Depot Maintenance: Improved Strategic Planning Needed to Ensure That Navy Depots Can Meet Future Maintenance Requirements
Published: 2010-06-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Navy's depots provide critical maintenance support to operations around the world. The Department of Defense's (DOD) increased reliance on the private sector for depot maintenance support coupled with downsizing led to a deterioration of depots' capabilities and cost increases. In 2007, the Office of the Secretary of Defense (OSD) directed each service to submit a depot maintenance strategic plan and provided direction for the content of those plans. The 2007 U.S. Navy Depot Maintenance Strategic Plan contained a separate plan for each of five functional areas and an executive summary. GAO used qualitative content analyses to determine the extent to which two of the plans address (1) elements of a results-oriented management framework and (2) OSD's direction for the plan's content. GAO examined the plans for Navy aviation (NAVAIR) and ships (NAVSEA), which account for 94 percent of Navy depot workload.
section_title: What GAO Found
paragraphs: While the Navy's plans for aviation and shipyard depot maintenance focus efforts on weapon system and equipment availability, they do not fully address the elements of a results-oriented management framework. GAO's prior work has shown that seven elements of a results-oriented management framework are critical for comprehensive strategic planning. The NAVAIR and NAVSEA plans both fully address one of the elements by including mission statements that summarize their depots' major functions and operations, but the plans partially address or do not address the other six elements. For example, even though the plans describe goals for the depots' mission-related functions, they do not specify interim milestones or time frames for achieving the goals. Additionally, the plans include some measurable warfighter support metrics to gauge progress toward achieving the NAVAIR and NAVSEA plans' long-term goals; however, the plans do not describe how these metrics directly correspond to each long-term goal, desired levels for each, or how they will be used to evaluate each goal. Further, the Navy does not have an integrated Navy-wide depot maintenance strategic plan, but instead uses an overarching executive summary that does not have clear linkages to the separate plans and has the weaknesses resulting from the separate plans' missing or limited information on some elements. The NAVAIR and NAVSEA plans do not fully address these concerns because of weaknesses in oversight. Although OSD established an oversight body, which included senior representatives from OSD and the services, to review the services' plans, this body did not review the plans. Also, the Navy did not establish an oversight mechanism to review its plans. The plans' weaknesses may limit the Navy's ability to use its plan as a tool to meet future challenges effectively and efficiently. In addition, the NAVAIR and NAVSEA plans are not fully responsive to OSD's direction to the services that was designed to provide the services with a framework to meet future challenges. OSD directed the services to address 10 specific issues in four general areas: logistics transformation, core logistics capability assurance, workforce revitalization, and capital investment. Both plans partially address 8 of these issues and do not address the remaining 2. For example, both plans discuss management approaches for integrating public- and private-sector depot sources, but the plans are silent with regard to integrating joint, interservice, or multinational depot capabilities. The plans do not discuss the methods for estimating the amount of workload or the projected effects on depot workload caused by weapon system retirements and locating weapon systems at specific installations. The plans do not fully respond to OSD's direction for the plans' content in part because of weaknesses in oversight in both OSD and the Navy. As a result, these weaknesses could additionally limit the Navy's efforts to posture and resource its depots to meet future maintenance challenges.

section_title: Letter
paragraphs: The Navy’s 11 maintenance depots provide equipment repair and  sustainment services that are critical to supporting ongoing operations  around the world. Prior to the onset of military operations in Iraq and  Afghanistan, the Department of Defense’s (DOD) increased reliance on the  private sector for depot maintenance support—coupled with declining  budgets, downsizing, and consolidations as a result of previous Base  Realignment and Closure Act (BRAC) decisions—led to a decline in  maintenance workloads for the depots and contributed to the general  deterioration of capabilities, reliability, and cost-effectiveness of military  depots. Downsizing efforts also affected the depots’ abilities to obtain  investments in facilities, equipment, and human capital to support their  long-term viability and to ensure that they remained a key resource for  repair of new and modified systems. In 2001, DOD identified performance- based logistics as its preferred support strategy, further increasing  reliance on contractors to support many of its weapon systems.
In 2003 and again in 2006, the House Armed Services Committee  encouraged DOD to develop a comprehensive depot maintenance  strategy. In March 2007, the Office of the Under Secretary of Defense for  Acquisition, Technology and Logistics (OUSD ) issued DOD’s depot  maintenance strategic plan, which articulated the department’s strategy  for posturing and resourcing the depots to meet the national security and  management challenges of the 21st century. In March 2007, the Office of  the Deputy Under Secretary of Defense for Logistics and Materiel  Readiness, within OUSD (AT&L), directed each of the services to conduct  strategic planning for depot maintenance and submit plans that focus on  achieving DOD’s strategy. In response, the Navy published its December  2007 U.S. Navy Depot Maintenance Strategic Plan, which consists of an  overarching executive summary and the individual depot maintenance  plans developed by the following Navy commands and centers: (1) the  Naval Sea Systems Command (NAVSEA), (2) the Naval Air Systems  Command (NAVAIR), (3) the Naval Undersea Warfare Center, (4) the  Naval Surface Warfare Center, and (5) the Space and Naval Warfare  Systems Command. According to Navy officials, together these five  documents and updates issued in 2009 collectively respond to OUSD  (AT&L)’s direction. DOD’s 2007 Depot Maintenance Strategy and  Implementation Plans also notes that the services would update their  depot maintenance strategic plans no later than 6 months after the  publication of an updated DOD depot maintenance strategic plan, which  will be published within 6 months of the publication of the February 2010  Quadrennial Defense Review Report.
