United States General Accounting Office

GAO Report to Congressional Requesters

March 1996 CLOSING

MAINTENANCE DEPOTS

Savings, Workload, and

Redistribution Issues

GAO/NSIAD-96-29

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-262045 

March 4, 1996

The Honorable Herbert Bateman

Chairman

The Honorable Norman Sisisky

Ranking Minority Member

Subcommittee on Military Readiness

Committee on National Security

House of Representatives

At your request, we reviewed selected issues related to the maintenance depot closures and

realignments that resulted from decisions made by the Base Commission on Closure and

Realignment. We found that (1) the Department of Defense (DOD) substantially reduced its

savings estimates from closing maintenance depots, but is still overestimating the savings that

will probably be achieved; (2) the number of employees involuntarily separated as a result of

past closure decisions was minimized because of a comprehensive but costly employee

assistance program; and (3) DOD is not using public-public or public-private competitions as a

means of allocating public depot workloads. The report includes recommendations that, if

implemented, should enable DOD to more cost-effectively redistribute closing depots’

workloads.

We are sending copies of this report to the Chairmen and Ranking Minority Members, House

and Senate Committees on Appropriations, House Committee on National Security and Senate

Armed Services Committee, and Senate Committee on Governmental Affairs and House

Committee on Government Reform and Oversight; the Director, Office of Management and

Budget; and the Secretaries of Defense, the Army, the Air Force, and the Navy.

Please contact me at (202) 512-8412 if you have any questions. The major contributors to this

report are listed in appendix II.

David R. Warren

Director, Defense Management Issues
Executive Summary

Purpose The Department of Defense (DOD) currently spends $15 billion annually on

maintaining aircraft, ships, tracked and wheeled vehicles, and other

equipment. However, it believes it can reduce maintenance costs by better

matching its depots’ workload capacity with current maintenance

requirements. Accordingly, as a result of the base closure and realignment

process, DOD is closing 15 of its 36 major maintenance depots and is

transferring their workloads to other depots or the private sector.

The Chairman and Ranking Minority Member, Subcommittee on Military

Readiness, House Committee on National Security, requested that GAO

(1) assess the reliability of DOD’s depot closure cost and savings estimates;

(2) obtain information on the policies and programs used to provide

employment and training opportunities to employees at closing depots;

(3) determine if the military services can increase savings by using

competitions between DOD depots (public-public competitions) or between

DOD depots and the private sector (public-private competitions) when

redistributing closing depots’ workloads; and (4) determine if the military

services adequately consider other services’ depots when they use

methods other than competition to redistribute the workloads. The scope

of this report is limited to the 10 depots that were recommended for

closure during the first 3 rounds of the base closure process.

Background Since the early 1970s, GAO and others have repeatedly reported on the

redundancies and excess capacity that exist in DOD’s depot maintenance

operations and have recommended increased integration and centralized

management to resolve the problem. However, the military services have

historically preferred to retain control of their depot maintenance

operations and allocate the workload for key systems to their own depots,

which frequently duplicate capabilities in other services’ depots.

Two things have exacerbated DOD’s excess capacity problem in recent

years. First, changing world conditions and other factors have significantly

reduced DOD’s depot maintenance requirements. Second, the private

sector, which has seen its production workload for new systems and

equipment decline as a result of the same conditions, is seeking more of

the depot maintenance workload.

Although some downsizing has been accomplished by mothballing or

disposing of equipment and by vacating buildings or converting them to

other uses, the problem of excess capacity has, for the most part, been

addressed through the base closure and realignment process. Three Navy

Page 2 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

shipyards, three naval aviation depots, one Air Force depot, and three

Army depots are being closed as a result of the first three rounds of the

base closure process. In addition, one Army depot, two Air Force depots,

one Navy shipyard, and one naval aviation facility are being closed as a

result of the 1995 round.

Results in Brief DOD has substantially reduced its initial estimates for the net savings that

depot closures will achieve during the 6-year implementation period

allowed by law and, to a lesser extent, for the annual savings after the

implementation period has been completed. Although DOD believes its

estimates have improved, current estimates still do not accurately reflect

potential savings because (1) some closure-related costs are not included

and (2) some estimates have not been updated to reflect major changes in

such areas as the expected cost of doing the work after it is transferred to

new sources of repair. As a result, the magnitude of savings is uncertain.

With the prospects of losing their jobs when depots close, employees face

a number of career and life-altering decisions. However, by offering a

comprehensive and costly outplacement program that provides assistance,

benefits, and separation incentives, DOD has greatly facilitated this

transition and has thus far successfully limited the number of depot

employees who were involuntarily separated. In addition, although jobs

have not always been available in the same geographical area, they have

often been available for employees willing to relocate.

The military services can substantially increase their savings by ensuring

that closing depots’ workloads are transferred to the most cost-effective

source of repair. They can accomplish this goal by (1) conducting

public-public and public-private competitions for the work or (2) by

analyzing the cost-effectiveness of moving the work to not only their own

depots but also those of the other services. In addition, they can improve

the efficiency of their operations and reengineer workloads that are

transferred from closing depots without competition.

However, neither DOD nor the military services have taken action to

maximize these savings. For example, GAO found that (1) public-public and

public-private competition programs were discontinued in May 1994;

(2) the Air Force is implementing a privatization-in-place plan that will

likely increase maintenance costs; (3) the military services rarely consider

interservicing alternatives (one service relying on another service for

depot maintenance support) when they redistribute workloads; and

Page 3 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

(4) neither DOD nor the services require depots to reengineer workloads

they receive from closing depots.

Principal Findings

Savings Estimates Have

Decreased

DOD and the base closure and realignment commissions used the Cost of

Base Realignment Actions model to develop preliminary cost and savings

estimates for each depot closure. After the President and Congress

accepted the commissions’ recommendations, the services provided

updated—and what they considered to be more reliable—cost and savings

estimates in their annual budget submissions to Congress. One major

difference between the preliminary estimates and the budget estimates

was that the model used to develop the preliminary estimates excluded

environmental cleanup costs, which DOD is liable for regardless of whether

a depot closes or not.

Although not directly comparable, the services’ budget estimates of total

net savings that the 10 depot closures will achieve during the 6-year

implementation are 85 percent less than the commissions’ estimates

($222.4 million versus $1,437.8 million). The primary reasons for this

difference are (1) a $711.1-million reduction in the amount of gross savings

that are expected during the implementation period resulting from such

factors as fewer than expected reductions in the number of personnel

eliminated; (2) the addition of a one-time environmental cost of

$409.1 million that was excluded from the commission’s estimates; and

(3) a $100.5-million increase in nonenvironmental costs for such things as

relocating civilian employees. The budget estimates for the total annual

savings after the implementation period are 10 percent less than the

commissions’ estimates ($656 million versus $729 million).

Current Estimates Still

Overstate Savings

Current estimates may be better than those used by base closure and

realignment commissions, but they still do not accurately reflect the costs

and savings that are likely to occur. First, the estimates exclude some

closure-related costs that are being financed through the Defense Business

Operations Fund or with operation and maintenance funds. Second, the

services have not updated their savings estimates since their initial budget

estimates, even though significant changes have occurred in such items as

Page 4 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

the expected cost of accomplishing depot maintenance work after it is

moved from a closing depot to a new source of repair.

In addition, DOD lacks effective tools for estimating the recurring costs of

depot maintenance operations in a post-closure environment—a condition

that could cause the services to select more costly alternatives when

deciding how to redistribute closing depots’ workloads. For example, the

decision to privatize-in-place the depot maintenance workload at the

closing Air Force Aerospace Guidance and Metrology Center may result in

an increase rather than decrease in costs.

Further, DOD does not require the military services to routinely accumulate

and update actual savings information on depot closures and has not

provided guidance on (1) how to compute actual savings after a depot is

closed or (2) what records should be retained for determining the

magnitude of the actual savings. As a result, DOD may not have reliable

information on the costs and savings associated with depot closures, even

after the closures are completed.

Efforts to Limit

Involuntary Separations

Have Been Successful, but

Costly

DOD has thus far successfully limited the number of employees who have

been involuntarily separated as a result of depots closures. As of July 31,

1995, 20,692 workers had either found other federal jobs or left

government service as a result of depot closures. Altogether, 

694 employees, or about 3.4 percent of the total, were separated through

the reduction-in-force process; 11,286, or about 54.5 percent, found

another job through such programs as DOD’s priority placement program;

and 8,712, or about 42.1 percent, separated voluntarily. To a large extent,

this success can be attributed to legislative actions and to the services’

comprehensive outplacement program that includes job placement

assistance, job training opportunities, separation incentive pay for those

who resign or retire voluntarily, and early retirement options.

Although complete data is not available, DOD’s outplacement program is

more costly than programs in most civilian agencies. For example, under

one job placement program, employees at bases that will remain open are

paid as much as $25,000 to retire or resign voluntarily and are then

replaced by employees from closing depots who are relocated at

government expense (at a cost of as much as $65,000 per employee).

According to Office of Personnel Management officials, although civilian

agencies have the legislative authority to provide many of the benefits

Page 5 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

offered by DOD, the high cost of such benefits is a restraining

factor—especially for smaller agencies.

Public Depot Competition

Can Be Used to Increase

Depot Closure Savings

DOD’s public-public and public-private competitions of depot maintenance

workloads have resulted in savings and benefits. Public-public

competitions conducted in 1992 and 1993 for the Sacramento Army

Depot’s workload and public-private competitions for Navy aviation

maintenance between 1987 and 1994 demonstrated that the services can

increase their savings by using such competitions to redistribute closing

depots’ workloads. The primary reasons for this are (1) the competing

depots have an incentive to reengineer a closing depot’s work if they must

compete for it, but do not if the work is simply transferred to them; (2) the

competitions introduce the discipline and incentives of private industry by

creating more of a buyer-seller relationship between the depots and their

customers; and (3) the services can apply lessons learned during the

competitions to similar, noncompeted workloads.

However, the Deputy Secretary of Defense discontinued DOD’s

public-public and public-private competition programs in May 1994. He

stated that DOD’s databases and financial management systems are not

capable of providing the data needed to determine the actual cost of

specific workloads. GAO agrees that DOD has problems with its databases

and financial management systems and completely correcting these

long-standing and well-documented problems is likely to take a long time.

However, in the interim, DOD has taken actions to develop more reliable

cost estimates and is taking further actions that should improve the

competition process.

Interservice Workload

Redistribution Alternatives

Are Rarely Considered

Congress has long been a strong proponent of using interservicing to

streamline and reduce depot maintenance costs. In addition, DOD believes

the greatest potential for savings comes from redistributing closing depots’

workloads. However, the services have not considered interservicing

alternatives for most of the closing depots’ workloads. Instead, most of the

work has been or will be transferred quickly to either the parent services’

remaining depots or the private sector. GAO found that (1) due largely to

service parochialism, DOD has been trying for about 20 years—without

significant success—to interservice depot maintenance workloads;

(2) many workloads, such as Navy ships and large Air Force aircraft, are

not considered susceptible to interservicing; and (3) only about 8 percent

of the susceptible workload is accomplished through interservicing.

Page 6 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

Public-Private

Competitions Not

Used in Allocating

Closing Depot’s

Maintenance

Workloads

Title 10 U.S.C. 2469 provides that competitive procedures that include

public entities be used when privatizing depot maintenance workloads

valued at $3 million or more. DOD canceled its public-private competition

program in May 1994. The Air Force is privatizing the Aerospace Guidance

and Metrology Center’s workload without using competitive procedures

that include public depots. DOD officials expressed differing views on the

statute’s application.

Recommendations GAO recommends that the Secretary of Defense (1) implement procedures

to capture relevant cost and savings data on depot closures; (2) improve

the process for estimating recurring costs of maintenance operations in a

post-closure environment; (3) implement a high-priority program to

resolve internal control deficiencies in depot management systems;

(4) maximize the use of competitive procedures and merit-based selection

criteria that include military depots in determining the most cost-effective

source of repair for workloads that have not yet been transferred from

closing depots; and (5) require the services to reengineer workloads that

are redistributed from closing depots on any basis other than competition,

starting with the largest and most stable workloads.

Agency Comments DOD provided official oral comments. With two exceptions, DOD officials

generally agreed with GAO’s findings and recommendations. First, although

they agreed that costs and savings estimates associated with depot

closures are not completely accurate, they noted it would not be a

cost-effective use of scarce resources to develop more accurate

estimates—especially since the last base closure round has been

completed. GAO believes that accumulating actual cost and savings data or

revising estimates should not be overly cumbersome because depots are

already required to compare their budgeted and actual costs and to

determine the cause of any significant variances. Further, the services

could make more informed and cost-effective workload redistribution

decisions if they had more reliable cost and savings data on past closures.

Second, DOD officials noted that public-private competitions—which GAO

has recommended be reinstituted—were reinstituted through a

November 1994 memorandum from the Deputy Under Secretary of

Defense to the service secretaries implementing 10 U.S.C. 2470. GAO notes

that no such competitions have been conducted since the program was

terminated in 1994. Further, DOD policy prohibits its depots from

Page 7 GAO/NSIAD-96-29 Closing Maintenance Depots
Executive Summary

participating in public-private competitions until the Defense Finance

Accounting Service certifies that adequate financial systems and

procedures are in place to identify and track all costs. Given these and

other factors, GAO continues to believe that DOD has not effectively

reinstituted its public-private competition program and should do so. GAO’s

recent report on the Navy’s implementation of the program includes this

recommendation.1

GAO continues to believe that to identify the most cost-effective source of

repair for transferring maintenance workloads from closing depots, DOD

should maximize the use of competitive procedures that include military

depots.

1

Navy Maintenance: Assessment of the Public-Private Competition Program for Aviation Maintenance

(GAO/NSIAD-96-30, Jan. 22, 1996).

