerships, we discussed 

the impact of removing title 10 provisions that currently limit the 

outsourcing of military depot maintenance and repair workload with OSD 

maintenance policy officials, depot officials, and contractor officials 

and discussed how these title 10 provisions affect contractorsí and 

military depotsí decisions to form public-private partnerships. To 

assess whether the opportunities for partnering are limited, we 

reviewed the reasons why ongoing partnerships developed and then 

discussed with these officials the servicesí ability to control or 

create opportunities that can lead to successful partnerships. We also 

discussed the relationship between the expansion of public-private 

partnerships and DODís implementation of performance-based logistics 

with OSD officials and reviewed the servicesí performance-based 

logistics implementation plans. To assess the potential impact of DODís 

new policy calling for private-sector investment in depots on 

establishing and funding needed depot capabilities, we reviewed and 

compared the new public-private partnership policy with DODís 

overarching acquisition policy, and discussed the partnering policyís 

implementation with depot and OSD officials.



We conducted our review from February 2002 through February 2003 in 

accordance with generally accepted government auditing standards.



[End of section]



Appendix II: Depot Maintenance Public-Private Partnerships Reviewed and 

Depots Visited:



Depot/Partnership (year initiated): Anniston Army Depot: Stryker-1 

(2001); Private-sector partner: General Dynamics Land Systems; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities and advantageous labor rates.; Expected annual value of 

work in depot: $2 million; Partnership type--description of 

partnership tasks: Direct sale/government-furnished resources--Depot 

performs finishing operations, paints the vehicle and provides 

production services. The contractor performs vehicle test and 

acceptance and supplies all parts and material for the production of 

the vehicle. Both the depot and the contractor perform vehicle 

assembly.



Depot/Partnership (year initiated): Anniston Army Depot: Stryker-2 

(2001); Private-sector partner: General Motors; Defense; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities 

and advantageous labor rates.; Expected annual value of work in depot: 

$40,000; Partnership type--description of partnership tasks: 

Direct sale--Depot performs hull and component modification and repair. 

The contractor performs vehicle assembly, test and acceptance, and 

provides all parts and material.



Depot/Partnership (year initiated): Anniston Army Depot: Fox Vehicle 

Upgrade-Services and Facility Use (1996); Private-sector partner: 

General Dynamics Land Systems; Reason(s) for partnership: Contractor 

sought out depot for its unique capabilities and advantageous labor 

rates.; Expected annual value of work in depot: $1 million; 

Partnership type--description of partnership tasks: Direct sale/lease-

-Depot performs vehicle hull upgrade, tail upgrade, paints vehicle, 

disassembles engine, and removes asbestos. The contractor performs 

vehicle disassembly and reassembly, sub assembly/component rework, and 

systems integration and test.



Depot/Partnership (year initiated): Anniston Army Depot: Fox Vehicle 

Maintenance-Facility Use (1996); Private-sector partner: General 

Dynamics Land Systems; Reason(s) for partnership: Provided collocation 

with related Fox vehicle upgrade partnership.; Expected annual value of 

work in depot: $30,000; Partnership type--description of 

partnership tasks: Lease--Depot provides use of a facility. Contractor 

uses facility to receive, store, and issue Fox vehicle subassemblies, 

components and parts for fielded vehicles.



Depot/Partnership (year initiated): Anniston Army Depot: Gunnerís 

Primary Sight Manufacturing (1997); Private-sector partner: General 

Dynamics Land Systems; Reason(s) for partnership: Depot had available 

production facilities needed by the contractor.; Expected annual value 

of work in depot: $85,000; Partnership type--description of 

partnership tasks: Lease--Depot provides use of a facility. Contractor 

performs manufacture of a new gunnerís primary site.



Depot/Partnership (year initiated): Anniston Army Depot: M113 Family of 

Vehicles Overhaul and Conversion (1997); Private-sector partner: United 

Defense Limited Partnership; Reason(s) for partnership: Program manager 

directed work share and contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: No annual 

estimate available, but total revenue reported since partnershipís 

inception in January 1997 through March 2002--$15.9 million.; 

Partnership type--description of partnership tasks: Work share/lease--

Depot performs vehicle disassembly, hull overhaul and conversion, and 

provides the ďdismateĒ power pack. The contractor overhauls 

subassemblies and components, performs engine and suspension 

modification, vehicle assembly, systems integration and test, and final 

paint.



Depot/Partnership (year initiated): Anniston Army Depot: M1/M1A2 

Upgrade (1994); Private-sector partner: General Dynamics Land Systems; 

Reason(s) for partnership: Program manager directed work share.; 

Expected annual value of work in depot: $15.3 million; 

Partnership type--description of partnership tasks: Work share--This is 

a partnership for the upgrade of the M1 tank to the M1A2 version. Depot 

performs vehicle receipt, disassembly, hull rework and upgrade, 

demilitarization of the turret, overhaul of major subassemblies and 

components, and then ships tank parts to the contractor in Lima, Ohio. 

Contractor performs vehicle reassembly, turret installation and systems 

test and integration.



Depot/Partnership (year initiated): Anniston Army Depot: Partnership 

for Reduced Operation and Support Cost--Engine (1999); Private-sector 

partner: Honeywell; Reason(s) for partnership: Program developed by 

program manager, contractor, and depot to enhance current depot engine 

overhaul programs, and reduce operations and support costs.; Expected 

annual value of work in depot: $31,000; Partnership type--

description of partnership tasks: Lease--Depot provides use of 

underutilized facility to contractor. Contractor uses facility to 

supply parts and material to support the depotís turbine engine repair/

overhaul line.



Depot/Partnership (year initiated): Anniston Army Depot: Recuperator 

Plate Manufacturing (1998); Private-sector partner: Honeywell; 

Reason(s) for partnership: Base realignment and closure (BRAC) process 

closed a government-owned facility where contractor performed work.; 

Expected annual value of work in depot: $200,000; Partnership 

type--description of partnership tasks: Direct sale/lease--Depot 

provides material handling and movement, and the contractor 

manufactures recuperator plates.



Depot/Partnership (year initiated): Anniston Army Depot: Abrams 

Integrated Management for the 21[ST] Century (1996); Private-sector 

partner: General Dynamics Land Systems; Reason(s) for partnership: 

Program manager directed work share.; Expected annual value of work in 

depot: $47 million; Partnership type--description of 

partnership tasks: Work share--This is a partnership for a 

recapitalization of the M1A1 tank. Depot performs vehicle receipt, 

disassembly; overhaul of hull, turret, and major subassemblies and 

components; and ships the tank to contractor in Lima, Ohio. The 

contractor performs vehicle reassembly and systems test and 

integration.



Depot/Partnership (year initiated): Anniston Army Depot: Hercules 

(1998); Private-sector partner: United Defense Limited Partnership; 

Reason(s) for partnership: Program manager directed work share.; 

Expected annual value of work in depot: No annual estimate available, 

but total revenue reported since partnershipís inception in January 

1998 through March 2002--$9 million.; Partnership type--

description of partnership tasks: Work share--Depot performs vehicle 

disassembly, structural repair of the hull and front blade repair. 

Contractor performs modification, reassembly, and systems test and 

integration.



Depot/Partnership (year initiated): Anniston Army Depot: Paladin 

(1998); Private-sector partner: United Defense Limited Partnership; 

Reason(s) for partnership: BRAC process closed a government-owned 

facility where contractor performed work.; Expected annual value of 

work in depot: No annual estimate available, but total revenue reported 

since partnershipís inception in January 1998 through March 2002--$1.6 

million.; Partnership type--description of partnership tasks: 

Work share--Depot performs overhaul and conversion of chassis assembly 

and armament system, and provides turret kit components. Contractor 

fabricates and assembles the new cab, performs vehicle reassembly and 

systems test and integration.



Depot/Partnership (year initiated): Anniston Army Depot: Wolverine 

(1998); Private-sector partner: General Dynamics Land Systems; 

Reason(s) for partnership: Program manager directed work share.; 

Expected annual value of work in depot: $1.6 million; 

Partnership type--description of partnership tasks: Work share--Depot 

performs vehicle disassembly, hull rework, demilitarization of turrets, 

overhaul of major subassemblies and components, and ships the vehicles 

to the contractor in Lima, Ohio. Contractor performs chassis assembly, 

procures and installs bridge systems, and conducts inspections and 

testing.



Depot/Partnership (year initiated): Anniston Army Depot: Opposing 

Forces Surrogate Vehicle (1999); Private-sector partner: United Defense 

Limited Partnership; Reason(s) for partnership: Contractor sought out 

depot for its unique capabilities and advantageous labor rates.; 

Expected annual value of work in depot: $8.2 million; 

Partnership type--description of partnership tasks: Work share--Depot 

fabricates unique parts and spares; disassembles vehicle; cleans, 

machines, and repairs hull; repairs, converts and paints; and assembles 

and integrates turret. Depot also performs program management 

functions. Contractor overhauls subassemblies and components, modifies 

engine and suspension, assembles and paints vehicle, and performs final 

systems integration and testing.



Depot/Partnership (year initiated): Corpus Christi Army Depot: 

T700 Engine 

Overhaul and Repair (2000); Private-sector partner: General Electric; 

Reason(s) for partnership: Desire to reduce repair turnaround time.; 

Expected annual value of work in depot: Partnership involves 

reengineering of ongoing workload that annually has a value of about 

$87.7 million.; Partnership type--description of partnership 

tasks: Teaming--Depot provides the labor, facilities and equipment for 

the overhaul and repair of airframes and components. Contractor 

provides technical, engineering and logistical support, and spare parts 

to improve repair turn around time.



Depot/Partnership (year initiated): Corpus Christi Army Depot:

H-60 Overhaul 

and Repair of Airframe and Structural Components (2000); Private-sector 

partner: Sikorsky Aircraft Corporation; Reason(s) for partnership: 

Desire to reduce repair turnaround time.; Expected annual value of work 

in depot: Partnership is in initial phase of development and 

implementation, and depot work has not yet begun--no annual estimate 

yet available.; Partnership type--description of partnership 

tasks: Teaming--Depot will provide the labor, facilities and equipment 

for the overhaul and repair of airframe and components. Contractor will 

provide technical, engineering and logistical support to improve repair 

turn around time.



