Navy Maintenance:

Public/Private Competition for F-14 Aircraft Maintenance

NSIAD-92-143: Published: May 20, 1992. Publicly Released: May 20, 1992.

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Pursuant to a congressional request, GAO reviewed the Naval Aviation Depots' (NADEP) airframe repair program, focusing on the: (1) effects of introducing private-sector competition for depot maintenance on F-14 aircraft overhaul costs; (2) Naval Air Systems Command's (NAVAIR) post-award administration of the F-14 competition program; and (3) costs of competed and noncompeted overhauls during the same repair period.

GAO found that: (1) F-14 overhaul costs have declined by about 23 percent since the introduction of the competition program, which encourages NADEP to streamline the overhaul process, ensure that only necessary work is performed, and focus on minimizing costs; (2) other factors contributing to cost reductions include accounting changes and aircraft parts funding changes; (3) actual F-14 overhaul costs have exceeded the amounts approved for payment, due to inconsistent contract administration guidance, failure to resolve contract administration problems, contract disputes, problems with the NADEP cost accounting system, and some NADEP inefficiency; (4) NAVAIR has issued new guidance on administering competitive awards won by NADEP; (5) modification of the NADEP cost accounting system to allow better tracking of costs could help to prevent contract disputes; (6) although NADEP applied the same maintenance practices to overhaul work they won under competitive and noncompetitive awards, noncompetitive F-14 overhauls cost about 21 percent more than competitive F-14 overhauls; (7) NAVAIR attributed cost differences to differences in the way the overhauls were administered and cited the positive impact of independent oversight on minimizing costs; and (8) NADEP attributed overhaul cost differences to aircraft age, although noncompetitive overhauls of older aircraft cost more than competitive overhauls of aircraft of the same age.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: NAVAIR Instruction 4200.35 has been revised to require that an administrative contracting officer and an on-site program support officer be designated to perform administration and oversight of the terms and conditions of the work assignment document, which serves as the controlling document for workload assignments to public activities.

    Recommendation: The Secretary of the Navy should direct the Commander, NAVAIR, to take appropriate steps, such as periodic progress meetings with key parties involved in competition efforts, to ensure that the new guidance on administration of competitive awards won by NADEP is successfully implemented and that all parties adhere to the guidance.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: The NAVAIR industrial financial management system was modified to allow labor and material costs to be tracked to individual work requests. The modifications were implemented at all depots on June 8, 1992, and training was provided to all depots on June 15 and 16, 1992.

    Recommendation: The Commander, NAVAIR, should follow through on NADEP plans to modify the cost accounting system to allow labor and material costs to be tracked to individual work requests.

    Agency Affected: Department of Defense: Department of the Navy: Naval Air Systems Command

  3. Status: Closed - Not Implemented

    Comments: NAVAIR still plans to issue policy guidance but has not done so. This matter is being followed up during an ongoing review of competition under assignment code 709042.

    Recommendation: The Secretary of the Navy should direct the Commander, NAVAIR, to issue policy guidance directing that the same administrative process be applied to both competed and noncompeted work.

    Agency Affected: Department of Defense: Department of the Navy

 

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