Page 8 GAO/NSIAD-96-29 Closing Maintenance Depots
Page 9 GAO/NSIAD-96-29 Closing Maintenance Depots
Contents

Executive Summary 2

Chapter 1 

Introduction

12

Depot Maintenance Overview 12

Depot Downsizing Has Occurred Largely Through BRAC 14

Objectives, Scope, and Methodology 17

Chapter 2 

Magnitude of Savings

Is Uncertain

20

Net Savings Estimates Have Decreased 20

Budget Estimates Do Not Include Some Costs 22

Budget Savings Estimates Have Not Been Updated 23

DOD Has Not Provided Adequate Guidance on How to Estimate

Savings

24

Conclusions 25

Recommendations 26

Agency Comments 26

Chapter 3 

Efforts to Limit

Involuntary

Separations Have

Been Successful, but

Costly

27

DOD Assistance Eases Employee Transition 27

Depots Have Extensive Employee Outplacement Programs 29

Cost of DOD Outplacement Programs 32

Conclusions 36

Agency Comments 36

Chapter 4 

Public-Public and

Public-Private

Competitions Can Be

Effective Tools for

Redistributing

Workloads

37

Sacramento Army Depot Public-Public Competitions 37

Sacramento Competitions Produced Substantial Price Reductions 39

Strengthened Buyer-Seller Relationship Has Generated

Additional Price Reductions

43

Price Reductions Enhanced Competitions’ Credibility 44

DOD’s Rationale for Canceling Competition Program Is

Questionable

44

Conclusions 48

Recommendation 49

Agency Comments 49

Page 10 GAO/NSIAD-96-29 Closing Maintenance Depots
Contents

Chapter 5 

Workload

Redistribution

Decisions Did Not

Adequately Consider

Some Alternatives

50

Interservicing Is Encouraged, but Frequently Not Considered 50

Navy Did Not Use Competition or Adequately Consider

Interservicing Alternatives

53

Public-Private Competitions Not Used in Allocating AGMC Depot

Maintenance Workloads

55

Conclusions 56

Recommendations 56

Agency Comments 57

Appendixes Appendix I: History of the Services’ Depot Systems 60

Appendix II: Major Contributors to This Report 68

Tables Table 1.1: Maintenance Depots Identified for Closure by the 1988,

1991, and 1993 BRAC Rounds

16

Table 2.1: Differences Between the 6-Year Cost and Savings

Estimates in Commission Reports and the Latest Budget Estimate

Submission for 10 Depots

21

Table 3.1: Depot Attrition and Job Placement 28

Table 3.2: Major Transition Benefits Available to DOD Workers 33

Table 3.3: Job Training Partnership Act Grants for Closing Depots 35

Table 4.1: Results of the Sacramento Army Depot Workload

Competitions

38

Table 4.2: Initial Estimates of Price Reductions That Resulted

From Sacramento’s Workload Competitions

40

Figure Figure 1.1: DOD’s Depot Maintenance System 14

Abbreviations

AGMC Aerospace Guidance and Metrology Center

BRAC Base Closure and Realignment Commission

CECOM Army Communications-Electronics Command

COBRA cost of base realignment actions

DOD Department of Defense

GAO General Accounting Office

VSIP voluntary separations incentive pay

Page 11 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

The Department of Defense (DOD) annually spends $15 billion1 for depot

maintenance work that involves the repair, overhaul, modification, and

upgrading of aircraft, ships, tracked and wheeled vehicles, and other

equipment. This work, which also includes limited parts manufacturing,

technical support, testing, reclamation, and software maintenance, is

performed by both public depots and the private sector.

A combination of factors, including declining maintenance requirements

and increasing pressures to outsource more and more work to the private

sector, has caused DOD to downsize its depot maintenance infrastructure.

This downsizing has taken place largely through the base closure and

realignment (BRAC) process.

Depot Maintenance

Overview

Prior to downsizing, DOD had 36 major maintenance depots—8 Army

depots, 6 naval aviation depots, 8 shipyards, 2 ship repair activities, 3 Navy

warfare centers, 7 Air Force depots, and 2 Marine Corps depots—as well

as other industrial facilities with a depot maintenance mission. This total

includes 15 depots that are closing, 6 of which have already ceased

maintenance operations. It does not include an Air Force depot

maintenance activity in Colorado Springs that performs software

maintenance for space systems or most specialized government-owned,

contractor-operated repair depots.

These depots, which represent a large government investment, have

historically had more extensive technical capability—in terms of the

facilities, equipment, and personnel—than lower maintenance levels.2

However, in recent years, various programs within the military services

have resulted in blending some of the maintenance levels.

In addition to in-house depot maintenance capability, DOD also contracts

with thousands of firms, including both repair houses and original

equipment manufacturers. These firms supply parts and provide direct

maintenance support in both their own facilities and government facilities.

1

This total includes $2 billion that is spent installing various weapon systems and equipment

modifications and upgrades—depot-level maintenance functions that are budgeted under procurement

appropriations rather than operation and maintenance appropriations.

2

The other two levels are (1) organizational maintenance, where members of operational military units

make functional checks and then adjust, service, or replace faulty parts and (2) intermediate

maintenance, where military personnel perform more extensive repairs—many of which require a

shop environment.

Page 12 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

In our April 1994 testimony,3 we reported that DOD’s estimate of the

workload mix between the public and private sectors—about 35 percent

to the private sector and the remainder to public depots—understated the

portion of private sector funding. We noted that an actual accounting of

the amount going to the private sector, either directly or through the

purchase of repair parts or secondary services, was not readily available

because of limitations in the way DOD collected data. However, based on

our review of available data, we projected that more than 50 percent of

depot maintenance funds goes to the private sector.

Figure 1.1 depicts DOD’s major depots, which collectively employ about

100,000 civilian employees and 2,000 military personnel. A brief history of

each military service’s depot system is provided in appendix I.

3

Depot Maintenance: Issues in Allocating Workload Between the Public and Private Sectors

(GAO/T-NSIAD-94-161, Apr. 12, 1994).

Page 13 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

Figure 1.1: DOD’s Depot Maintenance System

= Army Depot (AD)


= Navy Air Depot (NADEP)


= Navy Shipyard (NSY)


= Air Force-Air Logistics Center (ALC),


 Aerospace Guidance and 


 Metrology Center (AGMC),


 Aerospace Maintenance and 


 Regeneration Center (AMARC)


Keyport (NUWC)

Puget Sound Shipyard (NSY)

Mare Island (NSY)

Sacramento (ALC)


Sacramento (AD)

Concord (NWS) Almeda


(NADEP)

Ogden (ALC)

Tooele (AD)

Long Beach (NSY)

Barstow


(MCLB)

Seal Beach


(NWS)

North Island (NADEP)

Tuscon


(AMARC)

San Antonio (ALC)

Oklahoma


City (ALC)

Red River (AD)

Corpus


Christi (AD)

Anniston


(AD) Warner Robins (ALC)

Pensacola


(NADEP) Jacksonville (NADEP)

Albany


(MCLB)

Charleston (NWS)

Charleston (NSY)

Louisville


(NSWC)

Lexington-Bluegrass (AD)

Newark


(AGMC)

Norfolk (SPAWAR)

Cherry Point (NADEP)

Norfolk (NADEP) & (NSY) 

Yorktown (NWS)

Earle (NWS)

Mechanicsburg (DLA)


Philadelphia (NSY)


Letterkenny (AD)

Pearl Harbor NSY


Guam Ship Repair Facility


Yokosuka Ship Repair Facility

Tobyhanna (AD)

= Marine Corps Logistics Base (MCLB)


= Naval Weapons Station (NWS)


= Naval Surface Warfare Center (NSWC)


= Naval Undersea Warfare Center (NUWC)


= Defense Logistics Agency


= Space and Naval Warfare Systems Command (SPAWAR)

Portsmouth


(NSY)

San Diego (SPAWAR)

Crane


(NSWC)

Depot Downsizing

Has Occurred Largely

Through BRAC

A combination of factors has created too much depot maintenance

capacity in the military services’ depots. These factors include (1) the

downsizing of the armed forces due to the end of the Cold War; (2) efforts

by some DOD components to conduct more repairs in field-level

maintenance activities; (3) pressures by the defense industry to contract

out more depot work to the private sector; and (4) the increased

Page 14 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

reliability, maintainability, and durability of most military systems and

equipment.

Some initiatives—namely consolidating workloads, implementing

competition between government depots and the private sector,

mothballing depot plant equipment, and tearing down unused buildings or

converting them to other military uses—have been undertaken to reduce

some of the excess capacity. However, depot downsizing has largely

occurred through the BRAC process.

Closing unneeded facilities has never been easy, partly because of the

public’s concerns about the effects of closures on communities and about

the impartiality of the decision-making process. Additionally, 1970s

legislation requiring congressional notification of proposed closures and

preparation of economic, environmental, and strategic consequence

reports has greatly impeded base closure efforts. Legislation enacted in

1988 (P.L. 100-526) facilitated a successful round of base closure

decision-making. It outlined a special process for considering base closure

actions, authorized a special commission to review proposed closures and

realignments, and provided relief from certain statutory provisions that

hindered the base closure process.

In 1990, the Secretary of Defense found it was difficult to complete

additional base closure actions without special enabling legislation.

Therefore, Congress passed the Defense Base Closure and Realignment

Act of 1990 (title XXIX, P.L. 101-510), which halted any major closures

unless DOD followed the new act’s requirements. The act created

independent BRAC commissions and outlined procedures, roles, and time

frames for the President, Congress, DOD, GAO, and the commissions to

follow. It required that all bases be compared equally against (1) selection

criteria to be developed by DOD and (2) DOD’s current force structure plan.

The legislation mandated rounds of BRAC reviews in 1991, 1993, and 1995.

The first 3 rounds of the BRAC process resulted in decisions to close 

10 maintenance depots: 1 in BRAC 1988, 2 in BRAC 1991, and 7 in BRAC 1993.

Six of these depots are located on bases that are being closed completely,

but four—the Norfolk and Pensacola naval aviation depots and the

Lexington-Bluegrass and Tooele Army depots—are located on bases that

will continue to perform missions other than depot maintenance. Eight of

the depots have had or will have all or portions of their land and facilities

made available to the local community for reuse; however, the Navy plans

to retain all of the Norfolk and Pensacola naval aviation depots’ land and

Page 15 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

facilities for other missions. For purposes of this report, all BRAC actions

where depot maintenance operations will cease at a location are referred

to as “depot closures.”

Table 1.1 shows the depots recommended for closure, the dates they

either did or will cease maintenance operations, and their actual or

planned closure dates.

Table 1.1: Maintenance Depots

Identified for Closure by the 1988,

1991, and 1993 BRAC Rounds

Depot

BRAC

round

Cease

maintenance

operations

Planned/

actual

closure date

Lexington-Bluegrass Army Depot 1988 9/94 9/95a

Sacramento Army Depot 1991 9/94 3/95b

Philadelphia Naval Shipyard 1991 9/95 9/96

Charleston Naval Shipyard 1993 9/95 4/96

Mare Island Naval Shipyard 1993 4/95 4/96

Alameda Naval Aviation Depot 1993 9/96 3/97

Norfolk Naval Aviation Depot 1993 9/96 3/97a

Pensacola Naval Aviation Depot 1993 9/95 3/96a

Tooele Army Depot 1993 5/95 9/96a

Aerospace Guidance and Metrology Center,

Newark Air Force Base

1993 8/96c 9/96

aThese depots are located on bases that are being realigned rather than closed and that will

continue performing nonmaintenance missions.

bAlthough most of the depot’s land and facilities were turned over to the local community, some

were retained pending completion of environmental cleanup work.

cSince the closure plan involves turning the facility over to private contractors rather than closing

it, maintenance operations will not actually cease but will be transferred to the private sector.

Additionally, DOD civilians will continue to perform part of the metrology and calibration mission

since the functions they perform have been determined to be “inherently governmental.”

DOD’s report to the 1995 BRAC Commission included recommendations to

(1) realign the Letterkenny Army Depot and the Naval Undersea Warfare

Center, Keyport, Washington;4

 (2) close the Red River Army Depot, Long

Beach Naval Shipyard, and Naval Surface Warfare Center, Crane Division

Detachment, Louisville, Kentucky; and (3) reduce the five air logistics

centers’ excess capacity by consolidating various workloads, disposing or

mothballing depot plant equipment, and tearing down buildings. DOD

estimated that this approach would reduce the Air Force’s excess capacity

4

Although the warfare centers had previously been categorized as technical centers rather than depot

maintenance activities, their missions included performing some depot maintenance workload.

Page 16 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

by 1.5 depot equivalents. However, after these recommendations were

forwarded to the BRAC Commission for review, the Commission added all

five air logistics centers, Portsmouth Naval Shipyard, and Tobyhanna

Army Depot to the list for further review.

The Commission ultimately recommended closing the Long Beach Naval

Shipyard; the Naval Surface Warfare Center, Crane Division Detachment,

Louisville, Kentucky; and the Sacramento and San Antonio Air Logistics

Centers. In addition, it recommended that (1) the depot maintenance

mission be discontinued at the Letterkenny Army Depot (Pennsylvania);

(2) the Naval Undersea Warfare Center, Keyport, Washington, retain its

torpedo depot maintenance workload, but transfer its ship combat

systems workload; and (3) the Red River Army Depot remain open and

retain its Bradley Fighting Vehicle Series workload, but transfer its other

maintenance missions to other depots or the private sector.

President Clinton disagreed with some of the Commission’s

recommendations, especially those that affected depots in California and

Texas, but he ultimately approved the Commission’s report on July 13,

1995, and forwarded it to Congress. Congress completed its review and

accepted the Commission’s recommendations in September 1995.

Objectives, Scope,

and Methodology

The Chairman and Ranking Minority Member of the Subcommittee on

Military Readiness, House Committee on National Security, requested that

we (1) assess the reliability of DOD’s depot closure cost and savings

estimates; (2) obtain information on the policies and programs used to

provide employment and training opportunities to employees at closing

depots; (3) determine if the military services can increase depot closure

savings by using competitions between DOD depots (public-public

competitions) and between DOD depots and the private sector to

redistribute closing depots’ workloads; and (4) determine if the military

services adequately consider other services’ depots when they use

methods other than public-public or public-private competitions to

redistribute their closing depots’ workloads.

To assess the reliability of depot closure cost and savings estimates, we

analyzed the cost of base realignment actions (COBRA) and BRAC budget

estimates. We also discussed the reliability of the estimates with DOD and

service officials and examined financial documentation.

Page 17 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

To obtain information on the policies and programs used to provide

employment and training opportunities to employees at closing depots, we

(1) reviewed relevant legislation and regulations; (2) discussed the policies

and programs with cognizant depot officials; (3) determined the frequency

that various actions, such as reductions-in-force, have been used to

outplace depot employees; and (4) visited several depots’ employment

transition centers. To a limited extent, we also obtained information on

the cost of the various programs.

To determine if public-public competitions have been used effectively to

redistribute closing depots’ workloads, we (1) obtained information on the

scope and results of all public-public competitions that have been

conducted, (2) reviewed competition savings projections, and

(3) discussed the pros and cons of using public-public competitions to

redistribute closing depots’ workloads with officials at both the commands

that conducted the competitions and the depots that competed for the

workloads. We also evaluated the Deputy Secretary of Defense’s rationale

for canceling DOD’s public-public and public-private competition programs

in May 1994.

To determine if the military services adequately consider interservicing

alternatives when using methods other than public-public competitions to

redistribute closing depots’ workloads, we documented the services’ plans

for redistributing the workloads and then discussed the methodology used

to select new sources of repair with depot maintenance officials.

