Defense Depot Maintenance:

DOD Shifting More Workload for New Weapon Systems to the Private Sector

NSIAD-98-8: Published: Mar 31, 1998. Publicly Released: Mar 31, 1998.

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Pursuant to a congressional request, GAO reviewed: (1) the Department of Defense's (DOD) policy and implementation plans for allocating depot-repair workloads for new and upgraded weapon systems between the public and private sectors; and (2) the process it uses to make source-of-repair decisions.

GAO noted that: (1) overall, its work shows that DOD is moving to greater reliance on the private sector for depot support of new weapon systems and major upgrades; (2) this condition reflects DOD's shift from past policies and practices, which generally preferred the public sector; (3) DOD officials say that DOD is doing this within the framework of existing legislative requirements, while seeking legislative changes that would allow it to make greater use of the private sector; (4) GAO found that, in those programs where source-of-repair decisions have been made or where a specific source of repair is being strongly favored, these determinations were not always well supported; (5) further, weaknesses existed in guidance for implementing the decisionmaking process; (6) of 71 new system acquisition programs reviewed, 46 programs have made a source-of-repair decision or are strongly leaning toward one sector or the other; (7) of the 46 programs, 33 are selecting the private sector for most repairs and 13 are selecting the public sector; (8) the other programs reviewed have either selected a mixed workload utilizing both public and private sectors or are undecided; (9) uncertainty and unresolved issues related to DOD policy guidance, core capabilities, and DOD's belief there may be changes in legislation relating to depot workload allocation have caused several of the large acquisition programs to defer long-term support decisions; (10) in lieu of making a decision, these programs were opting for some type of interim contractor support arrangement that places initial support responsibilities with the original equipment manufacturers; (11) significant weaknesses exist in DOD's implementation of the decisionmaking process for determining depot maintenance strategies for new systems; (12) GAO's review of programs where source-of-repair decisions have been made showed that key factors were not always taken into account during the decision process nor, when they were, were they always consistently applied across programs; (13) for example, cost comparisons between public and private support options were not always done as required or were inconclusive; (14) inconsistencies in the decisionmaking process are partly attributable to changing and contradictory guidance for making source-of-repair decisions and uncertainties regarding public depot core capability requirements; and (15) DOD revised its primary guidance in October 1997 and continues to examine other possible changes.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Revisions to DOD Regulation 5000.2-R were finalized in June 2001. Revisions included expanded sections on source-of-repair guidance, single manager responsibilities, and specific cross-references to related core policy and DOD Directive 4151.18. DOD completed its review of core policy and implementation in February 2001. The Services revised policies and procedures for making source-of-repair decisions which are designed to integrate logistics support decisions with acquisition milestones.

    Recommendation: To provide for consistent and comprehensive source-of-repair decisions, the Secretary of Defense should direct that action be taken to clarify the inconsistencies among DOD Regulation 5000.2-R, DOD Directive 4151.18, service implementing instructions, and provisions in the 1998 Defense Authorization Act. In taking this action, at a minimum, the approach for analyzing core, cost, readiness, and sustainability factors for making source-of-repair decisions should be clearly defined.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: Source-of-repair guidance and acquisition policies continue to evolve and be revised. In response to this recommendation, DOD officials stated that, when there are changes in guidance, the service secretaries will determine whether previous decisions must be revisited. They stated that the services continually assess and make changes in source-of-repair for affordability, and to maintain depot capability and efficiency. They further stated that they plan to review prior decisions when appropriate during future program decision points. Thus, while there are no announced plans to reassess the adequacy of all decisions made over the 2-year period before the report's issue date, by agreeing to reassess source-of-repair decisions at major decision points, DOD is partially responsive to the recommendation.

    Recommendation: The Secretary of Defense should direct that the service secretaries assess the adequacy of the analyses supporting source-of-repair decisions made over the last 2 years. These reviews should be done based on the previously recommended clarifications to the decisionmaking approach. Where weaknesses in the analysis are identified, new analyses should be done and adjustments made to the source-of-repair decisions where appropriate and feasible.

    Agency Affected: Department of Defense


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