Depot Maintenance: Actions Needed to Identify and Establish Core Capability at Military Depots
Published: 2009-05-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) is required, by law, to maintain a core logistics capability that is government owned and government operated to meet contingency and other emergency requirements. Military depots play a key role in maintaining this "core capability," although in recent years DOD has significantly increased its use of contractors. At the subcommittee's request, GAO examined the extent to which (1) DOD has accurately assessed whether it has the required core capabilities in military depots and (2) DOD is preparing to support future core requirements for new and modified systems. GAO reviewed DOD's biennial process for determining core capability requirements and the associated workloads for fielded systems. GAO also reviewed whether DOD had identified and established core capability in a timely manner for new and modified systems.
section_title: What GAO Found
paragraphs: DOD, through its biennial core process, has not comprehensively and accurately assessed whether it has the required core capability to support fielded systems in military depots. Although DOD internally reported that its maintenance workload of 92.7 million hours in 2007 was "well over" the minimum of 70.5 million hours needed to fulfill core requirements at military depots and that the services were complying with their core capability requirements, this assessment did not show capability shortfalls identified by the services in their core computations. GAO's analysis of the services' 2007 core capabilities data determined that the Army, Navy, and Marine Corps had shortfalls for some equipment categories or technologies. For example, the Army identified core shortfalls of 1.4 million hours for 10 equipment categories. Several factors contributed to the deficiencies in the core process. Current guidance does not address how DOD is to consolidate the services' results into a meaningful department wide assessment. Also, there were errors and inconsistencies in the services' core calculations, making the full extent of the shortfalls unclear, and DOD also did not have effective internal controls in place to identify and resolve these errors and deficiencies. Further, DOD's core process does not have an effective mechanism for ensuring that corrective actions are taken to resolve shortfalls for fielded systems. As a result of shortcomings in the core process, DOD does not know the extent to which the military depots will have the capability to repair weapon systems to support future military operations. Finally, since DOD is not required to provide Congress information on its core process, the results of the process are not readily and routinely visible for purposes of congressional oversight. DOD is not adequately preparing military depots to support future core requirements through its acquisition process. Specifically, for the new and modified systems included in our review, the department had neither identified nor established core capabilities for certain systems in a timely manner. DOD acquisition guidance requires that an analysis of core requirements for new and modified systems be conducted early in the acquisition phase (no later than Milestone B or no later than Milestone C if there is no Milestone B). However, GAO found that program offices managing 20 of 52 systems we reviewed did not identify core requirements by Milestone C. DOD is also not establishing core capabilities for new and modified systems in a timely manner--that is, within 4 years of the system's achieving its initial operational capability, as required under DOD guidance. Shortcomings in the acquisition process include (1) acquisition guidance provides little or no information on how to identify and plan for the establishment of core capability, (2) program acquisition strategies do not fully address core requirements, and (3) some program offices are not procuring technical data necessary to establish a core capability. As a result, DOD has little assurance that the department is preparing military depots to meet future national defense contingencies.

section_title: Letter
paragraphs: The Department of Defense (DOD) maintains a multitude of complex  weapon systems including aircraft, ships, ground-based systems, missiles,  communications equipment, and other types of electronic equipment that  require regular and emergency maintenance to keep pace with national  security goals. This mix of weapon systems and their maintenance needs is  continually changing as new weapon systems replace older ones and  systems in the field are modified with newer and better technologies to  meet changing threats. To sustain all these systems, at the depot level, the  military uses a combination of private sector contractors and military  depots. Depots play a key role in maintaining military systems and  equipment in peacetime and during surge conditions like those created by  the ongoing conflicts in Iraq and Afghanistan. However, in recent years  DOD has significantly increased its use of contractors to support military  systems and equipment. “It is essential for the national defense that the Department of Defense maintain a core  logistics capability that is Government-owned and Government-operated (including  Government personnel and Government-owned and Government-operated equipment and  facilities) to ensure a ready and controlled source of technical competence and resources  necessary to ensure effective and timely response to a mobilization, national defense  contingency situations, and other emergency requirements.”
Under the core statute, the Secretary of Defense is charged with  identifying the core logistics capabilities described in the statute, as well  as the workload required to maintain those capabilities. These “core  logistics capabilities” identified by the Secretary of Defense must include  those capabilities that are necessary to maintain and repair the weapon  systems and other military equipment that are identified by the Secretary  of Defense, in consultation with the Chairman of the Joint Chiefs of Staff  (JCS), as necessary to enable the armed forces to fulfill the strategic and  contingency plans prepared by the Chairman, JCS. The statute also states  that the Secretary of Defense shall require the performance of core  logistics workloads necessary to maintain these identified core logistics  capabilities at government-owned, government-operated DOD facilities  (military depots) and assign these facilities sufficient workload to ensure  cost efficiency and technical competence in peacetime, while preserving  surge capacity and reconstitution capabilities necessary to support fully  the strategic and contingency plans referenced in the statute. The statute  further stipulates that core workloads needed to maintain a logistics  capability identified by the Secretary of Defense may not be contracted to  the private sector unless the Secretary of Defense has executed a waiver.  According to DOD officials, they have no record of a waiver being  requested.
DOD implements this statutory requirement to retain core capabilities and  workloads through a two-pronged process that includes the biennial core  capability determination process (for fielded systems) and the acquisition  process (for new systems and systems undergoing modification). In the  case of fielded systems, DOD has issued guidance that outlines a biennial  core determination process and provides a computational methodology to  identify essential DOD depot maintenance core capability requirements for  each DOD component, as well as the workloads needed to sustain those  capabilities. The core determination process expresses core capability  requirements and planned workload in direct labor hours. DOD guidance  also requires the Deputy Under Secretary of Defense for Logistics and  Materiel Readiness to collect, review, and evaluate service submissions as  applicable, and compute the composite core capability requirements and  associated workloads for DOD. The results of the process are summarized  in an internal report that shows overall DOD core requirements and  associated workloads and are then submitted for approval to the Under  Secretary of Defense for Acquisition, Technology, and Logistics. For new  systems and systems undergoing modification, the identification of core  requirements is to occur during the acquisition process, and DOD has  established a time frame for performing a core analysis that is linked with  major acquisition milestones. Furthermore, DOD guidance requires that  for systems that are identified as necessary to fulfill core requirements,  DOD has the capability to maintain and repair these systems at a military  depot within 4 years of a system’s initial operational capability.
The House Armed Services Committee’s Readiness Subcommittee  requested that we review whether DOD is identifying and establishing  required core capability for systems that are currently fielded as well as  for new and modified systems. In response to this request, we examined  the extent to which (1) DOD has accurately assessed whether it has the  required core capabilities in military depots to support fielded systems and  (2) DOD is preparing to support future core requirements for new and  modified systems in military depots.