We performed our work at

• the Office of the Secretary of Defense;

• the services’ headquarters;

• Headquarters, U.S. Army Materiel Command;

• Headquarters, Naval Air Systems Command;

• Headquarters, Naval Sea Systems Command;

• Headquarters, Air Force Materiel Command;

• Headquarters, U.S. Army Depot Systems Command, Chambersburg,

Pennsylvania;

• the Naval Aviation Depot Operations Center, Patuxent River, Maryland;

• the U.S. Army Communications-Electronics Command, Fort Monmouth,

New Jersey; and

• the U.S. Army Missile Command, Huntsville, Alabama.

Page 18 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 1 

Introduction

We also performed work at four Army depots (Sacramento Army Depot,

Sacramento, California; Tooele Army Depot, Tooele, Utah;

Lexington-Bluegrass Army Depot, Lexington, Kentucky; and Tobyhanna

Army Depot, Tobyhanna, Pennsylvania); three naval shipyards (Charleston

Naval Shipyard, Charleston, South Carolina; Mare Island Naval Shipyard,

Vallejo, California; and Philadelphia Naval Shipyard, Philadelphia,

Pennsylvania); three naval aviation depots (Pensacola, Florida; Alameda,

California; and Norfolk, Virginia); and the Aerospace Guidance and

Metrology Center at Newark Air Force Base, Ohio.

We conducted our review in accordance with generally accepted

government auditing standards. In conducting our review, we used the

same accounting systems, reports, and statistics the services use to

monitor their programs. Except where otherwise indicated, we did not

independently determine the reliability of this information.

Page 19 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

DOD believes its current budget savings estimates are better than the

Commission’s estimates, but the actual savings are still uncertain. The

current budget estimates indicate that closing the 10 depots will result in a

net savings1

 of $222.4 million during the 6-year implementation period

allowed by law and an annual savings of $656 million after that. Although

not directly comparable, these estimates are considerably less than the

Commission’s estimates—85 percent less for the implementation period

and 10 percent less in annual recurring savings. However, actual savings

are still uncertain because (1) the budget estimates do not include many

closure-related costs, (2) DOD has not updated the annual savings estimates

since it submitted the initial budget estimates to Congress, and (3) DOD has

not developed an effective methodology for estimating the cost of

accomplishing closing depots’ workloads at new sources of repair.

Further, DOD has not developed a methodology to determine actual closure

savings, and there are already indications that the data needed to make

this determination will no longer be available after the closures have been

completed.

As a result of these problems, the services lack reliable data for making

their workload redistribution decisions and may be selecting more costly

alternatives. For example, preliminary cost estimates indicate that the Air

Force’s decision to privatize-in-place work currently performed at the

Aerospace Guidance and Metrology Center (AGMC) will increase costs

rather than save money. Nevertheless, the services are either

implementing or considering a similar approach at four of the five depots

that the 1995 BRAC Commission recommended for closure.

Net Savings Estimates

Have Decreased

Initially, DOD used the COBRA model to estimate the cost of and savings

from closing each depot. It then provided COBRA estimates to each closure

commission. Generally, commission reports include COBRA estimates of

one-time costs, net savings for the 6-year implementation period, and

annual recurring savings for subsequent years.

After the President and Congress accept the Commissions’

recommendations, the services prepare cost and savings estimates for

budget submissions to Congress. Requirements for budget submissions are

established in the BRAC acts (P.L. 100-526, sec. 206 and P.L. 101-510, sec.

2907), which require that annual DOD budget requests (1) include cost and

savings estimates for each closure or realignment and (2) indicate the time

1

Net savings equal the savings that will be achieved as a result of the closure (e.g., savings from

eliminating base support costs) minus the cost of accomplishing the closure (e.g., relocation costs for

employees that are transferred to new jobs at other bases).

Page 20 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

for achieving these savings. The final budget estimate for the

Lexington-Bluegrass Army Depot, which was the only depot closed during

the first BRAC process, was submitted in February 1994. The latest budget

estimates for the other nine depot closures were submitted in

February 1995.

Defense and service officials emphasized that the COBRA model was never

intended to provide budget-quality estimates, and they pointed out that

budget and COBRA estimates are not directly comparable—primarily

because the COBRA model excludes environmental cleanup costs. They said

the COBRA estimates (1) were intended to be used to compare realignment

and closure options, (2) are based on limited data, and (3) exclude

environmental cleanup costs because DOD is liable for these costs

regardless of whether a depot is closed or realigned.

Table 2.1 shows the differences between the BRAC Commissions’ 6-year net

savings estimates and the military services’ latest budget estimates. As

indicated, the major reasons for the $1,215.4-million difference are (1) a

$711.1-million reduction in the amount of gross savings that are expected

during the implementation period resulting from such factors as fewer

than expected reductions in the number of personnel eliminated, (2) the

addition of $409.1 million in environmental costs, and (3) a $100.5-million

increase in nonenvironmental costs for such items as the relocation of

civilian employees.

Table 2.1: Differences Between the

6-Year Cost and Savings Estimates in

Commission Reports and the Latest

Budget Estimate Submission for 10

Depots

Fiscal year 1996 dollars in millions

COBRA Budget Difference

Total savings $3,141.9 $2,430.8 ($711.1)

Land sales revenue 7.6 29.3 21.7

Less: Costs in BRAC account

Environmental N/A 409.1 409.1

Nonenvironmental 1,711.7 1,812.2 100.5

Total BRAC account 1,711.7 2,221.3 509.6

Costs financed outside the BRAC

account

0 16.4 16.4

Total costs $1,711.7 $2,237.7 $526.0

Net savings $1,437.8 $222.4 ($1,215.4)

Estimates of annual recurring savings after the 6-year implementation

period have also been reduced. Specifically, the Commissions’ COBRA

analyses indicated that closing the 10 depots would save about

Page 21 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

$729 million annually, when adjusted to fiscal year 1996 dollars, but DOD’s

current budget estimates indicate the savings will be only $656 million

annually. For example, the net savings estimate for Tooele Army Depot

was reduced from the $112.5-million estimate by COBRA to $17.6 million in

the budget over the 6-year implementation period, and from $53.5 million

(COBRA) to $27.5 million (budget) for each subsequent year. Our analysis

shows the reduction was largely due to a change in assumptions about the

number of civilian positions that would be eliminated by the closure. The

COBRA estimate assumed the elimination of 1,268 civilian positions, while

the budget estimate assumed the elimination of 671 positions.

Budget Estimates Do

Not Include Some

Costs

DOD’s current budget estimates understate the actual cost of closing the 

10 depots. The primary reason for this is that they do not reflect

closure-related costs that either have been or will be paid from the

operation and maintenance account or by the Defense Business

Operations Fund. For example, the Navy estimates that, through fiscal

year 1995, closing naval aviation depots and shipyards will have

accumulated operating losses of about $882 million that will be recouped

from its operation and maintenance account ($695 million) or written off

within the Fund ($187 million). Only some of this loss is directly related to

depot closures. For example:

• Naval aviation depots and shipyards were directed to freeze overhead

rates at the time the closure decision was made and, as a result, they were

unable to recover some of their overhead costs when their workloads

declined.

• Two of the three closing shipyards have had losses from higher than

normal leave usage that is not reflected in the Navy’s BRAC budget

estimates because this cost is being financed from the Navy’s operation

and maintenance account. The operation and maintenance account is

paying for the $7.8-million loss that the Charleston Naval Shipyard

incurred in fiscal year 1994 and for losses the Philadelphia Naval Shipyard

will incur during fiscal year 1995.

• The Navy’s most current budget estimates do not reflect the impact of

productivity reductions that naval aviation depots experienced after their

closures were announced. For example, according to the Naval Depot

Operations Center’s information, direct labor efficiency for two aircraft

repair programs—measured by comparing established norms to the actual

number of direct labor hours required to overhaul EA6B aircraft at

Alameda and A6E aircraft at Norfolk—declined about 9 percent and

2 percent, respectively, between fiscal year 1992 (the last full year before

Page 22 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

closure was announced) and fiscal year 1994 (the first full year after

closure was announced).

In addition, closing Army depots have incurred closure-related costs and

losses that are being financed by the Defense Business Operations Fund.

For example:

• In fiscal year 1993, the Sacramento Army Depot charged about $12 million

in closure-related costs to the Defense Business Operations Fund instead

of the BRAC account. For example, the Navy and other organizations

charged depot employees’ voluntary separation incentive pay (VSIP)2

 to

their BRAC account, but the Sacramento Army Depot used the Defense

Business Operations Fund to finance these costs.

• The Sacramento Army Depot’s maintenance mission ended in fiscal year

1994, but the Army continued to use Defense Business Operations Funds

to finance base support and other costs during fiscal year 1995. This, in

turn, caused the depot to incur about a $6-million loss during the first 

6 months of the fiscal year.

Budget Savings

Estimates Have Not

Been Updated

According to DOD officials, the services have not updated budget savings

estimates to reflect some major changes that have occurred since they

submitted their initial budgets to Congress. For example:

• The savings estimate for closing the Sacramento Army Depot was first

submitted to Congress in January 1991 and remained unchanged in the

February 1995 submission. However, as discussed in chapter 4, significant

changes have occurred in not only the Army’s plans for redistributing the

depot’s workload, but also the expected cost of accomplishing the work.

• Navy budget estimates indicate that the only savings that will accrue in

fiscal years 1994 and 1995 from closing aviation depots will be a

$17.8-million cost avoidance due to canceled military construction

projects. However, according to an analysis by the Naval Aviation Depot

Operations Center, closing three aviation depots and consolidating work

at the three remaining depots have enabled the Navy to reduce fiscal year

1995 customer rates by $82.7 million.

2

To encourage voluntary retirements and resignations, DOD gave employees at closing depots up to

$25,000 if they voluntarily retired or resigned. According to its fiscal year 1995 budget submission, the

Army used its operation and maintenance account to reimburse the Defense Business Operations Fund

for VSIP costs in fiscal year 1994, and it increased customer rates to pay for these costs in fiscal year

1995.

Page 23 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

• In December 1994, we reported3 that closing AGMC could result in an

annual recurring cost rather than the $3.8-million savings that was initially

projected in the Air Force’s February 1994 budget submission. Air Force

officials acknowledged that the closure and privatization of the Center

could increase annual costs—possibly by as much as $600 million over a

6-year period. Moreover, although AGMC customers have been told to

budget more in future years for the same maintenance activities, the Air

Force’s February 1995 budget submission continued to show a projected

annual savings of $3.8 million.

DOD and service officials stated that savings estimates are not updated

because, once savings are reflected in the budget, there is no reason to

update the estimates unless significant new savings are identified.

Methodology Needed for

Estimating Post-Closure

Costs

DOD has not developed an effective methodology for estimating

maintenance costs in a post-closure environment. Prior to the 1995 BRAC

process, DOD officials recognized that they needed better estimates for

projecting the savings from moving closing depots’ workloads to new

repair sources. They considered using an Economic and Personnel

Analysis Model that was developed to evaluate the financial impact of

various interservicing alternatives. However, although the model is

compatible with the COBRA model, it requires an additional data call.

Further, all of the services did not agree to use the model during the 1995

BRAC process. As a result, the model was not used during the 1995 BRAC

round and is not being used to update budget savings estimates.

DOD Has Not

Provided Adequate

Guidance on How to

Estimate Savings

DOD does not require the military services to routinely accumulate and

update savings information on depot closures, and it has not provided

guidance on (1) how to compute actual savings once the closures have

been completed or (2) what records should be retained so that the

magnitude of the actual savings can be determined. As a result, DOD may

not have reliable information on the costs and savings associated with

depot closures, even after the closures are completed.

In the absence of DOD guidance, data needed for tracking costs and savings

are not being retained. For example, according to an Army Audit Agency

manager, preliminary information obtained from an ongoing review of

BRAC I bases, including the Lexington-Bluegrass Army Depot, indicates that

3

Aerospace Guidance and Metrology Center: Cost Growth and Other Factors Affect Closure and

Privatization (GAO/NSIAD-95-60, Dec. 9, 1994).

Page 24 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

(1) no provision has been made to ensure the retention of needed records

and (2) some of the information needed to estimate savings for these bases

may no longer be available. Similarly, when we attempted to review cost

and savings data from the Lexington-Bluegrass Depot, Army officials told

us that records needed to develop depot closure cost and savings

estimates had apparently been lost.

At the request of the Subcommittee on National Security, International

Affairs and Criminal Justice, House Committee on Government Reform

and Oversight, we are reviewing estimated and actual savings from past

base closure and realignment actions, including depots. As a part of that

review, we are also addressing issues related to the development of budget

estimates and measurement of actual savings.

In addition, in response to several congressional requests, including one

from the House Committee on National Security, we are also reviewing

DOD’s plans to privatize depot maintenance workloads. Specifically, we are

reviewing the methodology the services plan to use when they evaluate the

cost-effectiveness of implementing a privatization-in-place concept at

AGMC, the Letterkenny and Red River Army depots, the Sacramento and

San Antonio Air Logistics Centers, and the Naval Surface Warfare Center,

Crane Division Detachment, Louisville, Kentucky.

Conclusions DOD’s budget estimates show that the savings from the 

10 BRAC-recommended depot closures will be lower than the BRAC

Commissions original estimate. Further, questions remain about the

overall accuracy of DOD’s budget estimates. In some cases, certain costs

have not been included or estimates have not been updated to reflect

significant changes. Such information is needed to periodically update

defense managers and Congress on the amount of savings. DOD does not

currently have a standardized approach for capturing and presenting costs

and savings data, nor does it have a sound process for estimating recurring

costs of conducting maintenance operations in a post-closure

environment. Both of these elements are essential to evaluate the

cost-effectiveness of alternatives for conducting maintenance operations

after depots close.

Page 25 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 2 

Magnitude of Savings Is Uncertain

Recommendations We recommend that the Secretary of Defense (1) implement procedures to

capture relevant cost and savings data on depot closures and (2) improve

the process for estimating recurring costs of maintenance operations in a

post-closure environment.

Agency Comments DOD officials believe that, although budget estimates of the costs and

savings associated with depot closures are not completely accurate, it

would not be a cost-effective use of scarce resources to develop more

accurate estimates, especially since the last base closure round has been

completed. In our opinion, accumulating actual cost and savings data or

revising estimates as significant changes occur should not require a

substantial expenditure of additional resources because depots are

already required to compare their budgeted and actual costs and to

determine the cause of any significant variances.

Further, we believe developing more accurate cost and savings estimates

serves two purposes. First, if one or more additional rounds of base

closures are required, having more accurate information on the costs and

savings associated with past closures should allow DOD, the services, and

any future closure commissions to develop more reliable estimates and, in

turn, make more informed decisions.4

 Additionally, we believe the services

could make more informed and cost-effective workload redistribution

decisions if they had more reliable cost and savings data on past closures.