Our prior work has shown that organizations conducting strategic  planning—as the Navy is doing for its maintenance depots—need to  develop a comprehensive, results-oriented management framework to  remain operationally effective, efficient, and capable of meeting future  requirements. Such a framework includes seven critical elements: a  comprehensive mission statement; long-term goals; strategies to achieve  the goals; use of metrics to gauge progress; identification of key external  factors that could affect the achievement of the goals; a discussion of how  program evaluations will be used; and stakeholder involvement in  developing the plan. In its March 2007 call for strategic plans, OUSD  (AT&L) directed the services to address many of these elements in their  strategic plans. In addition, OUSD (AT&L) directed the services to address  10 specific issues in four general areas: logistics transformation, core  logistics capability assurance, workforce revitalization, and capital  investment. OUSD (AT&L) officials told us that the direction in these four  areas was designed to provide the services’ plans with a framework to  meet future challenges.
In September 2009, we issued a report on the Army’s and Marine Corps’  depot maintenance strategic plans. Subsequently, your office asked us to  review the Air Force’s and Navy’s depot maintenance strategic plans to  determine the extent to which the latter plans provided a comprehensive  strategy for meeting future requirements. In May 2010, we issued a report  on the Air Force depot maintenance strategic plan. As agreed with your  office, this report addresses two questions: (1) To what extent does the  Navy’s depot maintenance strategic plan address key elements of a results- oriented management framework? and (2) To what extent does the Navy’s  depot maintenance strategic plan address OUSD (AT&L)’s direction that  was designed to provide a framework for the services to meet future  challenges? The Related GAO Products section at the end of the report  lists additional publications on related topics.
We used the same set of methodological procedures to answer both  questions, and each type of procedure was performed simultaneously for  the two questions. Specifically, we reviewed the December 2007 U.S. Navy  Depot Maintenance Strategic Plan. Because the Navy does not have a  single Navy-wide plan, but rather a family of strategic planning documents,  we focused our review on plans developed by the two commands whose  maintenance depots collectively are responsible for 94 percent of the  Navy’s depot maintenance workload. The two plans are NAVAIR’s Naval  Aviation Industrial Strategy and NAVSEA’s Naval Shipyard Business  Plan. We reviewed the 2007 NAVAIR and NAVSEA plans and their 2009  updates. We evaluated the NAVAIR and NAVSEA plans using qualitative  content analyses to compare information from them against criteria both  from the seven elements of a results-oriented management framework  and the 10 issues listed in the OUSD (AT&L) direction for depot  maintenance strategic plans. To conduct these analyses, we first  developed a data-collection instrument that incorporated these two types  of criteria. One team member then analyzed the plans using this  instrument. To verify the preliminary observations from this initial  analysis, a second team member concurrently conducted an independent  analysis of the plans. We compared the two sets of observations and  discussed any differences. We reconciled the differences with the  assistance of analysts from the team that was evaluating the Air Force  depot maintenance strategic plan. We met with Navy officials to confirm  our understanding of the plans and sought additional information where  our preliminary analyses revealed that one or both plans partially address  or do not address the criteria. We also interviewed and obtained  documentary evidence from relevant OUSD (AT&L) officials regarding its  oversight of the services’ plans. Additionally, we interviewed depot leaders  and strategic planning personnel at three of the seven NAVAIR and  NAVSEA depots to obtain first-hand information on issues the depots face.  We also analyzed depot-level and servicewide depot maintenance data  such as workload, personnel, and depot capacity utilization and  determined that these data were sufficiently reliable for our report. More  detailed information on our scope and methodology is provided in  appendix I.
We conducted this performance audit from August 2009 through June 2010  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Depot maintenance is the materiel maintenance or repair requiring the  overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies,  and the testing and reclamation of equipment, regardless of the source of  funds for the maintenance or repair or the location at which the  maintenance or repair is performed. The Navy maintains 11 maintenance  depots that are designed to retain, at a minimum, a ready, controlled  source of technical competence and resources to meet military  requirements. NAVAIR’s three Fleet Readiness Centers and NAVSEA’s four  Naval Shipyards work on a wide range of weapon systems and military  equipment. These Fleet Readiness Centers and Naval Shipyards are  responsible for over 94 percent of the Navy’s depot maintenance  workload. Table 1 describes the location, principal work, workload, and  personnel for NAVAIR and NAVSEA depots.
Depot maintenance activities are complex and require deliberate planning  in order to efficiently and effectively meet future requirements. Our prior  work has shown that organizations, like Navy depots, need sound strategic  management planning in order to identify and achieve long-range goals  and objectives. We have identified critical elements that should be  incorporated into strategic plans to establish a comprehensive, results- oriented management framework. A results-oriented management  framework provides an approach whereby program effectiveness is  measured in terms of outcomes or impact, rather than outputs, such as  activities and processes. Approaches to such planning vary according to  agency-specific needs and missions, but our work suggests that,  irrespective of the context in which planning is done, such a strategic plan  should contain the following elements:  1.  Mission statement: A statement that concisely summarizes what the  organization does, presenting the main purposes for all its major  functions and operations.  2.  Long-term goals: A specific set of policy, programmatic, and  management goals for the programs and operations covered in the  strategic plan. The long-term goals should correspond to the purposes  set forth in the mission statement and develop with greater specificity  how an organization will carry out its mission.  3.  Strategies to achieve the goals: A description of how the goals  contained in the strategic plan and performance plan are to be  achieved, including the operational processes; skills and technology;  and the human, capital, information, and other resources required to  meet these goals.  4.  Use of metrics to gauge progress: A set of metrics that will be applied  to gauge progress toward attainment of each of the plan’s long-term  goals.  5.  External factors that could affect goals: Key factors external to the  organization and beyond its control that could significantly affect the  achievement of the long-term goals contained in the strategic plan.  These external factors can include economic, demographic, social,  technological, or environmental factors, as well as conditions or events  that would affect the organization’s ability to achieve its strategic  goals.  6.  Evaluations of the plan to monitor goals and objectives: Assessments,  through objective measurement and systematic analysis, of the manner  and extent to which programs associated with the strategic plan  achieve their intended goals.  7.  Stakeholder involvement: Consideration of the views and  suggestions—solicited during the development of the strategic plan— of those entities potentially affected by or interested in the  organization’s activities.
