Report to Congressional Committees

United States General Accounting Office

GAO

November 2001 DEPOT

MAINTENANCE

Management Attention

Required to Further

Improve Workload

Allocation Data

GAO-02-95
Page i GAO-02-95 Depot Maintenance Reporting

Letter 1

Results in Brief 3

Background 4

Military Departments Had Mixed Results Complying With 50-50

Prior-Years Requirement 6

Future-Year Projections Are Not Reasonably Accurate or Useful 14

Reporting Processes Improved, but Some Problems Remain 25

Conclusions 28

Recommendations for Executive Action 29

Agency Comments and Our Evaluation 31

Scope and Methodology 32

Appendix I Comments From the Department of Defense 35

Appendix II GAO Contacts and Staff Acknowledgments 39

GAO Contacts 39

Acknowledgments 39

Related GAO Products 40

Tables

Table 1: DOD Reported Depot Maintenance Workload Allocations,

Prior and Future-Years Reports 6

Table 2: GAO Changes to Army Prior-Years Report 7

Table 3: GAO Changes to Air Force Prior-Years Report 9

Table 4: GAO Changes to Navy Prior-Years Report 13

Table 5: GAO Changes to Army Future-Years Report 15

Table 6: GAO Changes to Air Force Future-Years Report 18

Table 7: GAO Changes to Navy Future-Years Report 23

Abbreviations

DOD Department of Defense

OSD Office of the Secretary of Defense

Contents
Page 1 GAO-02-95 Depot Maintenance Reporting

November 9, 2001

The Honorable Carl Levin

Chairman

The Honorable John Warner

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Bob Stump

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

Section 2466 of title 10, U.S. Code, stipulates that not more than 50 percent

of annual depot maintenance funding provided to the military departments

and defense agencies can be used for work accomplished by private sector

contractors. It also provides that the Secretary of a military department

may waive the 50-50 requirement if the Secretary determines a waiver is

necessary for reasons of national security and notifies Congress regarding

the reasons for the waiver. Further, section 2466 provides that the

Department of Defense (DOD) shall submit two reports on public- and

private-sector depot maintenance workloads to the Congress every year.

The first report is to provide the percentages of funds expended in the

public and private sectors during the 2 preceding fiscal years (the “prioryears report”), and the second report is to project this same information

for the current and 4 succeeding fiscal years (the “future-years report”).

For 2001, the prior-years report was issued on February 1, 2001, and the

future-years report on April 1, 2001.

Section 2466 requires us to submit to Congress our views on whether DOD

complied with the 50-50 requirement in the prior-years report and whether

the projections in the future-years report are reasonable. Accordingly, as

agreed with your offices, this report discusses whether (1) the military

departments met the 50-50 requirement for fiscal years 1999 and 2000 and

(2) the projections for fiscal years 2001 through 2005 represent reasonable

estimates. As a part of our work, we also examined the DOD’s efforts to

improve the reporting process and sought to identify opportunities to

further improve it. To accomplish these objectives, we analyzed each

service’s procedures and internal management controls for collecting,

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-95 Depot Maintenance Reporting

aggregating, and reporting depot maintenance information for purposes of

responding to the section 2466 requirements. Further explanation of our

methodology is provided in the scope and methodology section.

This is one in a series of reports on the 50-50 requirement. In last year’s

report covering the fiscal year 1998 and 1999 prior-years workloads and

fiscal year 2000-2004 future-years workloads, we noted that because of

DOD depot maintenance reporting data, we were unable to determine with

precision whether DOD had complied with the 50-percent limitation.1

 That

report recognized the limitations of DOD’s financial systems and data,

noting that in addition to the data reliability weaknesses, our audits of

financial management operations routinely identified pervasive

weaknesses in financial systems and fund controls that adversely affected

DOD’s ability to accumulate costs and reliably determine expenditures,

obligations, and funding availability. While we recognized that our analysis

of DOD’s 50-50 data showed that the quality of the data reported to

Congress in 2000 was substantially improved over previous years, we

continued to find errors and inconsistencies in the reporting and in how

well the services documented their analyses supporting their workload

reports. At that time we recommended, among other points, that the

Secretary of Defense direct the military departments to provide improved

guidance and increased management attention to improve workload

reporting in several areas including the reporting of depot-related portions

of contractor logistics support and warranties. We also recommended that

the Air Force implement a long-term strategy to comply with the

50-percent requirement. In an earlier report,2

 we observed that the future

year projections, at best, provide a rough estimate of future workload

allocations since they are developed with budgetary estimates that change

over time. Consequently, the forecast and actual workload mix will

continue to differ because of the changing nature of budget estimates.

Moreover, our recent testimony3

 highlighted continuing and pervasive

weaknesses in DOD’s financial management systems, operations, and

controls, which impair its ability to accurately accumulate and report

 1 Depot Maintenance: Action Needed to Avoid Ceiling on Contract Workloads

(GAO/NSIAD-00-193, Aug. 24, 2000).

2 Depot Maintenance: Future Year Estimates of Public and Private Workloads Are Likely

to Change (GAO/NSIAD-00-69, Mar. 1, 2000).

3 DOD Financial Management: Integrated Approach, Accountability, and Incentives Are

Keys to Effective Reform (GAO-01-681T, May 8, 2001).
Page 3 GAO-02-95 Depot Maintenance Reporting

reliable budget execution (including disbursements and obligations) and

cost data. To date, none of the military services or major DOD components

has passed the test of an independent financial audit. A continuing

inability to capture and report the full cost of its programs represents one

of the most significant impediments facing the Department. Nonetheless,

the reported 50-50 data are the only data available and are accepted and

used for DOD decisionmaking and for congressional oversight.

The military departments had mixed results complying with the 50-50

requirement for private sector workloads in fiscal years 1999 and 2000.

Based on our review, the Army met the requirement for both 1999 and

2000, while the Air Force met the requirement in 1999 but exceeded it in

2000, issuing a national security waiver as provided for in 10 U.S.C. 2466.

Although we identified some errors in the Army and Air Force prior-years

data, improved guidance and data collection efforts and validation and

reviews by the Army and Air Force audit agencies indicate that the

processes of these departments provided a sufficient basis for evaluating

compliance. Further, in the Army’s case, the errors we identified were not

material in the context of the 50-50 requirement because they were not

sufficient to cause it to exceed the limitation. With respect to the Air

Force, the cumulative errors added further support to the need for the Air

Force waiver. Although the reported Navy numbers indicated compliance

with the 50-50 requirement, because of concerns about management

processes and data validation, there is insufficient support for us to

determine the Navy’s compliance. An additional factor influencing our

concerns is that Navy leadership did not involve its internal audit service,

as did the other military departments.

The projections of the Army, Air Force, and Navy in DOD’s report for

fiscal years 2001 through 2005 are not accurate or reasonable estimates of

the future allocations of public and private sector workloads. The services’

management placed much less emphasis on the future-years data and

reports. The reported projections are based in part on incorrect data,

questionable assumptions, and some inconsistencies with existing budgets

and management plans. Further, our review identified errors and other

shortcomings. As a result, DOD’s report should be viewed with caution

because it does not provide the best data available to DOD decisionmakers

and congressional overseers, and the reported data are misleading with

regard to how future workloads are likely to be allocated between the

public and private sectors. For example, an apparent change in the Air

Force’s public-private ratio for fiscal year 2002 is due largely to a

17 percent rate increase in public workloads. However, it is questionable

that the Air Force’s projected workload would be funded at the increased

Results in Brief
Page 4 GAO-02-95 Depot Maintenance Reporting

rate as officials noted that a price increase of that magnitude would likely

result in a reduction in the amount of maintenance the operating

commands would be able to fund. Further, since January 2000 the Air

Force has told the Congress that it was developing a depot plan so that

waivers of the 50-50 requirement would not be needed. As of November

2001, it has not been successful in implementing such a plan.

While DOD has greatly improved the 50-50 reporting guidance and the

implementation of the reporting process, opportunities for improvement

still exist. We have noted improvements in the process each year in

response to our recommendations, particularly with respect to revisions to

the reporting guidance by the Office of the Secretary of Defense (OSD)

and by the Air Force and Army’s use of internal auditors to review data. At

the same time, some problems and concerns persist in the incomplete and

inconsistent recordkeeping by the services and Navy’s inadequate data

validation. Thus opportunities exist for DOD to take actions to improve

the validity of the process and the reliability of the data. Increased

management direction and oversight together with improved data

validation efforts, expanded use of service auditors, and continued

clarification of guidance in identified problem areas would help make the

50-50 report a more useful management tool for DOD in managing the

Department’s depot maintenance program to help maintain compliance

with the 50-50 requirement. It would also make the report more useful to

the Congress in its oversight of this requirement.

This report contains a number of recommendations for executive action

designed to improve the 50-50 reporting process and the usefulness of the

data for Defense planners and for congressional oversight. DOD generally

concurred with the recommendations.

OSD has issued guidance to the military departments for reporting publicprivate workload allocations required by 10 U.S.C. 2466. The guidance is

consistent with 10 U.S.C. 2460, which defines depot maintenance and

repair. The guidance requires the comprehensive reporting of all work

associated with the overhaul, upgrade, or rebuilding of parts, assemblies,

and subassemblies and the testing and reclamation of equipment,

regardless of the source of funds or the location at which maintenance is

performed. It also requires the reporting of software maintenance, interim

Background
Page 5 GAO-02-95 Depot Maintenance Reporting

contractor support, and contractor logistics support, to the extent work

performed in these categories is depot maintenance.4

In recent years, the Department of Defense has implemented acquisition

and logistics policy initiatives that have shifted depot maintenance

workloads from the public to the private sector. We recently reported5

 that

between 1987 and 2000, the public sector’s share of depot maintenance

work declined by 6 percent, while the private sector’s share increased by

90 percent. As the military departments move closer to the 50-percent

ceiling for private sector work, with the Air Force exceeding the ceiling,

the accuracy of the collection and aggregation of 50-50 data becomes

increasingly important. The data in the prior-years report are important

because they provide the best indicators the military departments have of

the current public-private sector allocations. While we have said that the

future-year data provide a rough estimate, the data are the Department’s

only predictor to indicate that management attention may be needed to

avoid potential compliance problems.

