Pursuant to a congressional request, GAO reviewed the Department of Defense's annual reports on depot maintenance, focusing on how military departments or defense agencies: (1) used funds appropriated annually for depot-level repair and maintenance done by contractor personnel; and (2) reported on estimated funds to be used for performing depot maintenance by public and private sector personnel for fiscal years 1999-2005.

GAO noted that: (1) the estimated funding to be used for depot maintenance work performed by the private sector increases annually during fiscal years 1999-2005; (2) the Army's and the Navy's estimates showed a slow increase in private sector maintenance work over this period, but the estimated private sector share remained below 50 percent; (3) the Air Force did not report on its depot maintenance estimates for the period; (4) preliminary data showed the Air Force's expenditures for depot maintenance workloads could exceed the 50-percent threshold between 2000 and 2003 unless actions are taken that would place additional work in the public sector; (5) Air Force officials have recognized that they may not be able to manage the workload within the statutory limit during fiscal year (FY) 2000; (6) the Air Force notified the Speaker of the House of Representatives and the President of the Senate that, as required by statute, the Secretary of the Air Force has approved a waiver of the 50-percent ceiling for FY 2000; (7) the reported data provides a rough estimate of future workload allocation, but it also has several limitations that affect its usefulness as a predictor of actual workload allocations; (8) portions of the data contained errors and inconsistencies; (9) some of the errors and inconsistencies may be resolved with the Department's report on actual data for FY 1999; (10) estimated data may vary significantly from actual experience because the data are developed from budget estimates and future years' defense requirements change over time; (11) Air Force actual depot maintenance workload funding allocations for 1999 were not available, however, other records indicated the potential for variance between planned and actual funding; (12) pilot programs to reengineer weapon system support activities are under way in each of the services and are shifting responsibility for more depot maintenance to the private sector; and (13) the data estimates do not yet fully reflect the future consequences of these actions.