In addition to our work on strategic planning, recent legislation has  focused attention on DOD’s and the military departments’ maintenance  strategies and plans. The National Defense Authorization Act for Fiscal  Year 2009requires the Secretary of Defense to contract for a study, that,  among other things, will address DOD’s and the military departments’ life- cycle maintenance strategies and implementation plans on a variety of  topics including: outcome-based performance-management objectives,  workload projection, workforce, and capital-investment strategies.  Additionally, the act requires that the study examine “the relevant body of  work performed by the Government Accountability Office.” OUSD (AT&L)  officials told us that they expect the final report from this study to be  delivered to Congress in December 2010.
section_title: NAVAIR and NAVSEA Plans Do Not Fully Address All Elements of a Results-Oriented Management Framework
subsections: section_title: NAVAIR and NAVSEA Plans Do Not Fully Address Elements of a Results-Oriented Management Framework, and Linkages with Navy- wide Summary Are Unclear
paragraphs: While the NAVAIR and NAVSEA plans focus their efforts on weapon  system and equipment availability, they do not fully address the elements  of a results-oriented management framework, and the two plans and the  Navy-wide executive summary are not clearly integrated. The NAVAIR  plan fully addresses one of the seven elements, partially addresses five  elements, and does not address one element that our prior work has  shown to be critical in developing a comprehensive strategic plan. The  NAVSEA plan fully addresses one of the seven elements, partially  addresses four elements, and does not address the remaining two  elements. Table 2 summarizes the extent to which both depot maintenance  strategic plans address the elements of a results-oriented management  framework. Additionally, the Navy does not have an integrated  servicewide plan with clear links across the command-level plans and to  the Navy-wide overarching executive summary. As a result of these  weaknesses, the Navy may be limited in its ability to use the information in  the plans as a servicewide decision-making tool to meet future challenges.
The NAVAIR and NAVSEA plans’ depot maintenance mission statements  fully address one of the seven elements of a results-oriented management  framework. NAVAIR’s and NAVSEA’s mission statements summarize each  command’s overarching purpose and address its major functions and  operations. In prior reports on strategic planning, we have noted that a  mission statement is important because it provides focus by explaining  why an organization exists and what it does. The overarching purpose of  the NAVAIR depots is to ensure that weapons systems and equipment are  operational and available to meet fleet demand at reduced costs. The  overarching purpose of the NAVSEA Naval Shipyards is to provide the  capability on ships and weapons systems required by Navy component  commanders and combatant commanders. Both mission statements are  outcome-oriented and correspond with the more general departmentwide  mission statement in DOD’s Depot Maintenance Strategy and  Implementation Plans, which states that the mission of DOD depots is to  meet the national security and materiel readiness challenges of the 21st  century.
subsections: section_title: NAVAIR Plan Partially Addresses Five Elements, and NAVSEA Plan Partially Addresses Four Elements
paragraphs: The NAVAIR and NAVSEA plans each partially address four of the results- oriented management framework elements: long-term goals, strategies to  achieve the goals, use of metrics to gauge progress, and stakeholder  involvement in developing the plan. The NAVAIR plan also partially  addresses a fifth area—external factors that could affect goals—that the  NAVSEA plan does not address.
With regard to the long-term goals, while both plans identify some  strategic goals that generally relate to mission statements, they do not  specify time frames for achieving any of these goals. For example, the  NAVAIR plan listed five goals, including the goal to optimize the industrial  base; however, it does not describe what aspects of the industrial base  require adjustments or specify the milestones or time frames for achieving  this goal. Similarly, the NAVSEA plan identifies three strategic goals. For  example, the plan identifies the goal of enhancing ship operational  availability by minimizing maintenance time, but the plan does not discuss  the time frames, numbers and types of ships that will undergo  maintenance, or the level of availability anticipated.
Both plans partially address strategies to achieve the goals. For example,  to realize the goal of logistics transformation, NAVAIR has adopted a  strategy that includes initiatives for the integration of depot and  intermediate levels of repair, industrial and maintenance program  coordinators, and the infusion of technologies into maintenance  processes. Similarly, the NAVSEA plan identifies multiple key strategic  investment areas to achieve its goals, such as the Information Technology  Modernization Plan to provide the Naval Shipyards with the information  systems they need to meet their mission. However, neither plan describes  the capital, personnel, or technology resources needed to facilitate  implementation of the strategies.
Regarding metrics to gauge progress, the NAVAIR and NAVSEA plans  partially address this element. Officials for each command indicated that  the metrics listed in their plan are intended to “indirectly” gauge progress  toward achieving the plan’s long-term goals. The NAVAIR plan includes  measurable warfighter support metrics such as “cycle time” (the amount  of time from when the need of repair is identified to when the component  such as an engine is reinstalled on the aircraft or restocked on a shelf) and  “time on wing” (the amount of time a component is operational on the  aircraft). The NAVSEA plan also generally describes some metrics such as  shipyard workload levels. However, the plans do not describe how these  metrics correspond to each long-term goal, the desired level for each  metric, or how the metrics will be used to evaluate each goal.
For the stakeholder-involvement element, NAVAIR and NAVSEA involved  many relevant stakeholders in the development of their respective plans,  but neither command involved depot officials directly in all aspects of its  strategic planning process. NAVAIR and NAVSEA developed their plans  primarily by using inputs from directorates and program executive offices  within the commands and the following Navy-wide stakeholders:    Office of the Assistant Secretary of the Navy for Research,    Office of the Assistant Secretary of the Navy for Installations and    Office of the Chief of Naval Operations, Director of Fleet Readiness  and Logistics.
In our interviews with NAVAIR and NAVSEA depot officials, they said they  were not directly involved in the plans’ development, even though their  depots would be directly affected by the plans. For example, NAVAIR and  NAVSEA depot officials indicated that they had limited or no involvement  in the development of their plans.