To assess the core determination process for fielded systems, we focused  on the 2007 core process, which began in 2005. We reviewed the military  services’ implementation of the core determination methodology and  compared the results of their process with the summary report compiled  by Office of the Secretary of Defense (OSD). We also discussed the core  determination process and our data analyses with OSD and service  officials. In reviewing the identification of core capability for new and  modified systems, we selected 52 program offices that had completed a  core analysis. We surveyed these program offices on how and when they  determined core capability requirements for their respective weapon  systems. Further, to determine whether core capability had been  established for new and modified systems as required under DOD  guidance, we identified systems that had completed the acquisition  process and were in operation between 1998 and 2003. We initially  selected 73 systems for this part of our review and ultimately focused on  30 of these systems. For these systems we reviewed various program  documents, including source-of-repair decisions and maintenance plans,  and interviewed program officials about the characteristics of the systems  and maintenance sustainment. We assessed the reliability of the data from  the services’ databases that we used to conduct our studies and  determined that the DOD data were sufficiently reliable for the purposes  of our analysis and findings. While the results of these reviews cannot be  generalized to all weapon systems in the acquisition process, deficiencies  in the way core capability is identified or established for these systems  indicate the existence of more widespread problems. Further, we did not  look at the larger question of whether DOD fulfilled the warfighter’s  requirements as part of our review. We conducted this performance audit  from June 2007 through March 2009 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 the evidence obtained provides a reasonable basis  for our findings and conclusions based on our audit objectives. A more  detailed description of our scope and methodology is included in   appendix I.
subsections: section_title: Background
subsections: section_title: Concept of Core Logistics Capability
paragraphs: To ensure core capability is maintained, Congress enacted Section 2464 of  Title 10, which requires, in part, that the Secretary of Defense maintain a  core logistics capability that is government owned, government operated,  and that uses government personnel, equipment, and facilities. The  authority and responsibility of the Secretary of Defense under Section  2464 has been delegated to the Under Secretary of Defense for Acquisition,  Technology, and Logistics. Statutory guidance and DOD’s implementing  guidance are aimed at ensuring that repair capabilities will be available to  meet the military needs of the nation should an emergency or contingency  arise (i.e., surge situations). The concept of core capability helps guide  government policy on which activities DOD should perform at a military  depot and which activities the private sector could or should perform.
DOD’s two-pronged approach in its implementation of the core statute  includes (1) the biennial core determination process for capturing and  reporting core capability requirements and associated planned workloads  for fielded systems and (2) the acquisition process for identifying and  establishing core capability for new systems and those undergoing  modifications. The following summarizes these processes.
section_title: Core Determination Process for Fielded Systems
paragraphs: DOD’s 2007 biennial core determination process began with a December  2005 tasking letter from the Deputy Under Secretary of Defense for  Logistics and Materiel Readiness to the services. The letter included  guidance on the process and required the services to provide proposed  depot maintenance core capability requirements and sustaining workloads  for fiscal year 2007. The 2005 guidance in the tasking letter generally  mirrored subsequent guidance issued in January 2007.
The DOD core determination process is comprised of a series of  mathematical computations and adjustments that are used to derive  required core capability requirements and the associated planned  workloads expected to be available to sustain those capabilities. The  computations involved in this methodology are performed from the  perspective of the service that owns the depot maintenance assets and are  divided into two parts. Part 1 identifies the core capability requirements  for DOD weapon systems. The services identify applicable weapon  systems based on the JCS contingency scenarios. The JCS scenarios  represent plans for responding to conflicts that may occur in the future.  All systems required to execute the JCS scenarios are to be included in the  core determination process regardless of whether depot maintenance is  actually performed in the public or private sectors. The services exclude  some systems for several allowable reasons (i.e., special access programs)  that are documented citing the authority for each exclusion from the core  process.
After the applicable weapon systems are identified, the services compute  annual peacetime depot maintenance capability requirements in direct  labor hours to represent the amount of time it regularly takes to perform  required maintenance, and a number of adjustments to these computations  are then applied. Contingency requirements and resource adjustments are  made to account for applicable surge factors during the different phases of  a contingency (for example, preparation/readiness, sustainment, and  reconstitution). The objective is to determine the most appropriate  composite “surge” adjustment for a particular set of circumstances.  Further adjustments are made to account for redundancy in depot  capability. For example, a service may determine that repair capabilities  for specific systems maintained in military depots are so similar that the  capabilities for one system can effectively satisfy the capability  requirements for another. Core capability requirements also are adjusted  when one service’s maintenance capability requirements will be supported  by other services. Throughout Part 1, core capability data for individual  systems are incorporated into categories of equipment and technologies,  which are also known as work breakdown structure categories, and these  categories are to be broken down at a minimum, to the third level of  indenture for aircraft and components, the second level of indenture for  aircraft engines, and the first level of indenture for all other categories. For  example, the aircraft equipment category includes subcategories for  airframes, aircraft components, and aircraft engines, while the airframes  category is further divided by types of airframes and the aircraft  component category is subdivided into instruments, landing gear,  avionics/electronics, and other areas.
Part 2 of the biennial core process identifies the planned workloads  associated with sustaining the depot maintenance core capability  requirements identified in Part 1. In this part, after the amount of depot  maintenance workloads (in direct labor hours) that are needed to sustain  core capabilities are subtracted from funded public sector depot  maintenance workload in each equipment/technology category, the  difference could represent either an amount of workload that is not  needed to sustain core capability requirements or a shortfall amount.  This part establishes a minimum level of public sector depot maintenance  workloads within each service. Applicable information on the results of  each step in this process for Parts 1 and 2 are recorded on the DOD depot  maintenance core capability worksheets and provided to OSD, which  compiles the service data into a departmentwide assessment that is  summarized in an internal report.
section_title: Core Logistics Capability within DOD’s Acquisition Process
paragraphs: DOD uses the acquisition process to identify and establish core capability  requirements for new and modified systems. The department’s  overarching acquisition guidance, DOD Directive 5000.01, states that the  program manager shall be the single point of accountability for  accomplishing program objectives for total life-cycle systems  management, including sustainment. DOD Instruction 5000.02, which  provides additional DOD guidance for managing and overseeing defense  acquisition programs, requires that program managers perform a core  logistics analysis, as part of the acquisition strategy, by the Milestone B  acquisition decision point or by Milestone C, if there is no Milestone B.  Milestone B is the second major decision point in the acquisition process  and comes after the technology development phase. Milestone C, the third  major decision point, comes after the system development and production  phase. The core logistics analysis identifies whether the capability to  maintain and repair a weapon system is necessary to support core  requirements and whether the capability should be established at a  military depot. Furthermore, according to DOD Directive 4151.18,  capabilities to support identified depot maintenance core requirements  shall be established not later than 4 years after the system’s initial  operational capability. The program manager uses DOD’s acquisition  management framework that is intended to translate mission needs and  requirements into systems acquisition programs. The program manager  develops an acquisition strategy that details how the program’s goals and  objectives will be met. The acquisition strategy also serves as a “road map”  for program execution from program initiation through post-production  support. As part of the acquisition strategy, the core analysis is supposed  to identify whether a weapon system will satisfy core logistics  requirements.