Table 1 provides a consolidated summary of DOD’s two reports to the

Congress on depot maintenance public and private sector workload

allocations, dated February 1, 2001 (prior- years) and April 1, 2001 (futureyears). The amounts shown are actual obligations incurred for depot

maintenance work in fiscal years 1999 and 2000 and projected obligations

for fiscal years 2001-2005 based on the defense budget and service funding

baselines.6

 The percentages show the relative allocations between the

public and private sectors.

 4

 Interim contractor support is designed to be an interim support arrangement in which a

contractor provides depot maintenance (and sometimes other logistics support) as part of

the acquisition strategy for new systems. Contractor logistics support is designed to be a

lifetime support concept in which a contractor provides most or all elements of logistics

support, including depot maintenance.

5 Defense Maintenance: Sustaining Readiness Support Capabilities Requires a

Comprehensive Plan (GAO-01-533T, Mar. 23, 2001).

6

 Although 10 U.S.C. 2466 specifies reporting of funds expended in the prior-years and

projected to be expended in the future-years, DOD’s past and current 50-50 reports are

based on obligations data. A DOD official explained that obligation data is considered to be

more appropriate in view of the statutory requirement to report funds made available in a

given fiscal year and expenditure data may not be completely recognized in the accounting

records for a year or more following its obligation.

Summary of 50-50 Data

Reported by DOD in

February and April 2001

for Prior and Future Years
Page 6 GAO-02-95 Depot Maintenance Reporting

Table 1: DOD Reported Depot Maintenance Workload Allocations, Prior and

Future-Years Reports

Dollars in millions

Prior Years Future Years

1999 2000 2001 2002 2003 2004 2005

Air Force

Public $3,593 $3,066 $3,350 $3,998 $3,607 $3,604 $3,642

54% 49% 49% 54% 52% 52% 52%

Private $3,012 $3,199 $3,520 $3,343 $3,358 $3,361 $3,370

46% 51% 51% 46% 48% 48% 48%

Total $6,605 $6,265 $6,869 $7,341 $6,966 $6,965 $7,012

Army

Pubic $1,035 $1,167 $1,257 $1,278 $1,575 $1,770 $1,670

53% 54% 54% 54% 59% 60% 61%

Private $925 $987 $1,088 $1,078 $1,101 $1,167 $1051

47% 46% 46% 46% 41% 40% 39%

Total $1,960 $2,154 $2,345 $2,356 $2,676 $2,937 $2,721

Navy

Public $3,843 $3,984 $3,746 $4,282 $4,684 $4,323 $4,456

57% 55% 54% 55% 56% 57% 57%

Private $2,850 $3,267 $3,215 $3,478 $3,623 $3,271 $3,346

43% 45% 46% 45% 44% 43% 43%

Total $6,693 $7,251 $6,961 $7,759 $8,307 $7,594 $7,802

Source: DOD “50-50 Reports”, dated Feb. 1 and Apr. 1, 2001. Marine Corps data are reported as part

of the Navy Department total.

The Department had mixed results complying with the 50-50 prior-years

requirement for fiscal years 1999 and 2000. Based on our review, the Army

met the requirement for both 1999 and 2000, while the Air Force met the

requirement in 1999 but exceeded it in 2000, issuing a national security

waiver as provided for in the statute. Although we identified some errors

in the Army and Air Force prior-years data, improved guidance and data

collection efforts and validation and reviews by their audit agencies

indicate that the Army and Air Force processes provide a sufficient basis

for evaluating compliance. Further, in the Army’s case, the errors were not

material in the context of the 50-50 requirement because they would not

be sufficient to cause it to exceed the limitation. With respect to the Air

Force, the cumulative errors further support the need for the Air Force

waiver. However, because of data reliability issues and concerns about

management controls and data validation, there is insufficient support for

us to determine the Navy’s compliance.

Military Departments

Had Mixed Results

Complying With 50-50

Prior-Years

Requirement
Page 7 GAO-02-95 Depot Maintenance Reporting

Based on our review, the Army met the 50-50 requirement in both 1999 and

2000, with about a 53 to 47 percent public-private sector split in both fiscal

years 1999 and 2000. Our review of the Army’s prior-years 50-50 report,

internal reviews by auditors, and improved guidance and direction of the

data collection effort indicate that the Army process provides a sufficient

basis for determining that it met the 50-50 requirement during this 2-year

period. While we identified errors that would increase private sector costs,

about 1 percent in fiscal year 2000 above that projected by the Army, this

would not be material to the 50-percent requirement since the Army would

still be about 3 percent below the ceiling. Table 2 shows our adjustments

to the Army data to correct for the errors we identified and the resulting

impacts on the public-private sector allocations.

Table 2: GAO Changes to Army Prior-Years Report

Dollars in millions

1999 2000

Public workload dollars reported $1,034.5 $1,167.1

Percentage reported 53% 54%

Army audit errors not corrected - $1.5

Other $3.7 $2.1

Revised public workload $1,038.2 $1,170.7

Revised percentage 53% 53%

Private workload dollars reported $924.7 $987.2

Percentage reported 47% 46%

Government material not reported - $24.0

Army audit errors not corrected - $20.4

Other - ($4.6)

Revised private workload $924.7 $1,027.0

Revised percentage 47% 47%

Total dollars reported $1,959.2 $2,154.3

Total dollars revised $1,962.9 $2,197.7

Note: Dollar amounts in parenthesis are negative.

The errors and their impacts are as follows:

• One reporting activity did not report about $24 million in governmentfurnished material costs in fiscal year 2000. According to OSD and

Army guidance, the costs of government-furnished material supporting

work performed by contractors are to be reported as private sector

costs. Other Army activities we reviewed properly reported

government-furnished material costs.

Army Met 50-50

Requirement in Fiscal

Years 1999 and 2000
Page 8 GAO-02-95 Depot Maintenance Reporting

• While we determined that the reliability of the Army data was

enhanced by the work of the Army Audit Agency, the Army had not

incorporated all the adjustments recommended by the Army Audit

Agency before the 50-50 data were submitted to OSD and subsequently

to the Congress. Auditors reviewed more than one-half of the reported

dollars submitted to Army headquarters for fiscal year 2000, identifying

errors in about 5 percent of the items. Army officials revised the 50-50

data to correct for about $70 million of the errors identified; but one

activity—citing time constraints—did not make another $21.9 million in

adjustments for errors before the Army submitted its report to OSD.

Adjusting for these errors adds $20.4 million to the private sector total

and $1.5 million to the public sector total.

• We identified several other small errors that in total would add

$5.8 million to the public sector in fiscal year 1999 and subtract

$4.6 million from the private side in fiscal year 2000. These were

attributable to officials using budgeted requirements instead of actual

obligations, double counting, and other mistakes.

As previously noted, we recognize there are some systemic problems with

DOD’s financial data. However, based on the work of the Army Audit

Agency and our work, we believe the Army process provides a sufficient

basis for determining that it met the 50-50 requirement during the 2-year

prior-year period of fiscal years 1999 and 2000.

Based on our review, the Air Force met the 50-50 requirement in fiscal year

1999, with a 54 to 46 percent public-private split. However, the 48 to

52 percent public-private sector split in fiscal year 2000 required that the

Secretary of the Air Force issue a national security waiver and notify

Congress. We identified some reporting weaknesses that increased the

amount the Air Force exceeded the ceiling in fiscal year 2000 from the

reported 1 percent to about 2 percent; and correcting for these

weaknesses resulted in increasing the private sector share in both fiscal

years 1999 and 2000. Consequently, the weaknesses were not material in

the context of meeting the 50-50 requirement since correcting for these

weaknesses did not cause the Air Force to exceed the limitation in fiscal

year 1999 and it had already reported exceeding the limitation in fiscal

year 2000.

While recognizing some problems in the data, the Air Force data review

process added to the reliability and the credibility of the reported data

and, together with our work, serves as a basis for determining compliance

with the 50-50 requirement. The 50-50 data reported to Congress included

Air Force Met 50-50

Requirement in Fiscal Year

1999 but Exceeded It in

2000, Issuing a Waiver
Page 9 GAO-02-95 Depot Maintenance Reporting

adjustments made as a result of reviews by the Air Force Audit Agency, Air

Force Materiel Command, and Air Force Headquarters. The auditors

identified adjustments amounting to 4.3 percent of the total workload.

This rate is higher than last year’s and follows several years of gradually

declining adjustment rates.7

 The higher rate was mainly attributed to

rather large errors in one acquisition program, late posting of a cash

transfer into the working capital fund, and high turnover in the staff

assigned to collect data.

Table 3 identifies the changes to the reported Air Force report after

adjusting to correct weaknesses we identified.

Table 3: GAO Changes to Air Force Prior-Years Report

Dollars in millions

1999 2000

Public workload dollars reported $3,593.4 $3,066.3

Percentage reported 54% 49%

General & admin. adjustment (42.6) ($57.9)

Revised public workload $3,550.8 $3,008.4

Revised percentage 54% 48%

Private workload dollars reported $3,011.7 $3,199.1

Percentage reported 46% 51%

General & admin. adjustment $42.6 $57.9

Contracts not reported $0.2 $2.1

Revised private workload $3,054.5 $3,259.1

Revised percentage 46% 52%

Total dollars reported $6,605.1 $6,265.4

Total dollars revised $6,605.3 $6,267.5

Note: Dollar amounts in parenthesis are negative.