Regarding external factors that could affect the goals, the NAVAIR plan  partially addresses this element, but the NAVSEA plan did not address the  element. The plan identifies ongoing conflicts in Afghanistan and Iraq and  changes in NAVAIR’s force structure as some of the key external factors,  but it does not describe how these factors can affect the plan. Also, our  report that identified the elements of a results-oriented management  framework for strategic planning noted a wide range of key external  factors to consider, such as economic, demographic, social, and  environmental factors. In contrast, the NAVSEA plan does not identify  any key external factors that could affect execution of that plan.
section_title: NAVSEA Plan Does Not Address Two Elements, and NAVAIR Plan Does Not Address One Element
paragraphs: As cited above, the NAVSEA plan does not address any key external  factors; and neither the NAVAIR nor the NAVSEA plan provides  information on how the command intends to evaluate the execution of its  plan. For example, neither describes the scope, methodology, or schedule  for the evaluations that will be needed to provide reliable data on goal  attainment. Also, neither plan identifies how the command will monitor  and use the results of such evaluations to adjust the plan’s long-term goals  and strategies to achieve desired levels of performance. Both plans do,  however, indicate that the commands must continuously validate and  update their depot maintenance strategic plans to meet operational depot  maintenance requirements.
section_title: The Navy Does Not Have an Integrated Servicewide Plan for Depot Maintenance
paragraphs: The Navy does not have an integrated depot maintenance strategic plan  that clearly links the elements of the commands’ plans with the  servicewide executive summary. As mentioned previously, the Navy-wide  plan consists of an executive summary and five separate plans. OUSD  (AT&L) instructed each service to publish its depot maintenance strategic  plan in a single depot maintenance–specific document or as an integral  part of one or more documents having a broader scope.
Linkage of information between the executive summary and one or more  of the plans, as well as linkage of information from the various plans, was  sometimes unclear. For example, the executive summary identifies four  “outcome metrics”—material availability, material reliability, mean down  time, and ownership costs—to be used across all fleet and aviation depot  maintenance activities. While the NAVAIR plan identifies metrics, the links  between those metrics and the four Navy-wide outcome metrics were not  specified. We could not determine if all four of the Navy-wide metrics  were addressed, at least indirectly, by the metrics in the NAVAIR plan.  Similarly, the commonalities or linkages among the plans were sometimes  not evident. For example, the NAVAIR plan identifies optimizing the  industrial base as one of its long-term strategic goals, but the NAVSEA  plan is silent about this goal.
Navy officials told us that they did not publish a single plan because Navy  commands and activities have different missions, capabilities, and  maintenance processes. They acknowledged that the linkages among the  plans and with the executive summary could have been more clearly  established, and they said they will address these weaknesses in future  plan updates. The limited integration across the separate plans and the  executive summary could have negative effects such as making it difficult  to (1) recognize areas where each plan does not address key Navy-wide  concerns and (2) use the separate plans efficiently and effectively for  servicewide decision making.
section_title: OUSD (AT&L) and the Navy Did Not Use Effective Oversight Mechanisms to Systematically Evaluate the Plan
subsections: section_title: OUSD (AT&L) Did Not Use an Effective Oversight Mechanism to Systematically Evaluate the Plan
paragraphs: OUSD (AT&L) did not use an effective oversight mechanism to  systematically evaluate the NAVAIR and NAVSEA’s plans to determine  whether they fully address all needed elements. DOD’s Depot  Maintenance Strategy and Implementation Plans states that the Depot  Maintenance Working Integrated Process Team would monitor the  development and subsequent execution of the services’ depot  maintenance strategic plans on a continuing basis. However, that team did  not review any of the services’ plans, according to OUSD (AT&L) and Navy  officials.
OUSD (AT&L) officials representing the Assistant Deputy Under Secretary  of Defense for Maintenance Policy and Programs told us that, in practice,  the Integrated Process Team did not assume responsibility for oversight of  the plan but instead monitored selected issues (such as the  implementation of some specific process-improvement initiatives) that the  services’ plans describe. The Maintenance Policy and Programs officials  told us that they reviewed the NAVAIR and NAVSEA plans through a  process consisting of informal meetings and conversations with service  representatives. They told us that, through their review, they found that  the NAVAIR and NAVSEA plans were a “good first start” but did not  address all needed elements. However, Navy officials told us that they  were not informed that the plans did not fully address elements of a  results-oriented management framework nor were they asked to revise the  plans. They also said that they did not receive any comments from OUSD  (AT&L) about linkages among the plans and with the executive summary.  Additionally, Maintenance Policy and Programs officials were unable to  provide us with documentation of their review of the NAVAIR and  NAVSEA plans.
In addition to reporting similar results in our review of Air Force depot  maintenance planning, we recommended, among other things, that the  Under Secretary of Defense for Acquisition, Technology and Logistics  address this oversight concern. Specifically, we recommended that the  Under Secretary develop and implement procedures to review revisions of  the depot maintenance strategic plan to ensure that they fully address all  key elements of a results-oriented management framework, explicitly  address any OUSD (AT&L) direction for the plans, and periodically assess  progress and corrective actions to the extent needed in meeting the plans’  goals.
section_title: The Navy Lacked an Effective Oversight Mechanism to Systematically Evaluate the NAVAIR and NAVSEA Plans
paragraphs: At the time NAVAIR and NAVSEA developed their plans, the Navy lacked  an effective oversight mechanism to help ensure that the plans fully  address the elements of a results-oriented management framework. Office  of the Chief of Naval Operations officials responsible for the Navy’s  strategic planning documents, including the NAVAIR and NAVSEA plans,  did not review the plans to ensure that the documents fully address the  elements of a results-oriented management framework. Furthermore, the  Chief of Naval Operations officials did not provide direction to NAVAIR  and NAVSEA regarding strategic planning elements that should be  incorporated in their respective plans. Moreover, while Chief of Naval  Operations officials told us that they conduct periodic reviews of depot  maintenance programs and that these reviews help provide oversight of  the plans’ implementation, these reviews do not systematically assess the  progress in achieving the plans’ long-term goals.
