Air Force Depot Maintenance: Privatization-in-Place Plans Are Costly While Excess Capacity Exists

DOD agreed to sustain core depot repair capability. It has been evaluating core requirements, focusing on workloads at the closing San Antonio and Sacramento depots to determine if any of these workloads should be retained. These two depots' workloads were generally considered in three separate packages--the same three workload packages that the Air Force plans to offer as competition packages, including the San Antonio C-5 aircraft programmed depot maintenance and engine and engine component workloads, and the hydraulics, KC-135 aircraft, and other Sacramento workloads. None of the C-5 or Sacramento workloads were determined to be core. A small amount of F-100 engine and engine component workload was determined to be core and will be transitioned to the Oklahoma City depot regardless of the results of the engine competition.

The Air Force agreed to evaluate public/private bids to ensure that any potential consolidation savings and resulting recurring and one-time costs were considered in its evaluation of all offers for the maintenance workloads at the three closing depots. During the depot maintenance competition, the Air Force included a factor in its cost analysis for consolidation savings. Based, in part, on consolidation savings, the Air Force awarded the competed workload to the remaining Air Logistics Centers and their private sector partners. The Air Force calculated that savings of $157 million on the C-5 workload,$253 million on the Sacramento workload, and $226 million on the engine workload were achievable by reducing overhead rates through more improved capacity utilization at the Warner Robins, Ogden, and Oklahoma City ALCs, respectively.

DOD reported that it would use competitive procedures for determining the best value source of repair for San Antonio and Sacramento depot workloads. The first competition resulted in an award to the competing public depot. The Air Force is using public-private competitions to determine the most cost-effective source of repair for the remaining workloads at the closing Air Force depots.

The Air Force and Army had been directed to review the transfer plans for the ground-communications and electronics workload from the Sacramento depot to the Tobyhanna depot and consider an expedited schedule. Subsequently, a coordinated plan was developed and approved by the Defense Depot Maintenance Council (DDMC), calling for the transfer of 20 percent of the workload in 1998 and 40 percent in each of the next 2 years. The Air Force began moving the communications workload to Tobyhanna in 1998, as planned. The Air Force transferred 20 percent of the workload in FY1998 and 35 percent in FY1999. The Air Force and Army have agreed to timelines to complete the transfer by the end of FY2000.However, with regard to other delays, Air Force actions were not responsive. For example, the Air Force delayed transferring the systems and material management functions until the end of the legal closure period despite economies and other benefits it could have realized through accelerated movements.