section_title: Prior GAO Work on Core Logistics Capabilities
paragraphs: In 2001, we reported that DOD lacked assurance that core logistics  capabilities were being maintained as needed to ensure timely and  effective response to national defense emergencies and contingencies, as  required by Section 2464 of Title 10, noting that several factors precluded  this assurance. DOD’s core policy, which established a process for  identifying core maintenance capability, was not comprehensive in that it  did not provide a forward look at new weapon systems and associated  future maintenance capability requirements. In addition, we also reported  that DOD has had other limitations, including a lack of sufficient  investment in facilities, equipment, and human capital to ensure the long- term viability of the military depots.
section_title: DOD Has Not Comprehensively and Accurately Assessed Whether It Has the Required Core Capability to Support Fielded Systems
paragraphs: DOD, through its core process, has not comprehensively and accurately  assessed whether it has the required core capability to support fielded  systems in military depots. Although DOD generally followed its own  guidance for conducting the 2007 biennial core assessment, we found that  (1) DOD’s method of compiling and internally reporting core requirements  and associated workloads for the 2007 core process did not reveal  shortfalls that the services had identified for specific  equipment/technology categories, (2) the services had errors and  inconsistencies in their identification of core requirements and associated  workloads, and (3) there was no mechanism for ensuring that the services  take corrective actions to resolve capability shortfalls. As a result of these  deficiencies, DOD lacks assurance that it has the required capabilities to  support its core requirements. Finally, DOD is not required to provide  Congress information on its core process, and therefore the results of the  core process are not readily and routinely visible for purposes of  congressional oversight.
subsections: section_title: DOD’s Method of Compiling and Internally Reporting Core Requirements and Associated Workloads Did Not Reveal Specific Shortfalls
paragraphs: The method by which DOD compiled and internally reported its 2007 core  requirements and associated workloads did not reveal core capability  shortfalls, even though the services, in their core computations, had  identified shortfalls in specific equipment/technology categories. For  example, the Army and the Navy identified workload shortfalls to support  avionics and electronics components—a shortfall of 238,090 labor hours in  the Army and 78,974 hours in the Navy. However, DOD did not disclose  this and other specific shortfalls because it aggregated the results of the  core determination process in its internal reporting on core capability. As  a result, DOD did not present a comprehensive and accurate assessment of  the services’ 2007 core capability. Core capability shortfalls exist when the  military depots do not possess the combination of skilled personnel,  facilities, equipment, processes, and technology that are needed to  perform a particular category of work (e.g., composite repair) and that are  necessary to maintain and repair the weapon systems and other military  equipment needed to fulfill strategic and contingency plans. When  shortfalls occur, DOD may not have the necessary capability to repair  weapon systems, which could affect the readiness of troops that rely on  these weapon systems that support future military operations.
According to an internal memorandum summarizing the results of the core  process for the Under Secretary of Defense for Acquisition, Technology,  and Logistics, DOD determined that projected workload in military depots  was adequate to support core capability requirements. The memorandum  stated, “The Services are complying with their core capability  requirements as they meet wartime needs. Their projected organic  workloads in military depots are adequate to support core capability  requirements.” More specifically, the memorandum stated that the  department’s planned maintenance workload of 92.7 million hours was  “well over” the minimum of 70.5 million hours needed to fulfill core  requirements at military depots. The memorandum further reported that  the Marine Corps, alone among the four services, had planned workload in  military depots that was less than its core requirement due to funding  constraints, although it added that depot capacity was available to meet  the core requirement. According to the memorandum, using fiscal year  2007 funding requested for expenses associated with the Global War on  Terrorism, the Marine Corps should be able to meet its core requirement.  The memorandum recommended that the Under Secretary approve the  DOD identification of core logistics capabilities, and the approval was  subsequently given. Table 1 shows the total core capability requirements  and planned workloads, by service, as summarized in the internal DOD  memorandum.
To derive its assessment of core capability, DOD compiled and reported  aggregated totals of the services’ core requirements and associated  workloads. DOD core determination guidance does not specify how to  identify departmentwide core requirements and workload. However,  DOD’s method of computing aggregated totals had the effect of masking  workload shortfalls that the services had identified in specific  equipment/technology categories. The services, in their respective core  computations, identified planned workload shortfalls in a total of 18  equipment/technology categories. The Army identified the greatest  shortfall in core capability workload, identifying a total shortfall of           1.4 million direct labor hours across 10 equipment/technology categories.  The Marine Corps had shortfalls in 7 categories and the Navy in 6.  However, the combined Marine Corps and Navy shortfall was only about  35 percent of the Army’s. Table 2 shows the 18 equipment/technology  categories for which the services identified shortfalls in planned workload  to meet core requirements.
As shown in table 2, one area of significant shortfall in 2007 was in  workload for Navy aircraft components. For example, the Navy had  shortfalls of 218,728 hours in workload for dynamic components,  instruments, landing gear, aviation ordnance, and avionics/electronics. In a  Naval Air Systems Command briefing discussing the results of the 2007  core results, several reasons were identified for some shortfalls. For  example, according to the Command, the Navy had designated 10 percent  of the items in the component database for repair in a military depot, but  these items had been repaired by contractors because a depot repair  capability was not established. Additionally, in some cases where a  military depot had established repair capability, sustaining workloads  were still going to the private sector, according to Naval Air Systems  Command officials.
When we initially met with OSD officials responsible for developing DOD’s  2007 core assessment, the officials told us they were aware only of the  Marine Corps’ shortfalls, but not the Army’s and Navy’s. However, when  we brought the results of our analysis to their attention, they  acknowledged that these two services had also identified shortfalls. The  officials noted, however, that under OSD’s methodology for aggregating  the services’ core data, shortfalls in specific equipment/technology  categories could be offset if one service had sufficient depot repair  capability to support the core requirements for another service. For  example, the Marine Corps had a shortfall in capability to repair tactical  wheeled vehicles while the Army had more workload in this  equipment/technology category than it needed to support its core  requirements. However, since OSD officials, at the time they made this  assessment, were unaware that some services had shortfalls, it is unknown  to what extent OSD could have made this offset determination.