Depot/Partnership (year initiated): Corpus Christi Army Depot:

AH-64 Apache 

and CH-47 Chinook; Overhaul and Repair of Airframe Structures and 

Components (2000); Private-sector partner: Boeing; Reason(s) for 

partnership: Desire to reduce repair turnaround time.; Expected annual 

value of work in depot: Partnership is in initial phase of development 

and implementation, and depot work has; not yet begun--no annual 

estimate yet available.; Partnership type--description of 

partnership tasks: Teaming--Depot will provide the labor, facilities 

and equipment for the overhaul and repair of airframes and components. 

Contractor will provide technical, engineering and logistical support, 

and some parts on an emergency basis.



Depot/Partnership (year initiated): Corpus Christi Army Depot:

T55/T53 

Engines Overhaul and Repair Activities (2000); Private-sector partner: 

Honeywell; Reason(s) for partnership: Desire to reduce repair 

turnaround time.; Expected annual value of work in depot: Partnership 

is in initial phase of development and implementation, and depot work 

has not yet begun--no annual estimate yet available.; 

Partnership type--description of partnership tasks: Teaming--Depot 

will provide the labor, facilities and equipment for the overhaul and 

repair of engines. Contractor will provide technical, engineering and 

logistical support, and some parts to depot workstations.



Depot/Partnership (year initiated): Red River Army Depot:

Bradley Fire 

Support Team Vehicle (2000); Private-sector partner: United Defense 

Limited Partnership; Reason(s) for partnership: Program manager 

directed work share.; Expected annual value of work in depot: $17.5 

million; Partnership type--description of partnership tasks: 

Work share--Depot modifies and overhauls the A2 configuration of the 

Bradley fighting vehicle and transports the vehicle to the contractorís 

York, Pennsylvania facility. Contractor integrates the Bradley Fire 

Support Team capability into the vehicle.



Depot/Partnership (year initiated): Red River Army Depot: Heavy 

Expanded 

Mobility Tactical Truck (2001); Private-sector partner: Oshkosh Truck 

Center; Reason(s) for partnership: Program manager directed work 

share.; Expected annual value of work in depot: $7.5 million; 

Partnership type--description of partnership tasks: Work share--Depot 

and contractor overhaul or recapitalize a complete vehicle and each 

partner performs work on an equal number of vehicles.



Depot/Partnership (year initiated): Anniston Army Depot: Multiple 

Launch Rocket System M270A1 (2000); Private-sector partner: Lockheed 

Martin; Reason(s) for partnership: Program manager directed work 

share.; Expected annual value of work in depot: $700,000; 

Partnership type--description of partnership tasks: Work share--Depot 

is overhauling vehicle chassis and components and transports completed 

chassis to contractorís overhaul facility. Contractor integrates and 

upgrades the Loader Launcher and its related components.



Depot/Partnership (year initiated): Red River Army Depot: Multiple 

Launch Rocket System Hoist Assembly (2001); Private-sector partner: 

Lockheed Martin; Reason(s) for partnership: Contractor sought out depot 

for its unique capabilities.; Expected annual value of work in depot: 

$347,200; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs the hoist assemblies and ships them to the 

contractorís plant in East Camden, Arkansas. Contractor installs the 

hoist on the vehicle.



Depot/Partnership (year initiated): Red River Army Depot: M915A4 Glider 

Program (2001); Private-sector partner: Lear Sielgler; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: No annual estimate available 

but total revenue reported; since partnershipís inception in March 2001 

through March 2002--$157,000.; Partnership type--description 

of partnership tasks: Direct sale--Depot provides support for testing 

qualifying and painting the engine and cleaning and painting the axel.



Depot/Partnership (year initiated): Red River Army Depot: Small 

Emplacement Excavator (2002); Private-sector partner: Stewart & 

Stevenson Tactical Vehicle Systems; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: Partnership is in initial phase of 

development and depot work has not yet begun--no annual estimate yet 

available.; Partnership type--description of partnership 

tasks: Teaming--Depot and contractor have agreed to cooperate in 

potential partnerships on mutually beneficial programs and 

solicitations.



Depot/Partnership (year initiated): Red River Army Depot: Patriot 

Missile Conduit Cover Shields (2001); Private-sector partner: Lockheed 

Martin; Reason(s) for partnership: Contractor sought out depot for its 

unique capabilities.; Expected annual value of work in depot: 

Partnership completed and total revenue generated during the 

partnershipís 2 month period of performance--$4,600.; 

Partnership type--description of partnership tasks: Direct sale--Depot 

provides all raw material and labor to manufacture Patriot missile 

conduit cover shields for the contractor. Contractor incorporates the 

shields into the Patriot missile.



Depot/Partnership (year initiated): Tobyhanna Army Depot: 

Communications Security Cryptographic Equipment (2002); Private-sector 

partner: Titan Systems; Reason(s) for partnership: Contractor sought 

out depot for its unique capabilities.; Expected annual value of work 

in depot: No annual estimate available, but total revenue reported 

since partnershipís inception in June 2002 through December 2002--

$4,900.; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs circuit cards, which contractor uses in 

repair of communications security cryptographic equipment.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Brackets and 

Racks, Local Area Network Box and Panel Display (2001); Private-sector 

partner: TRW; Reason(s) for partnership: Contractor sought out depot 

for its unique capabilities.; Expected annual value of work in depot: 

Partnership ended but total revenue reported for partnershipís; 6-month 

period--August 2001 to February 2002--$137,000; Partnership 

type--description of partnership tasks: Direct sale--Depot fabricated 

six items--Local Area Network Box Assembly, Remote TAU Radio Box 

Assembly, Flat Panel Display Assembly, V1 RWS Rigid Kit, and Router 

Adapter Plate Assembly. Contractor installed these parts in 

communications shelters as part of retrofit program.



Depot/Partnership (year initiated): Tobyhanna Army Depot: FIREFINDER 

Block II Program (1999); Private-sector partner: Raytheon; Reason(s) 

for partnership: Contractor sought out depot for its unique 

capabilities and advantageous labor rates.; Expected annual value of 

work in depot: $305,000; Partnership type--description of 

partnership tasks: Direct sale/teaming--Depot designed, manufactured, 

and tested two engineering development model Prime Power groups for the 

program; and provided cabling and interfaces needed to mount Portable 

Operations Suite in vehicles and power transfer boxes, as well as 

integration, test and logistics support at the system level. Contractor 

is responsible for overall design and manufacture of the weapon 

system.



Depot/Partnership (year initiated): Tobyhanna Army Depot: FIREFINDER 
AN/

TPQ-37 Radar (2001); Private-sector partner: Raytheon; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities 

and advantageous labor rates.; Expected annual value of work in depot: 

$300,000; Partnership type--description of partnership tasks: 

Teaming--Depot produces modular azimuth positioning system kits. 

Contractor incorporates kits into AN/TPQ-37 FIREFINDER radars.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Prophet Block 

I Cable Assemblies (2001); Private-sector partner: Titan Systems; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: No annual 

estimate available, but total revenue reported since partnershipís 

inception in June 2001 through March 2002--$209,000.; 

Partnership type--description of partnership tasks: Teaming--Depot 

manufactures cable assemblies. Contractor is prime for electronic 

warfare system that uses these cable assemblies.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Area Common 

User System Program (1998); Private-sector partner: CMC Electronics; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $500,000; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale/teaming--Depot designed and manufactures modification 

installation kits that are installed by Laguna Industries at the depot 

and Fort Hood. The contractor provides the radio that is connected to 

existing systems using the depotís installation kit.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Weapon 
Systems 

Omnibus-1 (1999); Private-sector partner: Blackhawk Management, Inc.; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: No annual 

estimate available, but total revenue reported since partnershipís 

inception in December 1999 through March 2002--$941,000.; 

Partnership type--description of partnership tasks: Direct sale/

teaming--Depot participated in program to secure repair workload on 

critical systems in order to help maintain critical capabilities and 

skills at the depot. The contractor markets the teamís capabilities to 

potential customers and provides depot and other subcontractors with 

components for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: AN/PRC-112 

Modernization (2001); Private-sector partner: EPS; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities 

and to meet new weapon system title 10 core depot maintenance 

requirements.; Expected annual value of work in depot: $100,000; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale/teaming--Depot assembles and warrants the field radio. Contractor 

manages overall contract and provides depot components needed to 

assemble the radio.



Depot/Partnership (year initiated): Tobyhanna Army Depot: CECOM Field 

Support Services-1 (2000); Private-sector partner: EPS; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities 

and advantageous labor rates.; Expected annual value of work in depot: 

Although depot initially expected workload from this partnership, none 

has materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets its teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: CECOM Field 

Support Services-2 (2000); Private-sector partner: Logistics, 

Engineering & Environmental Support Services, Inc.; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities 

and advantageous labor rates.; Expected annual value of work in depot: 

Although depot initially expected workload from this partnership, none 

has materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets the teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid 
Response 

to Critical System Requirements (1998); Private-sector partner: ARINC; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: Although depot 

initially expected workload from this partnership, none has 

materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets its teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid 
Response 

to Critical System Requirements (1998); Private-sector partner: Lear 

Siegler; Reason(s) for partnership: Contractor sought out depot for its 

unique capabilities.; Expected annual value of work in depot: Although 

depot initially expected workload from this partnership, none has 

materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets its teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Rapid 
Response 

to Critical System Requirements (1998); Private-sector partner: 

Lockheed Martin; Reason(s) for partnership: Contractor sought out depot 

for its unique capabilities.; Expected annual value of work in depot: 

No annual estimate available, but total revenue reported since 

partnershipís inception in October 1998 through March 2002--$2,600.; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale/teaming--Depot participated in program to secure repair workload 

on critical systems in order to help maintain critical capabilities and 

skills at the depot. The contractor markets its teamís capabilities to 

potential customers and provides depot and other subcontractors with 

components for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Navy Tri-

Service (1999); Private-sector partner: ARINC; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: Although depot initially 

expected workload from this partnership, none has materialized and none 

is currently expected.; Partnership type--description of 

partnership tasks: Direct sale/teaming--Depot participated in program 

to secure repair workload on critical systems in order to help maintain 

critical capabilities and skills at the depot. The contractor markets 

its teamís capabilities to potential customers and provides depot and 

other subcontractors with components for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Weapon 
Systems 

Omnibus-2 (1999); Private-sector partner: Information System Support 

Inc.; Reason(s) for partnership: Contractor sought out depot for its 

unique capabilities.; Expected annual value of work in depot: Although 

depot initially expected workload from this partnership, none has 

materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets the teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Tobyhanna Army Depot: Satellite 

Communications Equipment (2002); Private-sector partner: Signal 

Corporation; Reason(s) for partnership: Contractor sought out depot for 

its unique capabilities.; Expected annual value of work in depot: 

Although depot initially expected workload from this partnership, none 

has materialized and none is currently expected.; Partnership 

type--description of partnership tasks: Direct sale/teaming--Depot 

participated in program to secure repair workload on critical systems 

in order to help maintain critical capabilities and skills at the 

depot. The contractor markets its teamís capabilities to potential 

customers and provides depot and other subcontractors with components 

for repair.



Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point: 

P-3, S-3, C-2, 

and F/A-18 Auxiliary Power Units (2000); Private-sector partner: 

Honeywell; Reason(s) for partnership: To satisfy title 10 core depot 

maintenance requirements for the workload involved and contractor 

sought out depot for its unique capabilities.; Expected annual value of 

work in depot: $5.3 million; Partnership type--description of 

partnership tasks: Direct sale/teaming--Depot repairs power units 

providing repair facilities, skilled labor, support equipment, 

production engineering, and logistics support. Contractor provides 

failed power units, spare parts, engineering support, inventory 

management, and packaging and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point: 

F/A-18E/F 

Integrated Readiness Support Teaming (2001); Private-sector partner: 

Boeing; Reason(s) for partnership: To meet new weapon system title 10 

core depot maintenance requirements.; Expected annual value of work in 

depot: $885,000; Partnership type--description of partnership 

tasks: Direct sale/teaming--Depot repairs components providing touch 

labor and depot maintenance logistics support. Contractor provides 

overall program execution, and customer and engineering support.



Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point: 

AV-8B 

Remanufacture Program (1996); Private-sector partner: Boeing; 

Reason(s) for partnership: Program manager directed work share.; 

Expected annual value of work in depot: $6.5 million; 

Partnership type--description of partnership tasks: Work share--Depot 

disassembles the AV-8B aircraft, repairs and/or modifies 287 

components, and ships repaired components to contractor. Contractor 

installs components into new fuselage and delivers remanufactured 

aircraft to the Navy.



Depot/Partnership (year initiated): Naval Aviation Depot Cherry Point: 

SR-61/AS-61 

Blades (1999); Private-sector partner: Aviation Blade Services; 

Reason(s) for partnership: Program manager directed work share.; 

Expected annual value of work in depot: $22,000; Partnership 

type--description of partnership tasks: Work share--Depot dynamically 

balances turbine engine blades providing facilities, skilled labor, and 

logistics support. Contractor provides unbalanced blades.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

LAU-7, PP-

2581A/A Power Supply (2000); Private-sector partner: Associated 

Aircraft Manufacturing & Sales, Inc.; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: Partnership began in July 2000, ended in 

August 2001 and generated total revenue of $7,000.; 

Partnership type--description of partnership tasks: Direct sale--Depot 

repaired components providing repair facilities, skilled labor, support 

equipment, spare parts, and technical data. Contractor provided failed 

components and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

Test and 

Repair Components on P-3, F/A-18, H-3 and H-60 (2002); Private-sector 

partner: Aeronautical Systems, Inc.; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: $27,042; Partnership type--

description of partnership tasks: Direct sale--Depot repairs components 

providing repair facilities, skilled labor, support equipment, and 

technical data. Contractor provides failed components, packaging, and 

shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

AN/ALQ126B 

Countermeasures Set (2002); Private-sector partner: BAE Systems; 

Reason(s) for partnership: To satisfy title 10 core depot maintenance 

requirements for the workload involved and contractor sought out depot 

for its unique capabilities.; Expected annual value of work in depot: 

$771,428; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs components providing repair facilities, 

skilled labor, support equipment, and technical data; and collects and 

provides contractor with failure data. Contractor provides total asset 

management, failed components, repair parts, configuration management, 

technical and engineering support, and packaging and shipping; and 

investigates and incorporates reliability improvements.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

CF-18 

Boresight (2002); Private-sector partner: Boeing; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: $12,000; Partnership 

type--description of partnership tasks: Direct sale--Depot responsible 

for boresight calibration, shipment preparation, maintenance of 

inspection and test records, and reporting schedule and funding 

expenditures. Contractor responsible for inventory and asset tracking, 

preparation for shipping, repair parts, and technical support.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

F/A-18E/F 

Integrated Readiness Support Teaming (2001); Private-sector partner: 

Boeing; Reason(s) for partnership: To meet new weapon system title 10 

core depot maintenance requirements.; Expected annual value of work in 

depot: $130,600; Partnership type--description of partnership 

tasks: Direct sale--Depot repairs components providing repair 

facilities, skilled labor, and support equipment; and collects and 

provides contractor with failure data. Contractor provides total asset 

management, failed components, repair parts, configuration management, 

technical and engineering support, and packaging and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

F404 High 

Pressure Turbine Rotors (2001); Private-sector partner: General 

Electric; Reason(s) for partnership: Contractor sought out depot for 

its unique capabilities.; Expected annual value of work in depot: 

$350,000; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs components providing repair facilities, 

skilled labor, support equipment, and technical data; and collects and 

provides contractor with failure data. Contractor provides failed 

components, repair parts, and packaging and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

J52 Engines 

(2000); Private-sector partner: General Electric; Reason(s) for 

partnership: Contractor made business decision to close facility where 

work was previously done; Expected annual value of work in depot: 

$66,667; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs engines providing repair facilities, skilled 

labor, support equipment, spare parts, and technical data. Contractor 

provides failed engines and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

Calibration, 

Metal Processing, and Engineering Support (2001); Private-sector 

partner: Logistic Services International; Reason(s) for partnership: 

Contractor sought out depot for unique its capabilities.; Expected 

annual value of work in depot: $61,111; Partnership type--

description of partnership tasks: Direct sale--Depot calibrates test 

stands, and provides metal processing and engineering support services. 

Contractor provides access to test stands requiring calibration and 

items requiring metal processing, and shipping to and from the depot.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

Various F-14, 

EA-6B, AH-1 and F-22 Antenna and Radome Testing (2000); Private-sector 

partner: Neptune Technical Services, Inc.; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: This partnership; began in December 2000 

and ended in October 2001 but did not produce any workload.; 

Partnership type--description of partnership tasks: Direct sale--Depot 

was to provide antenna and radome testing, autoclave processing, 

coordination of measuring machine inspection, and technical data. 

Contractor was to provide components for testing and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

LAU-7, AN/APG-

65, and AN/ARA-48 (2002); Private-sector partner: S&K Technologies, 

Inc.; Reason(s) for partnership: Contractor sought out depot for its 

unique capabilities.; Expected annual value of work in depot: $81,081; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale--Depot repairs components providing repair facilities, skilled 

labor, support equipment, and technical data. Contractor provides 

failed components, and packaging and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot Jacksonville: 

AN/AWG-9 Fire 

Control Radar Components (1999); Private-sector partner: System & 

Electronics, Inc.; Reason(s) for partnership: Contractor sought out 

depot for its unique capabilities.; Expected annual value of work in 

depot: No annual estimate available, but total revenue reported since 

partnershipís inception in February 1999 through November 2002--

$19,000.; Partnership type--description of partnership tasks: 

Direct sale--Depot repairs components providing repair facilities, 

skilled labor, support equipment, and technical data. Contractor 

provides failed components and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot North Island: 

F/A-18E/F 

Integrated Readiness Support Teaming (2001); Private-sector partner: 

Boeing; Reason(s) for partnership: To meet new weapon system title 10 

core depot maintenance requirements.; Expected annual value of work in 

depot: $10 million; Partnership type--description of 

partnership tasks: Direct sale/teaming--Depot repairs components 

providing touch labor, facilities, equipment, production engineering, 

technical data, and packaging. Contractor provides failed components, 

repair parts, obsolescence management, and shipping.



Depot/Partnership (year initiated): Naval Aviation Depot North Island: 

Aircraft 

Painting (2002); Private-sector partner: San Diego Aircraft Carrier 

Museum; Reason(s) for partnership: Contractor sought out depot for its 

unique capabilities.; Expected annual value of work in depot: $150,000; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale--Depot will paint aircraft providing touch labor, facilities and 

equipment. Contractor will provide ready-for-paint aircraft, 

specifications, and paint.



Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS 

Enterprise 

Nuclear Aircraft Carrier (CVN 65) FY02 Extended Drydock Selected 

Restricted Availability (2001); Private-sector partner: Northrop 

Grumman Newport News; Reason(s) for partnership: Contractor sought out 

depot for its unique capabilities.; Expected annual value of work in 

depot: $4.5 million; Partnership type--description of 

partnership tasks: Direct sale/government-furnished resources--Depot 

is providing a drydock and related facilities, and skilled labor. 

Contractor is providing skilled labor and overall management 

responsibility for this overhaul.



Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS Nimitz 

(CVN 68) and USS Ronald Reagan (CVN 76) Production Services (2000); 

Private-sector partner: Northrop Grumman Newport News; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: $1.8 million; 

Partnership type--description of partnership tasks: Direct sale--Depot 

sold general production services--including pipefitting, sheet metal, 

and insulation--to contractor for these two overhauls. Contractor had 

overall responsibility for these overhauls.



