Army Industrial Facilities:

Workforce Requirements and Related Issues Affecting Depots and Arsenals

NSIAD-99-31: Published: Nov 30, 1998. Publicly Released: Nov 30, 1998.

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Pursuant to a congressional request, GAO reviewed: (1) the Army's basis for personnel reductions planned at its depots during fiscal years 1998-1999; (2) the Army's progress in developing an automated system for making maintenance depot staffing decisions based on workload estimates; (3) factors that may impact the Army's ability to improve the cost-effectiveness of its maintenance depot's programs and operations; and (4) workload trends, staffing, and productivity issues at the Army's manufacturing arsenals.

GAO noted that: (1) the Army did not have a sound basis for identifying the number of positions to be eliminated from the Corpus Christi Depot; (2) this was particularly the case in determining the number of direct labor personnel needed to support depot workload requirements; (3) Army efforts to develop an automated workload and performance system for use in its depots have proceeded to the point that required certification to Congress of the system's operational capability is expected soon; (4) however, system improvements that are under way would enhance the system's capabilities for determining indirect and overhead personnel requirements in Army depots; (5) other issues and factors affecting the Army's basis for workload forecasting or the cost-effectiveness of its depot maintenance programs and activities are: (a) an increased reliance on the use of regional repair activities and contractors for work that otherwise might be done in maintenance depots; (b) declining productivity; (c) difficulties in effectively using depot personnel; and (d) nonavailability of repair parts; (6) use of the arsenals has declined significantly over the years as the private sector has assumed an increasingly larger share of their work; (7) according to Army officials, as of mid-1998, the Army's two weapons manufacturing arsenals used less than 24 percent of their industrial capacity, compared to more than 80 percent 10 years ago; and (8) the Army's depots and arsenals face multiple challenges and uncertainties, and the Army has inadequate long-range plans to guide its actions regarding its industrial infrastructure.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In June 1999, the Army certified to Congress that it had successfully completed implementation of the Army Workload and Performance System at its 5 Army depot maintenance facilities. This certification of operational effectiveness included a GAO-suggested enhancement providing automated systems capability to determine indirect labor and overhead personnel requirements based on projected direct labor requirements. Ongoing enhancements to the automated system should enable the Army to target future personnel requirements and the identification of related excesses or shortages by specific job skills. The Army expects to complete development and implementation of these additional enhancements by January 2003.

    Recommendation: The Secretary of the Army should complete incorporating an analysis of overhead requirements into the Army Workload Performance System prior to certifying the system, pursuant to section 364.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: In response to GAO's preliminary audit findings, the Commanding General, Army Materiel Command sent a message to subordinate commanders responsible for workloading and funding Army maintenance depots. While the Army recognized that priorities often change with little notice due to changing world conditions, AMC officials told us they are continuing to emphasize the importance of accurate and consistent workload forecasts. Accordingly, the Army has included an objective in its evolving strategic plan suggesting that customers deliver at least 80 percent of forecasted workload requirements.

    Recommendation: The Secretary of Defense should require the Secretary of the Army to establish policy guidance to encourage Army Materiel Command customers to adhere to workloading plans, to the extent practicable, once they are established and used as a basis for the development of depot maintenance rates.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Army completed a congressionally mandated study on depot maintenance proliferation concluding that depot maintenance work conducted under special repair authority at various field activities totaled about 40 staff years, which the Army considered insignificant, when compared to the 10,000 staff years of work conducted by the five major depots. GAO's evaluation of that study determined that the Army had underestimated the volume of this work, at least partly because the information systems that the Army used to develop its estimate were faulty. In response to GAO's recommendations the Army announced plans to centrally control and coordinate Army-wide depot maintenance requirements, allocate work to only those activities with existing and proven capability and capacity, and eliminate financial incentives that encourage performance of depot-level maintenance at non-depot locations. Further in a March 2000 message, the Acting Deputy Chief of Staff for Logistics announced plans to reevaluate all existing special repair authorities. As items are inducted into the centralized management program, existing special repair authorities will be terminated and requests for new special repair authority will be denied.

    Recommendation: The Secretary of Defense should require the Secretary of the Army to require reevaluation of special repair authority approvals to accomplish depot maintenance at field activities to determine the appropriateness of prior underutilized capacity in Army depots.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: Army leadership is working with each depot, in cooperation with cognizant employee labor unions to develop and sustain a cross-trained and multi-skilled workforce. In addition, the evolving strategic plan for the depot maintenance enterprise includes appropriate goals and objectives for developing a sustained, multi-skilled workforce to achieve more cost-effective support of the Army's future depot maintenance workload requirements. While the depots have been unable to hire new employees for the last 13 years, the strategic plan calls for the Army to develop plans for hiring and training skilled employees to replace workers that have left federal employment and those that are expected to retire in the near future.

    Recommendation: The Secretary of Defense should require the Secretary of the Army to encourage depot managers to pursue worker agreements to facilitate multi-skilling or multi-crafting in industrial facilities.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: The Army's included in its new strategic plan for depot maintenance programs an objective to make Army depot rates more competitive by eliminating one half of the non-value added costs. This initiative will focus on actions to reengineer depot processes and make them more efficient and productive as well as to reduce nonproductive time, including excessive overtime, since this is a continuing problem in several Army depots.

