United States General Accounting Office

GAO Report to Congressional Committees

January 1998 PUBLIC-PRIVATE

COMPETITIONS

DOD’s Determination

to Combine Depot

Workloads Is Not

Adequately Supported

GAO/NSIAD-98-76

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279018 

January 20, 1998

The Honorable Strom Thurmond

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ronald Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

As required by the National Defense Authorization Act for Fiscal Year 1998

(1998 Defense Authorization Act),1

 this report is in response to one of our

several reporting requirements relating to the public-private competitions

for maintenance workloads at two closing Air Force maintenance depots.

Specifically, the act provides that certain depot-level maintenance and

repair workloads now being performed at the closing San Antonio, Texas,

and Sacramento, California, Air Force maintenance depots may be

combined in a solicitation for a single contract. However, this can only be

done if the Secretary of Defense determines that the individual workloads

cannot as logically and economically be competed separately. Further, the

Secretary must submit to Congress a report setting forth the determination

together with the reasons for the determination. Lastly, we are required to

review and provide our views to Congress on any such report not later

than 30 days after it is issued.

In accordance with the act, the Department of Defense (DOD) issued the

required determination and accompanying reports on December 19, 1997.2

This report provides our views on the adequacy of the support for DOD’s

determinations that the workloads at the two centers “cannot as logically

and economically be performed without combination by sources that are

potentially qualified to submit an offer and to be awarded a contract to

1

Appendix I lists the other depot maintenance reporting requirements contained in the act.

2

The Deputy Secretary of Defense delegated to the Under Secretary of Defense (Acquisition and

Technology) the authority to decide whether individual workloads cannot as logically and

economically be performed without combination and to submit reports to Congress. These

determinations and accompanying reports were provided to the President of the Senate and the

Speaker of the House of Representatives.

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perform those individual workloads.” However, as discussed later, it was

impossible for us to fully evaluate the support for the DOD report on

Sacramento because the Air Force refused to give us adequate or timely

access to contractor studies. These studies were cited in the DOD report as

indications that consolidating the workloads at Sacramento offered the

most logical and economic performance possibilities.

Background As a result of a 1995 Defense Base Realignment and Closure Commission

recommendation, Kelly Air Force Base, Texas, is to be realigned and the

San Antonio Air Logistics Center, including the Air Force maintenance

depot, is to be closed by 2001. Additionally, McClellan Air Force Base,

California, and the Sacramento Air Logistics Center, California, including

the Air Force maintenance depot, is to be closed by July 2001. To mitigate

the impact of the closing on the local communities and center employees,

the administration, in 1995, announced its decision to maintain certain

employment levels at these locations. Privatization-in-place was one of the

initiatives to be used in achieving these employment goals.

Since that decision, there has been a continuing debate between Congress

and the administration over the process for deciding where, and by whom,

the workloads at the closing depots would be performed.3

 Central to this

debate are concerns about the excess facility capacity that exists at the Air

Force’s three remaining maintenance depots and the legislative

requirement, 10 U.S.C. 2469, that workloads exceeding $3 million in value

that are being moved from a public depot to private sector performance

must be subject to a public-private competition.4

 Based on congressional

concerns raised in 1996, the Air Force revised its privatization-in-place

plans to provide for competitions between the public and private sectors

as a means to decide where the depot maintenance workloads will be

performed. The first competition was for the C-5 aircraft depot

maintenance workload, which the Air Force awarded to the Warner

Robins depot in Georgia on September 4, 1997.5

3

The workloads performed at these activities include such things as the KC-135 aircraft, ground

communications equipment, and hydraulics and other commodities at the Sacramento depot and the

F100, T39, and T56 engines and fuel accessories at the San Antonio depot. See appendix II for a more

detailed description of the workloads performed at each activity.

4

We have issued several reports addressing these issues. For more details see related GAO products at

the end of this report.

5

Public-Private Competitions: Processes Used for C-5 Aircraft Award Appear Reasonable

(GAO/NSIAD-98-72, Jan. 20, 1998).

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During 1997, Congress continued to provide oversight of DOD’s strategy for

allocating workloads currently performed at the closing depots. The 1998

Defense Authorization Act required that we and DOD analyze various issues

related to the competitions at the closing depots and report to Congress

concerning several areas. The act provides special procedures for

public-private competitions for the San Antonio and Sacramento

workloads and requires that we review the solicitations and the

competitions to determine if DOD has complied with the act and applicable

law.

Further, Congress was concerned that the workloads be offered to

competitors in the most logical and economical manner. Consequently, the

act requires that a solicitation may be issued for a single contract for the

performance of multiple depot-level maintenance or repair workloads,

only if (1) the Secretary of Defense determines in writing that the

individual workloads cannot as logically and economically be performed

without combination by sources that are potentially qualified to submit an

offer and to be awarded a contract to perform those individual workloads,

(2) the Secretary submits a report setting forth the determination together

with the reasons for the determination, and (3) the solicitation of offers for

the contract is issued more than 60 days after the date on which the

Secretary submits the report.