Depot/Partnership (year initiated): Norfolk Naval Shipyard: USS Dwight 

D. 

Eisenhower (CVN 69) and USS Ronald Reagan (CVN 76) Production Services 

(2001); Private-sector partner: Northrop Grumman Newport News; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $440,000; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale--Depot sold general production services--including pipefitting, 

sheet metal, electrician, and machinist--to contractor for these two 

overhauls. Contractor had overall responsibility for these overhauls.



Depot/Partnership (year initiated): Portsmouth Naval Shipyard: USS 

Memphis 

(SSN 691) FY02 Selected Restricted Availability/ Restricted 

Availability (2002); Private-sector partner: General Dynamics; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: Partnership 

expected to generate a total of $28.9 million between January 2002 and 

December 2002.; Partnership type--description of partnership 

tasks: Work share/teaming--Depot is providing manpower (60 percent) and 

has overall responsibility for submarine overhaul. Contractor is 

providing manpower (40 percent) and facilities--including a drydock.



Depot/Partnership (year initiated): Portsmouth Naval Shipyard: High 

Performance; Brush (2000); Private-sector partner: Noesis, Inc.; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $486,487; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale--Depot provides equipment, technical support, and knowledge for 

testing services. Contractor provides program management, technical 

data, engineering expertise, and research and development expertise.



Depot/Partnership (year initiated): Portsmouth Naval Shipyard: Lease of 

Portsmouth Naval Shipyard Former Prison (1999); Private-sector partner: 

Seavey Island, L.L.C.; Reason(s) for partnership: Contractor sought out 

depot for its unique facility.; Expected annual value of work in depot: 

Partnership has terminated without producing revenue for the depot.; 

[Empty]; Partnership type--description of partnership tasks: Lease--

Depot provided facility. Contractorís intent was to refurbish facility 

and sublet as office space. Lease termination negotiations in process 

because of death of lessee.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Nuclear 

Aircraft Carrier Maintenance Benchmarking (2001); Private-sector 

partner: Todd Pacific Shipyards Corporation; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: The sharing of processes under this 

partnership will not produce workload or revenue for the partners, 

instead the partners are benefiting from improved repair processes.; 

[Empty]; Partnership type--description of partnership tasks: Teaming--

The partnershipís intent is to study (benchmark) similar depot and 

contractor processes associated with nuclear aircraft carrier 

overhauls, which will contribute to a mutually beneficial goal of 

achieving the most timely and cost effective ship repair processes.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Nuclear 

Aircraft Carrier Maintenance Work Resource Sharing; (1999); Private-

sector partner: Todd Pacific Shipyards Corporation; Reason(s) for 

partnership: Partnership established to gain consistent planned and 

anticipated workload on nuclear aircraft carriers.; Expected annual 

value of work in depot: This partnership establishes a framework for 

resource sharing that will be used for carrier overhaul partnerships--

resulting revenue to the depot will be reported under these resulting 

partnerships; however, depot has not reported any revenue to date.; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale/government-furnished resources--Depot subcontracts segments of 

its aircraft carrier to contractor owing to resource shortfalls. 

Contractor also does this in reverse. Depot supports contractor by 

accomplishing work in propulsion spaces owing to security 

classification. Contractor supports depot by providing resources such 

as painters, welders, and pipe fitters.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: USS 

John C. 

Stennis (CVN 74) Planned Incremental Availability (2000); Private-

sector partner: Northrop Grumman Newport News; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: Partnership completed and 

between partnershipís inception in October 2000 and November 25, 2002 

generated total revenue of $156,000.; Partnership type--

description of partnership tasks: Direct sale--Depot performed work in 

propulsion plant owing to security classification. Contractor was 

responsible for overhaul.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: 

Explosion 

Bulge Plate Testing Services (2000); Private-sector partner: Northrop 

Grumman Newport News; Reason(s) for partnership: Contractor sought out 

depot for its unique capabilities.; Expected annual value of work in 

depot: Partnership completed between partnershipís inception in October 

2000 and January 2001 generated total revenue of $31,000.; 

Partnership type--description of partnership tasks: Direct sale/

government-furnished resources--Depot provided explosion bulge testing 

services. Contractor provided high-strength-low-alloy plates for 

testing.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Puget 

Sound 

and Pacific Railway Contract (1944); Private-sector partner: Puget 

Sound; and Pacific Railway; Reason(s) for partnership: 1944 triggering 

event is unknown.; Expected annual value of work in depot: $375,000; 

[Empty]; Partnership type--description of partnership tasks: 

Government-furnished resources--Contractor allowed use of Navy owned 

railway in exchange for normal maintenance to rails and roadbed. Depot 

provides funding for major maintenance and capital improvements.



Depot/Partnership (year initiated): Puget Sound Naval Shipyard: Guided 

Missile 

Attack Submarine (Nuclear Powered) Design Conversion (2001); Private-

sector partner: Electric Boat Corporation; Reason(s) for partnership: 

Contractor sought out depot for its unique capabilities.; Expected 

annual value of work in depot: No annual estimate available, but total 

revenue reported since partnershipís inception in October 2001 through 

November 2002--$67,000.; Partnership type--description of 

partnership tasks: Teaming--Depot will develop work packages for 

installation on submarine on the basis of contractor provided 

conversion drawings. Contractor will also provide all standard 

material, engineered components, and manufactured assemblies.



Depot/Partnership (year initiated): Ogden Air Logistics Center: 

Composites 

Umbrella Agreement (2002); Private-sector partner: Alliant 

Techsystems; Reason(s) for partnership: Contractor sought out depot for 

its unique capabilities.; Expected annual value of work in depot: 

Partnership is in initial phase of development and depot work has not 

yet begun--no annual estimate yet available.; Partnership 

type--description of partnership tasks: Direct sale/work share/lease--

Depot provides touch labor, non-destructive inspection, and support 

equipment operators. Contractor provides engineering, supply chain 

management, and oversight.



Depot/Partnership (year initiated): Ogden Air Logistics Center: Digital 

Analog 

Test Station (2002); Private-sector partner: Westest Engineering; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $10 million; 

[Empty]; Partnership type--description of partnership tasks: Work 

share--Test station design is a joint engineering effort between depot 

and contractor. Contractor will fabricate test stations. Depot and 

contractor will share effort to rehost software test programs on new 

test station.



Depot/Partnership (year initiated): Ogden Air Logistics Center: F-16 

Block 40 

Avionics Software Maintenance/Upgrade (2001); Private-sector partner: 

Lockheed Martin; Reason(s) for partnership: Contractor sought out depot 

for its unique capabilities.; Expected annual value of work in depot: 

$610,169; Partnership type--description of partnership tasks: 

Work share/government-furnished resources--Depot performs software 

maintenance tasks. Contractor integrates products associated with these 

tasks into the avionics system.



Depot/Partnership (year initiated): Ogden Air Logistics Center: Global 

Positioning System Metric Tracking Program (2002); Private-sector 

partner: Boeing and TRW; Reason(s) for partnership: Contractor sought 

out depot for its unique capabilities and advantageous labor rates.; 

Expected annual value of work in depot: $1.2 million; 

Partnership type--description of partnership tasks: Work share/

government-furnished resources--Depot provides labor for program 

installation, and share responsibility for the development of program 

hardware and software requirements with the contractors. Contractor 

provides program management and engineering support.



Depot/Partnership (year initiated): Ogden Air Logistics Center: 

Sacramento 

Competition Workload for KC-135 Programmed Depot Maintenance (PDM) and 

A-10 PDM and Commodities (1998); Private-sector partner: Boeing; 

Reason(s) for partnership: BRAC process closed a government-owned 

facility where work was performed.; Expected annual value of work in 

depot: Because this partnership is terminated, there is no continuing 

annual workload expected.; Partnership type--description of 

partnership tasks: Teaming--Depot performed analytical inspection and 

painted A-10 aircraft, overhauled components and subcontracted KC-135 

PDM workload to contractor. Contractor overhauled KC-135 aircraft. The 

Air Force transferred the contract management out of the depot; 

therefore, the depot no longer considers this a partnering effort--

there is no ongoing partnering interaction between the depot and the 

contractor.



Depot/Partnership (year initiated): Ogden Air Logistics Center: 

Intercontinental Ballistic Missile Automatic Test Systems (2001); 

Private-sector partner: TRW; Reason(s) for partnership: Program manager 

directed work share.; Expected annual value of work in depot: $4.1 

million; Partnership type--description of partnership tasks: 

Work share--Depot provides labor to replace antiquated automatic test 

station. Contractor maintains overarching ICBM system integration 

responsibilities and oversight.



Depot/Partnership (year initiated): Ogden Air Logistics Center: B-2 

Advanced; 

Composite (1998); Private-sector partner: Northrop Grumman; Reason(s) 

for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $3.0 million; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale/work share/government-furnished resources--Depot provides 

maintenance and repair for 413 different B-2 bomber panels, doors, and 

surfaces. Contractor provides engineering services and technical 

assistance.



Depot/Partnership (year initiated): Oklahoma City Air Logistics Center: 

B-2 Defensive 

Management System Tools Program Set (1999); Private-sector partner: 

Northrop Grumman; Reason(s) for partnership: Contractor sought out 

depot for its advantageous labor rates.; Expected annual value of work 

in depot: $800,000; Partnership type--description of 

partnership tasks: Work share/lease--Depot performs specified 

development and software maintenance tasks. Contractor maintains total 

system performance responsibility for this support effort.



Depot/Partnership (year initiated): Oklahoma City Air Logistics Center: 

Propulsion 

Business Area partnership (1999); Private-sector partner: Lockheed 

Martin; Reason(s) for partnership: BRAC process closed a government-

owned facility where work was performed.; Expected annual value of work 

in depot: $270 million; Partnership type--description of 

partnership tasks: Teaming--Depot performs overhaul and repair of F100 

engines, modules, components, and fuel accessories. Contractor performs 

overhaul and repair of T56 and TF59 engines, modules, components, and 

fuel accessories.