While Navy officials responsible for the plans acknowledged some of the  plans’ weaknesses, they told us that they believe the plans more fully  address the results-oriented management framework elements than our  analysis reflects. These officials stated that (1) although the plans do not  address some elements explicitly, the elements are implied in the plans’  discussion of various initiatives and processes, and (2) experienced  professionals involved in Navy depot maintenance would be able to  recognize these elements. However, because the plans do not explicitly  address these elements, they may not be clear to individuals not involved  or less involved in developing the plans.
In our review of the Air Force depot maintenance plan, we reported  similar oversight challenges for that service and recommended that the  Secretary of the Air Force take actions to strengthen its oversight of the  plans. The recommended actions to improve the Air Force’s oversight  parallel those listed previously in this report for the Under Secretary of  Defense for Acquisition, Technology and Logistics.
section_title: NAVAIR and NAVSEA Plans Do Not Fully Respond to OUSD (AT&L)’s Direction Designed to Meet Future Challenges
paragraphs: While the NAVAIR and NAVSEA depot maintenance strategic plans  describe many initiatives and programs important to the NAVAIR and  NAVSEA depots, they are not fully responsive to OUSD (AT&L)’s direction  to the services that was designed to provide the services with a framework  to meet future challenges. Specifically, the plans do not fully address  logistics transformation, core logistics capability assurance, workforce  revitalization, and capital investment—the four areas that OUSD (AT&L)  directed each service, at a minimum, to include in its plan. Within these  four general areas are 10 issues that OUSD (AT&L) also identified. The  NAVAIR and NAVSEA plans each partially address 8 issues and do not  address the remaining 2. Table 3 summarizes our evaluation of the extent  to which the NAVAIR and NAVSEA plans address each of the 10 issues.
As discussed for the elements of a results-oriented management  framework, OUSD (AT&L) and the Navy did not identify missing or  partially addressed issues because neither used effective oversight to help  ensure that OUSD (AT&L)’s direction for developing the plan was carried  out. Among other things, DOD’s Depot Maintenance Strategy and  Implementation Plans states that the DOD strategy will ensure that DOD  is postured to meet the national security and materiel readiness challenges  of the 21st century. However, at present, information missing from the  NAVAIR and NAVSEA plans may limit the service’s assurance that its  depots are postured and resourced to meet future maintenance  requirements.
subsections: section_title: NAVAIR and NAVSEA Plans Partially Address the Three Logistics Transformation Issues
paragraphs: The NAVAIR and NAVSEA plans partially address each of the three  logistics transformation issues that OUSD (AT&L) directed the services to  discuss in their plans. In this area, OUSD (AT&L) directed the services to  discuss the future roles and capabilities of the depots, transformation  actions, and approaches for integrating various depot capabilities in their  plans.
The two plans generally discuss the future roles of their depots, but the  plans do not discuss projected future capabilities of the depots or how  those capabilities will be measured. The NAVAIR plan states the general  role of the Fleet Readiness Centers is to establish and sustain capabilities  to support future weapon systems, and the NAVSEA plan states that Naval  Shipyards’ role is to provide the capability on ships and weapon systems  required by Navy component commanders and combatant commanders.  However, the NAVAIR and NAVSEA plans have a limited discussion on  projected future capabilities despite changes to the Navy’s force structure.  For example, the February 2006 Quadrennial Defense Review Report  noted that the integration of the Navy’s and Marine Corps’ tactical aircraft  would result in reducing the procurement of 500 Navy tactical aircraft.  This report also mentioned that four of the Navy’s oldest nuclear ballistic  missile submarines would reenter service after being converted into  guided-missile and special-operations platforms. NAVAIR officials told us  that they did not consider the effect these force structure changes would  have on the strategic plan when it was being developed. In addition, these  officials said that they will consider any effects the 2010 Quadrennial  Defense Review Report would have on the plan when it is next updated.
Additionally, the NAVAIR and NAVSEA plans partially address actions  they are taking to transform their depots. For example, under its future  capabilities and readiness goal, the NAVAIR plan discusses developing  capability and capacity baselines and tools so NAVAIR can improve the  delivery of products to meet warfighter requirements. However, the plan  does not identify the resources, methodology, and time frame required to  develop the baselines and tools. The NAVSEA plan notes that one of the  goals of the command’s continuous process-improvement program is to  increase workforce efficiencies, but the plan does not describe these  efficiencies or the specific actions and time frames to achieve them.
Moreover, the NAVAIR and NAVSEA plans partially address the  management approach for integrating various depot maintenance  capabilities, including public- and private-sector sources as well as joint,  interservice, and multinational capabilities. Both plans discuss a  management approach for integrating public- and private-sector depot  sources. For example, the NAVAIR plan notes that one way of maximizing  support for the warfighter is by exploring opportunities provided through  public-private partnerships. In addition, the NAVSEA plan notes that  workload fluctuations at public shipyards can be mitigated by reassigning  some intermediate-level work at regional maintenance centers and  facilities to public- and private-sector shipyards. However, both plans are  silent with regard to a management approach for integrating joint,  interservice, and multinational capabilities. Because the plans do not  discuss their approaches for integrating these other three types of  capabilities, it is unclear if NAVAIR and NAVSEA are positioned to reduce  redundancies and take advantage of potential cost-saving measures.
section_title: NAVAIR and NAVSEA Plans Partially Address One of the Core Logistics Capability–Assurance Issues and Do Not Address the Other
paragraphs: The NAVAIR and NAVSEA plans partially address one core logistics  capability–assurance issue and do not address one issue. For the issue that  both plans partially address, OUSD (AT&L) directed the services to  address four types of actions being taken or contemplated: NAVAIR’s plan  contains information on three of the four types of actions, and NAVSEA’s  plan contains information on two of the four.