Results in Brief It may be that the individual workloads at the closing San Antonio, Texas,

and Sacramento, California, Air Force maintenance depots cannot as

logically and economically be performed without combination by sources

that are potentially qualified to submit an offer and be awarded a contract

to perform those individual workloads. However, the DOD reports and

supporting data do not provide adequate information supporting the

determinations.

First, there is no analysis of the logic and economies associated with

having the workload performed individually by potentially qualified

offerors. Consequently, there is no support for determining that the

individual workloads cannot as logically and economically be performed

without combination by sources that would do them individually. Air

Force officials stated that they were uncertain as to how an analysis of

performing the workloads on an individual basis would be done. However,

Air Force studies indicate that the information to make such an analysis is

available. For example, in 1996 the Air Force performed analyses for six

depot-level workloads performed by the Sacramento depot to identify

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industry capabilities and capacity. Individual analyses were accomplished

for hydraulics, software, electrical accessories, flight instruments, A-10

aircraft, and KC-135 aircraft depot-level workloads. As a part of these

analyses, the Air Force identified sufficient numbers of qualified

contractors interested in various segments of the Sacramento workload to

support a conclusion that it could rely on the private sector to support

these workloads.

Second, the reports and available supporting data did not adequately

support DOD’s determination “that the individual workloads cannot as

logically and economically be performed without combination by sources

that are potentially qualified to submit an offer and to be awarded a

contract to perform those individual workloads.” For example, DOD’s

determination report relating to the Sacramento Air Logistics Center,

McClellan Air Force Base, California, states that all competitors indicated

throughout their Sacramento workload studies that consolidating

workloads offered the most logical and economical performance

possibilities. This statement was based on studies performed by the

offerors as part of the competition process.6

 However, one offeror’s study

states that the present competition format is not in the best interest of the

government and recommended that the workload be separated into two

competitive packages. We were unable to determine whether the other

two contractor studies support the statement in the DOD report that all

competitors favored consolidating the workloads because the Air Force

did not provide us adequate or timely access to the studies cited in the

report.

DOD’s Reports Do Not

Provide Sufficient

Support for the

Determination

DOD’s reports and supporting data do not provide adequate support for the

determinations that the Sacramento and San Antonio competition

workloads cannot as logically and economically be performed without

combination by sources that are potentially qualified to submit an offer

and to be awarded a contract to perform those workloads. While each

report presents reasons for performing the workload at a single location, it

does not provide any reasons why the individual workloads cannot be

logically and economically performed without combination. Further,

certain key statements contained in the reports are not well supported.

6

Prior to the planned competition, the Air Force engaged three offerors to identify work processes at

Sacramento and determine how those processes could be performed more efficiently.

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DOD Reports Presented

Rationale for Performing

the Workloads at a Single

Location

On December 19, 1997, DOD submitted determinations and accompanying

reports to the President of the Senate and the Speaker of the House of

Representatives. The reasons provided in the reports generally discussed

the potential for achieving economies at integrated industrial facilities and

the reduced risk of transitioning a combined workload managed under a

single contract. More specifically, the key points were:

• The workloads are currently performed at integrated facilities with

common backshop (areas where individual work processes are

performed) resources and a shared pool of highly skilled workers.

• With a larger workload base achieved through combining individual

workloads, significant cost savings can be achieved through process

improvements.

• Combining workloads into one solicitation helps to establish and retain a

stable skilled workforce by leveling out the unpredictable requirements

inherent in the separate workloads.

• Combined workloads create an incentive for the successful offeror to

invest in capital equipment since there will be enhanced opportunities for

a more significant return on investment.

• A single solicitation reduces the risks that would be associated with

multiple transitions.

Reports and Available

Supporting Data Do Not

Address Soliciting the

Work in Individual

Segments

A review of DOD’s reports and supporting documentation shows that DOD

did not do any analysis to determine the logic or economics of having the

workload performed by separate offerors. As a consequence, we had no

basis for assessing how DOD considered this issue in making its

determinations. Air Force officials indicated they were uncertain about

how to perform this analysis. However, our work indicates that there is

sufficient information to make an analysis of the logic and economics of

having solicitations for individual workloads.

Reports Do Not Analyze

Logic and Economics of

Individual Solicitations

DOD’s reports identified workload segments, but did not comment as to

whether these segments were a logical or economical way to segment the

workload for purposes of individual solicitations to be considered in the

DOD determinations. Further, the reports did not analyze the logic or

economies that may or may not be associated with the breakout of these

or any other specific segments of work at either Sacramento or San

Antonio depot. The DOD reports identified the following work segments at

the two closing depots:

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• KC-135 aircraft, A-10 aircraft, hydraulics, instruments/electronics,

electrical accessories, and backshop support services at Sacramento, and

• F100 turbine engine (noncore work), TF39 turbine engine, T56 turbine

engine, fuel accessories, engine electronics, TF39 two-level maintenance,

and T56 two-level maintenance at San Antonio.7

A responsible air staff official stated that he believed the reports met the

requirements of the act and the approach used for presenting the material

is a matter of judgment. The official also said that guidance and

instructions, regarding how to approach drafting the determination and

report, were provided orally to the San Antonio and Sacramento program

offices responsible for the competitions. Consequently, there is no written

documentation regarding the process used in preparing the reports.

