Depot Maintenance:

DOD's Report to Congress on Its Public-Private Partnerships at Its Centers of Industrial and Technical Excellence (CITEs) Is Not Complete and Additional Information Would Be Useful

GAO-08-902R: Published: Jul 1, 2008. Publicly Released: Jul 1, 2008.

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For several years, the Department of Defense (DOD) and Congress have encouraged the defense logistics support community to pursue partnerships with the private sector to combine the best commercial processes and practices with DOD's extensive maintenance capabilities. These public-private partnerships can combine the resources, risks, and rewards of public agencies and private companies and are intended to provide greater efficiency, better access to capital, and improved compliance with a range of government regulations. Although DOD has collected information on depot-level partnering arrangements for several years, DOD first issued a policy encouraging the use of public-private depot maintenance partnerships to improve the efficiency and viability of its depots in January 2002. DOD expects these improvements to depot operations to ultimately improve support for the warfighter. Public-private partnerships for depot-level maintenance are cooperative arrangements between a depot-level maintenance activity and one or more private sector entities to perform DOD or defense-related work, to utilize DOD depot facilities and equipment, or both. Pursuant to Section 2474 of Title 10, Unites States Code, the secretaries of the military departments (and the Secretary of Defense in the case of defense agencies) designated their depot-level maintenance activities (other than facilities approved for closure or major realignment under the Defense Base Closure and Realignment Act of 1990) as Centers of Industrial and Technical Excellence (CITE) in their core competencies. Section 2474 states that the secretary concerned may authorize and encourage the head of a CITE to enter into public-private partnerships comprising of government and private sector employees to perform work related to the CITE's core competencies. The statute also permits private industry to use underutilized or unutilized facilities and equipment at the CITEs. House Conference Report 110-477 accompanying H.R. 1585 directed DOD to submit a report to the House and Senate Armed Services Committees on the public-private partnerships at its CITEs that describes the following six reporting elements: (1) common approaches and procedures for DOD CITEs to use in the implementation of partnerships; (2) consistent cost methodologies and reimbursement guidance applicable to maintenance and repair workload performed by federal personnel participating in public-private partnerships; (3) implementation procedures for completing contract negotiation for partnerships within 12 months of initiating negotiations; (4) the secretary's use of commercial practices in partnerships to replace existing inventory and component management, technical publication data, document management, equipment maintenance, and calibration requirements; (5) delegation during a partnership of Class 2 design authority based on commercial practices to maintain the form, fit, and function of a weapons system platform, major end item, component of a major end item, or article; and (6) plans to expand core capabilities through the use of partnerships at DOD CITEs. To assess the completeness of DOD's report, we determined (1) whether DOD's report described each of the six reporting elements as directed by the conference report and (2) for the reporting elements that were described, whether DOD could have included additional information in its report that would have made it more useful to the committees and other interested parties.

DOD's report on public-private partnerships at DOD's CITEs provided responses to all six reporting elements; however, it did not directly describe reporting element three, and did not describe reporting element six, as directed by H.R. Conf. Rep. 110-477. Specifically, DOD did not directly describe the implementation procedures for completing contract negotiations for public-private partnerships within 12 months of initiating negotiations, nor did it describe its plans to expand core capabilities through the use of public-private partnerships at DOD CITEs. Although DOD did not provide a description of the implementation procedures for completing contract negotiations for public-private partnerships within 12 months of initiating negotiations, it provided an explanation of why imposing such a time frame on contract negotiations would have an adverse impact on creating new partnerships. DOD could have provided examples in its report to the committees to support its conclusion that imposing a 12-month time frame on contract negotiations would have an adverse impact on its partnerships. DOD did not describe its plans to expand core capabilities through the use of public-private partnerships. According to DOD officials, they could not describe the plans to expand core capabilities through the use of public-private partnerships because they had no plans to implement such an initiative. However, DOD does not explicitly state in its report to the committees that it has no plans to expand its core capabilities through the use of partnerships. Although DOD provided responses for all six reporting elements, based on our review of DOD's report we concluded that DOD could have provided additional information to the committees and other interested parties for two of these reporting elements. For reporting element four--describe the commercial practices to replace existing inventory and component management, technical publication data, document management, and equipment maintenance and calibration requirements for public-private partnerships--DOD's report to the committees could have included a more clear and descriptive explanation regarding the methodology used for selecting public-private partnerships identified in the appendix of the report. For reporting element one--describe common approaches and procedures for implementing partnerships--DOD's report to the committees could have disclosed the fact that the Army has not yet implemented DOD's policy requiring each of the services to conduct a business case analysis prior to entering into partnership arrangements to ensure that the partnership is in the best interest of the government, and could have described the Army's plans to do so. Additionally, DOD's report could have included a description of the various authorities, regulations, and other methods used to establish public-private partnerships, the various types of partnerships, and the benefits of public-private partnerships.

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

    Matter for Congressional Consideration

    Matter: In order to provide congressional decision makers with information on the challenges of implementing public-private partnerships at CITEs and the progress in meeting its intended goals of more responsive product support, better facility utilization, reduced cost of ownership, and more efficient business processes, in addition to reiterating our former matter, Congress may wish to consider having DOD provide the committees with information on the timing and challenges in implementing these partnerships, and its ongoing and planned use of public-private partnerships to sustain elements of core capabilities, which were not directly described in DOD's April 2008 public-private partnership report to the committees.

    Status: Closed - Not Implemented

    Comments: A legislative search was conducted by OGC and no statutory actions related to public/private partnerships at DOD Centers of Industrial and Technical Excellence were found.

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