 7

 The previous Air Force Audit Agency adjustment rates were 1.2 percent (1999), 3 percent

(1998), and 9 percent (1997).
Page 10 GAO-02-95 Depot Maintenance Reporting

The reporting weaknesses and their impacts are as follows:

• As in past years,1 Air Force officials continue to adjust the 50-50 data

for general and administrative expenses associated with managing

depot maintenance contracts. These amounts are for overhead and

salary costs incurred by government personnel charged with

administering depot maintenance contracts funded through the

working capital fund. Air Force headquarters and Materiel Command

officials subtract these amounts ($57.9 million in fiscal year 2000) from

the private sector costs—where they are accounted for within the

working capital fund—and add them to the public sector costs for

50-50 purposes. Air Force officials told us that they believe these costs

should be reported as part of the public sector since government

employees incur them. Although this type of cost is not specifically

addressed, OSD 50-50 guidance requires that the costs for all factors of

production—labor, material, parts, indirect, and overhead—associated

with a particular repair workload should be counted in the sector

accomplishing the actual maintenance. For example, contract

maintenance on depot plant equipment used by government employees

to repair items should be counted as public sector costs because they

are incurred by the government in producing the repair. Thus,

consistent with our prior assessments, we continue to believe that it is

appropriate to count the general and administrative costs associated

with administering depot maintenance contracts as part of the private

sector costs of doing business. Accordingly, in table 2 we reversed the

Air Force adjustments to again report them as private sector costs.

• We also identified unreported contractor logistics support costs

totaling about $2.3 million in both fiscal years 1999 and 2000. The Joint

Stars program office reported most of its depot maintenance dollars

appropriately but did not report technical data support costs.

Additionally, one office in the Special Operations Directorate did not

report contract maintenance costs that should have been reported

based on Air Force 50-50 guidance.

As previously noted, we recognize there are some systemic problems with

DOD’s financial data, but the Air Force has made improvements in the

 1

 We reported on this and other issues concerning DOD’s 50-50 submissions last year in

Depot Maintenance: Actions Needed to Avoid Exceeding the Ceiling on Contract

Workloads (GAO/NSIAD-00-193, Aug. 24, 2000). Other 50-50 reports are listed in the Related

GAO Products section at the end of this report.
Page 11 GAO-02-95 Depot Maintenance Reporting

50-50 reporting data processes since the requirement to submit the report

to Congress was imposed. Based on the past improvement efforts and the

more recent work of the Air Force Audit Agency and us, we believe the Air

Force provided a sufficient basis for determining that the Air Force met

the 50-50 requirement during fiscal year 1999 and exceeded it in fiscal year

2000, but submitted a waiver as provided by statute.

As authorized under section 2466, on January 11, 2000, the Air Force

notified the Congress that the Secretary was waiving the applicability of

the 50-percent limitation on private sector contracting for fiscal year 2000

for reasons of national security. The Air Force explanation for the waiver

was based primarily on the need to use temporary contracts to support

transitioning workloads from closing depots. However, we reported

previously that the temporary contracts represented only a minor share of

the Air Force contract workload.2

 We noted that the more significant

factors were previous Air Force actions, such as the increase of long-term

depot maintenance contracts from $600 million in 1996 to $1.1 billion in

2000 and the transfer of about half of the workload from two closing

depots to the private sector, had increased the private sector share from

36 percent in fiscal year 1991 to the 50-percent ceiling in fiscal year 2000.

These actions left Air Force officials little flexibility to use emergency

contracts without exceeding the ceiling for contract depot maintenance

work. We also pointed out that while the Air Force projected that it would

exercise management changes to remain within the 50-percent limitation

in fiscal year 2000 and beyond, it was uncertain whether it would be

successful in these efforts.

Because of weaknesses in the Navy’s reporting processes and data, we

were unable to determine whether the Navy complied with the 50-percent

requirement for the 1999 and 2000 prior-years report. The Navy’s report, as

presented, indicates that the Navy complied with the requirement in both

years, with a 57-43 percent mix in fiscal year 1999 and a 55-45 percent mix

in 2000. However, our review of the Navy 50-50 data for fiscal years 1999

and 2000 identified concerns about management controls and data

validation processes. Also, Navy leadership chose not to use the Naval

Audit Service as a part of this year’s process, and the absence of this

review added to our concern about the reliability of the Navy data. The

 2 Depot Maintenance: Air Force Faces Challenges in Managing to 50-50 Ceiling

(GAO/T-NSIAD-00-112, Mar. 3, 2000) and Depot Maintenance: Air Force Waiver to

10 U.S.C. 2466 (GAO/NSIAD-00-152R, May 22, 2000).

50-50 Waiver Issued for Fiscal

Year 2000

Process and Data

Weaknesses Preclude

Determination of

Compliance in Navy
Page 12 GAO-02-95 Depot Maintenance Reporting

specific process problems, which are discussed in more detail later in our

overall analyses of the military services’ data reporting processes, include

(1) a decentralized and tiered reporting process that consolidated 50-50

numbers into summary reports with little evidence that the data were

checked and validated while passing through the reporting layers and

(2) the inability to track and document the estimating methodologies.

While we have identified these same issues in the past, Navy leadership

has not placed enough emphasis on the 50-50 reporting process to make

the improvements required to assure that the data reported provide a

sufficient basis for developing the Navy’s 50-50 information in the prioryears report.

For example, the Naval Sea Systems Command, which reported about onefifth of the total Navy 50-50 amount for this time period, had one

coordinating official who received summary data from 37 reporting units.

Some units had in turn rolled up data received from as many as 10

subactivities. Individuals generally accepted the data, rolled up totals, and

transmitted them up the reporting chain without conducting in-depth

critical checks of the data. In most cases, an audit trail to track individual

subactivity 50-50 submissions that were subsequently rolled-up into a

single program or project unit figure did not exist.

In addition to our concerns about the Navy’s process, we identified one

major reporting inconsistency that would impact the public-private sector

allocations as shown in table 4.
Page 13 GAO-02-95 Depot Maintenance Reporting

Table 4: GAO Changes to Navy Prior-Years Report

Dollars in millions

1999 2000

Public workload dollars reported $3,843.4 $3,983.5

Percentage reported 57% 55%

Revised public workload $3,843.4 $3,983.5

Revised percentage 57% 55%

Private workload dollars reported $2,850.0 $3,267.0

Percentage reported 43% 45%

Inactivation costs not reported $81.8 $31.8

Revised private workload $2,931.8 $3,298.8

Revised percentage 43% 45%

Total dollars reported $6,693.4 $7,250.5

Total dollars revised $6,775.2 $7,282.3

We determined that two activities within the Naval Sea Systems Command

reported inactivation activities3

 inconsistently. One project office reported

$650 million in nuclear ship inactivation costs performed mainly at the

public shipyards, but another project office did not report about

$113.6 million in conventional ship inactivation costs performed mainly in

the private sector ($81.8 million in fiscal year 1999 and $31.8 million in

fiscal year 2000). Officials from the non-reporting office said they did not

know these types of costs were to be reported for 50-50 purposes. It is

uncertain how many other activities have similar non-reported costs.

DOD’s financial management regulation includes inactivation activities as

reportable depot maintenance workloads. The internal Navy guidance

specified reporting nuclear ship inactivations but did not mention

conventional ships.

In commenting on a draft of this report, Navy officials said that the

relatively complex process for nuclear ship inactivations is considered to

be equivalent to depot maintenance and repair, while the less-complex

process for conventional ship inactivations is not generally considered

equivalent to depot-level work. However, we believe that some portion of

the conventional ship workload should be reported as depot maintenance,

 3

 DOD Financial Management Regulation 7000.14-R, Vol. 6, Ch. 14 prescribes depot

maintenance reporting requirements and includes inactivation as a depot maintenance

activity. It defines inactivation as the servicing and preservation of an item before it is

placed in storage or in an inactive status.
Page 14 GAO-02-95 Depot Maintenance Reporting

based on follow-up reviews with Navy program officials. OSD is

developing additional guidance to clarify this reporting category for future

50-50 reports.

The projections of the Army, Air Force, and Navy in DOD’s future-years’

report for fiscal years 2001 through 2005 are not reasonably accurate

estimates of the future allocations of public and private sector workloads.

The services’ management placed much less emphasis on the future-years

data and reports. The reported projections are based in part on incorrect

data, questionable assumptions, and some inconsistencies with existing

budgets and management plans. Further, our review identified errors,

inconsistencies, and other shortcomings. As a result, DOD’s future-years

report should be viewed with caution because it does not provide the best

data available to DOD decisionmakers and congressional overseers, and

the reported data is misleading with regard to how future workloads are

likely to be allocated between the public and private sectors. To make the

future year 50-50 report a useful management tool would require improved

management oversight and direction.

While the reported Army future years’ workload allocations show an

increasing public sector share, after adjusting the reported numbers to

correct for errors and omissions, the net effect is an increase in the

projected private sector’s share for each year. In our last year’s report, we

noted that the Army faced long-term challenges remaining within the

contract ceiling. Army officials said that they had taken action to increase

the public sector’s share, not only to deal with the contract workload

ceiling but also to more cost-effectively use underutilized Army depot

infrastructure. The reported Army numbers suggested that these actions

were effective. However, we identified significant problems and omissions

in the Army’s reporting of its future-years 50-50 data, the net effect of

which significantly increases the projected private sector’s share each

year. Whereas the Army reported that public sector workloads were

projected to increase in the future years, in actuality, after correcting for

errors and omissions, the data show that the Army is substantially closer

to the private sector limitation and that the future expected public-private

sector allocations are relatively constant. Table 5 summarizes adjustments

we made to the reported future year Army numbers.