Program management officials at Sacramento said that the acquisition

strategy the Air Force has adopted was to combine the workloads to be

competed into one solicitation and that it was too late to change that

approach. Further, they stated they did not know how to go about

analyzing the logic and economies of individual workload breakouts. Thus,

they relied on the institutional knowledge of center officials and on

information developed by offerors who were studying the Sacramento

workload to explore business development approaches for reducing costs.

Program management officials at San Antonio said that they believe the

only way to test whether separate workload packages would be more or

less cost-effective would be to hold a competition where the workloads

could be done either in combination or separately. They further stated that

the strategy of combining the engine workloads has been in place since

1995 and to change strategies now is not practical given the time

constraints.

Information Is Available to

Evaluate Logic and Economic

Analysis of Individual

Solicitations

We recognize that the Air Force has considerable latitude to choose the

process and format for meeting the legislative reporting requirement.

However, we believe that the reports, as presented, do not fully address

the requirement as it relates to the logic and economic analysis of

individual solicitations. Regarding the reports’ content, our review shows

that there was no discussion of the logic and economics of individual

workloads that might be performed without combination by sources that

are potentially qualified to submit an offer and to be awarded a contract to

perform those individual workloads. Further, as discussed in the following

paragraphs, we believe that there is sufficient information available to

make an analysis of that issue.

7

As we understand it, core workloads refers to those workloads that are necessary to maintain

minimum facilities, equipment, and skilled personnel necessary to ensure a high level of technical

expertise and combat readiness repair capabilities in a military depot.

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Other Air Force studies show that the Air Force has analyzed information

related to the performance of individual workloads by qualified offerors.

For example, in late 1996, the Air Force accomplished repair base analyses

for six depot-level workloads currently performed by the Sacramento

depot. The objective of each analysis was to identify industry capabilities

and capacity to repair and overhaul specific workloads. Individual

analyses were accomplished for the hydraulics, software, electrical

accessories, flight instruments, A-10 aircraft, and KC-135 aircraft

depot-level workloads.

These analyses indicate that there are substantial numbers of private

sector companies willing and able to maintain and repair the Sacramento

workloads. For each type of workload, the analyses identified a number of

companies with the capabilities, capacities, and interest in repairing

specific commodities or selected portions of the workload. The analyses

show that while some firms were interested in the entire workload

associated with a commodity, other firms were primarily interested in

repairing only their own proprietary items or selected classes of items.

Some firms stated that they could not or did not want to be responsible for

an entire commodity or for the packaged workload of all six commodities.

Most firms also wanted to perform the work in their own facilities. Some

constraints were noted but were expected to be overcome by, among

other ways, supplying companies with available government-furnished

equipment and test stands.

To illustrate, 10 private sector companies were surveyed for their

capabilities and capacities to perform hydraulics maintenance. Three of

the companies were commercial airlines. The analyses concluded that

each airline had extensive depot repair and overhaul capabilities,

backshop support, well organized and managed repair processes, and well

developed supplier networks. All three were judged to have the capacity

and interest in performing hydraulics work for the Air Force, but would

require military test stands. Five equipment manufacturers were also

assessed and all expressed an interest in performing repairs only on their

own proprietary items. The remaining two firms (a manufacturer of

automated hydraulics test equipment and the company currently managing

the recently privatized Air Force Aerospace Guidance and Metrology

Center) expressed some interest in assuming the workload under a

privatization-in-place arrangement. The analyses found similar results for

the other five Sacramento workloads.

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Other Air Force studies also show that analyses can be made evaluating

the logic and economies of alternative breakouts and transfers of

individual segments of work. In recent years, the Air Force has conducted

many analyses of the cost-effectiveness of alternative repair sources. For

example, in developing recommendations for the 1995 base closure and

realignment process, the Air Force conducted an analysis of alternative

movements of workload among the five Air Force depots. The Air Force

evaluation, which was considered to be a regular part of the depot

workload planning process, was designed to evaluate the feasibility and

cost-effectiveness of realigning 35 commodity or process workloads. As a

result of this process, the Air Force proposed major workload

realignments that were projected to result in net savings of $138.7 million

during a 6-year implementation period.

While we recognize that the studies previously mentioned do not address

the specific analysis called for in the 1998 Defense Authorization Act, we

do believe they illustrate that information is available or could be

developed to specifically address the legislative mandate. Further, we

believe various prior Air Force workload planning studies, including the

two we previously cited, illustrate that information is available or could be

developed to specifically address the legislative mandate.