Depot/Partnership (year initiated): Oklahoma City Air Logistics Center: 

F100 Engine 

Test Cell (2002); Private-sector partner: Pratt and Whitney; Reason(s) 

for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $276,933; 

[Empty]; Partnership type--description of partnership tasks: Direct 

sale--Depot performs jet engine testing. Contractor provides jet 

engines.



Depot/Partnership (year initiated): Oklahoma City Air Logistics Center: 

F100 Eddy 

Current Workload (2002); Private-sector partner: Pratt and Whitney; 

Reason(s) for partnership: Contractor sought out depot for its unique 

capabilities.; Expected annual value of work in depot: $697,894; 

[Empty]; Partnership type--description of partnership tasks: Work 

share--Depot inspects and polishes F100 engine parts. Contractor 

provides F100 engine parts.



Depot/Partnership (year initiated): Oklahoma City Air Logistics Center: 

F100 Special 

Technologies Coating Facility (2002); Private-sector partner: Pratt and 

Whitney; Reason(s) for partnership: Contractor made business decision 

to close facility where work was previously done.; Expected annual 

value of work in depot: $57,000; Partnership type--description 

of partnership tasks: Lease--Depot provides depot space and support to 

contractor. Contractor performs proprietary spray coating processes in 

depot spray booth.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

C-130 

Integrated Weapon System Support Program (2001); Private-sector 

partner: Boeing; Reason(s) for partnership: To meet new weapon system 

title 10 core depot maintenance requirements and contractor sought out 

depot for its unique capabilities.; Expected annual value of work in 

depot: $397,000; Partnership type--description of partnership 

tasks: Work share/government-furnished resources--Depot provides 

software development and integration support for new components being 

added to aircraft, which increases the depotís software capabilities. 

Contractor maintains its overarching C-130 system integration 

responsibilities and oversight under the Air Forceís Total Systems 

Support Responsibility contract; therefore, specific contractor tasks 

will vary depending on the specific subsystem.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

C-17 

Analytical Condition Inspection (1999); Private-sector partner: 

Boeing; Reason(s) for partnership: To meet new weapon system title 10 

core depot maintenance requirements and contractor sought out depot for 

its advantageous labor rates.; Expected annual value of work in depot: 

$1.6 million; Partnership type--description of partnership 

tasks: Direct sale--Depot identifies hidden defects, deteriorating 

conditions, corrosion, fatigue, overstress, and other conditions that 

affect structure of C-17 aircraft. Contractor provides the depot with 

engineering, parts, and equipment support.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

Flexible 

Acquisition and Sustainment Tool (2001); Private-sector partner: 

Boeing, Lockheed Martin, MTC Inc., SSAI, and SAIC; Reason(s) for 

partnership: Contractor sought out depot for its unique capabilities.; 

Expected annual value of work in depot: No workload has materialized 

yet and because of the; variable and unpredictable frequency of task 

orders no annual estimate of workload value is available.; 

Partnership type--description of partnership tasks: Work share--Depot 

will provide labor to support delivery or task orders issued to one of 

five contractors under the Air Forceís flexible acquisition sustainment 

tool contract. Contractor will manage the delivery or task orders to 

ensure performance, however, the specific contractor tasks will vary 

depending on the specific delivery or task order.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

Low Altitude 

Navigation Targeting Infrared for Night (LANTIRN) Phase I (1997); 

Private-sector partner: Lockheed Martin; Reason(s) for partnership: 

Contractor made business decision to close facility where work was 

previously done.; Expected annual value of work in depot: $123,000; 

[Empty]; Partnership type--description of partnership tasks: Lease--

Depot provides facility where contractor repairs LANTIRN components.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

LANTIRN Phase 

II (2001); Private-sector partner: Lockheed Martin; Reason(s) for 

partnership: Contractor made business decision to close facility where 

work was previously done, and contractor sought out depot for its 

unique capabilities and advantageous labor rates.; Expected annual 

value of work in depot: $796,000; Partnership type--

description of partnership tasks: Direct sale--Depot repairs 155 

different components and delivers repaired components to contractor. 

Contractor provides failed components for repair.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

C-130 Avionics 

Modernization Program (2001); Private-sector partner: Boeing; 

Reason(s) for partnership: To meet new weapon system title 10 core 

depot maintenance requirements and contractor sought out depot for its 

unique capabilities and advantageous labor rates.; Expected annual 

value of work in depot: $1.4 million; Partnership type--

description of partnership tasks: Work share--Depot upgraded two 

laboratories to accommodate testing of upgraded avionics, and provides 

software engineering support to rehost operational flight software into 

upgraded avionics. Contractor provides upgraded avionics components for 

testing and rehosting.



Depot/Partnership (year initiated): Warner Robins Air Logistics Center: 

Joint 

Surveillance Target Attack Radar System (JSTARS) Total Systems Support 

Responsibility Partnership (2000); Private-sector partner: Northrop 

Grumman; Reason(s) for partnership: To satisfy title 10 core depot 

maintenance requirements for the workload involved.; Expected annual 

value of work in depot: $9.7 million; Partnership type--

description of partnership tasks: Work share--Depot performs prime 

mission equipment repair, system and ground support software 

maintenance, and various backshop functions. Contractor determines 

depotís work requirements, and provides depot with sustaining 

engineering and other support functions.



Depot/Partnership (year initiated): Marine Corps Maintenance Center--

Albany: Amphibious 

Assault Vehicle Reliability, Availability, and Maintainability/Rebuild 

to Standard (1998); Private-sector partner: United Defense Limited 

Partnership; Reason(s) for partnership: Program manager directed work 

share.; Expected annual value of work in depot: $22 million; 

Partnership type--description of partnership tasks: Work share/lease--

Depot disassembles and reassembles vehicle; rebuilds transmission, 

electronics, generators, and other components; installs new engine; and 

blasts and paints vehicle. Contractor provides labor expertise and 

equipment to modify vehicle hulls.



Source: DOD.



[End of table]



[End of section]



Appendix III: Summary Data Regarding the Reasons Cited and Approaches 

Used for the 90 Partnerships Reviewed:



Partnerships were formed for a variety of reasons such as to allow 

industry to take advantage of depotsí unique capabilities and 

advantageous labor rates, to take advantage of industryís engineering 

capabilities and accessibility to spare and repair parts, and to help 

meet title 10 requirements while increasingly relying on the private 

sector for logistics support activities. Depending on the specific 

circumstances surrounding the work to be performed, the services used 

various arrangements--such as work share and teaming--to form their 

partnerships. Although the partnerships involve many logistics 

functions performed in various combinations by both public-and private-

sector partners, in general, contractors perform more spare parts, 

engineering, and technical data functions, while the military depots 

provide more repair labor, facilities, and equipment.



Reasons for Partnering:



Partnerships between military depots and contractors were formed for a 

variety of reasons. Service depot officials identified nine reasons for 

entering into partnerships as indicated in figure 3.



Figure 3: Reasons Cited for Entering Public-Private Partnerships:



[See PDF for image]



Notes: Figures represent the number of partnerships citing a particular 

reason for partnering.



More than one reason may have been cited for each partnership.



[End of figure]



In some instances, a combination of these reasons motivated the parties 

to form a partnership. As shown by figure 3, the largest category 

involved contractors seeking out a depot for its unique capabilities--

57 times for the partnerships we reviewed. Other reasons frequently 

cited were contractors seeking out a depot for its advantageous labor 

rates--13 times, program mangers directing work share arrangements--12 

times, and meeting title 10 requirements that limit the outsourcing of 

depot maintenance--10 times.[Footnote 15] As discussed in the body of 

the report, DOD expects these title 10 requirements to increasingly 

become an important driver to expanding partnerships as the department 

increases contractorsí involvement in logistics support for weapon 

systems because the contractors will often be required to partner with 

depots in order to satisfy title 10 provisions that limit the 

outsourcing of depot workload.



Partnership Approaches Used Vary:



The reasons for partnering discussed above and the circumstances 

surrounding a depotís workload shape how the services develop the 

approach used for each of their partnerships, including the selection 

of a partnership type and how they divide responsibilities for the 

performance of logistics functions. The depot maintenance partnerships 

we reviewed used one or a combination of five partnering approaches: 

work share, direct sale, lease, government-furnished resources, and 

teaming. Figure 4 illustrates how frequently the five partnership types 

were used for the partnerships we reviewed.



Figure 4: Types of Partnerships:



[See PDF for image]



[End of figure]



As indicated by figure 4, ďdirect saleĒ was the most frequently used 

approach. According to DOD officials, that approach is expected to 

increase in number with the expansion of contractor-managed logistics-

support arrangements for weapon systems. The five public-private 

partnership approaches are described below.



1. Direct sale. An arrangement whereby military and commercial entities 

enter into a contractual relationship for the use of military depot 

maintenance facilities and employees to provide the private sector with 

articles and/or services. Forty-eight--53 percent--of the 90 

partnerships we reviewed used the direct sale approach, making it the 

most frequently used partnering arrangement. DOD expects the use of 

direct sale arrangements to increase as DOD expands contractor 

involvement in logistics support for weapon systems in order to comply 

with title 10 provisions that limit the outsourcing of depot 

maintenance. The Navyís F-18 Integrated Readiness Support Team and the 

Air Forceís B-2 Advanced Composite partnerships are examples of the 

direct sale approach to partnering. These examples each involve one 

partner--the depot--performing work directly for, and receiving payment 

from, the other partner--the contractor. (See appendix II for more 

detail on these and other partnerships.):



2. Work share. An arrangement whereby a combination of military and 

commercial facilities and/or employees is used to execute a program 

managerís work package--including tasks such as weapon systems 

remanufacture, modification, or upgrade. Under the work share 

arrangement, the program manager issues a work order to the military 

participant and a contract to the private-sector participant. The 

relationship between the participants to accomplish the work package is 

usually coordinated with a memorandum of understanding or memorandum of 

agreement instead of a contract. Twenty-six--29 percent--of the 90 

partnerships we reviewed used the work share approach, and this 

approach was typically used to form the servicesí larger partnerships. 