    Recommendation: The Secretary of Defense should require the Secretary of the Army to direct the depot commanders to develop specific milestones and goals for improving worker productivity and reducing employee overtime rates.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: The Army concurred with the recommendation regarding improving the efficiency and cost-effectiveness of its arsenals and has taken action to implement them. In October 1999, the Office of the Secretary of the Army issued a memorandum establishing guidelines for the retention, management, and financing of Army-owned arsenals and factories. The guidelines specified that component parts and assemblies required by the Army, except individual items within a contractor supported weapon system, shall be made in Army arsenals when economically feasible. Also stated that the Arsenals' cost proposals should be evaluated on the basis of direct costs and the portion of indirect costs attributed to the increased number of items to be manufactured. Lastly, the guidelines provided that the Army may directly fund the cost of underutilized manufacturing capability retained in excess of peacetime production requirements.

    Recommendation: The Secretary of Defense should require the Secretary of the Army to: (1) assess the potential for improving capacity utilization and reducing excess arsenal capacity; and (2) evaluate options for reducing costs and improving the productivity of the remaining arsenal capacity.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: In June 1999, the Army announced plans to centralize the management and coordination of depot maintenance workloads. Under the emerging national maintenance program, work will be allocated on the basis of best value analysis. Work will be distributed to regular maintenance depots, national maintenance contractors, and some unknown number of local-level maintenance providers. The Army's January 2000 Depot Maintenance Strategic Plan provides a framework and timeliness to ensure effective and timely implementation of this recommendation.

    Recommendation: The Secretaries of Defense and the Army should determine the extent to which: (1) the Army's logistics and manufacturing capabilities are of such importance that they need to be retained in-house; and (2) depot maintenance work is to be done at regular depots, rather than lower-level maintenance.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: In June 1999, the Army announced plans to centralize the management and coordination of depot maintenance workloads. Under the emerging national maintenance program, work will be allocated on the basis of best value analysis. Work will be distributed to regular maintenance depots, national maintenance contractors, and some unknown number of local-level maintenance providers. The Army's January 2000 Depot Maintenance Strategic Plan provides a framework and timeliness to ensure effective and timely implementation of this recommendation.

    Recommendation: The Secretaries of Defense and the Army should determine the extent to which: (1) the Army's logistics and manufacturing capabilities are of such importance that they need to be retained in-house; and (2) depot maintenance work is to be done at regular depots, rather than lower-level maintenance.

    Agency Affected: Department of Defense

  9. Status: Closed - Implemented

    Comments: In January 2000 the Army's Deputy Chief of Staff for Logistics issued the Army Depot Maintenance Enterprise Strategic Plan which provided for centralized management of depot maintenance workloads as defined by federal statute, including the allocation of work between organic depots, private sector firms and regional repair facilities. Other strategic issues addressed the: (1) adequacy of source-of-repair decisions; (2) capability of depot maintenance workforce to meet future requirements; (3) improved management of materiel and supplies required for the performance of depot maintenance workloads; and (4) techniques for making organic depots more competitive with private sector maintenance providers. To complement the strategic plan, the Army developed 20 individual action plans, including short-term milestones to address each of the strategic issues. While the Army did not develop a detailed strategic plan for its manufacturing arsenals, the Office of the Secretary of the Army, in October 1999, issued a policy statement that established clear guidelines for the retention, management, and financing of Army-owned arsenals and factories. The policy specified that component parts and assemblies required by the Army shall be made in Army arsenals when economically feasible. The Secretary also endorsed the use of direct funding to cover the costs associated with underutilized manufacturing capability retained for mobilization purposes.

    Recommendation: The Secretary of the Army should develop and issue a clear and concise statement describing a long-range plan for maximizing the efficient use of the remaining depots and arsenals. At a minimum, the plan should include requirements and milestones for effectively downsizing the remaining depot infrastructure, as needed, and an assessment of the overall impact from completing plans and initiatives that advocate increased use of private sector firms and regional repair facilities for depot-level workloads.

    Agency Affected: Department of Defense: Department of the Army

  10. Status: Closed - Implemented

    Comments: In June 1999, the Army certified to Congress that it had successfully completed implementation of the Army Workload and Performance System at its five Army depot maintenance facilities. This certification of operational effectiveness included a GAO-suggested enhancement providing automated systems capability to determine indirect labor and overhead personnel requirements based on projected direct labor requirements. Ongoing enhancements to the automated system should enable the Army to target future personnel requirements and the identification of related excesses or shortages by specific job skills. The Army expects to complete development and implementation of these additional enhancements by January 2003.

    Recommendation: The Secretary of Defense should require the Secretary of the Army, in making future personnel reductions in Army depots, to more clearly target specific functional areas, activities, or skill areas where reductions are needed, based on workload required to be performed.

    Agency Affected: Department of Defense

  11. Status: Closed - Implemented

    Comments: In January 2000 the Army's Deputy Chief of Staff for Logistics issued the Army's Depot Maintenance Enterprise Strategic Plan. The plan was issued in response to GAO's recommendations and is expected to improved the long-term viability of the Army's depot maintenance system. To complement the plan, the Army developed 20 individual action plans which included both short and long term milestones.

    Recommendation: If a decision is made to retain in-house capabilities, the Secretary of the Army should develop a long-term strategy, with shorter term milestones for improving the efficiency and effectiveness of Army industrial facilities, that would, at a minimum, include those recommendations stated in chapters 2 through 4 of this report.

    Agency Affected: Department of Defense: Department of the Army

 

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