Concerns About the Adequacy

of Support for Some

Statements in DOD’s Reports

Our review of DOD’s Report of Determination to Combine Multiple

Depot-Level Maintenance and Repair Workloads for Sacramento and San

Antonio workloads also identified several questions about the adequacy of

support for some specific statements in the reports.

Concerns Related to

Sacramento Determination

We question the adequacy of support for the Sacramento Determination

Report in the following areas.

• The report states that all competitors indicated throughout their separate

workload studies for Sacramento that consolidating workloads offered the

most logical and economical performance possibilities. As support for this

statement, the report referred to individual studies that had been prepared

by the three potential offerors for the Sacramento workloads. However,

the objectives of these studies were not the same as those identified by the

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authorization act.8 Further, one offeror’s study states that the present

competition format is not in the best interest of the government. More

specifically, the SM-ALC Depot Workload Competition Study Contract

Extension Transition Report, December 15, 1997, stated that the KC-135

workload should either be competed separately if the estimated quantity

remains at 35 aircraft, or transferred to an existing public depot if the

estimated quantity is reduced to 15—the number of aircraft currently

produced at Sacramento. This option also recommended that for various

reasons, other segments of the work should also be transferred to other

depots. A second option recommended in this study was that the

Sacramento workload be separated into two competitive

packages—aircraft and commodities—with the A-10 workload being

transferred within the Air Force rather than being included in the

competition package. These statements are inconsistent with the overall

generalization presented in DOD’s report. We were unable to fully evaluate

the support for the report because the Air Force did not give us adequate

or timely access to the contractor studies.

• The report states that workloads share common facilities and equipment

in seven areas such as plating, sheet metal, and machining, which are used

across the workloads for a variety of tasks. Further, the report states that

the combination of this workload provides the offerors with a greater

opportunity to maintain and operate efficient combined facilities and

provide an avenue for significant cost savings through process

improvements. However, workload data indicates that while common

equipment and facilities may be shared, the workload performed in

common facilities represents a relatively insignificant amount, thus raising

questions about the likelihood of achieving significant savings. For

example, of the 1.8 million direct labor hours estimated for the

Sacramento competition workload, about 114,000 hours, or 6 percent, of

the work is done in common facilities. Thus, while there may be

opportunities for cost savings by sharing these facilities; the savings

opportunities, contrary to the statement in DOD’s report, are not significant.

• The report states that a single competition for all of the workloads

provides for a single coordinated transition of the common areas, which

8

The strategy implemented by the Air Force for the public-private competition for the Sacramento

depot maintenance workloads is to conduct the program in two phases: one for the study contract(s),

and one for the maintenance contract(s). Each phase has a separate statement of work. The primary

objectives for the study contract are for the offerors to (1) become familiar with the workloads

available for competition, understand current maintenance processes and systems, and identify areas

for improvement; (2) explore business development approaches for reducing costs and /or adding

value to the maintenance acquisition; and (3) make recommendations for development of the

maintenance contract solicitation. Three offerors—two private contractors and one public depot were

each awarded $750,000 contracts for this effort. The studies were submitted by each contractor and

the depot in October 1997. The study phase was extended to expand the scope and the offerors were

required to submit final studies for the extended phase on December 15, 1997. The DOD report to

Congress on the Sacramento determination referenced these studies.

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will reduce the risks associated with managing multiple transitions. While

we agree that there can be risks associated with the transition of any

workload, the report and supporting documentation contained no

evidence that this risk is any greater than a single transition of a larger

workload. Further, as a part of prior depot closures and its workload

leveling process, the Air Force has successfully transitioned many

individual workloads from one location to another.

Concerns Related to San

Antonio Determination

We question the adequacy of support for the San Antonio determination

report in the following areas.

• We have an overall concern that there is no supporting documentation for

the report. In discussing this issue with San Antonio officials, they

indicated that they did not provide any analytical data supporting the

report. According to them, they based their reasons on the professional

judgment of senior officials at the San Antonio Air Logistics Center.

• The report states that the combination of the San Antonio workload

provides the offerors with a greater opportunity to maintain and operate

an efficient facility and provides an avenue for significant cost savings

through process improvements. However, these same opportunities exist

to achieve efficiencies for individual workloads performed either at the

existing facility or in combination with the same or similar workloads in

other existing facilities.

• The report states that a single competition for all of the workloads

provides for a single coordinated transition mitigating the risk of managing

multiple transitions of mission critical engines. As with our concern about

the Sacramento report, we agree that there can be risks associated with

the transition of any workload. However, the report contained no evidence

that this risk is any greater than a single transition of a larger workload.

Further, these risks have been successfully managed in the past.

Conclusions DOD’s reports and supporting documentation do not provide adequate

support for its determinations that the individual workloads at the

Sacramento and San Antonio depots cannot as logically and economically

be performed without combination by sources that are potentially

qualified to submit an offer and to be awarded a contract to perform those

workloads.

Agency Comments On January 15, 1998, we provided DOD a draft of this report for comment.

