Depot Maintenance:

Management Attention Required to Further Improve Workload Allocation Data

GAO-02-95: Published: Nov 9, 2001. Publicly Released: Nov 9, 2001.

Contact:

William M. Solis
(202) 512-8412
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Federal law states that not more than 50 percent of annual depot maintenance funding can be used for work by private sector contractors. In an earlier report, GAO could not determine whether the Department of Defense (DOD) had complied with the 50-percent limitation. More recent GAO testimony highlighted continuing and pervasive weaknesses in DOD's financial management systems, operations, and controls that impair its ability to accurately accumulate and report reliable budget execution and cost data. This report found that the military had mixed results complying with the 50-50 requirement for private sector workloads in fiscal years 1999 and 2000. The projections of the Army, Air Force, and Navy in DOD's report for fiscal years 2001 through 2005 are neither accurate nor reasonable estimates of the future allocations of public and private sector workloads. The services placed much less emphasis on the future-years data and reports. The reported projections use incorrect data and questionable assumptions and are inconsistent with existing budgets and management plans. DOD's report should be viewed with caution because it does not provide the best data available to DOD decisionmakers and congressional overseers, and the reported data are misleading about how future workloads are likely to be allocated between the public and private sectors. Although DOD has greatly improved the 50-50 reporting guidance and the implementation of the reporting process, further improvement could be made.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve 50-50 data collection, validation, and reporting processes for prior-years and future years data and thus the reliability and reasonableness of the reported data, and to improve management direction and oversight, the Secretary of Defense should require the Assistant Deputy Under Secretary of Defense for Maintenance Policy, Programs and Resources, in conjunction with the secretaries of the military departments, to improve and clarify 50-50 reporting guidance in problem areas noted in this report, including inactivation activities, contractor logistics support, incorporation of future repair costs for new and upgraded systems in 50-50 projections, depot-level maintenance performed at non-depot locations, and inclusion of government-furnished material in contract repair costs.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: OSD's revised guidance, dated November 2001, and the Services' supplementary instructions referenced GAO's report and these specific problem areas.

    Recommendation: To improve 50-50 data collection, validation, and reporting processes for prior-years and future years data and thus the reliability and reasonableness of the reported data, and to improve management direction and oversight, the Secretary of Defense should require the Assistant Deputy Under Secretary of Defense for Maintenance Policy, Programs and Resources to expand and clarify its guidance to (1) specify whether contract general and administrative expenses incurred by government employees and similar types of costs should be counted as part of the public or the private sector, and (2) allow for revisions to budgetary estimates to better reflect known and anticipated changes in workloads, workforce, priorities, and performance execution rates in order to achieve more reasonable projections of depot requirements where historical data indicates that budget data are unrealistic.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD did not concur with expanding guidance concerning general and administrative expenses. The reason cited was that this element is unique to the Air Force and additional departmental guidance is not considered necessary. The Air Force looked into the issue, but continued to make reporting adjustments for these expenses that GAO disagrees with. DOD concurred with the second part of this recommendation and issued revised guidance in November 2001 to implement this action. Supplementary guidance issued by the Services also referenced this change and GAO's 2002 review noted some improved reporting as a result. For example, the Air Force added about $540 million in its future-years report reflecting this change.

    Recommendation: To improve 50-50 data collection, validation, and reporting processes for prior-years and future years data and thus the reliability and reasonableness of the reported data, and to improve management direction and oversight, the Secretary of Defense should require the Secretary of the Navy to (1) review the management priority accorded the 50-50 reporting process throughout the command structure, (2) implement improved management controls and oversight of the processes used by the individual reporting commands to collect, verify, and report 50-50 data, (3) finalize procedures for accurately identifying and reporting depot maintenance costs at regional and other non-depot locations, (4) prior to issuing the data call for the 50-50 reports due in fiscal year 2002, hold a planning meeting of key officials representing all reporting commands to discuss and agree upon 50-50 data collection processes and guidance, and (5) direct the Naval Audit Service to review 50-50 processes and data to validate the data collection processes and results for both the prior-years and future-years reports.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: This recommendation is closed. DOD reports that the Navy (1) had given the 50-50 program adequate management priority through actions such as a new handbook, frequent contacts between the 50-50 manager and key reporting officials, internal meetings by the reporting organizations; (2) updated 50-50 data call and report guidance provided to Naval reporting organizations with directions to include the 50-50 reporting process as part of their Management Control Program--future data calls and guidance will implement improved management controls and oversight of the 50-50 process; (3) developed procedures for accurately identifying and reporting depot maintenance costs at regional and other non-depot locations; (4) considered the intent of this recommendation through the actions listed in (1); and (5) planned to use the Naval Audit Service to review the 50-50 process and validate the data as appropriate.

    Recommendation: To improve 50-50 data collection, validation, and reporting processes for prior-years and future years data and thus the reliability and reasonableness of the reported data, and to improve management direction and oversight, the Secretary of Defense should require the Secretary of the Army to (1) identify depot maintenance requirements associated with the recapitalization program, (2) require that the Army Audit Agency review both prior-years and future-years 50-50 data, (3) communicate the reporting requirements to all organizational levels responsible for reporting data, and (4) finalize and issue guidance concerning the reporting of depot maintenance at non-depot locations.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: GAO's review of the Army's 50-50 data during 2002 found substantial compliance with this 4-part recommendation. The Army more fully reported recapitalization costs, the Army Audit Agency did review both reports, tasking letters and revised guidance were widely disseminated and additional guidance was prepared concerning the reporting of depot maintenance at non-depot locations. On this latter issue, the Army is completing phase II of its study on proliferation of depot maintenance-type activities. Preliminary results indicate that there is still unreported depot maintenance being accomplished at non-depot locations, requiring additional guidance and management attention to this problem area. GAO's current review identified reporting problems continuing in this area, specifically two commands that did not report maintenance and another command not yet able to assume reporting responsibilities for these activities.

    Recommendation: To improve 50-50 data collection, validation, and reporting processes for prior-years and future years data and thus the reliability and reasonableness of the reported data, and to improve management direction and oversight, the Secretary of Defense should require the secretaries of the military departments to reemphasize and expand procedures for maintaining adequate records to document data collection processes, data sources, and estimating methodologies in order to facilitate management oversight and audits, as well as provide an historical record that can be readily used by staff newly assigned to the 50-50 process to annually replicate sound, efficient, and consistent data collection efforts.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with this recommendation and the services have reiterated the need for better record keeping in their annual 50-50 data calls and guidance. However, GAO's subsequent reviews have found that record-keeping problems remain an area that DOD and the services should placed greater emphasis on in order to further reduce this problem in the 50-50 process.

    Apr 23, 2014

    Apr 22, 2014

    Apr 18, 2014

    Apr 16, 2014

    Apr 11, 2014

    Apr 10, 2014

    Apr 9, 2014

    Looking for more? Browse all our products here