We applied OSD methodology for offsetting shortfalls in the same  equipment/technology categories across services to identify the potential  workload shortages that could be offset under these circumstances. The  result of applying this methodology was that DOD’s 2007 core shortfall  could be reduced by approximately 600,000 hours. However, this still  leaves a net shortfall of more than 1.3 million hours. Furthermore, it is  unclear that workload could be transferred cross-service as this analysis  might indicate. On the basis of our discussions with DOD officials, we  found that while the skill sets for repairing equipment may be the same or  similar, particularly for repairing less complex equipment such as tactical  wheeled vehicles, the ability to offset shortages in one service with excess  capacity in another would depend on the two services having the same  systems or systems so similar that repair capability in one service could  support the other service’s equipment. Skilled labor capable of working on  equipment from a given equipment/technology category may be able to  repair similar equipment from another service if the workers have the  required technical data, depot plant equipment is available, and the  workers have received necessary training. However, technical data and, to  some extent, depot plant equipment, are generally specific to a weapon  system. Thus, without knowing the extent to which the excess workload  from one service would represent maintenance that could be performed  by another service with a shortfall of work, cross-service analyses of  workload within the same equipment/technology category would not be  meaningful.
section_title: DOD’s Core Process Resulted in Errors and Inconsistencies in the Services’ Identification of Core Requirements and Associated Workloads
paragraphs: During our review, we found some errors and inconsistencies in the  services’ implementation of the biennial core determination process.  Moreover, DOD did not have effective internal controls to prevent these  errors and deficiencies in the core process.
First, most of the services did not accurately identify weapon systems  required to support the 2007 core requirements. According to DOD’s core  guidance, the starting point for calculating core requirements is to identify  weapon systems and equipment that are included in the JCS contingency  scenarios. The guidance states that when beginning to compute core  requirements, the services should consider all scenario-tasked weapon  systems that require depot maintenance, regardless of whether  maintenance for particular systems is currently being accomplished in the  public or private sector. The Marine Corps excluded some JCS-tasked  systems, such as the Medium Tactical Vehicle Replacement system, from  its core computation. Although systems repaired both in the public and  private sectors should have been included in its core computation, Marine  Corps officials stated that they did not include systems unless they had  been previously repaired in military depots. Thus, they erroneously  excluded some JCS systems from the starting point for calculating core  requirements. The Marine Corps official who performed the analysis said  he asked for guidance from Marine Corps Headquarters on what systems  should be included, but did not get a list of systems. In addition, according  to a May 2007 Army Audit Agency report, Army officials were unable to  verify that all JCS-tasked systems were included in the service’s core  reviews. Army officials said that they relied heavily on the program  executive office to conduct accurate and thorough reviews, but could not  prove that all weapon systems were assessed during the review. Because  the Army could not show whether all systems were included in the  biennial core process, the Army lacks the assurance that core capabilities  were identified for all required weapon systems.
Second, we found that the Navy and the Marine Corps omitted software  maintenance workloads from their 2007 biennial core requirements  computations, while the Army and the Air Force included software  maintenance in their core computations. The Naval Air Systems  Command’s rationale for not including software maintenance in its  calculation was that the Navy does not consider software maintenance as  maintenance in the usual sense of returning an item back to its original  condition. Also, the Navy does not perform software maintenance in  facilities that are traditionally considered depots. Nonetheless, cognizant  OSD officials told us that because DOD’s biennial core guidance defines  depot maintenance to include all aspects of software maintenance, the  Navy and Marine Corps should be including software maintenance in their  core analysis inputs. Given the services’ differing methodologies in  computing their respective core requirements, DOD cannot logically  compute the composite core capability requirements for the department as  a whole, as required by its guidance. Most importantly, DOD increasingly  relies on software to introduce or enhance performance of weapon  systems, and making software adjustments is increasingly a key  component of maintaining systems to prepare for emergency conditions.  Thus, it is important to comprehensively identify the software core  maintenance requirements.
Third, the Air Force, as a part of its adjustment for redundant or duplicate  capability, reduced its requirements because of private sector  maintenance workload. Duplicate or redundant capabilities occur when  multiple systems are similar and share a common or complementary base  of repair processes, technologies, and capabilities, or when a large  quantity of single platform requirements necessitate duplicate capabilities.  DOD core guidance requires that as a part of the core assessment, the  services adjust for duplicate maintenance work. According to DOD  officials, the intent of this provision in the guidance was that redundant  capability should only consider DOD depot workload—not private sector  workload. However, the Air Force considered private sector workload in  making these adjustments. For example, for most airframes, engines, and  other major end items, the Air Force reduced its workload based on  private sector workload.
According to Air Force officials, they included private sector workload in  the redundancy adjustment because they believed they had flexibility to  include both public and private sector workloads. Cognizant OSD officials  said they were unaware of the Air Force approach of including private  sector workload. When we informed them of the Air Force’s practice, they  agreed that this adjustment was not appropriate. They noted that since the  purpose of the core capability requirements determination process is to  identify public sector depot maintenance capability, reducing the depot  maintenance direct labor hours because of workload that exists in the  private sector is not what was intended by DOD core guidance.
By including private sector capability in its redundancy adjustment, the Air  Force is misstating its workload and limiting its flexibility to support  critical systems using military depot capability. The Air Force was the only  service that did not identify shortfalls using the same methodology as the  other services.  However, if they had not used private sector capability to  adjust for redundancy, it is likely that some categories would have had  shortfalls. For example, at least 10 equipment categories had core  requirements equal to the planned core workloads assigned. Thus, adding  back in the private sector adjustment that the Air Force made would  mathematically result in a shortfall.
Fourth, as noted above, the Air Force used a methodology for calculating  core capability shortfalls that differed from the methodology used by the  other services. Although DOD core guidance provides instructions for  determining core requirements and associated workload, it does not  specify how to calculate shortfalls based on the worksheets developed by  each service. In our discussions with service and OSD officials, they  agreed that the correct method is to subtract core requirements from  planned workload. If the difference is a negative number, that would  indicate a core shortfall. The Army, Navy, and Marine Corps all used this  method in calculating the results of the core determination process, and  we also applied this method in calculating shortfalls in specific  equipment/technology categories. However, the Air Force used a different  method of calculating shortfalls, which showed shortfalls in specific  equipment/technology categories that did not materialize using the other  services’ methodology. For example, unlike the other services, the Air  Force adjusted its core requirements before computing shortfalls.  According to Air Force officials, this method has been a long-standing  practice within the Air Force. To compound this inconsistency between  the Air Force and the other services, OSD’s internal memorandum, which  summarized core results across the department, reported adjusted core  requirements for the Air Force of 19.9 million direct labor hours, based on  the Air Force’s methodology. If OSD had reported the Air Force’s total  core requirements using the same methodology as the other services, the  Air Force’s total core requirement would have been 18.7 million direct  hours. Table 3 shows shortfalls the Air Force identified for 2007 using its  methodology.