DOD informed us that, given the short amount of time available, it chose

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not to comment on the report at this time. The scope and methodology for

our review are discussed in appendix III.

We are sending copies of this report to the Secretaries of Defense and the

Air Force; the Director, Office of Management and Budget; and interested

congressional committees and members. Copies will be available to others

upon request. If you have any questions about this report, please contact

me at (202) 512-8412. Major contributors to this report are listed in

appendix IV.

David R. Warren, Director

Defense Management Issues

Page 11 GAO/NSIAD-98-76 Public-Private Depot Competition
Contents

Letter 1

Appendix I 

Summary of Our

Depot Reporting

Requirements

Contained in the

National Defense

Authorization Act for

Fiscal Year 1998

14

Appendix II 

Overview of San

Antonio and

Sacramento Depot

Maintenance

Workloads

16

Appendix III 

Scope and

Methodology

20

Appendix IV 

Major Contributors to

This Report

22

Related GAO Products 26

Tables Table II.1: Sacramento Depot Aircraft Workload Breakout for

Fiscal Years 1995-97

16

Table II.2: Sacramento Depot Commodity Workload Breakout for

Fiscal Years 1995-97

17

Page 12 GAO/NSIAD-98-76 Public-Private Depot Competition
Contents

Table II.3: San Antonio Depot Engine Workload Breakout for

Fiscal Years 1995-97

18

Abbreviations

DOD Department of Defense

Page 13 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix I 

Summary of Our Depot Reporting

Requirements Contained in the National

Defense Authorization Act for Fiscal Year

1998

The National Defense Authorization Act for Fiscal Year 1998 contains

several depot-related reporting requirements for our office.

I. Report on DOD’s Compliance With 50-Percent Limitation (section 358)

The act amends 10 U.S.C. 2466(a) by increasing the amount of depot-level

maintenance and repair workload funds that the Department of Defense

(DOD) can use for contractor performance from 40 to 50 percent and

revises 10 U.S.C. 2466(e) by requiring the Secretary of Defense to submit a

report to Congress identifying the percentage of funds expended for

contractor performance by February 1 of each year.

Within 90 days of the annual DOD report’s submission to Congress, we must

review the DOD report and submit our views to Congress on whether DOD

has complied with the 50-percent limitation.

II. Reports Concerning Public-Private Competitions for the Depot

Maintenance Workloads at the Closing San Antonio and Sacramento

Depots (section 359)

The act adds a new section 2469a to title 10 of the United States Code,

which provides for special procedures for public-private competitions

concerning the workloads of these two closing depots. It also requires that

we report in the following areas:

First, the Secretary of Defense is required to submit a determination to

Congress if DOD finds it necessary to bundle any of the workloads into a

single solicitation. We must report our views on the DOD determination

within 30 days.

Second, we are required to review all DOD solicitations for the workloads

at San Antonio and Sacramento, and to report to Congress within 45 days

of the solicitations’ issuance regarding whether the solicitations provide

“substantially equal” opportunity to compete without regard to

performance location and are otherwise in compliance with applicable

laws and regulations.

Third, we must review all DOD awards for the workloads at the two closing

Air Logistics Centers and report to Congress within 45 days of the contract

awards on whether the procedures used complied with applicable laws

and regulations, provided a “substantially equal” opportunity to compete

without regard to performance location, determine if “appropriate

Page 14 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix I 

Summary of Our Depot Reporting

Requirements Contained in the National

Defense Authorization Act for Fiscal Year

1998

consideration was given to factors other than cost” in the selection, and

ascertain whether the selection resulted in the lowest total cost to DOD for

performance of the workload.

Fourth, within 60 days of its enactment, the 1998 Defense Authorization

Act requires us to review the C-5 aircraft workload competition and

subsequent award to the Warner Robins Air Logistics Center and report to

Congress on whether the procedures used provided an equal opportunity

for offerors to compete without regard to performance location, were in

compliance with applicable law and the Federal Acquisition Regulation,

and whether the award results in the lowest total cost to DOD.

III. Report on Navy’s Practice of Using Temporary Duty Assignments for

Ship Maintenance and Repair (section 366)

The act requires us to report by May 1, 1998, on the Navy’s use of

temporary duty workers to perform ship maintenance and repair at

homeports not having shipyards.

Page 15 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix II 

Overview of San Antonio and Sacramento

Depot Maintenance Workloads

Sacramento At the time it was identified for closure during the 1995 base realignment

and closure process, the Air Force’s Sacramento depot had responsibility

for repair of four aircraft and four commodity groups. The depot also had

a significant body of manufacturing or repair work it performed in small

quantities for various non-Air Force customers. Additionally, it had a

microelectronics facility that performed reverse engineering on parts to

provide technical data to support parts manufacturing or developing repair

procedures.