For example, the privatization-in-place concept that is being implemented

at AGMC is also being considered for four of the five depots that the 1995

Commission recommended for closure, even though DOD has not

developed a methodology for determining (1) how much this privatization

will save or cost the government and (2) if this approach is more

cost-effective than closing the depots and transferring their workloads to

either the remaining depots or the private sector.

4

The Secretary of Defense has already indicated that he believes at least one more round of closures

will probably be required.

Page 26 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

DOD has thus far been successful in limiting the number of employees that

must be involuntarily separated when depots close. To a large extent, this

success can be attributed to the transition programs that have been made

available. These programs have incurred significant costs that will grow as

more of the depots reach their actual closure date.

DOD Assistance

Eases Employee

Transition

With the imminent prospects of job loss resulting from depot closure,

employees face a number of career decisions. Table 3.1 shows that DOD

has been successful in limiting involuntary separations by providing a

combination of separation incentives and job placement opportunities. As

shown in the table, reductions-in-force affected only 694 workers, or about

3.4 percent of the 20,692 workers who either left government service or

found other government jobs. About 54.5 percent of the workers found

other jobs, while 8.5 percent took either an optional or disability

retirement;1

 14.1 percent took voluntary early retirement;2 and 13 percent

resigned. VSIP of up to $25,000, depending upon length of service, is one

tool DOD used. It is too early in the closure process to determine DOD’s

overall success in limiting involuntary separations. However, for two

depots that have closed or are near final closure, the number of

involuntary separations remains low. For example, at the Sacramento

Army Depot, although 164 employees were separated through the

reduction-in-force process, this represents only 7.3 percent of the total

losses and, according to the depot commander, most of these employees

chose to be separated rather than to relocate to other localities where DOD

jobs for which they qualified were available. Likewise, at the

Lexington-Bluegrass Army Depot, only two employees have been

separated through the reduction-in-force process.

Also as shown in table 3.1, the services also assisted many displaced

workers with their job searches. Of the 20,692 employees who had left

their jobs as of July 31, 1995, 11,806 employees, or 54.5 percent, either

found other DOD jobs or obtained jobs with other federal agencies. Most of

the DOD jobs were obtained either by transferring with the workload to a

nonclosing depot or through DOD’s priority placement or VSIP exchange

programs.

1

Federal employees who meet certain minimum age and years of service criteria are eligible for an

optional retirement. In addition, employees may be eligible for disability retirement if they have at

least 5 years of creditable service.

2

Voluntary early retirement and some other transition benefits available to DOD workers are

summarized in table 3.2 and described in greater detail in the remainder of this chapter.

Page 27 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

Table 3.1: Depot Attrition and Job

Placement (as of July 31, 1995) 

Naval shipyards

Philadelphia Mare Island Charleston

Year of closure 1996 1996 1996

Initial staff levela 7,404 5,560 4,522

Depot employees who separated

Voluntary early retirement 517 598 346

Optional/disability retirement 658 310 66b

Resignations 1,005 349 175

Reductions-in-force 71 0 137

Other separations 214 77 480b

Total 2,465 1,334 1,204

Depot employees who obtained another federal job (with DOD or another federal agency)

Priority placement program 520 932 1,093

VSIP exchange program 168 139 180

Transfer with workload 0 232 409

Other 1,080 380 0b

Total 1,768 1,683 1,682

Grand total 4,233 3,017 2,886

7/31/95 staff level 3,171 2,622 1,636

Page 28 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

Naval aviation depots Army depots

Air Force

depot

Alameda Norfolk Pensacola Sacramento Tooele Lexington Newark

Total

losses

Percent of

total

1996 1996 1995 1994 1995 1995 1996

2,846 3,506 2,581 2,257 2,718 1,340 1,603 34,337

186 0 186 504 479 94 2 2,912 14.1

87 67 217 90 66 164 36 1,761 8.5

125 144 50 345 468 267 40 2,968 14.3

175 0 55 164 89 2 1 694 3.4

37 35 26 32 155 3 12 1,071 5.2

610 246 534 1,135 1,257 530 91 9,406 45.5

)

219 388 651 678 42 79 149 4,751 23.0

101 0 94 168 141 0 0 991 4.8

562 297 790 123 0 625 0 3,038 14.7

149 310 188 151 86 72 90 2,506 12.1

1,031 995 1,723 1,120 269 776 239 11,286 54.5

1,641 1,241 2,257 2,255 1,526 1,306 330 20,692 100.0

1,205 2,332 308 2 1,192 34 1,505 14,007

Note: Data as reported by closing depots and shipyards. Reasons for minor variations in some

balance totals not determined.

aStaff levels in year of closure recommendation. BRAC I (1988)—Lexington Army Depot; BRAC II

(1991)—Philadelphia Naval Shipyard and Sacramento Army Depot; BRAC III (1993)—Alameda,

Norfolk, and Pensacola naval aviation depots; Mare Island and Charleston naval shipyards, Air

Force AGMC, and Tooele Army Depot.

bCharleston Naval Shipyard officials could not determine how many employees (1) received

disability retirement or (2) obtained another federal job by some means other than the three

methods listed. They, therefore, included these employees in the “other separations” category.

Depots Have

Extensive Employee

Outplacement

Programs

DOD has used a wide range of programs and incentives to limit the number

of employees that must be involuntarily separated when depots close. As

part of this program, depot employees have job placement assistance, job

training opportunities, VSIP, and early retirement options. The high

participation rate of affected workers has contributed to the positive

results of the outplacement.

Page 29 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

Job Transition Centers

Established at Closing

Depots

The services have established transition centers at the closing depots to

provide job search assistance, referral services, counseling, and training in

such areas as resume preparation and interviewing techniques. The

transition centers also provide access to a wide array of office equipment

and supplies, including computer hardware and software. For example,

the equipment available for employees at the Alameda center includes

(1) 11 computers that contain both private and federal sector job data;

(2) 1 computer programmed with Career Search (a private sector job

search tool); (3) additional computers and a laser printer that can be used

to prepare resumes and cover letters; (4) copy and facsimile machines;

and (5) telephones.

Employees appear to be using the services offered by the transition

centers. For example, at the time of our review, the Pensacola transition

center was averaging 727 employee visits per month; 1,908 employees also

attended various center-sponsored transition workshops. Similarly, at the

Philadelphia Naval Shipyard, 3,402 employees had registered with the

Career Transition Center, which provides such services as one-on-one

counseling, development of job search strategies, and training

assessments.

Job Placement Programs DOD has a variety of job placement programs that give displaced DOD

employees priority in hiring decisions. These programs, when combined

with a policy of giving workers an opportunity to move with workloads

being transferred to other depots, have been effective in securing

employment for many displaced workers. The success of these programs,

however, often hinges on employees’ willingness to relocate, since

comparable employment opportunities are often not available in the same

area.

The priority placement program has been particularly effective. Under this

program, DOD employees targeted for possible involuntary separation are

given top placement priority for vacant DOD positions for which they are

qualified. As of July 31, 1995, the program had accounted for 42.1 percent

of job placements at the 10 closing depots.

In some instances, the military services have been able to satisfy both their

own needs and the needs of depot employees by transferring employees

with transitioning workloads. From the employees’ perspective, this

approach is desirable because it allows them to obtain a comparable job at

comparable wages. Similarly, from the military services’ perspectives,

Page 30 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

retaining the existing workforce provides continuity in completing work at

the closing depot while, at the same time, providing a base for building a

knowledgeable work team at the gaining depot.

The Navy has modified its normal personnel rules to allow depots to

expand this option. Normally, if employees turn down an opportunity to

transfer with the workload, they would no longer be eligible to participate

in the priority placement program. However, they can now continue to

participate in the priority placement program, even if they had previously

turned down an opportunity to transfer with the workload. As of July 31,

1995, 3,038 employees, or 14.7 percent of affected employees, had

transferred with a workload.

Job Opportunities Limited

in Some Locations

In some instances, it may be impossible to place employees in comparable

jobs in the same geographical area. Some depots are the single largest

employer in their area. In addition, because they require highly specialized

skills, maintenance depots not only may be the largest, but also one of the

highest paying employers in their area. As a result, opportunities in the

same or similar field at comparable wages can be limited or nonexistent.

Consequently, employees’ ability to find a comparable federal or private

sector job frequently depends on their willingness to relocate. Throughout

DOD, the percentage of priority placements that required a permanent

relocation increased steadily from 37 percent in 1989 to 53 percent in 1993.

According to one depot official, during the initial stages of depot closures,

many employees wanted a federal job if they could get one in the

immediate area. However, unless there was a big demand for their skills or

career field, depot employees soon discovered they had to move.

Employees can increase their chances of getting a job in their commuting

area if they are willing to change career fields, but they may find it difficult

to match their previous income. For example, depot officials noted that in

areas with service-based economies such as Pensacola, Florida, and

Charleston, South Carolina, most jobs pay only 50 percent to 75 percent of

those previously available at the depot and shipyard.

Job Training Available Employees at closing depots are authorized to apply for federal grants to

upgrade or acquire new skills under the Defense Conversion Adjustment

and Defense Diversification programs. These programs, which were

Page 31 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

created by amendments to the Job Training Partnership Act,3 assist

workers dislocated by defense cutbacks and are financed with funds that

DOD transfers to the Department of Labor.

Funds can be provided for formal classroom training, often at local

schools and colleges, as well as on-the-job training and can be made

available for up to 2 years. Some of the depot employees are currently

eligible to be retrained in such areas as computer science, automobile

repair, social work, and teaching. We did not assess the effectiveness of

this training in assisting employees to find new occupations.

Retirement and

Resignation Incentives

Also Provided

In addition to job placement assistance and job training, closing depots

offer incentives to encourage voluntary retirements and resignations. For

example, employees at closing depots are given VSIP of up to $25,000 if they

voluntarily retire or resign, and they can take advantage of an early

retirement option if they (1) have at least 20 years of service and have

reached age 50 or (2) have 25 years of service, regardless of age.

Depot employees are also able to participate in the VSIP exchange program.

Under this program, a VSIP payment is made to employees who resign or

retire at installations that are remaining open, and the government pays

employees from closing depots to move to their new duty assignments and

fill the vacated positions. As of July 31, 1995, 991 depot and shipyard

employees had participated in the program.

Cost of DOD

Outplacement

Programs

Although complete data on the cost of DOD’s programs is not yet available,

they are significant. Costs are being incurred to (1) pay the relocation

costs of employees who transfer with the workload to another depot and

who find other DOD jobs through the priority placement program or VSIP

exchange program, (2) provide separation incentives to downsize the

workforce, and (3) pay for the various kinds of training and transition

assistance being provided. A number of programs and incentives being

offered to DOD civilian employees are currently not available to other

federal government employees. According to Office of Personnel

Management officials, although civilian agencies could also provide many

of the same benefits without additional legislative authority, the high cost

of such benefits is a restraining factor—particularly for smaller agencies.

3

The act authorizes the largest system of federal job training and retraining programs in the United

States. The primary purpose of the act’s programs is to provide educational and occupational training

to workers who have lost their jobs.

Page 32 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

Table 3.2 lists some of the major transition benefits available to DOD

workers.

Table 3.2: Major Transition Benefits Available to DOD Workers

Program/benefits Description

Placement programs

Priority placement Provides mandatory placement rights for separated DOD workers

to other vacant positions within DOD. When a vacancy occurs,

employees have a right to mandatory placement in those

positions matching their skills and grades.

Defense outplacement referral system The automated job referral system enables employees in the

public and private sector who have job vacancies to get a list of

DOD workers who may match the skill needed.

VSIP exchange Provides an incentive payment to employees who resign or retire

from installations that are remaining open, and the vacant

positions are then filled by employees from closing depots who

are moved to their new duty assignments at government expense.

Training/transition

Job Training Partnership Act Eligible DOD employees can participate in career counseling,

testing, retraining, placement assistance, support services, and

financial counseling.

Transition assistance center Provides a variety of services to dislocated employees, including

assessment tools to provide guidance in making career changes;

workshops on stress management, job search, and interviewing

techniques; assistance in preparing resumes; job fairs; and

administrative support.

Separation incentives

VSIP A lump-sum incentive equivalent to an employee’s severance pay

entitlement, up to a maximum of $25,000, is paid upon voluntary

resignation, early retirement, or optional retirement.

Voluntary early retirement Employees can retire early if they have at least 20 years of service

and have reached age 50 or have 25 years of service, regardless

of age. Annuities are reduced by 2 percent for each year below

55.

Relocation benefits

Reimbursement of

relocation costs

DOD employees transferring to other DOD and federal

government jobs are reimbursed for travel, transportation, and

relocation expenses.

Homeowners’ assistance DOD offers to buy a worker’s house if it cannot be sold and

provides compensation for some property value losses.

Relocation Benefits One of the depots’ largest closure costs is the payment of relocation costs

of employees who transfer to new jobs. For example, as of January 1995,

$20.2 million, or about 75 percent, of the Sacramento Army Depot’s total

Page 33 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

BRAC expenditures had been spent on relocation costs.4 Similarly, Navy

officials estimated that about $30.8 million, or 20.1 percent, of Alameda’s

BRAC expenditures and $45.9 million, or 22 percent, of Navy shipyards’

BRAC expenditures are for employee relocation costs.

These expenditures, estimated at one depot to be about $46,000 per

home-owning employee, reimburse the employees for a wide variety of

relocation costs. These include (1) reimbursement for house hunting and

other miscellaneous expenses; (2) real estate expenses; (3) transportation

of household goods; (4) travel; and (5) temporary living expenses,

including costs related to temporary storage.

To further ease the transition, the government also offers to purchase an

employee’s house at fair market value if it cannot otherwise be sold on the

open market. This can be an important benefit, particularly when the local

real estate market is depressed.

Employees may also qualify for the Homeowners Assistance program,

which is authorized by 42 U.S.C. 3374 and designed to compensate

employees for property value losses they suffer because a base closes.

Under the program, an employee could be reimbursed for the difference

between the home’s sale price and 95 percent of the previously appraised

value. For example, a DOD employee who owned a house worth $100,000

before the base closure announcement and sold the house for $80,000

after the announcement would receive $15,000.

Separation Incentive

Program Extended and

Expanded

The VSIP program, which is similar to the buyout program that was in effect

in some federal agencies until March 1995, was extended by Congress until

September 1999 and expanded by DOD to include a VSIP exchange program.

According to DOD officials, initial budget estimates were based on the

assumption that employees would either be reimbursed for their

relocation costs or given VSIP; however, under the VSIP exchange program,

depots must pay both. That is, an employee at a closing depot is relocated,

at government expense, to fill a vacancy that was created when another

employee accepted a VSIP payment. For example, as of November 1994, the

Tooele Army Depot had obligated $3 million to pay the relocation costs of

106 Tooele employees who were participating in the VSIP exchange

program and an additional $2.7 million to make VSIP payments to 

128 employees who were being replaced.