The Armyís M1/M1A2 Abrams Tank upgrade partnership and the Navyís 

Harrier Aircraft remanufacturing partnership are examples of work 

shares. These examples involve each partnerís performing its designated 

share of the workload directly for the weapon systemís program office 

and the paying of each partner by the program manager.



3. Teaming. An arrangement whereby military and commercial entities 

enter into a contractual relationship to accomplish a deliverable 

stipulated in a contract. The relationship between the participants is 

usually initially outlined in a teaming agreement during the proposalís 

preparation and then formalized as a contractor/subcontractor 

relationship subsequent to contract award. Twenty-seven--or 30 percent-

-of the 90 partnerships we reviewed used the teaming approach. Most of 

the teaming arrangements occurred in the Army--19, with the Navy using 

the teaming approach for six of its partnerships and the Air Force 

using teaming for two of its partnerships.



4. Lease. An arrangement whereby military and commercial entities enter 

into a contractual relationship for the private sectorís use of public 

depot maintenance facilities and/or its equipment to perform work for 

either the public or private sector. Twelve--13 percent--of the 90 

partnerships we reviewed used the lease approach, often in conjunction 

with other partnering approaches. For example, the upgrade partnership 

for the Armyís Fox Nuclear, Biological, Chemical Reconnaissance System 

vehicle uses a lease arrangement in conjunction with a direct sale 

arrangement. The lease portion of the Fox partnership involves the 

depotís providing underutilized facilities at Anniston Army Depot and 

the contractorís paying for facility upkeep and utilities. The Air 

Forceís partnership for the F100 aircraft engine special technologies 

coating facility is an example of a stand-alone lease arrangement not 

involving other partnering arrangements. In this example, the Air 

Forceís Oklahoma City depot provides underutilized facilities, while 

the contractor pays the depot for the use of the facilities, provides 

facility upkeep, and pays utilities.



5. Government-furnished resources. An arrangement whereby military and 

commercial entities enter into an agreement for private-sector use of 

public depot maintenance facilities and/or its equipment and employees 

at no cost in connection with and under the terms of a contract. Nine-

-10 percent--of the 90 partnerships we reviewed used the government-

furnished resources approach, which was also often used in conjunction 

with other partnering approaches. The Air Forceís F-16 block 40 

avionics software maintenance/upgrade and the Navyís Puget Sound 

railway partnerships are examples of the government-furnished resources 

approach to partnering. Under the F-16 partnership, the government 

performs F-16 component software maintenance tasks for the contractor 

without charge as a government-furnished resource, while the contractor 

performs final software integration. In the railway partnership, the 

government provides the contractor with access to a Navy-owned railway 

in exchange for the contractorís performing normal maintenance on the 

railway.



According to DOD and contractor officials, the type of partnership 

selected is based on what approach or combination of approaches best 

served the objectives of the partnership. For example, in the case of 

the Armyís Fox vehicle upgrade partnership, the Army contracted with 

General Dynamics to upgrade its Fox vehicle. To improve the economy and 

efficiency of the upgrade, the contractor elected to partner with the 

Armyís Anniston depot for a portion of the work and to colocate its 

segment of the upgrade with Annistonís segment at the Anniston depot. 

Consequently, the contractorís approach used a combination of two 

partnership types--direct sale and lease.



Functions Performed Vary between Public-and Private-Sector Partners:



Depot maintenance involves not only the application of labor to repair 

and maintain military equipment but also several other logistics 

elements or functions such as supply support, production engineering, 

facilities, and equipment. For the partnerships we reviewed, these 

logistics elements or functions were performed or provided by both 

public-and private-sector partners in various combinations on the basis 

of the characteristics of the workload and the abilities of the 

partners. In the case of the Navyís auxiliary power unit repair effort, 

for example, the depot was repairing power units but did not have all 

the spare parts needed to complete repairs in a timely manner. To 

improve the availability of overhauled power units, the Navy awarded a 

contract for the power unit programís overall system support and 

performance. As a condition of the contract, the contractor partnered 

with a Navy depot to perform depot repairs to comply with title 10 

requirements that limit the outsourcing of depot maintenance. The 

partnership that developed for this workload involved the depotís 

providing labor, facilities, and equipment, while the contractor 

provides technical data and spare parts. Figure 5 compares the 

frequency with which logistics functions are performed by depots and 

contractors for the partnerships we reviewed. As indicated by figure 5, 

the contractorsí contribution to the partnerships consisted of 

performing or providing more of the spare parts, engineering, and 

technical data functions than the other functions; and the depotsí 

contribution to partnerships consisted more of providing repair labor, 

facilities, and equipment.



Figure 5: Frequency of Depotsí and Contractorsí Performance of 

Logistics Functions:



[See PDF for image]



Note: The numbers in the figure represent how many of the 90 

partnerships involved the depotís or the contractorís providing the 

indicated logistics function.



[End of figure]



[End of section]



Appendix IV: Examples of Partnerships That Are Achieving Positive 

Results:



Some partnerships provide promising results or good potential for 

results related to improvements in parts availability, reduced repair 

time, reduced back orders, or reduced support costs. These improvements 

align with some of the partnership approaches included as a part of 

DODís logistics reengineering initiative--more efficient business 

processes, better facility utilization, workforce integration, and 

reduced cost of ownership--and may therefore contribute to enhancing 

depot efficiency and viability. The following examples provide 

illustrations of some of the improvements the partnerships achieved:



T700 Engine. Corpus Christi Army Depot wanted to reduce the repair time 

and improve reliability for the Armyís T700 helicopter engine. 

Consequently, it entered into a partnership with General Electric to 

achieve these improvements. (See fig. 6 on p. 53.) Under the 

partnership, Corpus Christi provides the needed facilities and 

equipment and repairs the engine. General Electric provides spare 

parts, and technical, engineering, and logistics services. According to 

depot officials, this effort has resulted in the introduction of 

General Electricís best practices at the depot, which in turn has 

resulted in the T700 engine repair lineís realizing a 26 percent 

reduction in engine turnaround time and a 40 percent increase in test 

cell pass rates. Depot and contractor officials both attribute the T700 

engineís improved depot repair times to better parts availability and 

improvements to the depotís repair processes, although they also 

recognize that the related T700 recapitalization effort begun shortly 

after the formation of the partnership may also be a factor influencing 

these improvements.



Figure 6: Depot and Industry Partnership Consultations at Corpus 

Christi Army Depot:



[See PDF for image]



[End of figure]



Auxiliary Power Unit. Cherry Point Naval Aviation Depot was repairing 

auxiliary power units for four aircraft[Footnote 16] but was 

experiencing production delays owing to poor spare parts support. To 

improve the availability of overhauled power units, the depot formed a 

partnership with Honeywell--the auxiliary power unitsí manufacturer. 

(See fig. 7 on p. 54.) Under the partnership, the depot provides labor, 

facilities, and equipment, while the contractor provides production 

engineering and spare parts. According to depot officials, the number 

of unitsí awaiting depot repair because of lack of parts went from 118 

when the partnership began in July 2000 to zero in October 2002. 

According to the auxiliary power units users in the fleets, the 

resulting improvement in support has been outstanding. For example, the 

back orders for the power units were reduced from 125 in July 2000 to 

26 in October 2002. Depot officials attribute these improvements to 

better parts support and the introduction of more efficient business 

practices to the repair process that include replacing rather than 

repairing worn components.



Figure 7: F/A-18 Auxiliary Power Unit Being Repaired Under a 

Partnership Between the Naval Aviation Depot Cherry Point and 

Honeywell:



[See PDF for image]



[End of figure]



USS Enterprise. Northrop Grumman Newport News shipyard was scheduled to 

overhaul the nuclear-powered aircraft carrier USS Enterprise in fiscal 

year 2002 but lacked the necessary capacity at its facility to perform 

the work as scheduled. (See fig. 8 on p. 55.) Consequently, Northrop 

Grumman formed a partnership with the Navy wherein the Norfolk Naval 

Shipyard provided drydock space and the Navyís four shipyards provided 

108,000 man-days of labor to augment Northrop Grummanís overhaul of the 

aircraft carrier, which resulted in the overhaulís completion as 

scheduled. Northrop Grumman retained overall responsibility for the 

overhaul and also contributed labor, equipment, production engineering, 

and technical data. According to shipyard officials, this partnership 

allowed the contractor and the shipyards to share their labor 

resources, which along with the drydock space, increased the 

Navyís maintenance ability and therefore increased its production, 

making carriers available to the fleet sooner than would otherwise have 

been feasible.



Figure 8: The Nuclear-Powered Aircraft Carrier USS Enterprise Entering 

Norfolk Naval Shipyard:



[See PDF for image]



[End of figure]



AGT1500 Recuperator.[Footnote 17] The Abrams Tank Recuperator 

production was formerly located at the Armyís Stratford Engine Plant in 

Connecticut, which was closed by BRAC in 1995. Honeywell relocated the 

capability to Anniston Army Depot in 1998 and entered a partnership 

with the depot at that time. (See fig. 9 on p. 57.) According to depot 

officials, this partnership is an example of a ďpureĒ facility lease 

arrangement in which production has been colocated with its primary 

user--Annistonís M1 tank engine repair line. The production operation 

benefits from base operations support provided by the depot. On-site 

production eliminates the need for a parts manager at the depot. It 

also eliminates the need for the Defense Logistics Agency to stock and 

issue recuperators, which means Anniston avoids Defense Logistics 

Agency surcharges. The minimal supply chain also reduces the need for 

raw material inventory and on-hand finished-goods inventory. Production 

is adjusted to meet customer demand on a near ďjust-in-timeĒ basis. 

According to depot officials, these benefits resulted from Honeywellís 

recuperator production operationís proximity to the depot.



