Defense Acquisitions:

Air Force Operating and Support Cost Reductions Need Higher Priority

NSIAD-00-165: Published: Aug 29, 2000. Publicly Released: Aug 29, 2000.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts to reduce the Air Force's operating and support costs, focusing on: (1) operating and support cost trends; (2) cost reduction initiatives; and (3) factors influencing the success of cost reduction efforts.

GAO noted that: (1) Air Force operating and support costs are growing at about 4 percent per year, even though the total number of aircraft, the number of hours these aircraft are flown, and the number of personnel who fly and maintain them have been declining for years; (2) from fiscal year (FY) 1997 to FY 1999, operating and support costs for aircraft increased from about $15.3 billion to $16.6 billion; (3) higher costs for repair parts were the principal cause of these increasing costs, and about 25 fault-prone parts on each system GAO examined were the biggest cost drivers; (4) to help reduce the operating and support costs of fielded systems, the Air Force has established several initiatives, including the Reduction in Total Ownership Cost program; (5) under this program, the Air Force developed a standardized methodology for assessing operating and support costs, identifying likely areas for cost reduction, proposing cost reduction projects, and tracking associated savings; (6) initially applied to several pilot programs in 1999, including the F-16 and B-1B, the program is now being expanded to other systems, as experience with the pilots increases; (7) however, the projected cost reductions from these efforts average only about $343 million each year, well short of the $2.6 billion to $7 billion needed to achieve DOD's goals; (8) several factors hinder greater operating and support cost reductions; (9) the Air Force does not give operating and support cost management the same high priority it assigns to other program concerns such as weapon performance during system development or improved combat capability after fielding; (10) instead of establishing an operating and support cost requirement and managing to meet it, new programs focus on initiatives to improve reliability, supportability, and maintainability; (11) although these initiatives do help lower operating costs, their impact on a system's operating and support costs is not tracked; (12) projects that could lower these costs in fielded systems cannot complete effectively for funding against projects that enhance safety, readiness, or combat capability; (13) because they are not given the same management priority, operating and support costs are not emphasized; (14) poor visibility of operating and support costs has been a key factor inhibiting management of operating costs, but the establishment of the new Air Force Total Ownership Cost data system appears to be overcoming this barrier; and (15) despite program managers' limited authority and low incentives, some programs, such as the B-1B, continue to champion cost reduction projects.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has not acted on this recommendation.

    Matter: Congress may wish to require the Secretary of Defense to direct the Secretary of the Air Force to submit an annual report summarizing each program's operating cost requirements, its actual costs, and the actions planned to achieve the requirement.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD did not directly address GAO's recommendation to establish an operating and support cost requirement for developmental and fielded weapon systems. In addition, DOD felt that it was premature to require that operating and support costs be tracked.

    Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to establish an operating and support cost requirement for developmental and fielded weapon systems to ensure full consideration of these costs among other program priorities.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD did not directly address GAO's recommendation to establish an operating and support cost requirement for developmental and fielded weapon systems. In addition, DOD felt that it was premature to require that operating and support costs be tracked.

    Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to measure and periodically assess progress toward meeting individual program operating cost requirements.

    Agency Affected: Department of Defense

 

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