Identify core requirements at program initiation. The NAVAIR  plan notes that industrial and maintenance coordinators work with  weapon acquisition program offices to identify core requirements  during the acquisition process, including program initiation. The  NAVSEA plan does not have a discussion regarding identifying core  requirements.
Ensure that depot source of repair decisions are made upon  program initiation. Neither plan discusses actions that the command  would take to ensure that depot source of repair decisions for new  systems are made upon program initiation.
Encourage the formation of public-private partnerships. Both  plans describe actions to encourage the formation of public-private  partnerships. For example, the NAVAIR plan states that the command  will support opportunities to provide labor through commercial  partnerships, but the plan does not identify these opportunities. The  NAVSEA plan discusses the “One Shipyard” concept that includes the  sharing of resources among public shipyards and partnering with  private shipyards, but it does not provide details on how NAVSEA may  encourage the formation of partnerships.
Identify and rectify core capability deficiencies. Both plans  describe actions to address deficiencies, but neither describes how the  deficiencies will be identified. For example, the NAVAIR plan notes  that the command will establish strong liaison between the  maintenance activities and the acquisition community. The NAVSEA  plan notes that core requirement levels will be sustained, in part, by  reducing the total workforce by 20 percent or 22,000 employees.
For the second of the two core logistics capability–assurance issues,  neither plan discusses the OUSD (AT&L) direction to address the  projected effects of weapon system retirements and bed-down (i.e., the act  or process of locating a weapon system at a particular base) and  retirements, despite changes to the Navy’s force structure for aircraft and  ships, as mentioned previously. In addition, the methods for estimating  depot workload are not addressed in the NAVAIR and NAVSEA plans. In  contrast, we reported DOD’s method of compiling and internally reporting  core requirements and associated workloads for 2007 did not reveal core  capability shortfalls, even though the services—including the Navy—had  identified shortfalls in specific equipment/technology categories.
section_title: NAVAIR and NAVSEA Plans Partially Address Each of the Three Workforce Revitalization Issues
paragraphs: The NAVAIR and NAVSEA plans both partially address each of the three  OUSD (AT&L)–directed workforce revitalization issues: reengineering  strategies, replenishment requirements, and replenishment strategies.  Regarding the workforce reengineering strategies issue, the NAVAIR plan  discusses the Qualified and Proficient Technician Training program that is  designed to provide existing employees new and enhanced skills, and the  NAVSEA plan notes that new weapon systems and technology  modifications will require new workforce skill requirements. However,  neither plan discusses commandwide or depot-specific actions to identify  emerging skill requirements. Also, the NAVSEA plan does not discuss the  reengineering needed to enable existing employees to gain the emerging  skills.
Regarding workforce replenishment requirements, both plans include  some information on forecasts of future workforce levels. For example,  the NAVAIR plan mentions its Workload Shaping model that includes  forecasts of workforce attrition rate. While the NAVSEA plan discusses  using shipyard demographics data to forecast future workforce attrition  rates and an annual 5 percent attrition rate for the workforce, it does not  provide details regarding attrition effects on more specific groups such as  blue- and white-collar workers. In addition, both plans do not describe the  methods used for forecasting projected losses (e.g., by specialty and by  year), even though the OUSD (AT&L) direction explicitly called for  discussion of those methods.
To address the workforce replenishment strategy issue, both plans provide  examples of recruiting actions, but they have limited information on  training—a second part of the OUSD (AT&L)–directed issue. The NAVAIR  plan briefly mentions hiring entry-level engineers and production workers.  Similarly, the NAVSEA plan talks about hiring 100 apprentice employees at  each Naval Shipyard each year. In addition to having few details on the  cited hiring plans, neither plan discusses a comprehensive management  approach for the recruitment and training.
The NAVAIR and NAVSEA plans’ limited and missing information for the  three issues in the workforce revitalization area is noteworthy in the  contexts of our previous findings on the DOD depot maintenance  workforce and information in the OUSD (AT&L)’s document directing the  services to provide the plans. In 2003, we reported that DOD faced  significant management challenges in succession planning to maintain a  skilled workforce at its depot maintenance facilities. Among other  challenges, we reported that relatively high numbers of civilian workers at  maintenance depots were nearing retirement age. DOD’s Depot  Maintenance Strategy and Implementation Plans makes a similar point.  It states that DOD’s depot maintenance community, like the rest of the  federal government, faces increasing numbers of retirements as the “baby  boom” generation reaches retirement eligibility. It goes on to state that the  retirement-eligible population within the depot maintenance workforce  and forecasted annual retirements are expected to increase annually for  the remainder of the decade. This dynamic—coupled with the highly  skilled nature of some depot maintenance work and the length of time  required to train new employees—creates hiring, training, and retention  challenges. Without a discussion that acknowledges these and other such  workforce challenges, it is unclear how well NAVAIR and NAVSEA are  positioned to address the challenges that their depots face.
section_title: NAVAIR and NAVSEA Plans Address One Capital- Investment Issue but Do Not Address the Other
paragraphs: The NAVAIR and NAVSEA plans partially address the capital-investment  issue of quantifying current capabilities but do not address the other  issue—capital-investment benchmarks. Neither the benchmarks for  evaluating the adequacy of investment funding nor NAVAIR’s and  NAVSEA’s basis for selecting the benchmarks are in the plans despite  OUSD (AT&L)’s direction to address these concerns. Even though neither  plan addresses capital-investment benchmarks, the NAVSEA plan notes  that the command intends to continue making an annual capital  investment of at least 6 percent of revenue, as required by law, to sustain  depot infrastructure requirements. An OUSD (AT&L) official mentioned  that NAVSEA’s citing of the 6 percent capital investment should be seen as  addressing the benchmark issue. While the NAVAIR plan did not mention  the 6 percent requirement, NAVAIR officials told us they intend to  continue making capital investments of at least this amount.