Figure 9: Honeywellís M1 Tank Engine Recuperator Manufacturing Line at 

the Anniston Army Depot:



[See PDF for image]



[End of figure]



LANTIRN Phase II. Lockheed Martin was under contract for the depot 

maintenance and repair of the Air Forceís LANTIRN[Footnote 18] system, 

but its vendors were not providing timely turnaround on the repair of 

certain LANTIRN components. To improve component support, Lockheed 

Martin and the Air Forceís Warner Robins depot negotiated a direct sale 

agreement for the depot to repair various quantities of 155 LANTIRN 

components. (See fig. 10 on p. 58.) According to Warner Robins 

officials, since the start of partnership in August 2001, the depotís 

performance in repairing the components has been very good. For 

example, the depotís average component repair turnaround time of 18 

days under the partnership is much better than the average turnaround 

time of 93 days under Lockheed Martinís prior vendors and also better 

than the negotiated turnaround time of 45 days agreed to under the 

partnership. Depot officials attributed these improvements to (1) 

Lockheed Martinís colocation at the depot, which reduced the shipping 

time between Lockheed Martin and its vendors--some of which were 

overseas--and (2) ongoing Warner Robinsí operations that historically 

were more efficient in the repair of the LANTIRN components than were 

Lockheed Martinís prior vendors.



Figure 10: Depot and Contractor Employees Repairing and Testing LANTIRN 

System:



[See PDF for image]



[End of figure]



ICBM Global Positioning System. As the Air Forceís intercontinental 

ballistic missile (ICBM) logistics integrator, TRW Inc. had a 

requirement to arrange for the modification of ICBMs to add satellite 

global positioning capability. (See fig. 11.) However, TRWís component 

manufacturing subcontractorís estimate for the modification was too 

costly. To achieve the required modification at less cost, TRW Inc. 

formed a partnership with the Air Forceís Ogden depot to replace the 

old tracking system with the required global positioning system 

capability. Under the partnership, Ogden provides the labor for the 

modification installation, while TRW Inc. performs its integration and 

engineering support responsibilities. As a result of the partnership, 

the depot estimates that the program will save about $11 million in 4 

years, thereby reducing the overall support cost of ICBMs. According to 

depot officials, the savings will result from the depotís ability to 

produce and install the guidance modification for less than the 

original equipment manufacturer.



Figure 11: ICBM Global Positioning System Modification Showing 

Developmental Configuration Module:



[See PDF for image]



[End of figure]



[End of section]



Appendix V: Fourteen Characteristics Identified by DOD and Contractor 

Officials Needed to Achieve Effective Partnerships:



DOD and contractor officials have identified 14 characteristics that 

they believe over time will contribute to a partnershipís success in 

achieving DODís objective of improved depot efficiency and viability. 

The following describes these characteristics and provides examples of 

how some of the partnerships we reviewed exhibited these 

characteristics.



1. Long-term relationship and commitment. A long-term relationship and 

commitment (1) permits both contractors and depots to better plan 

future workload requirements and create a better business case for the 

contractor to make investments to improve depot repair capability and 

(2) allows the contractor to help manage parts obsolescence. For 

example, the F/A-18 partnership involves a long-term relationship 

between the Navy and Boeing to provide logistics support for the F/A-

18E/F aircraft over the life cycle of the weapon system. Boeing and the 

depots are projecting partnering workloads for the Navy depots for the 

next 30 years, allowing the partners to create a phased plan to move 

from providing maintenance and repair on limited aircraft components to 

eventually encompass the entire weapon system.



2. Shared partnership vision and objectives. Having partners share the 

same partnership vision and objectives helps ensure that the partners 

will not be working at cross-purposes. The Navy ship depot maintenance 

partnerships involving shipyard work and workforce sharing--USS 

Memphis, USS Enterprise, and USS John C. Stennis--exemplify this 

characteristic. With the downsizing of the Navy, a corresponding 

decrease in the Navy and contractor shipyard workforces occurred. To 

manage the resulting downsized workforces and avoid the unnecessary 

duplication of skills, Navy and private shipyard officials developed 

and implemented a workforce-sharing initiative whereby shipyard workers 

are assigned to public or private workloads depending on the skills 

needed to perform the work and the Navyís ship maintenance priorities. 

The partners view the shipyards as a shared resource that needs to be 

effectively managed in order to provide the Navy with the needed 

overhaul capability and cost and schedule performance while minimizing 

the collective workforce requirements.



3. The right metrics and incentives. The right metrics and incentives 

are needed to effectively measure that progress is being made and that 

the partners are effectively motivated to achieve partnership goals and 

objectives. For example, the prime reason why the Navy entered into its 

auxiliary power unit partnership at its Cherry Point depot was the 

shortage of power units within the fleets. To ensure that this problem 

was addressed by the partnership, the metrics that the Navy uses to 

evaluate the partners are the same metrics used to assess the quality 

of auxiliary power unit support to the fleet--e.g., depot turnaround-

time, testing acceptance rates, and system availability.



4. Early acquisition community involvement. Developing the partnership 

with acquisition community involvement during the early phases of a 

weapon systemís acquisition helps to ensure that any additional depot 

maintenance capability development needed is fully planned and funded. 

The C-17 partnership efforts under way at Air Force depots illustrate 

that not building the partnership concept into the acquisition process 

early enough can lead to funding challenges. Until the Air Force 

recently determined that a significant portion the C-17 depot 

maintenance was core under 10 USC 2464 and would involve a public-

private partnership, the system acquisition strategy was focused on 

contractor-provided depot maintenance. Consequently, the acquisition 

community had not planned or budgeted for the development of depot 

capability to support the currently planned partnering efforts. The Air 

Force is exploring ways of dealing with the potential shortfall.



5. Complementary skills and abilities. Each partner should bring 

complementary skills and abilities to the partnership because if each 

partnerís capabilities are the same, the relationship may result in a 

competitive and potentially adversarial relationship, not the 

cooperative synergistic relationship hoped for in a partnership. The 

Air Forceís Low Altitude Navigation Targeting Infrared for Night 

(LANTIRN) partnering approach provides an example in which each partner 

brought complementary abilities to the effort. The contractor managed 

the repair of the LANTIRN system but did not have the ability within 

its supplier network to repair subcomponents in a timely manner. The 

Air Forceís Warner Robins depot already had an ongoing repair line for 

these components and was able to easily supply the contractorís 

requirements for maintaining the LANTIRN system.



6. Senior-level advocacy and support. DOD and contractor senior 

management support for a partnership is necessary to ensure that the 

effort receives the focus and resources needed to achieve success. The 

Air Forceís Joint Surveillance Target Attack Radar System (JSTARS) 

partnership, for example, illustrates the value of this characteristic. 

Senior Air Force and contractor leaders endorsed the partnership, 

requiring their managers to be innovative in overcoming the obstacles 

created by years of competitiveness and the associated tension. The 

partners responded by putting the right people in place with the 

mindset and leaderships skills necessary to make the partnership work.



7. Sound business case analysis. A comprehensive business case 

analysis, including expected outcomes, should be conducted as part of 

the decision process for entering a partnership to ensure a sound 

result benefiting both the depot and the private-sector partners. The 

Air Forceís ICBM Automatic Test Systems partnership, for example, was 

formed after the Air Force conducted an analysis to assess the cost-

benefit of the effort. As a result, the Air Force documented its 

expected savings of approximately $30 million over the 5-year 

partnership.



8. Mutual trust and shared risk. The partnership should be firmly 

grounded in mutual trust, open communications, and balanced risk among 

partners. For example, according to the business development office at 

the Corpus Christi Army Depot, the T700 partnership involved both 

partiesí investing the necessary time to understand each otherís goals 

and develop a level of trust so that both parties were willing to share 

risks in order to make their partnering effort successful.



9. Flexibility to change partnership scope. To ensure the ability to 

adapt to changing circumstances or factors, the partnerships should 

have the flexibility to change the partnership scope. The Air Forceís 

F100 partnership illustrates this characteristic. For example, the 

partnership currently involves two types of F100 workload--the 

inspections of selected engine components and engine testing--but the 

partnership agreement provides for adding additional F100 workloads and 

other engine workloads.



10. Balanced workload. Workload should be balanced among the partners 

to ensure meaningful involvement for each partner and ensure that one 

partner does not receive only low-skilled work or no work at all. The 

AV-8B Harrier Remanufacturing partnership demonstrates a balanced 

division of workload among the partners. Both the depot and the 

contractor were responsible for segments of the remanufacturing effort 

that involved challenging tasks requiring highly skilled labor. For 

example, the depot partner modified and rewired the aircraft wing and 

rebuilt complex aircraft components, while the contractor built and 

provided new aircraft components and then incorporated these components 

along with the wing and components from the depot into the 

remanufactured aircraft. The division of tasks helped each partner 

maintain and improve its respective technical expertise.



11. Independent review and oversight. Independent review and oversight 

provides an objective assessment of whether each partnership is 

achieving the expected benefits and that each partner performs as 

expected. Such a review also provides a basis for correcting or 

redirecting partnership efforts if expectations are not being met. To 

this end, OSD has begun a process to provide review and oversight of 

depot maintenance partnering efforts throughout the department. For 

example, OSD has directed its Joint Depot Maintenance Analysis 

Group[Footnote 19] to collect and maintain data on the conduct and 

performance of service partnerships. OSD plans to use these data to 

redirect and improve partnering efforts toward achieving DODís goals 

and objective.



12. Enforce partnership decisions and requirements. To ensure 

successful partnering efforts, the partnersí senior management must 

provide a mechanism for enforcing compliance with partnership decisions 

and requirements. The Air Forceís JSTARS partnership effort, for 

example, incorporates the partnership agreement and requirements into 

the overarching system logistics support contract. According to depot 

officials, the contract is the most effective means for compelling 

partner compliance with partnership decisions and requirements.



13. Full coordination with all stakeholders. Public-private partnership 

efforts should include steps to get feedback from all stakeholders on 

planned efforts and adjust the partnering strategies to reflect the 

legitimate concerns of these stakeholders. The Armyís Multiple Launch 

Rocket System Hoist Assembly partnership exemplifies full coordination 

among the depot; the contractor; and the major commandís general 

counsel, business operations office, and acquisition community.