Future-Year

Projections Are Not

Reasonably Accurate

or Useful

Army Future-Year

Projections Are Inaccurate

and Do Not Portray

Continuing Challenge
Page 15 GAO-02-95 Depot Maintenance Reporting

Table 5: GAO Changes to Army Future-Years Report

Dollars in millions

2001 2002 2003 2004 2005

Public workload dollars

reported

$1,256.6 $1,278.0 $1,575.2 $1,769.9 $1,670.4

Percentage reported 54% 54% 59% 60% 61%

Transcription error - - (211.6) ($324.0) ($147.9)

Repairs at non-depot

locations

$24.0 $24.0 $24.0 $24.0 $24.0

Double-counting costs - - - ($19.9) -

Revised public workload $1,280.6 $1,302.0 $1,387.6 $1,450.0 $1,546.5

Revised percentage 52% 52% 53% 53% 56%

Private workload reported $1,088.0 $1,077.9 $1,100.6 $1,167.2 $1,050.8

Percentage reported 46% 46% 41% 40% 39%

Contractor costs not

reported

$25.7 $28.6 $37.0 $63.5 $72.3

Government material not

reported

$24.0 $24.0 $24.0 $24.0 $24.0

Repairs at non-depot

locations

$56.0 $56.0 $56.0 $56.0 $56.0

Double-counting costs - - - ($36.3) -

Revised private workload $1,193.7 $1.186.5 $1,217.6 $1,274.4 $1,203.1

Revised percentage 48% 48% 47% 47% 44%

Total dollars reported $2,344.6 $2,355.9 $2,675.8 $2,937.1 $2,721.2

Total dollars revised $2,474.3 $2,488.5 $2,605.2 $2,724.4 $2,749.6

Note: Dollar amounts in parenthesis are negative.

The errors and their impacts are as follows:

• One reporting activity made a series of transcription errors that

reported thousands of dollars as millions of dollars. These errors

overstated public sector workloads by a total of $683.5 million in fiscal

years 2003 –2005.

• This same activity did not fully report contractor costs for contractor

logistics support, which resulted in understating private sector

workloads by a total of about $227.1 million in fiscal years 2001–2005.
Page 16 GAO-02-95 Depot Maintenance Reporting

• Two major commands did not report depot costs associated with the

Army’s Integrated Sustainment Management program.4

 Officials said

they did not report these costs because the Army Materiel Command

will eventually be responsible for the reporting. However, a Materiel

Command official told us the command was not ready to assume this

reporting and did not include the costs of these activities in the 50-50

report. These additional projected costs are estimated to add

$24 million per year to the public sector reporting and $56 million per

year for the private sector. As we reported in the past, the Army’s move

to consolidate maintenance activities under the National Maintenance

Program and to perform depot-level maintenance at field locations

continues to pose reporting challenges and could result in an

underreporting of both public and private sector costs.5

• As discussed in the section on the prior-years report, one Army

reporting activity had not reported the costs of government-furnished

material. This material, when supplied to a contractor for use in the

maintenance process, should be counted as private sector work.

Assuming annual material costs stay constant at the fiscal year 2000

level ($24 million), this activity underreported private sector costs by

about $120 million over the 5-year reporting period.

• Another activity double-counted $19.9 million dollars of its public

sector workload and $36 million of its private sector workload for

fiscal year 2004. Estimates for maintenance costs for 7 systems were

erroneously entered twice for 2004.

There are some additional non-quantifiable factors that are expected to

have major impacts on the Army’s future depot maintenance program and

these factors further support our concern (1) with the reasonableness of

the Army’s future year projections and (2) that the Army will be

challenged in the future to manage its depot maintenance program within

 4

 Integrated Sustainment Management is a program established by the Army Materiel

Command in 1996 to consolidate workloads and eliminate the proliferation of depot

maintenance–type activities. Our prior work, Depot Maintenance: Army Report Provides

Incomplete Assessment of Depot-type Capabilities (GAO/NSIAD 00-20, Oct. 15, 1999),

showed that the Army’s major operating commands developed extensive redundant local

maintenance facilities at multiple locations that supported similar capabilities and

workloads.

5 Depot Maintenance: Army Report Provides Incomplete Assessment of Depot-type

Capabilities (GAO/NSIAD-00-20, Oct. 15, 1999).
Page 17 GAO-02-95 Depot Maintenance Reporting

the 50-50 ceiling. First, quality of the future-years data is questionable

because some funding priorities and plans have substantially changed

since the budget figures supporting the 50-50 projections were prepared.

Revised plans for extensive repairs of the Patriot Missile and the Apache

Helicopter will likely alter depot workload projections and public-private

sector percentage allocations.

A second factor of potentially greater impact involves depot maintenance

requirements associated with the Army’s recapitalization program.6

Funding requirements and implementation strategies for the

recapitalization program are not fully known at this time and continue to

evolve. Consequently, these requirements and expected public-private

sector allocations were not fully reflected in the 50-50 outyear projections.

At the time of our review, Army records showed that it planned to spend

about $15.5 billion on recapitalized systems between fiscal years 2002 and

2007. Army officials said, however, that additional funding of at least

$7.6 billion is needed over this period but this has not yet been budgeted.7

Procedures for managing and coordinating the recapitalization program

were finalized in April 2001, and detailed implementation strategies are

currently being developed for each of the 21 weapon systems to be

recapitalized. While it appears that a significant portion of the program

expenditures will be considered depot maintenance-type work, the plans

supporting the distribution of workloads between the public and private

sectors have not yet been finalized.

Although the reported data indicate that the Air Force would breach the

50-percent ceiling in fiscal year 2001 but not in fiscal years 2002- 2005, we

identified significant problems and questionable assumptions in the Air

Force’s reporting of its future year 50-50 data, which indicate that the

future contract work is understated. After adjusting the reported numbers

to correct the problems we could quantify, the net effect is an increase in

the private sector share projected for each year. In addition, other

significant factors cannot be quantified, but indicate further growth in the

private sector is likely. Taken together, the Air Force will likely continue

 6

 The recapitalization program is the Army’s plan to modernize and sustain its aging

weapon systems. The program will restore currently fielded systems such as the M-1 tank

and the Bradley infantry vehicle. It will rebuild and upgrade the systems to ensure

operational readiness and a “zero time/zero mile” like new condition.

7

 Five of the 21 Army Recapitalization Programs have not yet been funded and there is a

funding shortfall for the other systems.

Air Force’s Future-Year

Projections Are Inaccurate

and Problems Will Likely

Lead to More Waivers
Page 18 GAO-02-95 Depot Maintenance Reporting

to exceed the 50-percent private sector limitation, leading to more waivers

such as the second one recently issued for fiscal year 2001. Table 6 shows

the reported data, our quantifiable adjustments, and the resulting impacts

on allocations. The revised allocations show the Air Force just under the

50-percent ceiling for the future years. Significantly, the reported and

revised amounts are both over the 48-percent target for private-sector

allocation that Air Force officials established for management purposes to

allow for some flexibility under the ceiling if estimates and circumstances

change.

Table 6: GAO Changes to Air Force Future-Years Report

Dollars in Millions

2001 2002 2003 2004 2005

Public workload reported $3,349.6 $3,997.6 $3,607.4 $3,603.6 $3,642.0

Percentage reported 49% 55% 52% 52% 52%

General & admin.

adjustment

($56.1) ($53.2) ($51.1) ($51.0) ($51.7)

Additional bridge contracts - ($11.0) ($2.6) ($2.5) -

Additional contract

augmentees

($1.6) ($3.4) - - -

New Items in source of

repair

- $0.7 $3.9 $3.9 $4.4

Revised public workload $3,291.9 $3,930.7 $3,557.6 $3,554.0 $3,594.7

Revised percentage 48% 53% 51% 51% 51%

Private workload reported $3,519.8 $3,342.9 $3,358.1 $3,361.3 $3,369.5

Percentage reported 51% 45% 48% 48% 48%

General & admin.

adjustment

$56.1 $53.2 $51.1 $51.0 $51.7

Additional bridge contracts - $11.0 $2.6 $2.5 -

Additional contract

augmentees

$1.6 $3.4 - - -

New items in source of

repair

- $32.2 $41.3 $58.0 $56.3

Contracts not reported $2.4 $0.7 $0.7 $0.7 $0.7

Mod installations not

reported

- - $1.0 $1.0 $1.0

Revised private workload $3,579.9 $3,443.4 $3,454.8 $3,474.5 $3,479.2

Revised percentage 52% 47% 49% 49% 49%

Total dollars reported $6,869.4 $7,340.5 $6,965.5 $6,964.9 $7,011.5

Total dollars revised $6,871.8 $7,374.1 $7,012.4 $7,028.5 $7,073.9

Note: Dollar amounts in parenthesis are negative.
Page 19 GAO-02-95 Depot Maintenance Reporting

The reporting weaknesses, errors, and their impacts are as follows:

• As discussed in our analysis of the Air Force’s prior-year numbers, the

Air Force’s adjustments for general and administrative expenses

associated with contracted workload shifts more than $100 million

annuallyadding about $50 million to the public sector and subtracting

the same amount from the private sector. We think it more appropriate

to count these expenses as part of the private sector amounts. They are

overhead costs required to manage contract workloads; and the OSD

reporting guidance says that the costs for all factors of

productionlabor, material, parts, indirect, and overheadassociated

with a particular repair workload should be counted in the sector

accomplishing the actual maintenance. In table 6 we reverse the

contract administration adjustment each year. This adds about

$263.1 million to projected private sector work for the reporting period

and decreases the public sector by the same amount.