4

Totals exclude expenditures that are not managed by the depot, such as those for environmental

cleanup.

Page 34 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

Retraining Efforts DOD allocated $225 million to retrain employees at closing bases. This total

includes $150 million that was allocated under the Defense Conversion

Adjustment program and $75 million that was allocated under the Defense

Diversification program and had to be obligated by September 30, 1994.

These funds are provided to employees at closing bases through Job

Training Partnership Act grants.

Although the cost of this assistance varies with the type of training

provided, it averaged more than $5,000 per student at both the depots for

which we analyzed the data. As shown in table 3.3, employees at all but

one of the closing depots have received training assistance through Job

Training Partnership Act grants.

Table 3.3: Job Training Partnership Act

Grants for Closing Depots (as of

September 30, 1994) 

Dollars in millions

Depot activity

Grant

amount

Philadelphia Naval Shipyard $11.2

Mare Island Naval Shipyard 6.0

Charleston Naval Shipyard 15.0

Alameda Naval Aviation Depot/Naval Air Station 2.3

Norfolk Naval Aviation Depot 7.1a

Pensacola Naval Aviation Depot 5.3

Sacramento Army Depot 2.3

Tooele Army Depot 1.9

Lexington Army Depot 0

Aerospace Guidance and Metrology Center 2.7

Total $53.8

aStatewide grant; no specific amount earmarked for Norfolk Naval Aviation Depot.

Additional DOD Programs The Fiscal Year 1995 National Defense Authorization Act authorized DOD

civilians to participate in several new pilot programs. The initial

authorization for these programs and demonstration projects was

$12.5 million. A pilot program was established whereby, if certain

conditions were met, DOD would pay up to $10,000 of the relocation and/or

training costs of former DOD employees hired by nonfederal employers. A

second program was designed to place separated military and terminated

civilians in teaching positions as bilingual math and science teachers.

Finally, demonstration projects were authorized to help military and

Page 35 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 3 

Efforts to Limit Involuntary Separations

Have Been Successful, but Costly

terminated civilians become business owners and obtain employment by

participating in the establishment and operation of ship recycling facilities.

Conclusions Although data is limited because actions have not been completed at most

closing maintenance depots, data for those further along indicate that DOD

has successfully used a wide variety of incentives and programs to ease

the transition of civilian workers located at closing depots. The data also

shows there are significant costs associated with these programs and they

are likely to increase as more of the depots near actual closure.

Agency Comments DOD raised no questions or concerns about the information presented in

this chapter.

Page 36 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

DOD’s public-public and public-private competitions of depot maintenance

workloads have resulted in savings and benefits. However, despite the

benefits, the Deputy Secretary of Defense discontinued these competitions

in May 1994.

This chapter discusses the results and benefits of public-public

competitions for the closing Sacramento Army Depot workloads and the

rationale the Secretary of Defense used as the basis for canceling the

public-public and public-private competition program. The results and

benefits of public-private competitions are addressed in a separate report.1

 Actions being taken to redistribute other closing depots’ workloads are

discussed in chapter 5.

Sacramento Army

Depot Public-Public

Competitions

The only public-public competitions that DOD has conducted has been for

the closing Sacramento Army Depot workloads. The nine Sacramento

competitions were conducted because the 1991 BRAC Commission directed

the Army to conduct them. The Army initially planned to simply transfer

Sacramento’s workload to other Army depots. However, data provided by

the Air Force and the Sacramento community indicated that this might not

be the most cost-effective way to redistribute the work. As a result, the

Commission indicated that the redistribution of the Sacramento Army

Depot’s workload should be based on the results of competitions

conducted between five Army depots (Tobyhanna, Anniston, Corpus

Christi, Red River, and Letterkenny) and the Sacramento Air Logistics

Center.

Between October 1991 and December 1993, separate competitions were

conducted for nine equipment groups. In each of the competitions, the

Sacramento Air Logistics Center competed against one of the five Army

depots. Headquarters, U.S. Army Missile Command solicited and evaluated

bids for two of the competitions, and Headquarters, U.S. Army

Communications-Electronics Command (CECOM) managed the other seven.

The source selection criterion for four of the competitions was

“acceptable, lowest price,” while the other five were evaluated under the

“best value” concept. The acceptable, lowest price criterion was used if

the workloads were considered to be technically low risk or the use of

innovative techniques was unlikely. Under this criterion, proposals with

unacceptable transition or technical plans were eliminated during the first

1

Navy Maintenance: Assessment of the Public-Private Competition Program for Aviation Maintenance

(GAO/NSIAD-96-30, Jan. 22, 1996).

Page 37 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

phase of the competition, and the lowest price proposal that remained was

then selected. The best value criterion was used when low price was not

the only important factor. For example, it was used for relatively complex

workloads or if there was concern about a possible degradation of

readiness during the transition from Sacramento to the new source of

repair. Under this criterion, awards were based on an overall assessment

of the competitors’ prices, transition plans, technical plans, and proposed

management structures.

As shown in table 4.1, the Sacramento Air Logistics Center won five of the

competitions, and the Tobyhanna Army Depot, which participated in five

of the competitions, won the other four.

Table 4.1: Results of the Sacramento Army Depot Workload Competitions

Dollars in thousands

Equipment group

Dates of

competition

Source

selection

authority

Basis for

award Award amount

Competitions won by the Sacramento Air Logistics Center

Fighting vehicle electronics 1/92 - 7/93 Missile

Command

Best value $3,715

Electro-optics/night vision equipment 2/92 - 11/93 Missile

Command

Best value 48,102

Gyros 8/92 - 10/93 CECOM Low cost 1,260

Radar 4/92 - 7/93 CECOM Best value 3,474

Test measurement diagnostic equipment 11/92 - 12/93 CECOM Low cost 1,235

Total $57,786

Competitions won by the Tobyhanna Army Depot

Airborne electronics 10/91 - 1/93 CECOM Best value $4,653

Radios 6/92 - 10/93 CECOM Low cost 4,976

Intelligence & electronic warfare 9/92 - 11/93 CECOM Best value 7,204

Wire/data communications switches 2/93 - 12/93 CECOM Low cost 1,358

Total $18,191

Total $75,977

Note: Total may not add due to rounding.

Page 38 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

Sacramento

Competitions

Produced Substantial

Price Reductions

CECOM headquarters initially estimated that the nine public-public

competitions would reduce Sacramento’s depot maintenance prices for

fiscal years 1993 to 1998 by $389 million. This estimate was based on

(1) Sacramento’s projected workload for the 429 items that were included

in the nine competitions and (2) a comparison of Sacramento’s

inflation-adjusted prices and the winning depots’ bid prices.

These price reductions,2

 which were partially offset by the $16-million cost

of conducting the competitions, can be attributed primarily to the fact that

the competitions forced the Sacramento Army Depot’s customers and

bidding depots to reengineer the closing depot’s workload. More

specifically, competition-related price reductions were achieved by

(1) eliminating unnecessary repairs, (2) reducing labor standards,3

 and

(3) developing more cost-effective repair procedures.

Table 4.2 shows the initial estimates of price reductions resulting from the

Sacramento Army Depot competitions.

2

Actual savings cannot be determined until the work is completed, and even then it may be difficult to

quantify. Factors that affect actual savings include not only the price reductions achieved but also

(1) the ability of depots to do the work for the amount they bid and (2) the amount of work that

materializes. Actual savings may be difficult to quantify because the competitions are only one of many

factors that affect the cost of depot maintenance work.

3

A labor standard is the time it should take a trained worker or group of workers, working at a normal

pace and under specific conditions, to produce a described unit of acceptable work. These standards

can be either engineered (based on an engineering method such as a time and motion study) or

nonengineered (derived by some other means such as technical judgment).

Page 39 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

Table 4.2: Initial Estimates of Price

Reductions That Resulted From

Sacramento’s Workload Competitions

Dollars in thousands

Equipment group

Sacramento’s

costs

Winning

bid

Price

reduction

Percent

reduction

Sacramento Air Logistics Center

Fighting vehicle electronics $11,558 $3,715 $7,843 67.9

Electro-optics/night vision

equipment

174,024 48,102 125,922 72.4

Gyros 18,664 1,260 17,404 93.3

Radar 34,008 3,474 30,534 89.8

Test measurement

diagnostic equipment

22,278 1,235 21,043 94.5

Tobyhanna Army Depot

Airborne electronics 37,655 4,653 33,002 87.6

Radio 55,425 4,976 50,449 91.0

Intelligence & electronic

warfare

85,074 7,204 77,870 91.5

Wire/data

communications switches

26,513 1,358 25,155 94.9

Total $465,198 $75,977 $389,222 83.7

Note: Total may not add due to rounding.

Unnecessary Repairs

Eliminated

The substantial price reductions that CECOM achieved in its seven workload

competitions can be attributed, in part, to eliminating unnecessary repairs.

For most of the work Sacramento did before the competitions, the

customers’ work requests indicated that the depot was to return items to a

serviceable condition by inspecting them and then repairing only what was

broken. However, in some instances, the depot did not comply with the

requests but rather returned items to a “like-new” condition by completely

overhauling them. CECOM officials considered this level of repair to be

unnecessary and, as a result, emphasized that the bidding depots were to

submit price estimates for a level of repair that would return items to a

serviceable rather than a like-new condition.

It is important to note that the problem of performing unnecessary repairs

is not unique to Sacramento. For example, in 1992, we reported4

 that the

U.S. Army Tank-Automotive Command could have saved as much as

$1.1 million in fiscal year 1992 by eliminating the requirement for the Red

River Army Depot to overhaul all 6V53 engines (used in M113 personnel

4

Army Maintenance: Savings Possible by Stopping Unnecessary Repairs (GAO/NSIAD-92-176, May 5,

1992).

Page 40 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

carriers) and allowing the depot to (1) establish a pre-shop analysis

program and (2) perform only those repairs necessary to return the

engines to service. Similarly, in the same report, we indicated that the

Tooele Army Depot was completely overhauling certain items that

required only inspection and repair and that it was doing so without the

knowledge of its higher headquarters or the approval of its customers.

A comparison of two bids submitted by the Sacramento Air Logistics

Center for the first competition illustrates the impact that eliminating

unnecessary repairs can have. During their review of the Center’s initial

bid, CECOM officials discovered that the Sacramento Air Logistics Center

had assumed in its price estimates that items would be completely

overhauled and returned to a like-new condition. As a result, they asked

the Center to submit a revised bid for a level-of-effort that would return

items to a serviceable condition. Due primarily to an audit of the Center’s

initial proposal by the Defense Contract Audit Agency, the direct labor

rates5

 used in the revised bid were about 15 percent higher than those in

the initial bid. However, the impact of this increase was more than offset

by the change in repair philosophy. Overall, the Center’s bid was reduced

by nearly 60 percent.

Labor Standards Reduced Another reason for the substantial price reductions is the fact that bidding

depots reduced Sacramento’s labor standards. For example, the

Tobyhanna Army Depot reduced one labor standard from 16 hours to less

than 1 hour when one of its industrial engineering technicians determined

that (1) the item in question was a sealed unit and (2) the only requirement

was to clean and inspect the item. This, in turn, allowed Tobyhanna to

reduce its bid on these tasks by 94 percent.

The two competitions conducted by the Missile Command provided a

good indication of the overall impact of these reductions in labor

standards. Due largely to lower labor standards, the two competitions

reduced prices by 67.9 percent and 72.4 percent, respectively.6

The existence of inflated labor standards is a long-standing and

well-documented problem that was not unique to Sacramento. For

5

Direct labor rates represent the average cost of a direct labor hour. They include wages and benefits,

overhead costs, and miscellaneous adjustments.

6

As part of its effort to ensure that these large reductions were realistic, Missile Command officials

asked Sacramento technicians to scrub their labor standards for 15 items. In most cases, the standards

were reduced by at least 50 percent.

Page 41 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

example, in January 1991, the DOD Inspector General reported7 that the

labor standards for 22 maintenance and repair operations, involving 

6 types of Army, Navy, and Air Force aircraft, could be reduced by an

average of 34 percent. Inflated labor standards have persisted, in part,

because depots lacked an incentive to reduce their labor standards. In

fact, there is a disincentive because (1) labor efficiency, which compares

actual labor time with labor standards, is one of the factors maintenance

employees and supervisors are evaluated on and (2) reducing inflated

labor standards will result in a corresponding reduction in reported labor

efficiency. In addition, since sales prices are based partly on labor

standards, a reduction in labor standards will result in less sales revenue

and this, in turn, will make it more difficult for maintenance activities to

earn a profit.

More Cost-Effective Repair

Procedures Developed

In some instances, winning bidders for Sacramento’s workload were able

to reduce prices by developing more cost-effective repair procedures. For

example, the Sacramento Air Logistics Center substantially reduced the

cost of repairing the AN/TPQ-37 radar by developing a repair process for

the 359 “subarray modules” that are located in the radar’s antenna and that

are considered nonrepairable by the Army. About 60 of these

$4,400-subarray modules must be either replaced or repaired each time a

radar antenna is overhauled. With a projected workload of three antennas

a year and an estimated repair cost of $500 for each subarray module, the

decision to repair rather than replace the modules is projected to save

$3.5 million over 5 years.

Similarly, the Tobyhanna Army Depot was able to substantially reduce the

reported cost of repairing the AN/GRC-106 and AN/GRC-106A radios by

developing a method that more efficiently diagnosed faults in component

parts and accomplished related repairs. More specifically, the depot

designed and developed new test equipment, replaced labor-intensive

testing methods, and eliminated redundant tasks. With a combined

authorized and projected workload of 1,077 radios over 5 years and an

estimated average savings of $6,035 per radio, these actions are expected

to save $6.5 million over 5 years.

7

Management of Labor Standards for Airframes at Aeronautical Depots (Report No. 91-039, Jan. 1991).

Page 42 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

Strengthened

Buyer-Seller

Relationship Has

Generated Additional

Price Reductions

Another important benefit of the Sacramento Army Depot competitions is

that they strengthened the buyer-seller relationship that exists between

maintenance depots and their customers. For example, since the

competitions, the CECOM Depot Maintenance Competition Office has saved

the Command more than $12 million by providing the same type of

independent oversight over the winning depots that is routinely exercised

over private industry. More specifically, the Competition Office has cut

costs by (1) ensuring that prices were reduced when the scope of work

declined; (2) denying price increases when depots improperly

characterized work as being outside the scope of the memorandum of

agreement;8

 (3) using lessons learned during the competitions to negotiate

lower prices for repairing similar, noncompeted items; and (4) identifying

more cost-effective repair methods, such as using items that were

available in property disposal offices rather than requisitioning new items

from the supply system.