The NAVAIR and NAVSEA plans partially address the issues pertaining to  the methods for quantitatively articulating these capital-investment  concerns: current capabilities, current and projected deficiencies, and the  capabilities that planned investment will provide. While the NAVAIR plan  notes that its capital investments are prioritized in order to support naval  aviation requirements, the NAVSEA plan discusses investments in the  context of supporting shipyard operations. Both plans discuss an  infrastructure-investment prioritization process but do not describe the  method for prioritizing needed investments. In addition, the NAVAIR and  NAVSEA plans do not present quantitative data on the projected funding  (or shortfalls) for facilities and equipment, despite both plans noting  infrastructure shortfalls and funding limitations. Modernizing and  refurbishing their facilities is an essential step for optimizing their  operating efficiencies. Key steps in modernizing facilities are articulating  investment priorities, quantifying shortfalls, and discussing how these  shortfalls may affect accomplishing strategic goals.
Capital investment in DOD depots has been an issue of concern in our  prior work. For example, in 2001, we reported that capital investments in  depot facilities and plant equipment had declined sharply in the mid-1990s  as a result of defense downsizing, depot closures and consolidations, and  DOD’s plan to increase its reliance on the private sector for logistics  support of new weapon systems.  As a result of DOD’s lack of capital  investment, its depots did not keep up with the latest technologies. In  subsequent years, funding levels increased as the services recognized the  need to modernize their depots. As with any business, modernizing and  refurbishing plant and equipment for optimal operating efficiency, as well  as acquiring new capabilities and cutting-edge technologies linked to new  workloads, are important to the future viability of the military depots. An  incomplete discussion of capital investment could negatively limit Navy  decision makers’ ability to purchase depot infrastructure, equipment, and  process improvements.
section_title: Conclusions
paragraphs: OUSD (AT&L) officials told us that the primary intent of OUSD (AT&L)’s  direction was to provide a framework for the services to meet challenges  in the future and that the issues identified in the four areas specified in the  direction were designed to address those challenges. Further, DOD’s  Depot Maintenance Strategy and Implementation Plans states that (1)  each service will conduct depot maintenance strategic planning that  focuses on achieving the DOD depot maintenance strategy and (2) the  DOD strategy will ensure that DOD is postured to meet the national  security and materiel readiness challenges of the 21st century. However,  NAVAIR’s and NAVSEA’s plans do not provide a comprehensive, results- oriented management framework to efficiently and effectively guide the  Navy’s future actions, nor do they fully respond to OUSD (AT&L)’s  direction that was designed to provide a framework for the services to  overcome four general areas of future challenges. Furthermore, focusing  on the development of separate command-level plans and an executive  summary, rather than a single Navy-wide plan, may have made it more  difficult to determine where additional information was needed to address  the elements and issues at the servicewide level. Another primary reason  for not correcting weaknesses in the plans is that OUSD (AT&L) and Navy  do not have effective oversight mechanisms in place to promptly identify  the weaknesses, communicate weaknesses to the plan developers, monitor  the revision of the plans to ensure that the weaknesses have been  addressed, and determine whether goals are being achieved. These  weaknesses in content, linkage, and oversight resulted in a missed  opportunity to identify a more complete Navy-wide vision for the effective  and efficient operation of its depots in the future. For example, had  NAVSEA and NAVAIR identified and implemented a systematic program  evaluation and a thorough set of metrics to directly assess goal  achievement, they and the Navy overall would have additional tools for  reacting in a timely manner to potential issues and challenges in executing  the strategies. Most importantly, integration of the plans could have  resulted in the Navy having more assurance that its depots are viably  positioned and have the maintenance workforce, equipment, facilities, and  funds they need to meet current and future requirements. On a closing  note, we previously made a recommendation to OUSD (AT&L) to develop  and implement procedures to (1) review revisions of the depot  maintenance strategic plan to ensure they fully address all key elements of  a results-oriented management framework, (2) explicitly address any  OUSD (AT&L) direction for the plans, and (3) periodically assess progress  and corrective actions to the extent needed in meeting the plans’ goals. We  reassert the need for DOD to implement that recommendation.
section_title: Recommendations for Executive Action
paragraphs: To provide greater assurance that Navy depots will be postured and  resourced to meet future maintenance requirements, we recommend that  the Secretary of Defense direct the Secretary of the Navy to take the  following four actions to revise the Navy’s depot maintenance strategic  plan:    Fully and explicitly address all elements needed for a comprehensive  results-oriented management framework, including those elements  that we have identified as partially addressed or not addressed in the  current plan.
Demonstrate clear linkages among plans should the Navy continue to  submit individual depot maintenance strategic plans instead of a single  Navy-wide plan.
Fully and explicitly address the four critical areas of logistics  transformation, core logistics capability assurance, workforce  revitalization, and capital investment, consistent with OUSD (AT&L)  criteria.
Develop and implement procedures to review revisions of the depot  maintenance strategic plan to ensure they fully address all key  elements of a results-oriented management framework, explicitly  address any OUSD (AT&L) direction for the plans, and periodically  assess progress and corrective actions to the extent needed in meeting  the plans’ goals.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD concurred with our  four recommendations to provide greater assurance that Navy depots will  be postured and resourced to meet future maintenance requirements.  DOD’s written comments are reprinted in appendix II.
The department concurred with our recommendation to direct the  Secretary of the Navy to revise the Navy’s depot maintenance strategic  plan to fully and explicitly address all elements needed for a  comprehensive results-oriented management framework. DOD stated that  it will direct the Navy and the other services to more clearly address all  elements needed for a results-oriented strategy in the next OUSD (AT&L)  request to the services to update their depot maintenance strategic plans.  DOD noted that the updates are expected in early 2011, after completion  of the mandated future depot capability study.
DOD also concurred with our recommendation to direct the Secretary of  the Navy to revise the Navy’s depot maintenance strategic plan to  demonstrate clear linkages among the plans, should the Navy continue to  submit individual depot maintenance plans instead of a single Navy-wide  plan. In its response, DOD stated that it will direct the Navy and the other  services to more clearly demonstrate the linkages of their depot  maintenance strategies to the DOD depot maintenance strategic plan in  the next OUSD (AT&L) request to the services to update their depot  maintenance strategic plans.