• The Air Force data do not fully reflect depot officials’ estimates of the

continuing need for temporary contracts and contractor augmentees

resulting from work transfers from base closures and contract

competitions.8

 At the time the future-years report was submitted, these

would have added about $21.1 million to the private sector costs for the

fiscal year 2001-2004 reporting period and decreased the public side by

the same amount.

• The Air Force data do not include the estimated repair costs of new

systems and upgrades being reviewed for establishing the source of

repair. Most of these items 48 of 66 and representing about

90 percent of the repair cost estimates for all the systems undergoing

the revieware currently recommended for private sector repair.

Examples include the C-5 AMP repair, which is expected to add about

$57 million in private sector repair costs and the KC-10 reverser fan

modification, which is expected to add $41 million in private sector

repair costs between fiscal years 2001 and 2005. Although some of

these source-of-repair decisions could change, as they stand now, the

net effect of the additional workloads would add about another

$175 million to the private sector costs for fiscal years 2002 through

 8

 Increased use of temporary contracts and contractor augmentees (temporary contract

personnel performing depot maintenance at a government facility) was the stated basis for

the fiscal year 2000 waiver of the 50-50 requirement. However, as previously discussed, we

determined that these costs were a minor part of the Air Force’s 50-50 problem.
Page 20 GAO-02-95 Depot Maintenance Reporting

2005. In commenting on a draft of this report, Air Force officials

pointed out that it is difficult to accurately project the outcome of the

source of repair process and that the annual dollar projections are very

rough budget estimates. However, all of the data projected in the

future-years report are point-in-time estimates and subject to change.

Incorporating estimated costs for systems in the source-of-repair

process would provide a more comprehensive and useful projection of

expected future public-private sector allocations.

• We also identified underreported contractor logistics support costs and

contractor costs to install modifications totaling about $8.2 million.

Program officials at one activity were unaware of the 50-50 reporting

requirement, while other offices reported some, but not all, of the

depot-related contract costs. Officials in the Towed Decoy program

office said they did not know that the costs for installing modifications

should be reported as depot maintenance costs. The Joint Stars

program office did not report technical data support costs and the

Special Operations office did not report contract maintenance costs. As

we have reported in the past, it is difficult to identify to what extent

costs that should be reported are being reported. However, based on

our review this year, we noted improvements in reporting these kinds

of contract costs.

In addition to the problems we could quantify, there are some other

significant factors which, while they cannot be quantified, are likely to

have major impacts on future-year workloads as the Air Force moves

closer to execution. Both public and private sector amounts can be

affected. However, based on past experience, the Air Force’s practice of

placing more depot repair work for new and upgraded systems in the

private sector, and the unlikely event that the in-house depots will receive

the projected amounts of work currently estimated, it is likely that the Air

Force will continue to need to waive the 50-percent limitation in the

future, absent corrective action.

One of the non-quantifiable factors is the relative accuracy of cost and

budget data reported by the depot maintenance activity group, a part of

the Air Force working capital fund. From 70 to 80 percent of the total

depot maintenance amounts reported annually by the Air Force are

financed through the depot maintenance activity group. Consequently, the

relative accuracy of budget projections and accounting records for the

activity group will significantly affect the quality and completeness of the

Air Force’s 50-50 data. However, our review last year of the depot

maintenance activity group identified poor budget estimates, inaccurate
Page 21 GAO-02-95 Depot Maintenance Reporting

pricing, and overoptimistic assumptions about worker productivity and

process improvement savings.9

In addition, the rates charged for maintenance work and workload

assumptions used in estimating fiscal years 2003-2005 requirements did

not incorporate price increases for both public and private workloads, nor

did they fully reflect expected surcharges and other workload changes. In

recent years, operating losses in the depot maintenance activity group

have necessitated large cash inflows and surcharges applied to

maintenance rates to balance the accounts. For example, a reimbursement

of $483 million ($417 million for the public sector and $66 million for the

private sector) was spread over fiscal years 2001 and 2002 to make up for

accumulated losses in the Depot Maintenance Activity Group operations

for fiscal year 2000 and prior years. Performance indicators to date

indicate that financial performance problems are continuing in fiscal year

2001 that could require changes in future rates and surcharges. Also, the

apparent improvement in the 50-50 ratio for fiscal year 2002 shown in

DOD’s report and table 1 in this report is due largely to a 17-percent rate

increase on public workloads. However, it is questionable whether the

projected public workload program can be funded at the higher rates.

Depot officials noted that a price increase of that magnitude would likely

result in a reduction in the amount of maintenance the operating

commands would be able to fund. They said that budget estimates used to

support the projections assumed that 100 percent of the anticipated

workload would be accomplished. In reality, actual performance generally

does not approach 100 percent, resulting in an overstatement of the

reported 50-50 data. Officials at the three Air Force depots said that

historically in the year of program execution, there are reductions in the

depot maintenance program performed in the public depots and an

increase in the amount of contracted workload over what had been

projected. An official at one depot said that only about 94 percent of the

current program would likely be accomplished in fiscal year 2001 due to

operating inefficiencies, parts shortages, budget reductions, and other

constraints. Air Force Materiel Command headquarters officials said this

lower execution rate can affect both public and private workloads, but it

generally has a greater impact in reducing the actual work accomplished

in public depots. Changes in the amount of workload that is actually

 9

Air Force Depot Maintenance: Budgeting difficulties and Operational Inefficiencies

(GAO/AIMD/NSIAD-00-185, Aug. 15, 2000.)
Page 22 GAO-02-95 Depot Maintenance Reporting

accomplished will have obvious impacts on the dollars and public-private

sector allocations reported in the future.

The Air Force future-years report shows the Department exceeding the

50-percent ceiling in 2001. On July 31, 2001, the Air Force notified

Congress that the Secretary of the Air Force had waived the 50-percent

requirement for fiscal year 2001. The waiver determination was justified as

necessary for national security because “the Air Force concluded that no

significant workload could be moved into the public depots in the near

term without increased cost and an adverse effect on readiness.” While we

did not analyze the basis for the Air Force’s determination, we agree that

those transitioning workloads, whether new or old ones, to a military

depot would require increased funding.

The Air Force waiver determination also said that to address future

compliance, the Air Force is preparing a long-term strategic plan that will

address current capacity shortfalls, as well as new technologies and the

associated infrastructure. This long-term depot strategy is supposed to be

designed to ensure compliance with the 50-percent limitation.

However, the Air Force promised such a plan last year but has not been

successful in developing it. After announcing on January 11, 2000, that the

Air Force would exceed the 50-percent limitation last year, the Air Force

told interested Congressional members and the Subcommittee on

Readiness, Senate Committee on Armed Services, that it was developing a

short- and long-term strategy for resolving the 50-50 dilemma. According

to Air Force officials, they were unsuccessful in identifying workloads that

could be moved into the Air Force depots in the short term and were

equally unsuccessful in identifying workload to transfer into the depots in

the long term. Program offices said they had entered into long-term

contracts with private contractors and they had not budgeted for technical

data or depot plant equipment and facilities that might be required before

establishing an in-house capability in one of the three remaining Air Force

depots. Further, DOD and Air Force acquisition strategy continues to

express a preference for long-term contractor logistics support, to include

maintenance, supply, and other logistics functions. This year’s waiver

determination did not specify a date for the completion of the Air Force’s

latest effort in developing a long-term depot strategy that would resolve

the Air Force’s current 50-50 imbalance. As of November 2001, it has not

been successful in implementing such a plan. Without an approved

strategy for increasing the Air Force depots’ workloads and the funding of

the resources required to establish new capability, the Air Force will not

be able to resolve its 50-50 problem. The Air Force’s long-term depot

Air Force Issued a Second

Waiver for Fiscal Year 2001
Page 23 GAO-02-95 Depot Maintenance Reporting

strategy is now expected to be completed by the end of calendar year

2001, according to officials commenting on our draft report.

We identified two major problems in reporting that, together with our

reservations about the reliability of the Navy’s data, lead us to conclude

that, like the other services, the Navy’s future year projections are not

accurate. The resulting impacts on public-private sector allocations after

adjusting for these problems are displayed in table 7.

Table 7: GAO Changes to Navy Future-Years Report

Dollars in millions

2001 2002 2003 2004 2005

Public workload reported $3,745.7 $4,281.9 $4,684.0 $4,323.1 $4,456.0

Percentage reported 54% 55% 56% 57% 57%

Revised public workload $3,745.7 $4,281.9 $4,684.0 $4,323.1 $4,456.0

Revised percentage 52% 54% 56% 56% 56%

Private workload reported $3,215.0 $3,477.5 $3,623.1 $3,271.0 $3,346.2

Percentage reported 46% 45% 44% 43% 43%

Inactivation costs not

reported

$74.5 $56.6 $86.8 $58.2 $80.7

USS Cole repairs not

counted

$150.0 $93.0 - - -

Revised private workload $3,439.5 $3,627.1 $3,709.9 $3,329.2 $3,426.9

Revised percentage 48% 46% 44% 44% 44%

Total dollars reported $6,960.7 $7,759.4 $8,307.1 $7,594.1 $7,802.2

Total dollars revised $7,185.2 $7,909.0 $8,393.9 $7,652.3 $7,882.9

The problems and their impacts on the allocations are as follows:

• As discussed in the earlier section on the prior-years 50-50 report, the

Navy did not report inactivation costs for conventional ships as depot

maintenance costs but reported similar work for nuclear ships. The

Navy projects that up to $357 million over the 5-year period covered in

the future-years report will be spent on conventional ship inactivation

activities, mostly in the private sector. The Navy projections did

include about $1.2 billion in nuclear inactivation workloads at public

shipyards for this time period. As discussed earlier, the Navy believes

that conventional ship inactivation workload is generally not equivalent

in complexity to depot-level maintenance. A Navy official said they

would use the additional clarifying guidance being developed by OSD

in reporting future 50-50 workload allocations.

