Defense Depot Maintenance:

Public and Private Sector Workload Distribution Reporting Can Be Further Improved

NSIAD-98-175: Published: Jul 23, 1998. Publicly Released: Jul 23, 1998.

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Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) report on the percentage of depot maintenance funding provided to the public- and private-sector depot maintenance activities, focusing on: (1) GAO's assessment of the completeness and the consistency of workload distribution data reported by the military departments and defense agencies for fiscal year (FY) 1997; and (2) the procedures DOD used to define and quantify funding for depot maintenance workloads.

GAO noted that: (1) in February 1998, DOD reported that the military departments and defense agencies allocated a total of $10.3 billion in depot maintenance funds for FY 1997--$6.5 billion to public-sector facilities and $3.8 billion to private-sector contractors; (2) GAO's work shows that the military departments did not develop complete and consistent workload distribution information; (3) while recognizing the lack of clarity in the reporting requirements, if included the public-sector share of depot maintenance funding would have been $6.8 billion, and the private-sector share about $5.4 billion; (4) this condition exists for three reasons: (a) Office of the Secretary of Defense (OSD) guidance--while substantially improved over prior years--leaves room for varying interpretations of reporting requirements for several workload categories; (b) the military departments and defense agencies have not developed internal procedures and systems to facilitate timely and accurate reporting; and (c) the military departments, defense agencies and OSD have not resolved questions concerning whether funding for some depot-level workloads should be included in computing the public-private mix as required by 10 U.S.C. 2466; (5) without accurate data and consistent reporting between the two sectors, the data provides only a broad indication of the relative mix of funding provided to the public and private sectors; (6) thus, until the problems are corrected, future reports of public- and private-sector workload distribution will continue to be inaccurate; (7) although DOD is not required by statute to report estimates of future workload mix, it is essential that DOD maintain this data to support the oversight and management of depot maintenance activities and to monitor compliance with 10 U.S.C. 2466; (8) based on preliminary data developed by the military departments and defense agencies, total DOD-wide depot-level maintenance funding will increase from $13.4 billion in FY 1998 to $15.4 billion in FY 2003; and (9) while not yet resolved, the Air Force and Army are considering changes in future reporting criteria for several workload categories that could reduce the amount of reported depot-level funding in future years.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On November 23, 1998, the Office of the Secretary of Defense (OSD) issued guidance that directed the military departments and defense agencies to develop and document internal operating procedures for collecting and reporting public- and private-sector workload allocation data. In complying with OSD's direction, the Army and Air Force developed and documented specific internal operating instructions that were used in developing data for the fiscal year 1998 public and private workload allocation report to Congress. The Navy is developing and documenting internal operating procedures for use in developing workload allocation data for the fiscal year 1999 reporting cycle.

    Recommendation: To improve the accuracy of future mandated public- and private-sector workload distribution reports, the Secretary of Defense should direct that the Secretaries of the military departments and commanders of the defense agencies establish and document internal operating procedures for collecting data and reporting public and private sector depot-level workload distribution. The procedures should clearly identify the specific commands and activities responsible for submitting data and describe the records and systems from which documentation will be pulled and the minimum documentation to be retained for followup. Procedures should also require monitoring of the implementation, to ensure consistency of reporting between the services, and facilitate timely and accurate collection of data for the next annual report.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: On November 23, 1998, OSD issued clarifying guidance to the military services to facilitate data collection and promote more accurate and consistent reporting. The instructions specified that funding for the installation of parts for modifications and upgrades of safety and performance enhancements should be included as a matter of DOD policy. GAO's report on the fiscal year 1998 workload allocation report (GAO/NSIAD-99-154) concluded that while DOD issued the suggested guidance, the military departments continued to experience difficulties developing complete and consistent reports of funding for the installation of modifications and upgrades.

    Recommendation: To improve the accuracy of future mandated public- and private-sector workload distribution reports, the Secretary of Defense should establish milestones for issuing clarifying instructions stating whether or not installation of modification and upgrade hardware financed with procurement appropriation funding should be included in future public and private workload distribution reports and ensure consistency in reporting among the public and private sectors. The milestones should be established to allow for timely collection and reporting of data for the next congressional reporting cycle.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: On November 23, 1998, OSD issued guidance to the military services to facilitate data collection and to promote more accurate reporting during the fiscal year 1998 congressional reporting cycle. In addition, OSD held supplemental working group meetings to discuss and clarify specific reporting instructions. For example, during the supplemental workgroup meetings, OSD discussed reporting requirements for medical support equipment. As a result, the Defense Health Agency reported on these workloads for the fiscal year 1999 reporting cycle. Lastly, OSD officials clarified that contract administration costs are not to be considered as factors of production and therefore, instructed the services that such costs should not be included in determining the public- and private-sector workload distribution reports.

    Recommendation: To improve the accuracy of future mandated public- and private-sector workload distribution reports, the Secretary of Defense should establish milestones and issue guidance to resolve questions concerning responsibilities for reporting depot-level maintenance funding for: (1) classified and intelligence programs; (2) medical support equipment; (3) space systems software; and (4) contract administration. The milestones should be established to allow for timely collection and reporting of data for the next congressional reporting cycle.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: In November 1998, OSD issued guidance specifying that all depot maintenance work was to be reported, regardless of where the work was performed, including all work at non-working-capital funded maintenance facilities, and facilities primarily devoted to purposes other than depot-level maintenance. A subsequent GAO report (GAO/NSIAD-99-154) indicates that problems persist in the services' efforts to accurately and consistently define and report such work conducted at nondepot locations. For example, the amount of depot maintenance work conducted at Army field activities was understated, while the total amount of such work cannot be readily determined. Additionally, the Navy did not report any of the work conducted at its Trident Refit Facilities, even though these facilities were designed to support incremental depot overhauls and repairs. OSD commented that it intended to issue further clarifying guidance to address these problems prior to the next congressional reporting cycle.

    Recommendation: To improve the accuracy of future mandated public- and private-sector workload distribution reports, the Secretary of Defense should direct the Secretaries of the military departments to develop methodologies for aggregating and reporting the amount of funding--regardless of the source of funding--for depot-level work accomplished at non-working capital funded repair sites, including Navy Trident Refit Facilities, Army Integrated Sustainment Maintenance Activities, and other similar repair sites prior to the next congressional reporting period.

    Agency Affected: Department of Defense

 

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