As shown in table 3, the analysis identified core capability shortfalls for  airframes, software, and components, with the component shortfall  representing 82 percent of the total. The Air Force, in presenting these  shortfalls, also considered depot maintenance workload for new and  emerging systems that could mitigate shortfalls. For instance, the Air  Force cited requirements for the F-22A, Joint Strike Fighter, and CV-22  aircraft and the Predator and Global Hawk unmanned systems.
section_title: DOD’s Core Process Lacks a Mechanism for Ensuring That the Services Take Action to Resolve Core Capability Shortfalls for Fielded Systems
paragraphs: DOD’s core process lacks a mechanism for ensuring that corrective  actions are taken to resolve core capability shortfalls for fielded systems.  At the time the services prepared their 2007 biennial core calculations, the  services were not required to and therefore did not develop plans to  specifically address capability shortfalls at the equipment/technology  category level for fielded systems. Further, some Army officials told us  that the core process is an exercise in futility in that the services are  required to conduct the core analysis, but nothing comes out of it to  address shortfalls. Thus, the services compute their biennial requirements,  workload, and shortfalls, as required by DOD’s core guidance, but the  results are put on the shelf and little is done until the next biennial  process. As shown in table 4, our analysis of the Army’s biennial core data  found that shortfalls for some equipment/technology categories  substantially increased from 2005 to 2007, while shortfalls in other  categories were eliminated.
Unlike the core guidance that was in effect for the 2007 core process, the  guidance for the ongoing 2009 core process requires the services to  include in their biennial reports plans to rectify capability shortfalls (if  any), including a description of planned capital investment, timing, and  planned workarounds until new capability is available. Although the new  guidance is a step in the right direction, it falls short of establishing an  effective mechanism to ensure that shortfalls are corrected. Further, the  new guidance does not require that mitigation plans address shortfalls at  the equipment/technology category level. Finally, since the core  computations occur every 2 years, DOD would not know whether progress  was being made in the interim period.
section_title: Congress Lacks Visibility of DOD’s Core Process
paragraphs: Because there is no requirement to do so, DOD does not provide Congress  information on the results of the biennial core determination process for  fielded systems. Thus, Congress does not have readily available and  routine visibility of core capability requirements, associated workloads,  and shortfalls, if any exist. As a result, Congress is not in the best position  to make oversight decisions, and DOD is not held accountable regarding  the extent to which the military possesses the core logistics capabilities  specified in Section 2464 of Title 10, U.S. Code.
Conversely, DOD is required to report annually to Congress the percentage  of depot-level maintenance and repair dollars spent in the public and  private sectors—-also known as the 50/50 reporting requirement. Under  Section 2466(a) of Title 10, not more than 50 percent of funds made  available in a fiscal year to a military department or defense agency for  depot-level maintenance and repair may be used to contract for the  performance by nonfederal government personnel of such workload for  the military departments and agencies. Further, the Secretary of Defense  must submit an annual report to Congress showing the percentages of  funds expended for public and private depot maintenance. Although we  and some service audit agencies have cited shortcomings, service officials  told us that the 50/50 reporting process has influenced the services to  consider shifting maintenance work to military depots to improve their  50/50 posture. For example, because of the visibility associated with a  breach in the 50/50 reporting requirement, DOD has required the services  to prepare a get-well plan when they come within 2 percent of the              50 percent private sector depot maintenance funding ceiling. As a result,  we previously reported that the visibility of the 50/50 reporting  requirement helps to ensure that the percentage maximum is not  exceeded. In contrast, there are no external reporting requirements  associated with Section 2464 of Title 10.
section_title: DOD Has Neither Identified nor Established Core Capabilities in a Timely Manner to Prepare Military Depots to Support Future Core Requirements for Some New and Modified Systems
paragraphs: DOD has neither identified nor established core capabilities in a timely  manner to prepare military depots to support future core requirements for  some new and modified systems included in our review. As older systems  phase out of the inventory and new or modified systems phase in, it is  essential that the acquisition process ensures that program offices take the  actions necessary to establish core depot maintenance capability in  military depots. Two key actions that must occur are, first, the  identification of any core depot maintenance capability requirements  associated with the new system and, second, if there are no existing  organic capabilities, the establishment of depot maintenance capabilities  through the acquisition of all resources necessary to achieve those  capabilities. Our review of the acquisition process demonstrated that  program offices are not taking these actions in a timely manner. We  identified shortcomings in the acquisition process that contributed to the  lack of timely identification and establishment of core capabilities.
subsections: section_title: DOD Did Not Identify Core Capabilities in a Timely Manner for Some New and Modified Systems in the Acquisition Process
paragraphs: DOD did not identify core capabilities for some new and modified systems  in the acquisition process in a timely manner. Although DOD acquisition  guidance requires that core logistics capabilities be identified no later than  Milestone B, or by Milestone C if there is no Milestone B, the identification  of core requirements did not normally occur until later for most of the  systems we reviewed. Specifically, for 20 of the 52 systems we reviewed,  core capability was not identified until either the production and  deployment or operations and support phases of the acquisition process  (after Milestone C), which could be years after the identification was  supposed to occur. For example, a core analysis for the Army’s Stryker  Family of Vehicles and the Air Force’s Mobile Approach Control System  were not completed until after Milestone C, by which time the systems  were already in the production and deployment or sustainment phases.  Our analysis also identified additional systems that should have had a core  analysis completed by Milestone B, but for which analyses were not  completed until Milestone C. Figure 1 shows the number of systems from  our non-probability sample of 52 systems for which a core logistics  analysis was prepared in each phase of the acquisition process.
The U.S. Army Audit Agency’s 2007 report identified similar delays in the  identification of core capability for some Army weapon systems that had  achieved initial operational capability but had not been subjected to the  core capabilities analyses required by Army and DOD guidance. These  systems included the Secure Mobile Anti-Jam Reliable Tactical Terminal  (December 1999 initial operational capability), the Advanced Field  Artillery Tactical Data System (fiscal year 1996 initial operational  capability), and the Bradley Fighting Vehicle System A3 Upgrades (fiscal  year 2001 initial operational capability). The Army Audit Agency report  also stated that Army officials who did not perform the required analyses  may not be assured that they made the best decisions for the Army  regarding the use of organic or contractor support.
According to DOD officials and based on the results of our analyses, if  core capability requirements for new and modified systems have not been  identified early in the acquisition process, and if there is no existing DOD  capability for a particular system, it is unlikely that core capability can be  established at military depots within 4 years of initial operational  capability, as required by DOD guidance. Also, delays in making  maintenance decisions can significantly limit DOD’s sustainment concept  options because as programs progress in the acquisition timeline, program  decisions already made—such as not making provisions for the acquisition  of technical data (or access to it), depot plant equipment, and other  resources required to establish military depot maintenance capability— may limit the practicability of being able to establish core capability in a  military depot.
section_title: DOD Is Not Establishing Required Core Capabilities for Some New and Modified Systems in a Timely Manner
paragraphs: In addition to not identifying core capability requirements in a timely  manner for new and modified systems in the acquisition process, program  offices are also not taking the actions that are needed to establish required  core capabilities in a timely manner. Although DOD Directive 4151.18  states that the capabilities to support identified depot maintenance core  requirements shall be established not later than 4 years after initial  operational capability for DOD materiel directly supporting the  department’s strategic and contingency plans, this is not always occurring.  Specifically, 24 of the 30 programs we reviewed with identified core  requirements either had not established any core capability or had  achieved only a partial core capability within 4 years of their initial  operational capability. Table 5 summarizes our analysis of the 30 systems  in our review.