Navy and Marine Corps

Future-Year Projections

Are Inaccurate
Page 24 GAO-02-95 Depot Maintenance Reporting

• We also determined that the Navy did not include the costs of repairs

on the USS Cole, the target of last year’s terrorist attack. The Congress

late in calendar year 2000 appropriated $150 million in fiscal year 2001

funds for these repairs, which are to be accomplished at a private

shipyard. Officials said the 2001 supplemental came after the 50-50

report was developed. Officials estimate that about another $93 million

will be required to complete repairs on the USS Cole, which was also

not reported in the 50-50 data. For display purposes, table 7 shows this

additional amount in fiscal year 2002.

Several other issues affect the Navy’s report but are not quantified. For

example, the Navy plans call for a substantial increase in submarine depot

maintenance workloads associated with a major refueling program during

this reporting period. Most of the work is expected—and was reported for

50-50 purposes—to be accomplished at the public shipyards. However,

Naval Sea Systems Command officials told us that the plans and depot

requirements are not yet firm and that extensive use of contract

employees to augment the civilian workforce at the shipyards is

anticipated. These contract requirements have not been fully identified

and were not included in the 50-50 report. In commenting on a draft of this

report, Navy officials stated that as soon as contract requirements for

shipyard augmentation are determined, the amounts will be included in

the 50-50 reports.

As we reported last year, the Navy is moving to a regional maintenance

approach, which has made it difficult to identify and report depot-level

work. Initially implemented at Pearl Harbor, this approach combines

depot-level and lower levels of non-depot maintenance, changes funding

sources, and consolidates financial systems. The Navy has not yet

developed a system to discretely track and account for work meeting the

definition of depot maintenance. In its absence, the officials used

estimates to report 50-50 data. While this is a reasonable approach, actual

data will likely cause future estimates to be revised if this program is

implemented as planned throughout the Navy.

The Marines Corps projections for fiscal years 2001-2005 were based on a

combination of budget formulation figures and straight-line projections.

Headquarters Materiel Command Officials agreed that the reported data

do not fully reflect the planned decrease in total revenues for this period,

the impact of new systems going to the private sector for support, and the

anticipated decrease in the public depot workforce. They did not provide

an estimate to reflect these changes but said actions are underway to

improve future reports.
Page 25 GAO-02-95 Depot Maintenance Reporting

In its report, we observed that the Navy and Marine Corps are now

projecting a substantial shift to more private sector workload over the

50-50 reporting period compared to last year. Comparing the 5 years that

the current 50-50 reports and last year’s reports have in common (fiscal

years 2000-2004), the Navy is now projecting an additional $2.9 billion in

private sector work and a decrease of $1.1 billion in public sector work.

Whereas in last year’s reports they were projecting private sector

allocations in the 35- to 42-percent range, this year’s reports project a

significantly higher 43- to 46-percent range. Navy officials responsible for

coordinating and reporting the 50-50 data attributed the increase in private

sector amounts to (1) a sharp increase in the private sector wage rates,

(2) some shifts in ship maintenance from the public to private sectors to

make room for the extensive submarine refueling effort to be

accomplished mainly in the public sector, (3) contracts with private

shipyards, and (4) changes in cost models and estimating baselines.

While DOD has greatly improved the 50-50 reporting guidance and

implementation, opportunities for improvement still exist. We have noted

improvements in the process each year, particularly with respect to the Air

Force and Army’s use of internal auditors to review data, the Navy’s

development of internal guidance, and OSD’s revisions to its reporting

guidance in response to our recommendations. At the same time, some

problems and concerns persist, including incomplete and inconsistent

recordkeeping by the services and the Navy’s inadequate data validation.

While the 50-50 process and resulting data will never be perfect, there are

still opportunities for DOD to take actions to improve the validity of the

process and the reliability of the data. If implemented, these improvements

could improve the reasonableness of the 50-50 data as input to the

management of the depot maintenance program to attain future

compliance with the 50-50 requirement.

For this year’s 50-50 data collection, Army officials added to the already

extensive and detailed internal instructions used to supplement the OSD

guidance. Army officials cited our report findings and their auditor

findings to improve guidance in several areas, including warranties and

contractor logistics support. Also, the Deputy Chief of Staff for Logistics

held two workshops to prepare for the 50-50 data call and to address our

prior-year findings, OSD’s reporting requirements, as well as the changes

in the Army supplemental instructions. Command individuals responsible

for responding to the data call and coordinating reporting efforts within

their respective commands attended the workshops. Nonetheless, we

noted that guidance and reporting requirements were not always clearly

Reporting Processes

Improved, but Some

Problems Remain

Army
Page 26 GAO-02-95 Depot Maintenance Reporting

communicated or understood by potential reporting activities, resulting in

some incomplete and missed reporting. The Army’s task in this regard is

challenging in that 14 major commands need to be involved, along with

numerous reporting levels within each command. Nonetheless, improved

communication of the reporting guidance to activities that may not

initially recognize that they have reportable maintenance activities should

mitigate the problem of incomplete and missed reporting in the future.

The Army Audit Agency reviewed the data collection process at command

levels as it was evolving, and problems they identified in the report for

fiscal year 2000 were for the most part corrected before the activity

reports were sent to Army headquarters. The error rate identified by the

auditors was about one-half the rate found last year7.1 percent for fiscal

year 2000 versus 15 percent in fiscal year 1999. For fiscal year 2000, Army

auditors reviewed about $13 billion and identified adjustments of about

$92 million. Auditors attributed the improvement to better guidance, the

planning workshops, and overall management efforts. However, Army

auditors put little emphasis on reviewing the future-year projections. This

year’s review of the future year projections was concerned only with the

process and how reporting organizations were determining projections.

The Army auditors did not review or spot check the amounts projected for

individual items or weapon systems, deciding that a detailed audit was not

necessary since they had done a more thorough analysis of the future

process and numbers last year without identifying significant errors.

Nonetheless, we found significant errors that would likely have been

identified by Army auditors if they had spot-checked projected amounts.

The Air Force supplemented OSD guidance by adding details on

contractor and interim contractor logistics support contracts, partnering,

and software maintenance to its internal instructions. For the fourth

consecutive year, the Air Force Audit Agency assisted Air Force

headquarters and Materiel Command officials in verifying data and

validating collection processes, significantly improving the quality and

completeness of data before its submission to OSD and the Congress.

However, as in the other services, some Air Force offices did not maintain

adequate documentation for reviewing and supporting data. Some offices

we visited could not readily reconstruct estimating methodologies and

provide source documents for their reported data. For example, F-117

contractor logistics support costs and F-15/F-16 trainer/simulator costs

were omitted. Documentation requirements are not only valuable for audit

purposes and management review but also as a method of maintaining

Air Force
Page 27 GAO-02-95 Depot Maintenance Reporting

historical records that can be used in subsequent years. This is especially

important given the high turnover of staff performing these functions.

In response to our prior findings and those of the Naval Audit Service,

Navy headquarters compiled and distributed a handbook with guidance to

supplement the OSD reporting requirements. This handbook improved the

Navy’s process as it included more detailed data collection procedures, a

responsibility matrix, and a standard reporting format. Some commands

also prepared additional instructions to reporting units. In addition, the

headquarters official responsible for coordinating the Navy’s reports

conducted on-site reviews at several commands and identified some errors

that were corrected before the data was reported to OSD. However, the

Navy did not hold a planning meeting to assemble the key staff involved in

the 50-50 reporting process from the major commands to discuss and

critically analyze procedural guidance. We have found such meetings to be

useful in the Air Force and the Army in surfacing problems and concerns

and helping to ensure a more consistent approach to data collection.

Furthermore, the Naval Audit Service was not asked to review processes

and validate this year’s 50-50 data. Last year, auditors found that Navy

guidance, data validation, and documentation lacked the detail to identify,

collect, support, report, and document depot-level maintenance between

public and private sectors. As a result, the Naval Audit Service concluded

that the quality of the data reviewed was inadequate to determine the

accuracy and completeness of the prior submission for fiscal year 1999.

According to audit officials, by not doing a follow-on review, the accuracy

and completeness of the Navy’s 50-50 data remain suspect.

We encountered similar problems during this review. The Navy’s

decentralized and tiered reporting process rolls up data from numerous

subactivities, consolidating 50-50 numbers into summary reports with little

evidence that the data were checked and validated while passing through

the reporting layers. In many cases, an audit trail did not exist which was

sufficient to track and document the estimating methodologies and the

data used to develop the individual subactivity 50-50 submissions that

were subsequently rolled up into a single program or major activity

amount. Although the Air Force and Army also have multi-layered

reporting chains, we found their processes for collecting and verifying

information to be generally better, especially their use of audit agencies to

provide an effective third party review of the data collection process and

to correct errors and validate data before submitting it to OSD and to the

Congress.

