Air Force Depot Maintenance:

Information on the Cost-Effectiveness of B-1 and B-52 Support Options

NSIAD-97-210BR: Published: Sep 12, 1997. Publicly Released: Sep 12, 1997.

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David R. Warren
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Pursuant to a congressional request, GAO provided information about programmed depot maintenance of five B-1B aircraft under contract with Boeing North American, Inc., and Boeing's proposal to reengine the B-52 fleet, focusing on: (1) comparing the cost of performing depot maintenance on five B-1B aircraft at Boeing's Palmdale, California, facility to the estimated cost of performing similar work at the Oklahoma City Air Logistics Center; and (2) analyzing the differences between Boeing's proposal (and associated projected savings) to reengine the B-52 fleet and the subsequent Air Force analysis and projected costs of implementing the proposal.

GAO noted that: (1) in fiscal years 1995 and 1996, the Air Force paid twice as much for each B-1B aircraft repaired under contract as the Oklahoma City depot estimated it would have cost that depot to repair the same aircraft; (2) the Air Force paid approximately $19 million for five aircraft repaired by Rockwell International Corporation in each of the 2 fiscal years, compared to about $9 million estimated for similar repair of 5 aircraft in the depot each year; (3) in 1996, when the Oklahoma City depot had the capability to repair the 5 aircraft that were contracted out in addition to the 18 it already repaired each year, the B-1B program office considered allocating the entire annual requirement to the depot; (4) confronted with this situation and other factors, the contractor reduced the B-1B contract price from $18 million to $11 million--about 39 percent; (5) GAO estimates that in fiscal years 1997 and 1998 the Air Force could have saved approximately $5.3 million by consolidating the B-1B depot maintenance work at the Oklahoma City Air Logistics Center; (6) this is $4.5 million more than the Air Force projected it could save over that same period if the five aircraft repaired at Boeing were consolidated with B-1B's being repaired at the Oklahoma depot; (7) the two factors most significantly influencing this difference are the impact of overhead savings at the Boeing facility and at the depot; (8) Boeing's unsolicited proposal to reengine the B-52 fleet would cost the Air Force approximately $1.3 billion rather than save approximately $4.7 billion as Boeing projected; (9) an Air Force team formed to study Boeing's proposal analyzed the lease and purchase alternatives and concluded that both options are cost-prohibitive compared to maintaining the existing TF-33 engines; (10) on April 15, 1997, DOD reported to Congress that implementing Boeing's reengining proposal is not cost-effective; (11) risks such as the length of the lease, termination liability, and indemnification made Boeing's proposal unacceptable; (12) additionally, the Institute for Defense Analysis projected that implementing the Boeing proposal would cost the Air Force $1 billion; (13) faced with continuing pressure to modernize the fleet, the Air Force is currently exploring alternatives for modernizing all TF-33 engines; and (14) the Air Force has awarded contracts to three engine manufacturers to explore modernization options and expects to develop a rank-ordered list of alternatives by January 31, 1998.

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