Prior to the competitions, CECOM rarely questioned the prices it paid public

depots for maintenance work because it generally lacked an incentive and

basis to do so. It lacked an incentive because DOD’s budget process usually

ensured that the Command received additional funding when the depots

increased their prices. It generally had no basis for questioning them

because it usually lacked either the data or the time and resources

required to evaluate the prices.

However, the competitions gave CECOM an incentive to question the depots’

prices. Command officials were concerned about the possibility that

depots would use “business as usual” practices to negate the

competition-generated price reductions that had been achieved. The

competitions also allowed the Command to question the depots’ prices

because, as discussed in the next section, the price reductions provided a

benchmark for evaluating the depots’ repair prices for similar, information

items9

 as well as noncompeted workloads.

8

Awards were made under a memorandum of agreement rather than a contract because the

government cannot legally contract with itself.

9

To reduce the cost of conducting the competitions, depots were only required to submit bids for

about 10 percent of the national stock numbers that were included in the nine equipment groups.

Prices for the remaining 90 percent of the items, which are referred to as “information” items, were to

be negotiated if and when repair requirements materialized for them.

Page 43 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

Price Reductions

Enhanced

Competitions’

Credibility

The Sacramento Air Logistics Center, Tobyhanna Army Depot, and the

CECOM Depot Maintenance Competition Office are further strengthening

the competition process by applying lessons learned during the

competitions to information items. Although the memorandums of

agreement did not specifically state that winning depots were expected to

use their competition labor rates to establish prices for information items,

this fact was well known to the competitors, and Sacramento and

Tobyhanna have now both agreed to do so. In addition, the Competition

Office has developed a methodology that uses the price reductions

achieved on bid items as a benchmark for evaluating the depots’ proposed

prices for information items.

The potential magnitude of these savings was demonstrated during the

negotiations for repairing the communication-electrical maintenance van,

AN/ASM-189A. The initial repair estimate, which is used by Army direct

and general support maintenance units to repair

communications-electronics items in the field, was $149,000. However, the

Depot Maintenance Competition Office’s analysis indicated that this was

too much for the work requested and asked Tobyhanna to provide

supporting documentation for the estimate. It then determined that the

initial price estimate was based on (1) a more extensive level of repair

than the Command wanted, (2) inflated labor standards, and (3) direct

labor rates that were much higher than the depot’s competition rates. This,

in turn, allowed the Competition Office to renegotiate a repair price of

$47,322, or a reduction of over $100,000 per van. Since the depot is

expected to have a projected workload of 87 vans over the next 4 years,

these negotiations are expected to reduce the Command’s depot

maintenance repair costs for fiscal years 1995 to 1998 by $8.9 million.

DOD’s Rationale for

Canceling

Competition Program

Is Questionable

DOD discontinued its public-public competition program in May 1994

because DOD officials believed that (1) interservicing10 could provide

similar efficiencies without the cost of conducting competitions and

(2) DOD databases and financial management systems do not provide

reliable information on the actual cost of specific workloads. At the same

time, for similar reasons, DOD discontinued the public-private competition

program. Although these actions are consistent with the conclusions and

recommendations of an April 1994 Defense Science Board study11 and a

10Interservicing occurs when maintenance is performed by the organic capability of one military

service in support of another military service.

11Report of the Defense Science Board Task Force on Depot Maintenance Management (Apr. 1994).

Page 44 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

July 1994 interim report by the accounting firm of Coopers and Lybrand,12

our analysis indicates that the rationale is questionable. Specifically:

• Interservicing is accomplished for 8 percent of the workload that is

considered suitable,13 and it is unlikely that this percentage will increase

significantly in the future.

• Although DOD has long-standing and well-documented problems with its

databases and financial management systems, action can be taken to

circumvent these problems and ensure fair competitions.

Interservicing Is Not Likely

to Significantly Increase

GAO and others have reported on redundancies and underutilization in

DOD’s depot maintenance operations and have recommended increased

integration of the services’ depot maintenance operations. However, DOD’s

recent BRAC experience indicates that interservicing is unlikely to increase

significantly. The BRAC Commission’s July 1993 report to the President

expressed concern about the limited amount of interservicing

arrangements that had been implemented during the preceding 20 years

and about DOD’s failure to even consider interservicing alternatives during

the 1993 BRAC process. The report encouraged DOD to ensure that

interservicing alternatives were adequately considered during the 1995

round of base closures.

Prior to the 1995 BRAC round, the Deputy Secretary of Defense directed

that DOD’s input to the 1995 BRAC process be based on a cross-service

analysis. In response, a joint cross-service group did (1) analyze the

capacity of 24 facilities to maintain and repair 57 equipment commodities,

such as aircraft engines and landing gear; (2) recommend consolidating 

13 workloads at single sites and other workloads at two or more locations;

and (3) propose several additional depot closures. However, the military

services adopted few of these recommendations and very little

interservicing resulted.

Similarly, on May 4, 1994, the Deputy Secretary of Defense noted that

redundant aviation repair capability existed and directed the Secretaries of

the Navy and the Air Force to develop a coordinated plan for consolidating

depot maintenance workload for fixed-wing aviation across service

boundaries. He also suggested that the services strongly consider jointly

managing and operating a single depot. However, these initiatives never

12Coopers & Lybrand, Public versus Private Competition, Preliminary Case Studies (July 1994).

13Some workloads, such as the Air Force’s large cargo and strategic bomber aircraft and the Navy’s

ships, are not considered suitable for interservicing.

Page 45 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

came about, and each of the services developed its 1995 BRAC input

independent of the other services.

Although DOD’s March 1995 report to Congress outlined a new joint

interservicing methodology, it was not scheduled to be implemented until

after the 1995 BRAC process was completed. Furthermore, there is little

support to suggest that this process will overcome the traditional

impediments to increased interservicing. In fact, the 1993 BRAC

Commission concluded that service parochialism will prevent DOD from

developing streamlined and integrated operations until all maintenance

depots are consolidated under a single joint service organization.

We reported the same findings in our 1993 depot maintenance testimony.14

 We noted that the services have had many opportunities to work

cooperatively over the past 35 years, but have failed to do so. Thus, some

form of centralized management external to the military services appears

to be needed. We also noted that strong, effective leadership would be

particularly critical as DOD makes decisions about core requirements and

workload transfers related to the 1993 BRAC closures. This did not occur.

As will be discussed in chapter 5, workloads were generally transferred to

other depots owned by the same service or to the private sector.

Actions Taken and Needed

to Improve Competitions

and Ensure Their Fairness

Although we share DOD officials’ concern about the reliability of depot

maintenance data and the adequacy of management information systems,

we do not believe these long-standing and well-documented problems

should preclude DOD from conducting future competitions. DOD had

already taken numerous actions to enhance the credibility and fairness of

the competitions before it canceled its competition program in May 1994.

In addition, other actions can be taken to further improve the

competitions and ensure their fairness.

Many of the actions DOD has taken to improve public-public competitions

were summarized in our September 30, 1993, correspondence15 to the

Chairman, Subcommittee on Defense, Senate Committee on

Appropriations. These actions include (1) developing a cost comparability

handbook that, among other things, identifies the adjustments that should

be made to public depots’ bids as a result of differences in the services’

accounting systems and (2) directing the Defense Contract Audit Agency

14Depot Maintenance: Issues in Management and Restructuring to Support a Downsized Military

(GAO/T-NSIAD-93-13, May 6, 1993).

15Depot Maintenance (GAO/NSIAD-93-292BR, Sept. 30, 1993).

Page 46 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

to certify that successful bids include comparable estimates of all direct

and indirect costs.

The correspondence also identified additional actions that could be taken

to further improve the competitions. These include (1) ensuring that

Defense Contract Audit Agency auditors receive the technical support they

need to properly evaluate the depots’ bids and (2) requiring the Agency to

conduct incurred cost audits to verify that the depots could perform the

work for the bid amount. In addition to these DOD-wide actions, some

depots have independently improved the quality and accuracy of their

maintenance databases, systems, and processes, including cost

accounting. For example, one of the basic problems that we and others

have pointed out with the Air Force’s accounting system is that actual

costs are accumulated at the maintenance shop level rather than at the job

level. Because of this condition, a shop that performs both competed and

noncompeted work could offset losses on its competed workloads with

profits from its noncompeted workloads. However, at several depots, this

deficiency was significantly mitigated by creating shops that worked only

on competed workloads.

The Ogden Air Logistics Center has made a particularly noteworthy effort

to overcome the deficiencies in its management information systems. At

our recommendation, the Center Commander implemented a broad-based

financial management improvement program that included developing and

implementing the Depot Maintenance Business Area Policies and

Procedures Handbook. This handbook addresses financial management

policies, procedures, and responsibilities; internal controls; and other key

areas. Defense Contract Audit Agency officials reviewed drafts of the

handbook and worked with Center officials to refine the policies and

procedures. So far, the new policies and procedures have been

implemented for competition programs and the entire aircraft directorate.

According to Defense Contract Audit Agency officials who recently

audited the Center’s aircraft directorate, the current and planned controls

address previously identified internal control weaknesses. They noted that

although Ogden’s accounting systems may be different than the private

sector’s, the same types of internal controls required of defense

contractors are being implemented, including certification of employee

time charges and improved tracking of material costs.

Finally, recognizing the need for improved internal controls throughout

DOD’s depot system, the Under Secretary of Defense (Logistics) established

Page 47 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

an integrated process team to help improve DOD’s financial management

and internal controls systems. In addition, Coopers and Lybrand will be

working with a depot from each service to implement the required

improvements.

Competition Not

Appropriate for All

Workloads

Managers at the Sacramento Air Logistics Center and Tobyhanna Army

Depot—the two depots that won all nine of the Sacramento Army Depot

competitions—believe public-public competitions can be used effectively

to redistribute at least part of closing depots’ workloads. However, they

cited several reasons why competition should not be used for all

workloads. For example, because the competition process can be costly,

labor-intensive, and time-consuming, they believe competition is generally

not a cost-effective tool for redistributing either relatively small workloads

or workloads that may not materialize. Sacramento managers also

indicated that problems related to the services’ incompatible data systems

limit the benefits of conducting interservice competitions for relatively

small workloads.

Center managers also had a more general concern about the use of

public-public competitions for redistributing closing depots workloads.

Specifically, the lengthy competition process, combined with the fact that

employees from the closing depots were generally not allowed to transfer

with the workload, led to low morale at the closing depots and, in turn, to

several undesirable side effects. For example, they found technical data in

the trash and inoperative test equipment that appeared to have been

sabotaged. However, these managers acknowledged that problems such as

these can be minimized and the learning curve virtually eliminated if

workers from the closing depot are allowed to transfer to the depot that

wins the competition.

Conclusions The nine competitions conducted for the Sacramento Army Depot’s

workload demonstrated that public-public competitions can be used

effectively to redistribute closing depots’ work, primarily because they

give depots and their customers an incentive to reengineer the work.

However, despite the benefits of public-public competitions, the Deputy

Secretary of Defense canceled the public-public competition program as

well as the public-private competition program. DOD officials (1) believe

DOD can use interservicing to gain similar efficiencies without the cost of

conducting competitions and (2) were concerned about the adequacy of

DOD’s databases and financial management systems.

Page 48 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 4 

Public-Public and Public-Private

Competitions Can Be Effective Tools for

Redistributing Workloads

For some DOD workloads, particularly relatively large and stable core

workloads that are moved because of depot closures, public-public

competitions are a cost-effective method of allocating the workload. The

savings often occur because competitions force depots to reengineer the

workloads, thereby improving their processes and procedures. Because

little of the services’ total workload is likely to be competed, increased

emphasis and oversight is needed to ensure reengineering is also applied

to noncompeted workloads, starting with the largest and most stable

workloads.

Because DOD has made limited progress over the last 20 years in

interservicing workloads, it appears unlikely that this cost-reduction tool

will be used on a widespread basis. We agree that DOD’s long-standing and

well-documented problems with its databases and financial management

systems make it more difficult to conduct public-public competitions, and

we believe that correcting these problems should be given high priority.

However, in the interim, because of the significant savings that have

resulted from competitions, it appears public-public and public-private

competition should continue to be used to create more efficient and

effective depot operations.

Although some initiatives have been undertaken to improve the depots’

accountability of costs, this effort has not had sufficient priority. Further,

when DOD canceled the competition program, it removed the incentive for

implementing improvement initiatives.

Recommendation We recommend that the Secretary of Defense implement a high-priority

program to resolve internal control deficiencies in depot management

systems.

Agency Comments DOD officials concurred with our recommendation to assign a high priority

to implementing an improvement program to resolve internal control

deficiencies in depot management systems. They have identified

improvement initiatives and established an integrated product team

composed of several representatives from each of the services to

implement the initiatives.

Page 49 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

Despite widespread agreement that DOD can and should reduce its depot

maintenance costs by transferring closing depots’ workloads to more

cost-effective sources of repair, the military services are not adequately

considering opportunities to transfer work to other services’ depots.

Further, the Air Force is privatizing most of AGMC’s depot maintenance

workload. The existing statute requires that before privatizing depot

maintenance workload valued at $3 million or more, competitive

procedures be used that include public entities. DOD terminated its

public-private competition program in May 1994. DOD officials differed on

the applicability of the statute to the AGMC privatization.

Interservicing Is

Encouraged, but

Frequently Not

Considered

Congress has long been a strong proponent of using interservicing to

streamline and reduce the cost of depot maintenance operations. In

addition, DOD’s March 1995 report1

 to the House Committee on

Appropriations indicated that the greatest potential for achieving

interservicing savings comes from reallocating closing depots’ workloads.

However, the military services have not generally considered

interservicing alternatives for their closing depots’ workloads unless

(1) the BRAC Commission specifically directed them to do so or (2) another

service’s depot was already performing the same work.

Use of Interservicing Is

Encouraged but Not

Required

According to 10 U.S.C. 2469, the Secretary of Defense should use

merit-based selection procedures that consider all of DOD’s depot-level

activities when transferring workloads valued at $3 million or more from

one depot to another. However, the Conference Report on this provision

indicates that the use of merit-based selection procedures should not

affect the orderly flow of work resulting from base closure decisions.

Consequently, DOD does not require the use of merit-based procedures

unless a BRAC Commission specifically directs the services to do so.

Instead, it allows the services to determine if using merit-based selection

procedures impedes the orderly flow of work from their closing depots.

Military Services Retain

Control Over Most of Their

Closing Depots’ Work

Ten maintenance depots were recommended for closure or realignment

during the 1988, 1991, and 1993 BRAC rounds.2

 As discussed in chapter 4,

the commission-mandated competitions that were conducted for the

1

Report on Depot Maintenance Interservicing, Prepared for the House Committee on Appropriations

(Mar. 1995).