Navy
Page 28 GAO-02-95 Depot Maintenance Reporting

Our review this year, as in the past, determined that each of the services

could better maintain auditable records for documenting data collection

methodology, estimating techniques, and final reported results. While

some central records are maintained, information and reporting rationales

at program offices and maintenance activities are sometimes lacking, and

it is difficult for a third party to understand and reconstruct the

methodology and verify results. For example, some Air Force reporting

activities had not kept consolidated records to document their data

collection procedures, estimating methodologies and assumptions, and

data sources. In some other instances, key reporting staff had been

transferred and, without adequate documentation, new staff could not

readily explain nor replicate the results. Also, a Navy major command was

in the process of realigning its units for budget purposes; and neither we

nor officials responsible for the 50-50 effort could always determine which

project unit actually provided the data, the type of depot maintenance

being performed, and the class of ship involved. We also noted that the

command had developed special budget codes to help identify and track

depot funding, but that the codes were not extensively or consistently

used. Good records, documentation of processes followed, and

identification of data sources used are important not only for audit and

management oversight but also for use as a historical record that can be

followed by newly assigned staff to assist in data collection and by

programs reporting for the first time.

Expanded guidance and the efforts of service audit agencies have

improved the prior-years 50-50 report overall, but more so in the Army and

the Air Force. Nonetheless, problems still exist, and this is particularly

true in the Navy, where inadequate management oversight has resulted in

continuing weaknesses in reporting control processes and data validation

procedures. These weaknesses make it difficult to verify the reliability of

reported data. Correcting reporting accuracy problems in all the services

is necessary to provide the Congress and DOD managers assurance that

the requirements of 10 U.S.C. 2466 are being met. Also, inaccurate data

hinder Defense managers in taking timely actions to meet the statutory

requirements and leave the Congress uncertain as to whether legislative

requirements are being met.

The future-years report is not accurate or reasonable and is not currently a

useful tool for guiding DOD actions or informing the Congress about likely

future compliance with section 2466 requirements. The management of the

military services placed much less emphasis on ensuring the accuracy or

reasonableness of the future-years data. Accurate or reasonable

projections are of particular importance for the Air Force, which has now

Record-Keeping

Weaknesses Continue to

Be a Problem

Conclusions
Page 29 GAO-02-95 Depot Maintenance Reporting

issued two waivers of the limitation on the private sector and is likely to

exceed the 50-percent ceiling in future years. The Army also faces

increasing management challenges in managing its depot maintenance

work within the 50-percent ceiling, but problems with the reliability of the

data and the lack of an effective review of the future-years data and

process by the Army Audit Agency concealed the impact of the results.

Admittedly, projecting the future public-private sector mix is much more

difficult and much less precise than quantifying the results of what has

already occurred. Depot plans and strategies are still evolving with

uncertain impacts on depot workloads. Similarly, repair plans for new and

upgraded systems and other logistics programs and initiatives impacting

the amount and location of depot maintenance services are not fully

known. Yet future–year projections must use the best information

available to make the most reasonable estimates. Such information should

include the latest budget estimates with reasonable adjustments made as

needed.

Although DOD and service guidance for both the prior and future-years

reports has been improved over the years, we continue to identify errors,

omissions, and inconsistencies in several reporting categories. These were

caused in large part by insufficient direction and clarification in the

reporting guidance and inadequate management attention. These problem

areas include inactivation activities, contractor logistics support, depot

maintenance at non-depot locations, government-furnished material,

contract general and administrative expenses, incorporation of future

repair costs for new systems, and adjustments for expected execution of

programmed workload. In addition, record-keeping weaknesses hinder

audit and management oversight efforts and do not provide a sound

historical record for facilitating future data collection and reporting

efforts. With improved management oversight and direction and the

implementation of the required corrective actions, the 50-50 report could

become a more useful management tool for DOD and the Congress in

managing the Department’s depot maintenance program to attain future

compliance with the 50-50 requirement.

To improve 50-50 data collection, validation, and reporting processes for

prior-years and future years data and thus the reliability and

reasonableness of the reported data, and to improve management

direction and oversight, we recommend that the Secretary of Defense

require

• the Secretary of the Army (1) identify depot maintenance requirements

associated with the recapitalization program, (2) require that the Army

Recommendations for

Executive Action
Page 30 GAO-02-95 Depot Maintenance Reporting

Audit Agency review both prior-years and future-years 50-50 data,

(3) communicate the reporting requirements to all organizational levels

responsible for reporting data, and (4) finalize and issue guidance

concerning the reporting of depot maintenance at non-depot locations;

• the Secretary of the Navy (1) review the management priority accorded

the 50-50 reporting process throughout the command structure,

(2) implement improved management controls and oversight of the

processes used by the individual reporting commands to collect, verify,

and report 50-50 data, (3) finalize procedures for accurately identifying

and reporting depot maintenance costs at regional and other non-depot

locations, (4) prior to issuing the data call for the 50-50 reports due in

fiscal year 2002, hold a planning meeting of key officials representing

all reporting commands to discuss and agree upon 50-50 data collection

processes and guidance, and (5) direct the Naval Audit Service to

review 50-50 processes and data to validate the data collection

processes and results for both the prior-years and future-years reports;

• the Assistant Deputy Under Secretary of Defense for Maintenance

Policy, Programs and Resources expand and clarify its guidance to

(1) specify whether contract general and administrative expenses

incurred by government employees and similar types of costs should be

counted as part of the public or the private sector, and (2) allow for

revisions to budgetary estimates to better reflect known and

anticipated changes in workloads, workforce, priorities, and

performance execution rates in order to achieve more reasonable

projections of depot requirements where historical data indicates that

budget data are unrealistic;

• the Assistant Deputy Under Secretary of Defense for Maintenance

Policy, Programs and Resources, in conjunction with the secretaries of

the military departments, improve and clarify 50-50 reporting guidance

in problem areas noted in this report, including inactivation activities,

contractor logistics support, incorporation of future repair costs for

new and upgraded systems in 50-50 projections, depot-level

maintenance performed at non-depot locations, and inclusion of

government-furnished material in contract repair costs; and

• the secretaries of the military departments reemphasize and expand

procedures for maintaining adequate records to document data

collection processes, data sources, and estimating methodologies in

order to facilitate management oversight and audits, as well as provide

an historical record that can be readily used by staff newly assigned to
Page 31 GAO-02-95 Depot Maintenance Reporting

the 50-50 process to annually replicate sound, efficient, and consistent

data collection efforts.

DOD generally concurred with our recommendations. However, it did not

concur with certain parts of two recommendations. The Department’s

specific comments and our evaluation of them are discussed below.

Service officials also offered some technical comments that we

incorporated in this report where appropriate. DOD’s comments are

included as appendix I to this report.

The Department did not concur with two parts of our recommendation

addressing Navy 50-50 issues. First, regarding our recommendation that

the Navy hold a 50-50 planning meeting, the Navy response said that its

new handbook, frequent contacts between the 50-50 manager and key

reporting officials, and meetings held internally by reporting organizations

accomplish the same purpose. While we agree that these efforts are

important and should be continued, an initial planning meeting of key

representatives of reporting commands has proven useful in both the

Army and the Air Force. For example, service officials have said that

these meetings surfaced reporting issues up-front and helped ensure more

consistency in reporting processes and results. Thus, we continue to

believe the Navy should hold an initial planning meeting. Second, the

Navy disagreed with our recommendation that the Naval Audit Service

review 50-50 processes and data. The Department’s response noted that

the Navy believes sufficient management attention has been given to this

process and is confident in the integrity of its data. However, the

comments also stated that the Naval Audit Service will be used should the

Navy determine that an audit service review is necessary. Because of the

value added by audit services in the Army and the Air Force (and by the

Navy last year), we continue to believe that the Naval Audit Service should

be used to review 50-50 processes and data.

Finally, the Department did not concur with one part of our

recommendation regarding clarification of Office of Secretary of Defense

50-50 guidance to the services. Specifically, the Department’s response

noted that the counting of contract general and administrative expenses

incurred by government employees is unique to the Air Force and

additional departmental guidance is not necessary. We continue to believe

that this issue should be clarified in the OSD guidance because a

substantial amount is involved and the Air Force continues to make this

adjustment every year.

Agency Comments

and Our Evaluation
Page 32 GAO-02-95 Depot Maintenance Reporting

To determine whether the military departments met the 50-50 requirement

in the prior-years report, we analyzed each service’s procedures and

internal management controls for collecting and reporting depot

maintenance information for purposes of responding to the section 2466

requirement. We reviewed supporting details (summary records,

accounting reports, budget submissions, and contract documents) at

departmental headquarters, major commands, and selected maintenance

activities. We compared processes to determine consistency and

compliance with legislative provisions, OSD guidance, and military service

instructions. We selected certain programs and maintenance activities for

more detailed review.10 We particularly examined reporting categories that

DOD personnel and we had identified as problem areas in current and past

reviews; these areas included interserviced11 workloads, contractor

logistics support, warranties, software maintenance, and depot

maintenance at non-depot locations. We evaluated processes for collecting

and aggregating data to ensure accurate and complete reporting and to

identify errors, omissions, and inconsistencies. We coordinated our work,

shared information, and obtained results of the Army and Air Force

service audit agencies’ data validation efforts.

To determine whether the future-years projections were based on accurate

data, valid assumptions, and existing plans, and represented reasonable

estimates, we followed the same general approach and methodology used

to review the report on the preceding years discussed above. Although the

future-years report is a budget-based projection of expenditures, the

definitions, guidance, organization, and processes used to report future

data are much the same as for the prior-years report of actual obligations.

We discussed with DOD officials the main differences between the two

processes and the manner in which the data were derived from budgets

and planning requirements and key assumptions made in the outyear data.