Two of the four aircraft repaired at the Sacramento depot will not be

included in the competition package. F-15 repair is being consolidated at

the Warner Robins depot, which is the F-15 center of excellence and

already performs most of the F-15 work. The EF-111 repair requirement is

expected to end, as that aircraft is phased out of operations. KC-135 and

A-10 aircraft requirements are expected to be included in the Sacramento

competition package. The KC-135 aircraft is currently repaired at the

Oklahoma City depot and at a contractor facility in Birmingham, Alabama.

Table II.1 provides production hours for 1995, 1996, and 1997 for the

KC-135 and A-10 aircraft. The KC-135 workload may be increased in the

competition package. The future A-10 requirement is expected to decrease

and to be erratic as that aircraft is phased out of the inventory.

Table II.1: Sacramento Depot Aircraft

Workload Breakout for Fiscal Years

1995-97

Direct production actual hours based on customer orders

1995 1996 1997

KC-135 823,755 1,045,027 696,760

A-10 77,090 102,819 87,939

Total 900,845 1,147,846 784,699

As recommended by the 1995 Base Realignment and Closure Commission,

the Sacramento depot’s largest commodity grouping—ground

communications and electronics, which has a projected workload of about

825,000 hours—is being transitioned to the Tobyhanna Army Depot

between 1998 and 2001. The Sacramento depot’s software maintenance

workload has been declining significantly and the remaining software

work is expected to be transferred outside the competition process to the

Ogden depot. The remaining commodity groups currently repaired at

Sacramento include hydraulics, instruments and avionics, and electrical

accessories.

Table II.2 provides an overview of the actual direct labor hours incurred

between fiscal year 1995 and 1997 for the commodity groupings currently

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Appendix II 

Overview of San Antonio and Sacramento

Depot Maintenance Workloads

repaired at the Sacramento depot that are expected to be a part of the

competitive package.

Table II.2: Sacramento Depot

Commodity Workload Breakout for

Fiscal Years 1995-97

Direct production actual hours based on customer orders

1995 1996 1997

Hydraulics 449,803 479,702 436,659

Electrical Accessories 377,765 350,979 291,449

Instruments & Avionics 325,626 289,300 312,226

Total 1,153,194 1,119,981 1,040,334

The Air Force made a core assessment of the Sacramento competition

workloads, including a repair base analysis of the private sector.1

 Through

this process, which was approved by the Defense Depot Maintenance

Council, none of the Sacramento workload was determined to be a core

workload.

San Antonio At the time of closure, the San Antonio depot consisted largely of

modification and repair of aircraft, turbine engines, and support

equipment, along with a smaller amount of nuclear ordnance work and

engine software. The source of repair for the C-5 aircraft was determined

through a separate public-private competition. That workload was won by

the Warner Robins military depot, which assumed responsibility for the 

C-5 workload in November 1997, with work-in-process continuing at San

Antonio until the summer of 1998. The Warner Robins depot inducted its

first C-5 aircraft in January 1998. The nuclear ordnance commodity

management workload is being transferred outside the competition to

Ogden, Oklahoma City, and Kirkland, with the bulk of the work going to

Ogden.

Table II.3 shows a breakout of the San Antonio engine workload based on

direct production actual hours for fiscal years 1995 through 1997.

1

As we understand it, core capabilities consist of the minimum facilities, equipment, and skilled

personnel necessary to ensure a high level of technical expertise and combat readiness by maintaining

weapon systems, or components in a military depot. The objective of the repair base analysis was to

identify industry capabilities and capacity to repair and overhaul specific workloads.

Page 17 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix II 

Overview of San Antonio and Sacramento

Depot Maintenance Workloads

Table II.3: San Antonio Depot Engine

Workload Breakout for Fiscal Years

1995-97

Direct production actual hours

1995 1996 1997

F100 1,693,031 1,688,945 1,414,954

T56 627,199 917,017 981,068

TF39 462,704 676,837 654,632

Total 2,782,934 3,282,799 3,050,654

For various reasons, the engine competition will not include all of the

engine workload currently performed at the San Antonio depot. For

example, core workload will be moved outside the competition process to

the Oklahoma City depot. Further, as previously noted, statutory limits on

the percentage of depot maintenance work that can be performed by the

private sector may result in some of the engine workloads that might

otherwise be included in the competition being transitioned to the

Oklahoma City depot outside the competition process.

The Air Force made a core assessment of the Air Force engine workloads

at the San Antonio and Oklahoma depots. As a result of this process,

which included a repair base analysis, the Air Force determined that

capability to repair about 24 percent of the annual F100 engine module

workloads and 50 percent of the workload required to maintain capability

to repair and check out whole engines—or about nine whole

engines—should be retained in a military depot. Accordingly, the Air

Force is planning to transition the F100 core workload to the Oklahoma

City depot outside the engine competition.