2

In addition, the Army’s Pueblo Depot Activity’s mission to repair the Pershing missile ended with the

deactivation of the missile in fiscal year 1992.

Page 50 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

Sacramento Army Depot’s workload demonstrated that reengineering a

closing depot’s workload could produce substantial savings. However, just

moving maintenance workloads from one depot to another has generally

not resulted in the work being “reengineered.” Instead, a vast majority of

work is merely being transferred as quickly as possible to the parent

services’ remaining depots.

Implementation of 1988

Recommendations

After the 1988 BRAC Commission recommended realigning the

Lexington-Bluegrass Army Depot’s maintenance workload, the Army

transferred (1) the depot’s communications-security and

communications-electronics maintenance missions to the Tobyhanna

Army Depot, (2) its supply stocks and the Quality System Engineering

Center to the Letterkenny Army Depot, and (3) the Central Test

Measurement and Diagnostic Equipment Activity and the Materiel

Readiness Support Activity to its Redstone Arsenal. Additionally, some

depot maintenance workload remained at a contractor facility on the

depot, and the Ionization Radiation Dosimetry Center moved to the

Redstone Arsenal in September 1995.

Implementation of 1991

Recommendations

The Sacramento Army Depot and the Philadelphia Naval Shipyard were

recommended for closure during the 1991 round of base realignments and

closures.

As discussed in chapter 4, based on the BRAC Commission’s

recommendation, the Army redistributed the Sacramento Army Depot’s

workload based on the results of nine public-public competitions

conducted between the Sacramento Air Logistics Center and various Army

depots. The depot’s maintenance mission ended in February 1994.

The Philadelphia Naval Shipyard’s primary workload, the Service-Life

Extension program, is being phased out and, as a result, there will be no

major workload realignments associated with closing the shipyard. Certain

elements of the shipyard, such as the drydocks, were to be preserved3

 and

others, such as the propeller facility and the Naval Inactive Ships

Maintenance Facility, were to remain active. The shipyard’s projected

operational closure date is September 1996.

Implementation of 1993

Recommendations

The 1993 BRAC Commission recommended closing three naval aviation

depots (Pensacola, Norfolk, and Alameda); two naval shipyards

3

The Secretary of Defense’s February 28, 1995, report to the Chairman of the BRAC Commission

indicated that it was no longer necessary to preserve these elements.

Page 51 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

(Charleston and Mare Island); and AGMC. It also recommended realigning

the Tooele Army Depot.

As discussed in more detail in the next section, the Navy plans to transfer

most of its closing naval aviation depots’ workloads to the remaining

depots. The major exceptions are (1) work on H-1 and H-60 helicopters is

being transferred to the Corpus Christi Army Depot, which is already

performing nearly identical work for the Army; (2) work on the T-56 and

501K engines is being transferred to the San Antonio Air Logistics Center,

which is already performing nearly identical work for the Air Force; and

(3) work on the H-3 helicopter was competed in the private sector.

Altogether, these five workloads account for about 10 percent of the

closing naval aviation depots’ total workload. In some cases, the Navy

awarded bridging contracts to private contractors while workloads are

being transferred from one military depot to another.

The Charleston Naval Shipyard’s major shipboard work has been

redistributed to the remaining shipyards, and its only major4

 nonshipboard

operation, the Modular Maintenance Facility, is being transferred to the

Naval Command, Control, and Ocean Surveillance Center, In-Service

Engineering, East. The shipyard’s projected operational closure date is

April 1996.

The Mare Island Naval Shipyard’s shipboard work has also been

redistributed to the remaining shipyards, and its only major nonshipboard

operation, Ocean Engineering, is being transferred to the Puget Sound

Naval Shipyard. The shipyard’s projected operational closure date is

April 1996.

The Air Force awarded two contracts to private contractors who will

perform much of AGMC’s current operations. Under this

privatization-in-place concept, the Air Force will retain ownership over the

depot plant equipment. The base and facilities will be conveyed to a local

community entity, such as a port authority, and it will (1) manage and

maintain the property, (2) lease space to the contractor, and (3) lease

space to the government for certain activities. Based on its determination

that the program management function of AGMC’s metrology and

calibration function is an “inherently governmental” function, the Air

Force will retain 115 government civilians. About 10 percent of AGMC’s

workload was interserviced from the Army and the Navy. These services

are transferring this workload to other depots or the private sector. On

4

The Navy defines a major workload as one that requires at least 200 people.

Page 52 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

December 15, 1995, the Air Force awarded a cost-reimbursable contract to

Rockwell International (Avionics and Missile Systems Division) for the

remaining navigation/guidance system repair work covering a transition

period plus four 1-year options. The contractor operation will be fully

implemented by the first quarter of fiscal year 1997.

The Army has not yet determined the ultimate disposition of most of the

Tooele Army Depot’s workload. The Army initially planned to transfer

most of this work to the Red River Army Depot. However, the 1995 BRAC

Commission recommended that most of Red River’s depot maintenance

workload be transferred to either other depots or the private sector. The

Army is now considering whether to privatize-in-place much of this

workload at Red River. Some workloads have already been contracted out

to private firms.

Finally, although most of the work from Tooele and closing naval aviation

depots is first being transferred to one of the parent services’ remaining

depots, service managers noted that much of this workload could

ultimately go to the private sector. They acknowledged that this two-step

process is not as efficient as transferring the work directly to the private

sector, but they believe it is necessary. They said that because contracting

out work to the private sector—developing statements of work, soliciting

and evaluating bids, and awarding the contracts—is time-consuming and

labor-intensive, the closure of the depots could be significantly delayed if

they were not allowed to use this two-step process.

Navy Did Not Use

Competition or

Adequately Consider

Interservicing

Alternatives

The Navy missed an opportunity to save money when it decided to transfer

most of the work from its three closing naval aviation depots to the three

that are remaining open. First, Navy officials decided not to conduct any

public-public competitions that would have delayed closing the depots.

Further, the Navy did not consider interservicing for most of its closing

depots’ workloads.

The Navy’s reason for not conducting public-public competitions appears

valid for the Pensacola depot, but not for the other two. Although the BRAC

law allows DOD 6 years to completely close bases, Navy officials believe

they could save more money by closing the Pensacola depot in 2 years and

the Alameda and Norfolk depots in 3 years. They believe these accelerated

closure schedules would not provide sufficient time to conduct

public-public competitions.

Page 53 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

Our analysis indicates that accelerating the closure of the Pensacola depot

was necessary because the depot had to vacate its facilities before two

other BRAC actions—the movement of the Navy’s Bureau of Personnel to

the Memphis Training Command’s facility and the movement of the

Memphis Training Command to the Pensacola depot’s facilities—could

proceed. However, the Navy would have had sufficient time to compete at

least a portion of the Alameda and Norfolk depots’ workload. For

example, as shown in table 4.1, most of the competitions conducted for

the Sacramento Army Depot’s workload took less than 2 years to

complete. In addition, the Navy completed a private-private competition

for the Pensacola depot’s H-3 helicopter workload in less than a year.

Although the Navy could not have feasibly conducted public-public

competitions for all of the closing depots’ workloads, it could have

conducted at least a few competitions during the 3-year closure period.

Navy Did Not Consider

Interservicing

The Navy did not consider Air Force depots when planning to redistribute

most of its workloads because its industrial policy calls for private

contractors to perform noncore workloads and for Navy depots to

perform core workloads. This policy reflects all the services’ desire to

control the maintenance for their own systems—so they will have the

technical competence and resources to respond to emergency

requirements. The services have generally not been willing to assume that

another military service would provide responsive support when needed,

and they have justified retaining their own depots by pointing out that title

10 gives the service secretaries the responsibility for providing logistics

support.

This “service core” concept was endorsed by the Defense Science Board

Depot Maintenance Task Force in its April 1994 report to Congress, but it

is inconsistent with the “DOD core” concept that is DOD’s stated policy. In a

May 1994 memorandum that implemented many Task Force

recommendations, the Deputy Secretary of Defense indicated that DOD’s

policy is to identify core requirements on an agencywide basis rather than

at the service level.

However, it is not clear that DOD actually approaches the core concept

from an agencywide perspective. For example, we recently reported that

even though an Air Force depot won a competition for repairing F-18

aircraft, the Navy—with Office of the Secretary of Defense

concurrence—was allowed to retain F-18 core capability in a Navy depot

Page 54 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

while the Air Force depot received only the minimum number of aircraft.5

According to DOD officials, although they plan to identify core

requirements on an agencywide basis, each service will be allowed to

retain core capability in its own depots for service-unique systems—even

if another service’s depot has similar systems and equipment.

The extent to which DOD intends to consolidate commodities across

service lines is also unclear. Although the Defense Depot Maintenance

Council identified some DOD centers of technical excellence, this has not

resulted in significant movement toward additional consolidations. For

example, the Ogden Air Logistics Center has been designated the DOD

center of technical excellence for aircraft landing gear, but the Navy

continues to overhaul its landing gear in Navy depots.

Public-Private

Competitions Not

Used in Allocating

AGMC Depot

Maintenance

Workloads

The Air Force is privatizing-in-place the AGMC workload. Title 10 U.S.C.

2469 requires that the performance of depot-level maintenance workloads

valued at $3 million or more should not be changed to performance by a

contractor unless the change is made using competitive procedures that

include public entities. However, in May 1994, DOD discontinued its

public-private competition program, citing fairness concerns in comparing

public and private costs. Consequently, DOD is not allowing its depots to

compete for closing depot workloads until the Defense Finance and

Accounting Service certifies that adequate procedures and accounting

systems are in place to identify and track all pertinent costs.

Some DOD officials stated that the DOD and BRAC Commission

recommendation recognized privatization as an option for AGMC’s

workload; therefore, they did not believe a competition was required.

Other officials stated that only a direct recommendation incorporated into

the BRAC report would permit privatization without competition. Still other

DOD officials said that the statute’s application is unclear and should be

clarified.

Our 1994 report on the AGMC privatization noted that privatization-in-place

could increase rather than decrease the costs of accomplishing the AGMC

workload.6 A later cost estimate projected that over a 5-year period, the

privatization option may cost $600 million more than costs that would

5

Depot Maintenance: The Navy’s Decision to Stop F/A-18 Repairs at Ogden Air Logistics Center

(GAO/NSIAD-96-31, Dec. 15, 1995).

6

Aerospace Guidance and Metrology Center: Cost Growth and Other Factors Affect Closure and

Privatization (GAO/NSIAD-95-60, Dec. 9, 1994).

Page 55 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

have been incurred had the depot continued operations as a military

depot. This projection included estimates for contract costs and

nonrecurring costs as well as various recurring costs to the government as

a result of privatization-in-place—such as costs for government-furnished

material; government civilian personnel who will continue to function at

AGMC for program management of the metrology and calibration mission;

lease and investment; research, development, test and evaluation; and

contract administration and management. After awarding the AGMC

contract, DOD officials stated that given the decision to close AGMC, they

believe the privatization-in-place will be cost-effective. However, officials

acknowledged that it will be several years before costs under a

cost-reimbursable contract will be known. Further, in addition to the

contract costs, other costs incurred because of AGMC’s closure and

privatization would have to be considered in a cost comparison between

privatization and operation as a military depot.

Conclusions The military services can substantially increase the savings from closing

unneeded depots by transferring the work to the most cost-effective

source of repair. However, because the services’ want to retain control

over their own depot maintenance operations and DOD has been unable to

force them to rely on one another, the services are not taking advantage of

ways to cut costs and are expeditiously transferring closing depots’ work

to one of their remaining depots.

DOD is not using public-public or public-private competitions in public

depots to compete for workloads being transferred from closing deports.

Recommendations We recommend that the Secretary of Defense

• maximize the use of competitive procedures and merit-based selection

criteria by including military depots in determining the most cost-effective

source of repair for workloads that have not yet been transferred from

closing depots and

• require the services to reengineer workloads that are redistributed from

closing depots on any basis other than competition, starting with the

largest and most stable workloads.

Page 56 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

Agency Comments Our draft report included a recommendation that DOD reinstitute

public-public and public-private competitions. However, according to DOD

officials, a November 1994 Office of the Secretary of Defense

memorandum reinstituted public-private competitions under certain

conditions.

Despite this memorandum, we did not find any evidence that the

public-private competition program has been reinstituted. DOD has not

conducted a public-private competition since terminating the program in

1994, and DOD activities have dismantled their competition offices. Further,

DOD’s March 1995 report to Congress on the public-private competition

program stated that it cannot reinstitute these competitions until adequate

cost accounting and data systems are in place. Yet no criteria has been

established for determining if depots meet the required standards. Finally,

the November 1994 memorandum addressed depot maintenance

workloads of other federal agencies, such as Federal Aviation

Administration ground control equipment and Coast Guard boats, rather

than DOD maintenance workloads.

We continue to support the need for the competition program. Our

January 1996 report on the Navy aviation public-private competition

program recommended that the Secretary of Defense (1) reinstitute

public-private competition for depot maintenance workloads as quickly as

possible; (2) develop and issue guidelines regarding the conditions,

framework, policies, procedures, and milestones for reinstating

competitions; and (3) require the Defense Contract Audit Agency to review

internal controls and accounting policies and procedures of DOD depots to

ensure they are adequate for identifying, allocating, and tracking costs of

depot maintenance programs and to ensure that proper costs are

identified and considered as part of the bids by DOD depots.7

 Although our

draft report sent to DOD for comment also contained a specific

recommendation that DOD reinstitute its public-private competition

program, to avoid repetition, we have deleted the recommendation from

our final report. However, we are continuing to recommend in this report

that DOD maximize the use of competitive procedures that include military

depots to determine the most cost-effective source of repair for handling

workloads from closing depots.

DOD officials generally agreed that reengineering workloads could be

beneficial and noted DOD requires that workload standards be reviewed.

7

Navy Maintenance: Assessment of the Public-Private Competition Program for Aviation Maintenance

(GAO/NSIAD-96-30, Jan. 22, 1996).

Page 57 GAO/NSIAD-96-29 Closing Maintenance Depots
Chapter 5 

Workload Redistribution Decisions Did Not

Adequately Consider Some Alternatives

However, recent personnel reductions have eliminated many of the

government workers who would have conducted these analyses. We

continue to believe that reengineering efforts would increase productivity

and cost reductions in the depot maintenance program and that DOD

should prioritize its reengineering efforts where savings opportunities are

the greatest.

Page 58 GAO/NSIAD-96-29 Closing Maintenance Depots
Page 59 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

The services’ maintenance depots have primary responsibility for

maintaining, overhauling, and repairing most major systems and system

components, including aircraft, helicopters, ships, tanks, artillery, support

vehicles, missiles, and ammunition. The maintenance depots are a

controlled source of technical capability for repairing and manufacturing

mission-essential equipment and components that support peacetime

operations or a surge capability in the event of total mobilization or some

other national defense contingency. The depots also provide engineering

services for the production and development of hardware design changes.