For reviews of both 50-50 reports, we performed certain checks and tests,

including variance analyses, to judge the consistency of this information

with data from prior years and with the future-years budgeting and

 10 We selected the programs reviewed based on size and importance, leads obtained from

internal auditors, and any previously identified areas of concern. Given the nature of our

sample, the results are not projectible to the universe of depot maintenance activities. We

also did not audit the integrity of DOD’s financial systems and accounting data used to

prepare the 50-50 reports.

11 Interserviced workload is maintenance that one military service performs on equipment

owned and funded by another service.

Scope and

Methodology
Page 33 GAO-02-95 Depot Maintenance Reporting

programming data used in DOD’s budget submissions and reports to the

Congress. For example, we compared each service’s 50-50 data reported in

February and April 2001 for the period 1999 through 2004 with data

reported for these same years in the 50-50 reports submitted in 2000. We

found repeated and significant changes, even though the estimates were

prepared only about one year apart. This analysis helped us identify large

transcription errors and unreported costs that the Army had made which

resulted in the data reported to Congress erroneously indicating an

increase in the percentage of depot maintenance work assigned to the

public sector. Instead, our corrected data shows the Army allocation

percentages staying rather constant during this period and closer to the

50-percent ceiling. This analysis also revealed a greater increase in the

Navy’s shift to more private sector workload than had been projected last

year. Variance analysis showed that congressional and DOD

decisionmakers were given quite a different view of the public-private

sector workload mix than that presented just last year. During this review

we also used to a great extent our prior and ongoing audits in such areas

as sustainment planning, depot policies, financial systems and controls,

and DOD pilots and initiatives for increasing contractor involvement in

maintenance.

Several factors concerning data validity and completeness were

considered in our methodology and approach to reviewing the prior and

future years’ reports. One key factor is the continuing deficiencies GAO

has noted in DOD’s financial systems and reports that preclude a clean

opinion on its financial statements and which results in limited accuracy

of budget and cost information. Another factor is that documenting depot

maintenance workload allocations between the public and private sectors

is becoming more complicated by the consolidation of maintenance

activities and performance of depot-level maintenance at field locations.

This (1) makes it more difficult to identify work that meets the statutory

definition of depot maintenance; (2) complicates workload reporting; and

(3) results in underreporting of depot maintenance for both the public and

private sectors. In addition, many contracts, especially the newer

performance-based contracts, do not separately identify maintenance

activities or account separately for their costs, which can result in underand over-reporting of depot maintenance work performed in the private

sector.

To review DOD efforts to improve the accuracy and completeness of

reports, we discussed with officials managing and coordinating the

reporting process their efforts to address known problem areas and

respond to recommendations by the audit agencies and us. We compared
Page 34 GAO-02-95 Depot Maintenance Reporting

this year’s sets of instructions with last year’s to identify changes and

additions. We reviewed efforts to identify reporting sources and to

distribute guidance and taskings. We asked primary data collectors their

opinions on how well efforts were managed and data verified. We asked

them to identify “pain points” and ideas they had to improve reporting. We

reviewed prior recommendations and service audit agency findings to

determine whether known problem areas were being addressed and

resolved.

We interviewed officials, examined documents, and obtained data at OSD,

Army, Navy, and Air Force Headquarters in Washington, D.C.; Army

Materiel Command in Alexandria, Virginia; Naval Sea Systems Command

in Arlington, Virginia; Naval Air Systems Command in Patuxent River,

Maryland; Air Force Materiel Command in Dayton, Ohio; Army Audit

Agency in Washington, D.C.; Air Force Audit Agency in Dayton, Ohio; and

several operating activities under the military departments’ materiel

commands. We conducted our review from February to July 2001, in

accordance with generally accepted government auditing standards.

We are sending copies of this report to the Secretary of Defense, the

Secretary of the Air Force, the Secretary of the Army, the Secretary of the

Navy, the Commandant of the Marine Corps, the Director of Office of

Management and Budget, and interested congressional committees. We

will make copies available to others upon request and will post the report

to GAO’s homepage at www.gao.gov. Key contributors to this report are

listed in appendix II.

David R. Warren, Director

Defense Capabilities and Management
Appendix I: Comments From the Department

of Defense

Page 35 GAO-02-95 Depot Maintenance Reporting

Appendix I: Comments From the Department

of Defense
Appendix I: Comments From the Department

of Defense

Page 36 GAO-02-95 Depot Maintenance Reporting
Appendix I: Comments From the Department

of Defense

Page 37 GAO-02-95 Depot Maintenance Reporting
Appendix I: Comments From the Department

of Defense

Page 38 GAO-02-95 Depot Maintenance Reporting
Appendix II: GAO Contacts and Staff

Acknowledgments

Page 39 GAO-02-95 Depot Maintenance Reporting

David R. Warren (202) 512-8412

Julia C. Denman (202) 512-4290

In addition to the above contacts, John Brosnan, Raymond Cooksey, Bruce

Fairbairn, Johnetta Gatlin-Brown, Jane Hunt, Steve Hunter, Glenn

Knoepfle, Ron Leporati, Fred Naas, Andy Marek, and Bobby Worrell made

contributions to this report.

Appendix II: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Acknowledgments
Related GAO Products

Page 40 GAO-02-95 Depot Maintenance Reporting

Defense Maintenance: Sustaining Readiness Support Capabilities

Requires a Comprehensive Plan (GAO-01-533T, Mar. 23, 2001)

Depot Maintenance: Key Financial Issues for Consolidations at Pearl

Harbor and Elsewhere Are Still Unresolved (GAO-01-19, Jan. 22, 2001).

Depot Maintenance: Action Needed to Avoid Exceeding Ceiling on

Contract Workloads (GAO/NSIAD-00-193, Aug. 24, 2000).

Air Force Depot Maintenance: Budgeting Difficulties and Operational

Inefficiencies (GAO/AIMD/NSIAD-00-185, Aug. 15, 2000.)

Depot Maintenance: Air Force Waiver to 10 U.S.C. 2466

(GAO/NSIAD-00-152R, May 22, 2000).

Depot Maintenance: Air Force Faces Challenges in Managing to 50-50

Ceiling (GAO/T-NSIAD-00-112, Mar. 3, 2000).

Depot Maintenance: Future Year Estimates of Public and Private

Workloads Are Likely to Change (GAO/NSIAD-00-69, Mar. 1, 2000).

Depot Maintenance: Army Report Provides Incomplete Assessment of

Depot-type Capabilities (GAO/NSIAD-00-20, Oct. 15, 1999).

Depot Maintenance: Status of the Navy’s Pearl Harbor Project

(GAO/NSIAD-99-199, Sep. 10, 1999).

Depot Maintenance: Workload Allocation Reporting Improved, but

Lingering Problems Remain (GAO/NSIAD-99-154, July 13, 1999).

Navy Ship Maintenance: Allocation of Ship Maintenance Work in the

Norfolk, Virginia, Area (GAO/NSIAD-99-54, Feb. 24, 1999).

Defense Depot Maintenance: Public and Private Sector Workload

Distribution Reporting Can Be Further Improved (GAO/NSIAD-98-175,

July 23, 1998).

Defense Depot Maintenance: DOD Shifting More Workload for New

Weapon Systems to the Private Sector (GAO/NSIAD-98-8, Mar. 31, 1998).

Defense Depot Maintenance: Information on Public and Private Sector

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

Related GAO Products
Related GAO Products

Page 41 GAO-02-95 Depot Maintenance Reporting

Outsourcing DOD Logistics: Savings Achievable But Defense Science

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

Navy Regional Maintenance: Substantial Opportunities Exist to Build

on Infrastructure Streamlining Progress (GAO/NSIAD-98-4, Nov. 13,

1997).

Defense Depot Maintenance: Uncertainties and Challenges DOD Faces in

Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-112,

May 1, 1997) and (GAO/T-NSIAD-97-111, Mar. 18, 1997).

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-96-148, Apr. 17, 1996) and

(GAO/T-NSIAD-96-146, Apr. 16, 1996).

Depot Maintenance: Issues in Allocating Workload Between the Public

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

(350048, 350046)
The General Accounting Office, the investigative arm of Congress, exists to

support Congress in meeting its constitutional responsibilities and to help

improve the performance and accountability of the federal government for the

American people. GAO examines the use of public funds; evaluates federal

programs and policies; and provides analyses, recommendations, and other

assistance to help Congress make informed oversight, policy, and funding

decisions. GAO’s commitment to good government is reflected in its core values

of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents is through the

Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-text files of

current reports and testimony and an expanding archive of older products. The

Web site features a search engine to help you locate documents using key words

and phrases. You can print these documents in their entirety, including charts and

other graphics.

Each day, GAO issues a list of newly released reports, testimony, and

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site

daily. The list contains links to the full-text document files. To have GAO E-mail

this list to you every afternoon, go to our home page and complete the easy-to-use

electronic order form found under “To Order GAO Products.”

The first copy of each printed report is free. Additional copies are $2 each. A

check or money order should be made out to the Superintendent of Documents.

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a

single address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

P.O. Box 37050

Washington, D.C. 20013

To order by phone: Voice: (202) 512-6000

TDD: (301) 413-0006

Fax: (202) 258-4066

GAO Building

Room 1100, 700 4th Street, NW (corner of 4th and G Streets, NW)

Washington, D.C. 20013

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm,

E-mail: fraudnet@gao.gov, or

1-800-424-5454 (automated answering system).

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G. Street NW, Room 7149,

Washington, D.C. 20548

GAO’s Mission

Obtaining Copies of

GAO Reports and

Testimony

Order by Mail or Phone

Visit GAO’s Document

Distribution Center

To Report Fraud,

Waste, and Abuse in

Federal Programs

Public Affairs