Under 10 U.S.C. 2466, the military departments and defense agencies can use no more than 50 percent of annual depot maintenance funding for work performed by private-sector contractors. The Department of Defense (DOD) must submit a report to Congress annually on the division of depot maintenance funding between the public and private sectors during the preceding fiscal year and projected distribution for the current and ensuing fiscal years. As required, GAO reviewed the report submitted in April 2005 and is, with this report, submitting its views to Congress on whether (1) the military departments complied with the "50-50 requirement" for fiscal year 2004 and (2) the projections for fiscal years 2005 and 2006 represent reasonable estimates. Additionally, GAO is assessing whether the data currently provided in DOD's annual 50-50 report are useful to Congress in exercising its oversight role.
Matter for Congressional Consideration
|If Congress determines, for oversight purposes, that improvements are needed in the reliability and usefulness of DOD's annual report on depot maintenance funding allocations, Congress may wish to require the Secretary of Defense to enhance its annual 50-50 report to Congress as stated in our recommendations. Specifically, this enhanced reporting should include (1) variance analyses of significant changes in depot maintenance workload allocations from the prior year's report and the reasons for these variances; (2) analysis of historical workload allocation trends; (3) explanation of the methodologies used to estimate workload allocation projections; and (4) plans to ensure continued compliance with the 50-50 requirement, including the identification of decisions on new weapon systems maintenance workload sourcing that could be made to support remaining within the 50 percent threshold. Additionally, the enhanced reporting should address the corrective actions DOD is taking to improve the persistent deficiencies we have identified in DOD's 50-50 data reporting processes.||While Congress has not amended the annual 50-50 reporting requirement as we recommended, it has been reevaluating the 50-50 reporting requirement as an oversight tool. Specifically, the Senate Report on the National Defense Authorization Act for Fiscal Year 2008 required GAO to review and make recommendations regarding the reports, assessments, analyses, and documents used for determining the compliance of DOD and the military departments with the 50-50 percentage limitation. The committee expressed particular interest in learning whether there are better methods than the current system for meeting its oversight responsibilities of DOD compliance with the 50-50 requirement. In response to the Senate Report, we issued a briefing document in May 2008 (GAO-08-761R).|
Recommendations for Executive Action
|Department of Defense||1. The Secretary of Defense, in future accountability reports, should disclose a management control weakness in DOD's 50-50 data reporting processes along with planned corrective actions to improve management control in (1) management review, attention, and policies sufficient to ensure accurate and complete 50-50 reporting; and (2) independent review and validation of 50-50 data by service audit agencies or other third parties, with auditor-identified data inaccuracies corrected prior to submission of the annual report to Congress; and (3) annual training on 50-50 policies and procedures for all individuals participating in data gathering and reporting.|
|Department of Defense||2. The Secretary of Defense should enhance DOD's annual 50-50 report submitted to Congress. This enhanced reporting should include (1) variance analyses that identify significant changes in depot maintenance workload allocations from the prior year's report and the reasons for these variances; (2) analysis of historical trends in depot maintenance workload allocations; (3) explanation of the methodologies used to estimate workload allocation projections for the current and ensuing fiscal years; and (4) the military departments' plans to ensure continued compliance with the 50-50 requirement, including the identification of decisions on new weapon systems maintenance workload sourcing that could be made to support remaining within the 50 percent threshold.|