14. Clearly documented objectives in partnering agreement. Once clear 

mutual partnering objectives are determined, they should be documented 

into a formal partnering agreement. For example, the Armyís Tobyhanna 

depot follows a standard procedure of documenting all partnering 

arrangements with formal agreements. This documentation typically 

includes a nondisclosure agreement, which protects shared information 

that is proprietary or otherwise business sensitive, and a partnering 

agreement that includes the partnershipís objectives, a statement of 

work to be performed, the partnersí roles and responsibilities, and 

other terms and conditions as needed.



[End of section]



Appendix VI: Comments from the Department of Defense:



DEPUTY UNDER SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL READINESS 

3500 DEFENSE PENTAGON WASHINGTON, DC 20301-3500:



MAR 31 2003:



Mr. Barry W. Holman:



Director, Defense Capabilities and Management Issues U.S. General 

Accounting Office:



Washington, DC 20548:



Dear Mr. Holman:



This is the Department of Defense (DoD) response to the GAO draft 

report, ďDEPOT MAINTENANCE: Public-Private Partnerships Have 

Increased, but Long-Term Growth and Results Are Uncertain,Ē dated March 

7, 2003 (GAO Code 350160).



The Department has reviewed the draft report and agrees with the 

information, analysis and conclusions. However, we believe the 

recommendations are so generally drawn that they are not actionable as 

a practical matter. An explanation of the DoD position is enclosed.



Sincerely,



Allen W. Beckett:



Signed by Allen W. Beckett:



Enclosure: As stated:



GAO DRAFT REPORT DATED MARCH 7, 2003 GAO-03-423 (GAO CODE 350160):



ďDEPOT MAINTENANCE: PUBLIC-PRIVATE PARTNERSHIPS HAVE INCREASED BUT 

LONG-TERM GROWTH AND RESULTS ARE UNCERTAINĒ:



DEPARTMENT OF DEFENSE COMMENTS TO THE GAO RECOMMENDATIONS:



RECOMMENDATION 1: To improve the management, direction, potential for 

success, and assessment of its public-private partnerships, the GAO 

recommended that the Secretary of Defense direct the Under Secretary of 

Defense for Acquisition, Technology and Logistics to establish baseline 

data and overarching goals for expected outcomes of partnership 

efforts, including the partnership initiativeís desired improvements to 

depot operations. (p. 24/GAO Draft Report):



DOD RESPONSE: Partially concur.



The Department believes that it has already substantially established 

baseline data and overarching goals for expected outcomes of 

partnership efforts. Baseline data has been collected and published for 

depot maintenance public-private partnering through fiscal year 2001. 

The data base reflects, for each partnership, expected benefits to 

include capital investment by both private and public sectors, revenue 

to the depot, workforce impacts, business process improvements, cost 

avoidance, and facility utilization. Efforts are now underway to 

collect data for fiscal year 2002. In our policy memorandum of January 

30, 2002, Public-Private Partnerships for Depot Maintenance, we believe 

that our overarching goals have been stated.



We agree with the GAO in the report that there needs to be clearly 

documented objectives in individual partnering agreements and the right 

metrics and incentives needed to measure progress. This does not 

translate into the ability to set overall detailed overarching 

departmental goals beyond those that have already been set. The GAO 

acknowledges that partnerships are formed for a variety of reasons and 

using differing approaches on the basis of the circumstances 

surrounding the specific partnering effort. These may include lease and 

use agreements for facilities and equipment, direct sales of articles 

or services, teaming arrangements, subcontractor relationships, base 

operations support relationships, and performance based logistics 

arrangements. There is also a significant difference in the nature and 

employment of partnerships based on the commodities and technologies 

involved. For example, a partnership involving a nuclear shipyard is 

dramatically different than one involving an aviation depot.



We believe it is far more practical to assess individual partnerships 

based on their stated goals and metrics than it would be to go beyond 

the currently established goals and measures in place for the overall 

DoD program.



RECOMMENDATION 2: To .improve the management, direction, potential for 

success, and assessment of its public-private partnerships, the GAO 

recommended that the Secretary of Defense direct the Under Secretary of 

Defense for Acquisition, Technology and Logistics to develop or refine 

metrics as needed to provide a more complete basis to assess the 

results of the depot partnering arrangements as well as ensuring that 

they differentiate between improvements to a weapon systemís support 

resulting from partnering and from other factors or changes affecting 

the weapon system. (p. 24/GAO Draft Report):



DOD RESPONSE: Partially concur. We agree that refinements can be made 

to the Departmentís data gathering efforts. While we agree we must 

identify and track metrics to assess the results of depot partnering 

arrangements, it will be difficult if not impossible to differentiate 

between improvements solely resulting from partnering and other 

factors. Industrial operations are complex and the numerous 

interrelationships are difficult to untangle. It may never be possible 

to differentiate between improvements resulting from partnering and 

from other factors or changes effecting the weapon system. Partnerships 

are part of complex business relationships, not controlled situations 

where direct cause and effect relationships may be established.



RECOMMENDATION 3: To support the expansion of partnership arrangements 

for new systems, the GAO recommended that the Secretary of Defense 

require the Under Secretary of Defense for Acquisition, Technology and 

Logistics to require specific assessment and planning for new 

capability in military depots where partnership arrangements for new 

systems are expected. (p. 24/GAO Draft Report):



DOD RESPONSE: Partially concur. The Department currently requires 

assessment and planning for new capability in military depots for new 

weapon system, whether or not partnering arrangements are expected. We 

agree that more emphasis can be placed on determining the role that 

depot maintenance public-private partnerships may play in this 

planning.



RECOMMENDATION 4: To support the expansion of partnership arrangements 

for new systems, the GAO recommended that the Secretary of Defense 

require the Under Secretary of Defense for Acquisition, Technology and 

Logistics as part of planning, assess the likelihood of private sector 

investment in new systems capability in military depots and other 

alternatives as needed. (p. 24/GAO Draft Report):



DOD RESPONSE: Partially concur. It was never the intention of the depot 

maintenance public-private partnership program to supplant the need for 

the services to conduct planning and funding for required capital 

investment. Partnerships may create unique opportunities in certain 

circumstances that result in private sector investment, but these 

instances tend to result from unique situations. Expecting capital 

investment by the private sector across the broad spectrum is 

unrealistic. A capital investment made as the result of a partnership 

is a secondary effect. As any potential for private sector investment 

depends on conducting a business case analysis for a specific 

situation, these assessments must be made on a system-by-system basis 

at the appropriate phase of acquisition planning, not on an across-the-

board basis as recommended by GAO.



[End of section]



Appendix VII: GAO Staff Acknowledgments:



Acknowledgments:



Julia Denman, Larry Junek, Robert Malpass, M. Jane Hunt, Jack Edwards, 

Robert Ackley, and John Strong also made significant contributions to 

this report.



(350160):



:



FOOTNOTES



[1] We compared current depot partnerships with those in place in 1998, 

the last time we reviewed such arrangements.



[2] DOD defines ďmajor depotsĒ as those having 400 or more employees.



[3] 10 USC 2466.



[4] DOD is required under 10 USC 2464 to identify and maintain within 

government owned and operated facilities a core logistics capability, 

including the equipment, personnel, and technical competence required 

to maintain weapon systems identified as necessary for national defense 

emergencies and contingencies. 



[5] 10 USC 2469.



[6] Section 832 of the Floyd D. Spence National Defense Authorization 

Act for Fiscal Year 2001 required the Comptroller General to convene a 

panel of experts to study the policies and procedures governing the 

transfer of commercial activities for the federal government from 

government to contractor personnel. The Commercial Activities Panelís 

report entitled Improving the Sourcing Decisions of the Government 

(CAP-02-01) was issued on April 30, 2002.



[7] See U.S. General Accounting Office, Defense Depot Maintenance: Use 

of Public-Private Partnering Arrangements, GAO/NSIAD-98-91 

(Washington, D.C.: May 7, 1998).



[8] The initiative is called the Future Logistics Enterprise and 

comprises six elements: (1) depot maintenance partnerships, (2) 

condition-based maintenance, (3) total life-cycle systems management, 

(4) end-to-end distribution, (5) executive agents, and (6) enterprise 

integration--see Deputy Under Secretary of Defense (Logistics and 

Material Readiness), Future Logistics Enterprise: The Way Ahead 

(Washington, D.C.: June 3, 2002).



[9] In 1995, the Base Realignment and Closure process resulted in the 

closure of the Air Forceís San Antonio depot. The Air Force conducted a 

public-private competition for the placement of much of the depotís 

engine workload. The Air Forceís Oklahoma City depot teamed with a 

contractor to compete for a combined workload package, which once 

awarded, resulted in each partner working independently on different 

aircraft engine workloads at their own respective locations--an 

atypical partnering arrangement according to DOD officials.



[10] The work being done as a result of the Marine Corpsí partnership 

is scheduled to be completed in December 2003, although according to 

depot officials, the Marine Corps is looking for additional 

opportunities to partner.



[11] 10 USC 2464.



[12] 10 USC 2466.



[13] See U.S. General Accounting Office, Defense Logistics: Actions 

Needed to Overcome Capability Gaps in the Public Depot System, GAO-02-

105 (Washington, D.C.: Oct. 12, 2001).



[14] The sections DOD considered proposing for repeal were 2460, 2464, 

2466, 2469, 2470, and 2472.



[15] While specifically mentioned 10 times by depot officials, title10 

requirements are generally recognized by DOD and service officials as 

providing a major impetus for partnering.



[16] The four aircraft are the C-2, F/A-18, S-3 and P-3.



[17] The recuperator is a heat exchanger for the Abrams tank used for 

warming inlet air for the engine.



[18] The LANTIRN system--Low-Altitude Navigation and Targeting Infrared 

for Night--is used on the Air Forceís F-15E and F-16C aircraft for 

targeting enemies.



[19] The Joint Depot Maintenance Activities Group is a DOD organization 

created to support the departmentís Joint Depot Maintenance Program by 

providing DOD with staff support in depot maintenance areas such as 

studies and analyses, business planning and evaluation, and performance 

metrics development and tracking.



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