Aerospace Guidance and Metrology Center:

Cost Growth and Other Factors Affect Closure and Privatization

NSIAD-95-60: Published: Dec 9, 1994. Publicly Released: Dec 9, 1994.

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Pursuant to a congressional request, GAO reviewed the cost and savings issues related to the closure and privatization of the Newark Air Force Base Aerospace Guidance and Metrology Center (AGMC).

GAO found that: (1) the justification for closing AGMC is not clear; (2) the Department of Defense (DOD) considers AGMC work conducive to conversion to the private sector and has recommended closing AGMC through privatization and transferring its workload to other depots; (3) DOD estimates that closing AGMC would cost $31.3 million and would result in annual savings of $3.8 million; (4) one-time closure costs have doubled in the past year and may still be underestimated; (5) the projected costs of conducting post-privatization operations could exceed the cost of current Air Force operations and reduce or eliminate projected savings; and (6) other closure and privatization issues create uncertainty about the validity of the Air Force's planned action, including the disposition of proprietary data claims, the effect of the closure on excess depot maintenance capacity, the segmentation of the metrology and calibration mission, and the transfer of AGMC property to a local reuse commission.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD partially concurred with this recommendation, noting that it continued to support the 1993 Defense Base Closure and Realignment Commission decision to close Newark AFB/AGMC, but agreed with GAO that the approach to closure should not be limited to privatization in place. DOD noted that it would evaluate further the potential costs of the privatization-in-place initiative and would also reassess organic alternatives to determine the most effective approach for implementing the closure decision. Subsequently, an internal Air Force study, which was supported by an independent public accountant's findings, substantiated that privatization in place and other organic options are more expensive than the costs of operation. However, DOD did not ask for reconsideration of the AGMC closure during the 1995 BRAC process. DOD continues to implement the privatization-in-place initiative. Contracts were awarded and the transition period has been completed.

    Recommendation: The Secretaries of the Air Force and Defense should reevaluate, as a part of the ongoing Base Closure and Realignment Commission 1995 process, both the DOD 1993 recommendation to close Newark Air Force Base/AGMC and the Air Force's approach to implementing the closure decision through privatization-in-place.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD partially concurred with this recommendation, noting that it continued to support the 1993 Defense Base Closure and Realignment Commission decision to close Newark AFB/AGMC, but agreed with GAO that the approach to closure should not be limited to privatization in place. DOD noted that it would evaluate further the potential costs of the privatization-in-place initiative and would also reassess organic alternatives to determine the most effective approach for implementing the closure decision. Subsequently, an internal Air Force study, which was supported by an independent public accountant's findings, substantiated that privatization in place and other organic options are more expensive than the costs of operation. However, DOD did not ask for reconsideration of the AGMC closure during the 1995 BRAC process. The Air Force awarded contracts for depot maintenance workloads and the metrology program.

    Recommendation: The Secretaries of the Air Force and Defense should reevaluate, as a part of the ongoing Base Closure and Realignment Commission 1995 process, both the DOD 1993 recommendation to close Newark Air Force Base/AGMC and the Air Force's approach to implementing the closure decision through privatization-in-place.

    Agency Affected: Department of Defense: Department of the Air Force

 

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