With regard to the San Antonio non-core engine workload, the engine

competition package is expected to include non-core F100 engine repair

and checkout, which is expected to be about 9 whole engines per year; the

remaining F100 modules (or about 76 percent of the workload currently

repaired in-house at the San Antonio depot); F100 exchangeable spares

workload, which consists of components below the module level; TF39

two-level maintenance; and Air Force and Navy T-56 maintenance. The Air

Force also plans to transition several other San Antonio workloads that

the Air Force determined to be non-core, including gas turbine engines,

independent of the competition. A key factor in how much of the non-core

engine work will be included in the competition package is the statutory

requirement that at least 50 percent of the funds made available for the Air

Force’s depot maintenance work is expended for performance by DOD

employees as required by 10 U.S.C. 2466. According to Air Force officials,

they plan to include the F100, T56, and TF39 engines in the competition

Page 18 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix II 

Overview of San Antonio and Sacramento

Depot Maintenance Workloads

package. It is unknown how the Air Force will adjust the competition

package to accommodate any limitations resulting from the 50/50

requirement. For example, the competition package may or may not

include fuel accessories for these engines. The fuel accessories workload

involves fuel system components such as filters, valves, pumps, manifolds,

fuel/oil coolers, fuel controls, bleed cylinders, actuators, temperature

sensors, spray rings, pressure switches, and refueling receptacles. The

fiscal year 1996 fuel accessories workload was 464,000 manhours and is

projected to decline to 277,000 manhours in fiscal year 2001.

Air Force

Management

Structure for the

Sacramento and San

Antonio Competitions

The Air Force is expected to use a similar management structure to

administer and manage the Sacramento and San Antonio competitions as

it used for the C-5 competition. That would include a program office and

evaluation team at each center, as well as an advisory council and source

selection official at Air Force Headquarters. The program office has

general responsibility for preparing and managing the request for

proposals. The evaluation team reports its assessments to the council

made up of representatives from the Office of the Secretary of Defense,

Air Force Headquarters, and Air Force Materiel Command staff. The team

reviews the assessment and advises the source selection official.

Page 19 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix III 

Scope and Methodology

The scope of our work included a review of the reports provided by the

DOD to Congress pursuant to section 2469a(e) added to title 10 of the

United States Code by section 359(a) of the National Defense

Authorization Act for fiscal year 1998, and other information relevant to

the preparation of these reports.

Our methodology for an analysis of DOD’s reports included a review of

(1) information contained in the reports; (2) documentation and other data

supporting the reports; (3) discussions with Air Force officials responsible

for preparing the reports and managing depot maintenance workloads;

(4) discussions with contractor officials who are planning to participate in

the competitions for workloads currently performed at the Sacramento

and San Antonio depots; (5) a review of related Air Force studies, reports,

and data; (6) our prior work regarding related depot maintenance issues;

and (7) a review of applicable laws and regulations.

Beginning December 18, 1997, we repeatedly requested access to studies

prepared for the Air Force under contract with Boeing Aircraft Company

and AAI. These studies are cited in the DOD report on Sacramento as

support for the determination that the individual workloads in Sacramento

cannot as logically or economically be competed separately. The Air Force

declined to provide adequate or timely access to the studies. According to

the Air Force, the companies that prepared the studies were concerned

that they contain competition sensitive and proprietary information.

After efforts to resolve this matter informally, on January 8, we sent a

formal request for the studies to the Secretary of Defense pursuant to 

31 U.S.C. 716(b), citing our statutory right of access to the studies. The Air

Force did not agree to let us see the studies until January 14, 1998, and the

Air Force limited our review to reading the documents in Air Force offices

and required that without further permission no notes, copies or other

materials could leave those premises. This limited opportunity to read the

studies came too late for us to adequately determine whether they

supported the DOD report.

Further, because the reports and supporting documentation did not

contain information related to individually performing the workloads at

closing depot by individual potential offerors, we were unable to review

DOD’s position on that issue. As a result using information available, we

assessed the adequacy of support of the reports’ statements and the

determinations contained therein.

Page 20 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix III 

Scope and Methodology

We conducted this review and are reporting our findings within the 30-day

period allowed by the statute. We conducted our review between

December 17, 1997, and January 20, 1998, in accordance with generally

accepted government auditing standards.

Page 21 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix IV 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

James Wiggins, Associate Director

Julia Denman, Assistant Director

Office of General

Counsel

John Brosnan, Assistant General Counsel

Dallas Field Office Penney Harwell, Evaluator-in-Charge

Larry Junek, Deputy Project Manager

John Strong, Site Senior

Pam Valentine, Evaluator

Chicago Field Office Bruce Fairbairn, Senior Evaluator

Page 22 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix IV 

Major Contributors to This Report

Page 23 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix IV 

Major Contributors to This Report

Page 24 GAO/NSIAD-98-76 Public-Private Depot Competition
Appendix IV 

Major Contributors to This Report

Page 25 GAO/NSIAD-98-76 Public-Private Depot Competition
Related GAO Products

Public-Private Competition: Processes Used for C-5 Aircraft Award Appear

Reasonable (GAO/NSIAD-98-72, Jan. 20, 1998).

DOD Depot Maintenance: Information on Public and Private Sector

Workload Allocations (GAO/NSIAD-98-41, Jan. 20, 1998).

