Depot Maintenance: Public-Private Partnerships Have Increased, but Long-Term Growth and Results Are Uncertain
GAO-03-423
Published: Apr 10, 2003. Publicly Released: Apr 10, 2003.
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Highlights
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 DOD's 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 DOD's planned expansion of partnerships.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| 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 may want to 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 may also want to 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. |
Closed – Implemented
|
In H.R. 108-106 (dated May 16, 2003--page 304), Congress directed DOD to report no later than November 1, 2004, on a Depot Maintenance Long-Term Strategy. This report is supposed to include an evaluation of future depot workload, an assessment of how DOD will maintain core capability, and a workforce revitalization plan. This reporting requirement addresses GAO's recommendation for Congress to 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. GAO's review of service strategies for depot maintenance, in particular the Air Force, indicates that public-private partnerships will play an ever increasing role in the services' long term strategy for depot maintenance. Consequently, the requirement levied on DOD will partially implement the intent of GAO's recommendation. For example, by addressing how DOD will maintain core capabilities, the department should address the retention of core capabilities. Additionally, the Department's workforce revitalization plan will address GAO's recommended action in developing plans for preserving a viable workforce. In November 2003, the Department issued its report to Congress, "Department of Defense Depot Maintenance Long-Term Strategy", which included an evaluation of future depot workload, an assessment of how DOD will maintain core capability, and a workforce revitalization plan. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve the management, direction, potential for success, and assessment of its public-private partnerships, the Secretary of Defense should 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 initiative's desired improvements to depot operations. |
Closed – Implemented
In commenting on GAO's report, DOD stated that it believes it is more practical to assess individual partnerships based on their stated goals and metrics than to measures the overall DOD program. However, DOD also stated that it agreed with the information, analysis, and conclusions of our report, and in April 2007, DOD issued DOD Instruction 4151.21---"Public-Private Partnerships for Depot-Level Maintenance"--which establishes goals for partnerships, such as maximizing the utilization of the government's facilities, equipment, and personnel at DOD depot-level maintenance activities and assigns the Deputy Under Secretary of Defense for Logistics and Materiel Readiness with responsibility for monitoring and reviewing the performance of depot-level maintenance partnerships throughout the Department of Defense. The instruction also requires that the decision to enter into a partnership must be supported by a business case analysis considering costs, benefits, and best use of public and private sector capabilities that demonstrates that it is in the best interest of the government. We believe the provisions of the defense instruction are in keeping with intent of our recommendations and if followed will improve the department's ability to assess the performance of its partnering initiatives and plan for new capability where partnerships are planned for new systems.
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| Department of Defense | To improve the management, direction, potential for success, and assessment of its public-private partnerships, the Secretary of Defense should 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 system's support resulting from partnering and from other factors or changes affecting the weapon system. |
Closed – Implemented
DOD stated that while refinements can be made to DOD's data-gathering efforts, it would be difficult to differentiate between improvements solely resulting from partnering versus other factors. DOD considers partnerships to be complex situations where the direct cause and effect relationships may not be established. Although DOD currently considers this recommendation not to be practical, DOD did agree with the information, analysis, and conclusions of the report. Further, in April 2007, DOD issued DOD Instruction 4151.21 Public-Private Partnerships for Depot-Level Maintenance, which establishes goals for partnerships, such as maximizing the utilization of the government's facilities, equipment, and personnel at DOD depot-level maintenance activities and assigns the Deputy Under Secretary of Defense for Logistics and Materiel Readiness with responsibility for monitoring and reviewing the performance of depot-level maintenance partnerships throughout the Department of Defense. In the course of implementing this instruction the office of the Deputy Under Secretary will develop metrics to conduct its partnership review and monitoring responsibilities. The instruction also requires that the decision to enter into a partnership must be supported by a business case analysis considering costs, benefits, and best use of public and private sector capabilities that demonstrates that it is in the best interest of the government. We believe the provisions of the defense instruction are in keeping with intent of our recommendations and if followed will improve the department's ability to assess the performance of its partnering initiatives and plan for new capability where partnerships are planned for new systems.
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| Department of Defense | To support the expansion of partnership arrangements for new systems, the Secretary of Defense should 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. |
Closed – Implemented
In response to GAO's recommendation, DOD stated that it currently requires assessment and planning for new capability in military depots for new weapon systems, regardless of expectations for partnering arrangements. However, DOD added that it could place more emphasis on determining the role that depot maintenance public-private partnerships may play for new systems. in April 2007, DOD issued DOD Instruction 4151.21---Public-Private Partnerships for Depot-Level Maintenance, which establishes goals for partnerships, such as maximizing the utilization of the government's facilities, equipment, and personnel at DOD depot-level maintenance activities and assigns the Deputy Under Secretary of Defense for Logistics and Materiel Readiness with responsibility for monitoring and reviewing the performance of depot-level maintenance partnerships throughout the Department of Defense. The instruction also requires that the decision to enter into a partnership must be supported by a business case analysis considering costs, benefits, and best use of public and private sector capabilities that demonstrates that it is in the best interest of the government. Further, DOD's April 2007 depot strategy report to Congress noted that DOD policy encourages the use of public-private partnerships for depot maintenance whenever feasible and beneficial. Additionally DOD activities will attempt to structure partnerships in ways that encourage and justify private sector capital investment at the organic activity. We believe the provisions of these defense documents are in keeping with the intent of our recommendations and if followed will improve the department's ability to assess the performance of its partnering initiatives and plan for new capability where partnerships are planned for new systems.
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| Department of Defense | To support the expansion of partnership arrangements for new systems, the Secretary of Defense should require the Under Secretary of Defense for Acquisition, Technology and Logistics to, as part of this planning, assess the likelihood of private-sector investment in new systems capability in military depots and other alternatives as needed. |
Closed – Implemented
In responding to GAO's recommendation, DOD stated that capital investment by the private sector across the broad spectrum is unrealistic and that it was never the intention of the public-private partnership program to supplant the need for services to conduct planning and funding for required capital investment. In April 2007, DOD issued DOD Instruction 4151.21---Public-Private Partnerships for Depot-Level Maintenance, which establishes goals for partnerships, such as maximizing the utilization of the government's facilities, equipment, and personnel at DOD depot-level maintenance activities and assigns the Deputy Under Secretary of Defense for Logistics and Materiel Readiness with responsibility for monitoring and reviewing the performance of depot-level maintenance partnerships throughout the Department of Defense. The instruction requires that the decision to enter into a partnership must be supported by a business case analysis considering costs, benefits, and best use of public and private sector capabilities that demonstrates that it is in the best interest of the government. The instruction also states that where possible, partnerships should be structured in ways that encourage and justify private sector investment at the organic activity. We believe the provisions of the defense instruction are in keeping with intent of our recommendations and if followed will improve the department's ability to assess the performance of its partnering initiatives and plan for new capability, including investment by the private sector, where partnerships are planned for new systems.
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Best practicesDefense procurementPrivate sectorProcurement practicesStrategic planningDepot maintenancePublic-private partnershipsU.S. ArmyLogisticsWeapons systems