According to program officials, 6 of the 30 systems we reviewed were  fielded and had required core capability established in military depots. For  11 of the 30 programs we reviewed, however, DOD had not established any  of the required core capability to maintain and repair the systems. Another  13 of the programs had established some but not all core capability  through either performance-based logistics arrangements (11 programs) or  public-private partnerships (2 programs) with contractors. According to  DOD officials, these arrangements and partnerships with contractors were  intended to support the core workload.
subsections: section_title: Some Programs Had Not Established Any Core Capability within Required Time Frames
paragraphs: The following discussion illustrates cases among the 11 programs in our  review where the required core capabilities were identified, but had not  been established in the military depot system within 4 years of initial  operational capability as required by DOD guidance.
The Navy’s Air Launched Expendable-50 (ALE-50) System, which provides  an electronic countermeasure method against anti-aircraft missile threats,  reached initial operational capability in 2002. However, no core capability  to maintain and repair this system exists in a military depot, even though it  should have been established by 2006. The Navy determined that the ALE- 50 had core requirements, and the Navy and the Joint Depot Maintenance  Activities Group  agreed that organic capability should be established at  Naval Aviation Depot, Jacksonville, Florida—now known as Fleet  Readiness Center Southeast, Jacksonville. Interim commercial support  was established until the organic capability could be established.  Currently, the Jacksonville depot has only the capability to troubleshoot  and to make limited repairs to certain components. However, the  contractor performs most depot maintenance on this system. According to  Navy and program officials, while the Naval Air Systems Command has  requested funds to establish core capability, funds from the Office of the  Chief of Naval Operations have not been made available to stand-up the  required depot capability. Thus, 7 years after the system reached initial  operational capability, the depot still does not have full capability to repair  the ALE-50.
The Navy’s Mission Computer Upgrade, which reached initial operational  capability in 2002, is the primary computing device on the E-2C aircraft.  The electrical cabinet component of this unit which was designated as  core is used to house the computer’s circuit cards. This unit provides  digital data signal interface and power to the circuit card assemblies and  routes all external sensor and operator control inputs to the applicable  circuit card assemblies. Eleven depot-level repairable items on the  computer have core requirements and, therefore, a capability to maintain  and repair these items should exist in military depots. Currently, no DOD  depot has the capability to maintain and repair the mission computer  cabinet. Although the program office has identified and requested the  funding that would be required to purchase technical data and depot plant  equipment needed to establish this capability, the funding from the Office  of the Chief of Naval Operations has never been made available. Thus, the  candidate repair depot—Fleet Readiness Center Southwest, North  Island—did not have repair capability 7 years after initial operational  capability, and the original equipment manufacturer is still repairing the  equipment.
The Navy’s Advanced Tactical Air Reconnaissance System (ATARS),  which reached initial operational capability in 2000, is a reconnaissance  avionics subsystem consisting of a sensor suite providing image  acquisition, data storage, image manipulation, and reconnaissance system  control functions. Reconnaissance system control functions include the  capability to record radar sensor data and control a data-link subsystem  for real-time and near-real-time transmission. Although ATARS was  determined to have core requirements, program officials indicated that the  manufacturer was determined to be the only cost-effective source of repair  due to the limited number of systems and the unique tools needed for the  complex repairs. Thus, funding to establish core capabilities for ATARS  has been requested by the program officials; however, funds from the  Office of the Chief of Naval Operations have not been made available          9 years after initial operational capability. While ATARS was fielded before  DOD issued its guidance requiring core capability to be established within  4 years of initial operational capability, the guidance does not exempt  systems that were already fielded or those where establishing capability is  costly.
section_title: Some Programs Managed under a Performance-Based Logistics Arrangement or Public-Private Partnership Did Not Have All Core Capability Established within Required Time Frames
paragraphs: The following discussion illustrates cases among the 13 programs we  reviewed where a partial, but not full, core capability had been established  in the military depot system through the implementation of performance- based logistics arrangements or public-private partnerships. Performance- based logistics involve the purchase of performance outcomes (such as  the availability of functioning weapon systems) through long-term  contractor support arrangements rather than the purchase of individual  elements of support, such as parts, repairs, and engineering support.  Public-private partnerships for depot-level maintenance are cooperative  arrangements between a depot-level maintenance activity and one or more  private sector entities to perform DOD or defense-related work, to utilize  DOD depot facilities and equipment, or both.
The Air Force’s Large Infrared Countermeasure (LAIRCM) System, which  reached initial operational capability in 2004, provides fast and accurate  threat detection, processing, tracking, and countermeasures to defeat  current and future generation infrared missile threats. The LAIRCM has  been maintained by the manufacturer because the Air Force did not  acquire the technical data or depot plant equipment needed to support  establishing a core capability at the depot. According to program officials,  these resources were not a high enough program priority to be funded.  The Air Force and Joint Depot Maintenance Activities Group agreed that  organic capability should be established at the Warner Robins Air  Logistics Center through a public-private partnership, but currently, there  is no work being performed at the depot. According to program officials,  the depot will receive some workload in 2009 and is expected to be fully  capable of maintaining the system in 2010, but it is unclear whether this  milestone will be achieved.
The Army’s AN/MPQ-64 Sentinel Radar System achieved initial operational  capability in 1997. While the Sentinel’s core depot assessment, completed  in May 2004, determined the system to have core requirements, currently  core capability has been established for only 11 of the 29 depot-level  reparables, and these are the components that are common to the  Firefinder radar system, the precursor to the Sentinel. By the third quarter  of fiscal year 2009, core capability will be established to repair two  additional depot-level reparable items, thus increasing the reparable  capability to 13 depot-level items. The Sentinel is supported with a  performance-based logistics arrangement with Thales Raytheon  Corporation, which was supposed to partner with the Tobyhanna Army  Depot to provide the capability to achieve core capability. Additionally,  the Tobyhanna Army Depot does not have full capability to test either the  original Sentinel system or the improved version, for which 62 of the  Army’s 143 systems have been upgraded. According to Army officials,  funding is not available to establish full core capability. Thus, 12 years  after initial operational capability was achieved, the Army still had not  established the required capability in the military depot system.
section_title: Shortcomings in the Acquisition Process Contributed to Lack of Timely Identification and Establishment of Core Capability
paragraphs: We identified several shortcomings in the acquisition process that  contributed to the lack of timely identification and establishment of core  capability for new and modified systems. More specifically, (1) acquisition  guidance provides little to no information on how to identify and plan for  the establishment of core capability, (2) acquisition strategies do not fully  address core requirements, and (3) some program offices are not  procuring technical data required to establish core capabilities.
subsections: section_title: Acquisition Guidance Does Not Explain How the Core Analysis Should Be Performed or Provide Information on Actions Needed to Establish Core Capability
paragraphs: While DOD requires the identification and establishment of core capability  for new and modified systems, we found that DOD acquisition guidance  does not explain how the required core analysis should be performed, or  provide specific information on actions needed to establish core  capability. As discussed earlier, DOD Instruction 5000.02 requires that a  core logistics analysis be included as part of the acquisition strategy by  Milestone B or by Milestone C, if there is no Milestone B. However, this  guidance resides in a table of statutory and regulatory information  requirements, which deemphasizes this requirement compared to guidance  provided in the main text of the instruction. Further, the instruction  provides no specifics about the elements —such as resource requirements  and time frames—needed to effectively plan for the establishment of a  core capability if a core requirement is identified through the core logistics  analysis. In December 2008, DOD updated Instruction 5000.02 and made a  change that requires that the core logistics analysis and source of repair  analysis be addressed in the life-cycle sustainment plan for Milestone B  and that the life-cycle sustainment plan be included in the acquisition  strategy document. However, while this guidance provides more emphasis  on the sustainment phase, it still does not require specific plans, including  resource requirements and time frames, for establishing core capability.
