This report responds to questions that Congress raised about Air Force engine maintenance and repair work currently performed at Kelly Aviation Center (KAC) and the potential transfer of that work to another location. In 1999, Oklahoma City Air Logistics Center (OC-ALC) awarded a contract to KAC to perform work, including depot-level maintenance, repair, and overhaul on TF39 engines, which are typically used for C-5 Galaxy aircraft; T56 engines, which are typically used for C-130 aircraft; and fuel accessories on these engines. The Air Force estimates the total expenditure under the contract for this work to be $3.7 billion from February 16, 1999, through December 1, 2010. The contract is not to exceed 15 years (the contract had an initial 7-year ordering period that could be extended to 15 years or reduced to 5 years based on performance), and will expire not later than February 15, 2014. The Air Force will need to determine how to conduct the engine maintenance work after the term of the contract ends. Congress requested that we review the potential transfer of the engine maintenance and repair workload from KAC. Our objectives were to determine (1) the extent to which the Air Force has identified the costs and benefits of possibly moving engine maintenance for selected aircraft from KAC and (2) the steps the Air Force has taken and plans to take to mitigate any potential aircraft readiness risks that might occur if the work is moved.

We found that the Air Force is assessing various options (DOD depot only, contractor only, or a combination of the two) for performing the engine repair after the term of the existing contract ends, and is conducting separate cost-benefit analyses for the TF39 and T56 engine maintenance work. Under Air Force guidance for depot-level source-of-repair selection, cost is to be considered, although a formal costing effort is not always necessary. The Air Force has decided to conduct a business case analysis to determine how to best accomplish the long-term, depot-level maintenance for these engines. Air Force officials estimate that the source-of-repair decision will be made by January 2012, but if this decision designates some or all of the work to be competitively sourced, the final decision on the source of repair could be later because of steps in the competitive bidding process. These steps typically include soliciting proposals for the work, receiving and evaluating proposals from potential providers of the work, and awarding the contract. Regarding any potential readiness risks that may result from transferring the engine work, we found that the Air Force recognizes the importance of risk mitigation planning. However, the Air Force has not developed specific risk mitigation plans for the TF39 or T56 engines because it is still assessing how the work will be performed after the term of the contract ends. DOD guidance identifies risk assessment as a factor to be considered when assigning maintenance work, and Air Force guidance requires that a business case analysis include sensitivity and risk analyses. If a decision were made to transfer the work, Air Force officials said that the service could apply risk mitigation strategies similar to those it has successfully used in the past. These strategies have included increasing its shelf stock of component parts and identifying in advance other depot and commercial facilities capable of performing specific workloads. We are not making any recommendations in this report.