Furthermore, they furnish technical teams to provide field maintenance of

equipment as needed in emergencies.

Army Depots From the Revolution until World War II, the Army’s equipment

maintenance needs were mostly contracted out. During the 19th century,

in-house maintenance work, consisting mostly of rifle and other gun

repair, as well as carriage repair, was done in the Army’s arsenals, which

also manufactured guns. The number of arsenals tended to rise and fall

according to the various wars and other military actions that occurred in

the 19th and early 20th centuries.

About the time of World War I, the Army began to acquire larger

equipment such as trucks and tanks, which typically require more

maintenance than rifles, guns, and carriages. Still, most maintenance work

between World Wars I and II continued to be contracted out. Finally,

during and after World War II, large-scale, in-house equipment

maintenance began in earnest when the Army acquired massive quantities

of new, modern equipment.

By the 1970s, the Army’s depot maintenance work was centralized at a

limited number of depots compared to previous years. In 1976, 10 depots

performed maintenance work in the continental United States and 2 in

Europe. Between 1983 and 1985, Army depot maintenance personnel

strengths increased to over 20,000, their highest level ever. At that time,

the organic program represented approximately 67 percent of the total

Army direct depot maintenance program funding. During the mid-1980s,

the Army lost some of its organic depot maintenance workload, staffing,

and capacity. By 1988, only six depots were still performing maintenance

work in the United States and only one in Europe. Sierra, Seneca,

Sacramento, and New Cumberland depots had stopped performing

maintenance work in the United States and in Europe, the Mainz Depot

Page 60 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

was closed. However, as its in-house maintenance capability declined, the

Army increased its reliance on commercial sources, reversing a long trend.

Although the Department of Defense’s (DOD) input to the 1995 Base

Closure and Realignment (BRAC) process recommended closing the Red

River Army Depot and transferring the light combat vehicle maintenance

mission to the Anniston Army Depot, the BRAC Commission disagreed. The

Commission found that although Anniston has the capacity to accept

ground combat vehicle depot maintenance workload from Red River, this

would place too much risk on readiness. It recommended realigning Red

River Army Depot by moving all maintenance missions, except for that

related to the Bradley fighting vehicle series, to other depot maintenance

activities, including the private sector.

Navy Shipyards In 1799, Congress authorized five naval shipyards to be located at

Portsmouth, New Hampshire; Boston, Massachusetts; New York, New

York; Philadelphia, Pennsylvania; and Norfolk, Virginia. The Mare Island

and Puget Sound shipyards were authorized in 1852 and 1891, respectively.

The last four naval shipyards were authorized in this century: Charleston,

in 1901; Pearl Harbor, in 1908; San Francisco (Hunters Point), in 1919; and

Long Beach, in 1940.

From the earliest years, through World War I, naval shipyards were the

principal logistics support element in the Navy’s shore establishment. In

addition to building and repairing ships, naval shipyards provided many

support activities, such as supply support, medical and dental care, and

training facilities. During the period between the World Wars, additional

shore facilities were established to support the fleet and provide a wide

range of support services. Naval shipyards were thus able to focus on their

industrial mission of building, maintaining, and modernizing Navy ships.

Employment peaked at over 380,000 personnel during World War II.

In 1968, naval shipyards stopped building ships in order to concentrate on

repairing an increasingly complex fleet. This enabled the private sector to

focus more on new construction. From the mid-1960s to the mid-1970s, the

Navy closed three nonnuclear shipyards—New York, Boston, and Hunters

Point—leaving six nuclear-capable and two nonnuclear naval shipyards.

These closure decisions were made after careful studies indicated that

there was excess capacity for the foreseeable peacetime and mobilization

workloads.

Page 61 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

During the post-Vietnam years, naval shipyards’ employment peaked at

80,000 in 1983. Since then, naval shipyard employment levels have

declined due to improved ship design techniques, reduced force levels,

changes in maintenance philosophy, and austere budgets. As a result, the

Philadelphia Naval Shipyard was selected for closure during the BRAC 1991

process and the Mare Island and Charleston naval shipyards were selected

for closure during the BRAC 1993 process. All three shipyards will close in

1996. The employment level of the remaining five naval shipyards is

projected to be 29,520 by the end of fiscal year 1996.

DOD recommended closing the Long Beach Naval Shipyard while retaining

(1) the sonar dome in a government-owned, contractor-operated facility

and (2) family housing units needed to fulfill Department of the Navy

requirements. The 1995 BRAC Commission concurred with this

recommendation.

Navy Aviation Depots The first naval aviation maintenance depot was established in 1917 at

Norfolk, Virginia, and was named the Construction and Repair

Department. In 1923, this unit and two others formed by then—one at

North Island and one at Pensacola—were redesignated as assembly and

repair departments. In 1948, their names were changed to overhaul and

repair departments. Prior to 1967, the aviation depots were under the

cognizance of their respective air stations. The status of overhaul and

repair departments at the six Navy and one Marine Corps air stations was

changed in 1967 to that of separate commands, each called a naval air

rework facility and directed to report to the Commander of the Naval Air

Systems Command instead of the air station commanding officer. In 1987,

the name naval aviation depot replaced the name naval air rework facility

to more accurately reflect the range of their activities.

In 1973, the Naval Air Rework Facility, Quonset Point, Rhode Island, was

closed under the Navy Shore Establishment Realignment Program. This

was the first naval aviation depot to close in recent history. The 1993 BRAC

Commission called for closing three more naval aviation depots—those

located in Norfolk, Virginia; Pensacola, Florida; and Alameda, California.

The depots remaining open are located at the Marine Corps Air Station at

Cherry Point, North Carolina; the Naval Air Station at North Island, San

Diego, California; and the Naval Air Station at Jacksonville, Florida.

The naval aviation depots went from a high of 35,690 employees in 1967, to

14,797 employees in 1995. Further planned reductions from closures and

Page 62 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

downsizing are projected to reduce the number of employees to 10,707 by

1999.

DOD did not recommend additional aviation depot closures as a result of

the 1995 BRAC process. However, it did recommend closing the Naval

Surface Warfare Center, Louisville, Kentucky, which provides mission

support for naval gun systems and the Naval Air Warfare Center, Aircraft

Division, Indianapolis, Indiana, which provides in-service technical

engineering support for naval avionics and electronics. Although these

activities had not been previously categorized as depots, their missions

include functions that the Air Force conducts in its in-house maintenance

depots and that are largely funded by depot maintenance funding.

Marine Corps Depots The two Marine Corps maintenance depots are now called

multicommodity maintenance centers. The oldest, in Albany, Georgia, was

established as the Repair Branch of the Marine Corps Supply Center in

1954. The other, located in Barstow, California, was established in 1961 as

the Yermo Complex. The facilities have grown over the years as a result of

additional mission responsibilities and the expansion of their industrial

production capabilities. Today, each facility has just over 1,000 civilian

employees and 10 Marine Corps officers. Each generally supports the

same systems and commodities, except that Albany also supports the

Marine Corps Maritime Prepositioning Forces program. Both Albany and

Barstow perform a combination of intermediate and depot maintenance

activities.

Air Force Depots From 1918 to 1939, the Army Air Corps, from which the Air Force was

created after World War II, operated four air depots. With the threat of

global conflict in 1939, two additional depots were constructed. During

World War II, the number of depots increased to 12. After the war, three

depots were deactivated. In the early 1950s, during the Korean Conflict,

the Air Force invested $1.8 billion to upgrade the remaining nine depots,

which became part of the Air Materiel Command. A 10th depot was

activated in 1961 to house laboratories and management activities for the

Air Force’s metrology and calibration program and depot repair of inertial

navigation systems for intercontinental missile systems and aircraft. The

Air Force entered the 1960s with over 145,000 personnel at 10 logistics

centers, including 62,000 depot maintenance personnel. In 1963 and 1964,

4 of the 10 depots were closed. The remaining six became the base of the

Air Force Logistics Command in support of the Vietnam Conflict. Five of

Page 63 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

the six were located on multifunction logistics bases called air material

areas, which were responsible for both wholesale supply and depot

maintenance activities for Air Force weapon systems and equipment. By

the end of the 1960s, the Air Force Logistics Command had been reduced

to 112,000 employees, including 50,000 depot maintenance personnel.

During the 1970s, the Air Force consolidated individual repair activities at

its 6 depots, reducing the number from 52 to 20. This realignment

eliminated duplicate repair sources for many commodity items. During the

early 1980s, Air Force logistics operations grew as U.S. military forces

were increased during the Reagan years. The Air Force undertook a major

capitalization improvement program to modernize the depot industrial

base with modern plant equipment and technological advancements. The

Air Force Logistics Command employed 90,900 employees in 1986,

including 40,800 depot maintenance personnel. In the 1990s, downsizing,

consolidations, and cuts were made to the Air Force depot system, and the

Air Force Logistics Command merged with the Air Force Systems

Command to form the Air Force Material Command. Depot maintenance

manning was reduced by 17 percent between 1990 and 1991. In 1995, the

Air Force Material Command had 28,520 depot maintenance personnel.

The type of depot maintenance work accomplished at each of the Air

Force depots includes the following:

• Ogden Air Logistics Center: strategic missiles, aircraft, air munitions,

photo/reconnaissance, and landing gear;

• Oklahoma City Air Logistics Center: aircraft, engines, oxygen equipment;

• Sacramento Air Logistics Center: space/ground

communications-electronics, aircraft, hydraulics, and instruments;

• San Antonio Air Logistics Center: aircraft, engines, and nuclear equipment;

• Warner Robins Air Logistics Center: aircraft, avionics, propellers, and life

support systems; and

• Aerospace Guidance and Metrology Center: inertial guidance and

navigation systems and components and displacement gyroscopes for

intercontinental ballistic missiles and most Air Force aircraft.

The 1993 BRAC Commission recommended closing the Aerospace Guidance

and Metrology Center, Newark, Ohio, which is being privatized-in-place.

Although DOD did not recommend any additional depots for closure in

1995, the BRAC Commission recommended closing the San Antonio Air

Logistics Center and Sacramento Air Logistics Center, which the Air Force

also plans to privatize-in-place. The Air Force also has one depot-level

Page 64 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

activity in Colorado Springs, Colorado, which performs software

maintenance on Air Force space systems. This activity is not funded using

depot maintenance funds and is not officially categorized as a depot. It is

staffed with a combination of government and contractor personnel. Air

Force contractors also maintain several government-owned,

contractor-operated facilities used for repairing specific Air Force

systems.

Other Depot Facilities

Naval Weapons Stations The five existing naval weapons stations are descendants of the naval

ammunition depots of World War II. However, these depots are no longer

the major providers and maintainers of naval ordnance that they were in

the past. In the 1970s, the Army, under the single manager concept, was

assigned responsibility for producing and maintaining most of the Navy’s

high-volume conventional munitions and missiles. The naval weapons

stations now maintain only small volume, miscellaneous items.

Naval Surface Warfare

Center

The Naval Surface Warfare Center, Crane Division, supports the

development, production, evaluation, and maintenance of electronic and

mechanical products integral to combat weapon systems. The Crane

Division employs about 5,380 personnel. Commissioned in 1941 as a naval

ammunition depot, Crane was one of four inland activities constructed to

load, store, and issue ammunition to the fleet. Today, the Crane Naval

Surface Weapons Center serves as a modern sophisticated leader in

diverse and highly technical product lines, such as microwave devices,

acoustic sensors, and microelectronic technology.

The Louisville, Kentucky, site of the Crane Division was commissioned by

the Navy in 1941 to produce ordnance material and munitions for World

War II. Louisville employed 4,480 personnel at its peak during World 

War II. Today, it provides major overhaul and engineering support for

naval gun and missile launching systems. It is the Navy’s center for

producing small weapon system parts using flexible computer integrated

manufacturing technologies and methods.

Naval Undersea Warfare

Center

The Navy’s undersea warfare munitions capability was originally

established in 1914. In recent years, depot maintenance for undersea

Page 65 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

warfare systems has been consolidated at the Naval Undersea Warfare

Center, Keyport, Washington. The consolidation was done to recognize the

inherent efficiencies of having a single national depot maintenance center

for the Navy’s family of torpedoes. Among its assigned duties, the Naval

Undersea Warfare Center is responsible for maintaining and repairing

undersea weapons and systems, underwater targets, and countermeasure

devices.

Since the end of the Cold War, workload at the Undersea Warfare Center

has followed a downward trend like the other warfare centers. Direct

workload has declined from a peak of 821 work years in the late 1980s to

609 work years in fiscal year 1994, representing a 27-percent decline. The

workforce has declined by over 800 personnel.

Space and Naval Warfare

Systems Command

The Space and Naval Warfare Systems Command relies on two

maintenance depots for repairing electronic systems. The Command’s

western depot, at San Diego, California, is its major depot facility and

serves as the designated overhaul point and repair facility for assembly

modules and printed circuit boards drawn from electronic warfare, special

communications, teletype, crypto, and communications equipment. The

depot has grown from a small 80-person calibration and repair shop in

1966 to a complex that in September 1994 employed 100 government

personnel and 175 personnel of a government-owned, contractor-operated

facility.

The Command’s eastern depot at Norfolk, Virginia, is the former Naval

Electronic Systems Engineering Center, Portsmouth, Virginia. It is a

contractor-owned, contractor-operated facility. As of September 1994, it

had 133 personnel assigned.

Defense Logistics Agency The Defense Logistics Agency maintains an industrial plant equipment

repair facility in Mechanicsburg, Pennsylvania. The facility was originally

established as a Navy activity during World War II but was assigned in the

early 1960s to Defense Depot, Mechanicsburg. It performed depot

maintenance repair for industrial plant equipment for all of the services.

Under the Defense Logistics Agency, the facility continues to provide

worldwide support to all of DOD. Its mission is to maintain, repair, rebuild,

retrofit, and install industrial equipment. The facility specializes in

repairing computerized numerical controlled metal working machinery. It

Page 66 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix I 

History of the Services’ Depot Systems

also can provide support for most types of equipment used in industrial

and maintenance support operations and employs 129 civilian employees.

Page 67 GAO/NSIAD-96-29 Closing Maintenance Depots
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Julia Denman, Project Director

Edward Waytel, Evaluator

San Francisco

Regional Office

Karl Gustafson, Deputy Project Director

John Schaefer, Senior Evaluator

Bob Tomcho, Evaluator

Eddie Uyekawa, Senior Evaluator

Cincinnati Regional

Office

Frank Lawson, Senior Evaluator

Los Angeles Regional

Office

Dennis DeHart, Senior Evaluator

Jean Orland, Evaluator

(709042) Page 68 GAO/NSIAD-96-29 Closing Maintenance Depots
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100