The department also concurred with our recommendation to direct the  Secretary of the Navy to revise the Navy’s depot maintenance strategic  plan to fully and explicitly address OUSD (AT&L)’s direction that provides  a framework for the services to address the four critical areas of logistics  transformation, core capability assurance, workforce revitalization, and  capital investment, consistent with OUSD (AT&L) criteria. DOD stated  that it will direct the Navy and the other services to explicitly address the  OUSD (AT&L) direction for depot maintenance strategic planning in the  next OUSD (AT&L) request to the services to update their depot  maintenance strategic plans.
Additionally, DOD concurred with our recommendation to direct the  Secretary of the Navy to revise the Navy’s depot maintenance strategic  plan to develop and implement procedures to review revisions of the  depot maintenance strategic plan to ensure they fully address all key  elements of a results-oriented management framework, explicitly address  any OUSD (AT&L) direction for the plans, and periodically assess progress  and corrective actions to the extent needed in meeting the plans’ goals. In  its response, DOD stated that it will direct the services to explicitly  address the procedures noted in our recommendation. DOD also said that  OUSD (AT&L) would further develop a process to periodically assess  progress and corrective actions to ensure the services are meeting OUSD  (AT&L) and service plans’ goals.
DOD also provided technical comments that we have incorporated into  this report where applicable.
We are sending copies of this report to the Secretary of Defense, the  Secretary of the Navy, the Office of the Chief of Naval Operations, Naval  Air Systems Command (NAVAIR), and Naval Sea Systems Command  (NAVSEA). In addition, the report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If you or your staff have any questions, please call me at (202) 512-8246 or  edwardsj@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Staff members who made key contributions to this report are listed in  appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: In this report, we address two questions: (1) To what extent does the  Navy’s depot maintenance strategic plan address key elements of a results- oriented management framework? and (2) To what extent does the Navy’s  depot maintenance strategic plan address Office of the Under Secretary of  Defense for Acquisition, Technology and Logistics’ (OUSD )  direction that was designed to provide a framework for the services to  meet future challenges? Because Naval Air Systems Command (NAVAIR)  and Naval Sea Systems Command (NAVSEA) are collectively responsible  for 94 percent of the Navy’s depot maintenance workload, we focused the  scope of our review on NAVAIR’s Naval Aviation Industrial Strategy,  NAVSEA’s Naval Shipyard Business Plan, and the 2009 update that each  command provided.
We used the same set of methodological procedures to answer both  questions, and each type of procedure was performed simultaneously for  the two questions. To understand the context of our analysis, we first  reviewed relevant laws; Department of Defense (DOD) and Navy  instructions governing depot maintenance; and depot maintenance-related  reports issued by agencies and organizations such as GAO, DOD, the  Logistics Management Institute, and RAND. We then used qualitative  content analyses to compare the Navy plans against criteria from the  seven elements of a results-oriented management framework and the 10  issues listed in the OUSD (AT&L) direction for depot maintenance  strategic plans. To conduct these analyses, we first developed a data- collection instrument that incorporated these two types of criteria. One  team member then analyzed the plans using this instrument. To verify  preliminary observations from this initial analysis, a second team member  concurrently conducted an independent analysis of the plans. We  compared observations of the two analysts and discussed any differences.  We reconciled the differences with the assistance of analysts from the  team that was evaluating the Air Force depot maintenance strategic plans.  We subsequently met with Navy officials to confirm our understanding of  the plans and sought additional information where our preliminary  analyses revealed that the plans partially address or do not address the  criteria. We also interviewed and obtained documentary evidence from  relevant OUSD (AT&L) officials regarding the office’s oversight of the  services’ plans. Additionally, we interviewed depot leaders and strategic  planning personnel at four NAVAIR and NAVSEA depots to obtain first- hand information on issues the depots face. We also obtained data on  workload and personnel from the Navy and determined that these data  were sufficiently reliable for our report.
The organizations and installations where we visited and conducted  interviews are listed in table 4.
We conducted this performance audit from July 2009 through June 2010 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: Key contributors to this report were Sandra B. Burrell, Assistant Director;  Allen Westheimer; Steve Boyles; Ron La Due Lake; Joanne Landesman;  Cristina M. Ruggiero-Mendoza; Michael Willems; and Elizabeth Wood.
section_title: Related GAO Products
paragraphs: Depot Maintenance: Improved Strategic Planning Needed to Ensure That  Air Force Depots Can Meet Future Maintenance Requirements.   GAO-10-526. Washington, D.C.: May 14, 2010.
Depot Maintenance: Improved Strategic Planning Needed to Ensure That  Army and Marine Corps Depots Can Meet Future Maintenance  Requirements. GAO-09-865. Washington, D.C.: September 17, 2009.
Depot Maintenance: Actions Needed to Identify and Establish Core  Capability at Military Depots. GAO-09-83. Washington, D.C.: May 14,  2009.
Depot Maintenance: Actions Needed to Provide More Consistent Funding  Allocation Data to Congress. GAO-07-126. Washington, D.C.: November  30, 2006.
Depot Maintenance: DOD’s Report to Congress on Its Public-Private  Partnerships at Its Centers of Industrial and Technical Excellence  (CITEs) Is Not Complete and Additional Information Would Be Useful.  GAO-08-902R. Washington, D.C.: July 1, 2008.
Depot Maintenance: Issues and Options for Reporting on Military  Depots. GAO-08-761R. Washington, D.C.: May 15, 2008.
DOD Civilian Personnel: Improved Strategic Planning Needed to Help  Ensure Viability of DOD’s Civilian Industrial Workforce. GAO-03-472.  Washington, D.C.: April 30, 2003.
Defense Maintenance: Sustaining Readiness Support Capabilities  Requires a Comprehensive Plan. GAO-01-533T. Washington, D.C.: March  23, 2001.