Air Force Privatization-in-Place: Analysis of Aircraft and Missile System

Depot Repair Costs (GAO/NSIAD-98-35, Dec. 22, 1997).

Outsourcing DOD Logistics: Savings Achievable but Defense Science

Board’s Projections Are Overstated (GAO/NSIAD-98-48, Dec. 8, 1997).

Air Force Depot Maintenance: Information on the Cost-Effectiveness of

B-1B and B-52 Support Options (GAO/NSIAD-97-210BR, Sept. 12, 1997).

Navy Depot Maintenance: Privatizing the Louisville Operations in Place Is

Not Cost-Effective (GAO/NSIAD-97-52, July 31, 1997).

Defense Depot Maintenance: Challenges Facing DOD in Managing Working

Capital Funds (GAO/T-NSIAD/AIMD-97-152, May 7, 1997).

Depot Maintenance: Uncertainties and Challenges DOD Faces in

Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-111, Mar. 18,

1997) and (GAO/T-NSIAD-112, Apr. 10, 1997).

Defense Outsourcing: Challenges Facing DOD as It Attempts to Save

Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar. 12, 1997).

Navy Ordnance: Analysis of Business Area Price Increases and Financial

Losses (GAO/AIMD/NSIAD-97-74, Mar. 14, 1997).

High-Risk Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997).

Air Force Depot Maintenance: Privatization-in-Place Plans Are Costly

While Excess Capacity Exists (GAO/NSIAD-97-13, Dec. 31, 1996).

Army Depot Maintenance: Privatization Without Further Downsizing

Increases Costly Excess Capacity (GAO/NSIAD-96-201, Sept. 18, 1996).

Navy Depot Maintenance: Cost and Savings Issues Related to

Privatizing-in-Place the Louisville, Kentucky, Depot (GAO/NSIAD-96-202, 

Sept. 18, 1996).

Page 26 GAO/NSIAD-98-76 Public-Private Depot Competition
Related GAO Products

Defense Depot Maintenance: Commission on Roles and Mission’s

Privatization Assumptions Are Questionable (GAO/NSIAD-96-161, July 15,

1996).

Defense Depot Maintenance: DOD’s Policy Report Leaves Future Role of

Depot System Uncertain (GAO/NSIAD-96-165, May 21, 1996).

Defense Depot Maintenance: More Comprehensive and Consistent

Workload Data Needed for Decisionmakers (GAO/NSIAD-96-166, May 21, 1996).

Defense Depot Maintenance: Privatization and the Debate Over the

Public-Private Mix (GAO/T-NSIAD-96-146, Apr. 16, 1996 ) and (GAO/T-NSIAD-96-148,

Apr. 17, 1996).

Military Bases: Closure and Realignment Savings Are Significant, but Not

Easily Quantified (GAO/NSIAD-96-67, Apr. 8, 1996).

Depot Maintenance: Opportunities to Privatize Repair of Military Engines

(GAO/NSIAD-96-33, Mar. 5, 1996).

Closing Maintenance Depots: Savings, Personnel, and Workload

Redistribution Issues (GAO/NSIAD-96-29, Mar. 4, 1996).

Navy Maintenance: Assessment of the Public-Private Competition Program

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

Depot Maintenance: The Navy’s Decision to Stop F/A-18 Repairs at Ogden

Air Logistics Center (GAO/NSIAD-96-31, Dec. 15, 1995).

Military Bases: Case Studies on Selected Bases Closed in 1988 and 1991

(GAO/NSIAD-95-139, Aug. 15, 1995).

Military Base Closure: Analysis of DOD’s Process and Recommendations

for 1995 (GAO/T-NSIAD-95-132, Apr. 17, 1995).

Military Bases: Analysis of DOD’s 1995 Process and Recommendations for

Closure and Realignment (GAO/NSIAD-95-133, Apr. 14, 1995).

Aerospace Guidance and Metrology Center: Cost Growth and Other

Factors Affect Closure and Privatization (GAO/NSIAD-95-60, Dec. 9, 1994).

Page 27 GAO/NSIAD-98-76 Public-Private Depot Competition
Related GAO Products

Navy Maintenance: Assessment of the Public and Private Shipyard

Competition Program (GAO/NSIAD-94-184, May 25, 1994).

Depot Maintenance: Issues in Allocating Workload Between the Public and

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

Depot Maintenance (GAO/NSIAD-93-292R, Sept. 30, 1993).

Depot Maintenance: Issues in Management and Restructuring to Support a

Downsized Military (GAO/T-NSIAD-93-13, May 6, 1993).

Air Logistics Center Indicators (GAO/NSIAD-93-146R, Feb. 25, 1993).

Defense Force Management: Challenges Facing DOD as It Continues to

Downsize Its Civilian Workforce (GAO/NSIAD-93-123, Feb. 12, 1993).

(709318) Page 28 GAO/NSIAD-98-76 Public-Private Depot Competition
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