Other DOD acquisition guidance also lacks specific information on the  elements necessary to effectively identify and establish core capabilities  within the required time frames. The Defense Acquisition Guidebook,  which was last updated in December 2004, is a resource for program  managers to use as a reference guide supporting their management  responsibilities. The guidebook does not establish mandatory  requirements, but provides the program managers with discretionary best  practices. Regarding core logistics analysis, the Defense Acquisition  Guidebook states only that the program managers shall ensure that  maintenance source of support selection complies with requirements  identified in DOD Instruction 5000.2. It provides no further specific  direction for identifying and establishing core capability.
Moreover, DOD guidance overall places less emphasis on core capability  relative to other guidance about sourcing sustainment activities, including  maintenance, through performance-based logistics arrangements. DOD  has identified performance-based logistics as the “preferred” support  approach for DOD systems. This emphasis on performance-based  logistics contributes to the lack of emphasis by program offices on  integrating core capabilities into the acquisition process. Some program  officials cited what they perceive as a conflict between the department’s  emphasis on outsourcing logistics activities through private contractors  and the guidance to establish core logistics capability in military depots.  One official provided us with a copy of a 1997 training guide for  acquisition officials that emphasized an outsourcing strategy for  supporting weapon systems. The guide stated that under DOD’s  outsourcing strategy, support concepts for new and modified systems  maximize the use of contractor-provided, long-term, total life-cycle  logistics support that combines depot-level maintenance with wholesale  and selected retail materiel management functions. While this training  guide is no longer in use, it illustrates the emphasis that has been placed  on using sustainment approaches other than military depots.
Recognizing more guidance was needed on how to perform a core logistics  analysis, the Army’s Communications Electronics Life Cycle Management  Command joined with the Program Executive Offices for Command,  Control, Communications-Tactical and Intelligence, Electronic Warfare  and Sensors in 2002 to develop standard operating procedures that  document the steps needed to successfully complete this analysis, along  with a corresponding source of repair analysis. The standard operating  procedures address elements that should be part of the core logistics  analysis, both at the system and component level. For example, the  procedures address the need for a program manager to ensure that the  component-level core logistics analysis incorporates a plan for obtaining  the rights or access to technical data. Because of a backlog of legacy  systems for which a core analysis had not been performed, these Army  offices also created a streamlined standard operating procedure applicable  to legacy systems.
Another shortcoming in DOD’s acquisition guidance is that it does not  make specific reference to the 4-year time frame for establishing core  capability after a system reaches its initial operational capability. While  this 4-year time frame is established within a DOD directive (4151.18) that  is applicable across the department, this directive is generally used more  by DOD’s logistics support community than by the acquisition community.  DOD Instruction 5000.02 is silent on the required time frame for  establishing core capability.
Recognizing the importance of early identification of core requirements to  the establishment of core capability, the Air Force since 2006 has required  program offices to conduct an initial core assessment when the core  analysis that is required by DOD guidance cannot be accomplished. The  intent of this requirement is to allow for an earlier evaluation of the  system’s sustainment concept. According to the Air Force, traditionally  source of repair and core decisions have not been accomplished until later  in the acquisition process—at least partially due to not having sufficient  data available about the system to accomplish a source of repair and core  analysis. These delays led to decisions that ultimately limited the  government’s sustainment concept options. To address this concern, the  Air Force in December 2006 added an additional requirement to its  acquisition guidance that a strategic source of repair determination be  conducted for systems when a depot source of repair determination  cannot be accomplished for program initiation approval (for example, by  Milestone B) in order to allow for an earlier assessment of the sustainment  concept. Air Force officials told us that, under this new policy, the  strategic source of repair determination should be conducted for new  systems prior to Milestone B. Air Force officials pointed out that programs  must still conduct a core logistics analysis as required under DOD  Instruction 5000.02. The officials noted that from October 2007 to            July 2008, the strategic source of repair determination was used on three  weapon system acquisition programs: the F-15E Active Electronically  Scanned Array Radar System, the KC-135 Replacement Tanker Aircraft,  and the C-27 Joint Cargo Aircraft. The strategic source of repair  determination for these three systems resulted in their being identified as  having core capability requirements. According to the Air Force, the  strategic source of repair determination will allow acquisition programs to  identify anticipated sources of repair early enough in the acquisition  process so that defense acquisition planning and programming documents,  as well as resulting contracts, contain the appropriate sustainment  elements needed to support the acquisition strategy. This initial core  assessment appears to be a promising practice to support the timely  establishment of core capability.
section_title: Acquisition Strategies Do Not Fully Address Core Requirements
paragraphs: Our review of acquisition strategies for 11 major acquisition programs  prepared from April 2001 to February 2008 determined that this key  acquisition documentation did not fully address core capability  requirements for the systems or how the programs would go about  establishing required core capabilities. The acquisition strategy is a  business and technical management approach designed to achieve  program objectives within the resource constraints imposed. It is the  framework for planning, directing, contracting for, and managing a  program. However, as noted earlier, DOD acquisition guidance does not  explain how to incorporate specific plans for establishing core capability  in the acquisition strategy. We looked at 11 ACAT I system acquisition  strategies to determine the extent to which these strategies addressed core  capability requirements in the absence of specific DOD guidance. For  example, in the absence of such guidance, we determined whether the  strategies (1) stated that the systems were designated to support core  capability requirements, (2) identified a possible depot source of repair,  and (3) provided a plan for funding and establishing core capability. The  acquisition strategies we reviewed did not include these types of  information, even though the systems had been determined to have core  requirements. Specifically, we found that the most frequent information  provided in the acquisition strategies was simply a statement of the need  to address core requirements as required by Section 2464 of Title 10.  Further, none of the acquisition strategies we reviewed laid out a plan to  establish core capabilities within 4 years of initial operational capability at  military depots. Without adequate considerations for core capability  requirements in pertinent decision documents, such as the acquisition  strategies, program offices likely will not adequately plan for acquiring  resources to establish core capability at military depots.
section_title: Program Offices Did Not Procure Technical Data Needed to Establish Core Capability
paragraphs: A key impediment to the establishment of core capability is that some  program offices have not been procuring necessary technical data during  the system acquisition process. Some of the programs in our review of  new and modified systems for which a core capability was not established  within required time frames cited the unavailability of technical data as a  key factor contributing to this situation. Also, as discussed earlier,  acquisition approaches that planned on long-term use of contractor  support resulted in not acquiring technical data or access to technical data  rights, which are essential for establishing depot maintenance capability in  military depots.
In 2006, we reported that the lack of technical data rights limited the  services’ flexibility to make changes to sustainment plans that are aimed at  achieving cost savings and meeting legislative requirements for depot  maintenance capabilities. Specifically, we reported on seven Army and  Air Force weapon system programs where the services encountered  limitations in implementing revisions to sustainment plans. The programs  were the C-17 aircraft, F-22 aircraft, C-130J aircraft, Up-armored High- Mobility Multipurpose Wheeled Vehicle, Stryker family of vehicles,  Airborne Warning and Control System aircraft, and M4 carbine rifle.  Although circumstances surrounding each case were unique, earlier  decisions made on technical data rights during system acquisition were  cited as a primary reason for the limitations subsequently encountered. We  noted that delaying action in acquiring technical data rights can make  these data cost prohibitive or difficult to obtain later in the weapon system  life cycle. For example, the Air Force did not acquire technical data during  the acquisition process for the C-17, F-22, and C-130J aircraft. In these  cases, the Air Force made attempts to obtain needed technical data but  found that the equipment manufacturer, among others, declined to provide  the data or it was too expensive. Without successfully working out  arrangements to provide the depots the technical data they need, the Air  Force cannot develop comprehensive core maintenance capability for  these aircraft. Officials at the Warner Robins Air Logistics Center told us  that while establishing partnerships is sometimes seen as the way to get  around technical data issues, the depot has been challenged to establish  viable agreements with the subcontractors for various C-17 systems and  components that were identified as core requirements. Similarly, the Army  Materiel Command designated Anniston Army Depot as the Army’s depot  maintenance facility using a performance-based logistics arrangement  with General Dynamics Land Systems for the Stryker family of vehicles.  According to Army officials, the contract with General Dynamics Land  Systems will provide Anniston with instructions for the repair of the  Stryker. However, Anniston has been unable to obtain sufficient technical  data rights, which limits its ability to perform maintenance, even though  Anniston participated in the assembly of Stryker vehicles in a partnership  arrangement.
Recent changes in law and DOD guidance have addressed the acquisition  of technical data. Section 802(a) of the National Defense Authorization Act  for Fiscal Year 2007 directed the Secretary of Defense to require program  managers for major weapon systems and subsystems of major weapon  systems to assess the long-term technical data needs of their systems and  to establish corresponding acquisition strategies that provide for technical  data rights needed to sustain the systems over their life cycle. In July 2007,  the Under Secretary of Defense for Acquisition, Technology, and Logistics  directed that program managers for ACAT I and II programs assess their  long-term technical data needs. Further, the December 2008 update of  DOD Instruction 5000.02 requires that a program’s long-term technical  data needs be reflected in a data management strategy. The data  management strategy is to be approved in the context of the acquisition  strategy prior to issuing a contract solicitation. It is too soon to determine  the impact that this data management initiative may have on the  availability of technical data and the establishment of core capabilities.
section_title: Conclusions
paragraphs: Under the biennial core determination process, DOD lacks assurance that  it possesses the core capabilities that are necessary to maintain and repair  the weapon systems and other military equipment that are identified as  necessary to enable the armed forces to fulfill the strategic and  contingency plans prepared by the Chairman, JCS. DOD’s core  determination process for 2007 did not provide a complete and accurate  assessment of core capabilities at military depots. Although DOD reported  that more than enough capability existed DOD-wide to support core  requirements for fielded systems, the services’ data showed that capability  shortfalls existed for several equipment/technology categories. An  accurate and comprehensive identification of shortfalls is a necessary first  step to managing them and taking corrective actions. Further, DOD lacked  internal controls to prevent errors and inconsistencies in the military  services’ implementation of the core determination process, with the  result that shortfalls were probably greater than the numbers computed by  the military services. In addition, because DOD lacks an effective  mechanism for ensuring that corrective actions are taken to manage and  reduce core shortfalls for fielded systems, shortfalls in capability can  remain unresolved and grow over time. DOD could address most of the  shortcomings in the biennial core process by improving its core  determination guidance, ensuring service compliance with the guidance,  expanding on the internal reporting of core results, and instituting a  mechanism to ensure corrective actions are taken when shortfalls in core  capability are identified. In addition, visibility and oversight of the core  determination process could be enhanced by submitting to Congress the  results of the core process, as well as planned corrective actions to  address shortfalls.
Shortcomings in DOD’s acquisition guidance and its implementation have  resulted in DOD program managers not identifying and establishing  required core capability at military depots in a timely manner—capability  that will be needed to support future maintenance requirements for new  and modified systems. As older fielded systems phase out of the inventory  and newer ones are phased in, shortfalls in core capability to support  these systems could grow unless DOD acquisition programs change their  practices of delaying the identification and establishment of core  capability. Since acquisition guidance provides little or no information on  how to identify and plan for the establishment of core capability and  relatively greater emphasis is placed on using contractor support  arrangements, such as performance-based logistics, program managers  may continue to focus their sustainment strategies on the use of  contractors. For example, the practice of not acquiring or obtaining access  to technical data during the weapon system acquisition process has  impeded DOD’s ability to establish core capabilities at military depots.  DOD could improve its acquisition process to provide better assurance  that program offices identify and establish core depot maintenance  capabilities for new and modified systems in a timely manner. If DOD’s  acquisition process is not improved and current practices continue, as  fielded systems are phased out of the inventory, DOD depots may not be  able to provide the ready and controlled source of technical competence  they need to ensure an effective, timely response to future national  defense emergencies.
section_title: Recommendations for Executive Action
paragraphs: To improve DOD’s ability to assess core logistics capabilities with respect  to fielded systems and correct any identified shortfalls in core capability,  we recommend that the Under Secretary of Defense for Acquisition,  Technology, and Logistics take the following four actions to revise DOD’s  biennial core instruction:    Require DOD to compile and report the services’ core capability  requirements, planned organic workloads, and any shortfalls by  equipment/technology category (work breakdown structure).
Require DOD to implement internal controls to prevent errors and  inconsistencies in the services’ core calculations. At a minimum, internal  controls should address errors and inconsistencies identified in our review  on the need to include (1) all JCS-scenario-tasked systems, (2) software  maintenance requirements, and (3) only public depot maintenance  workload when adjusting for redundancy.
Explicitly state the mathematical calculations, based on their core  determination worksheets, which the services should use to determine  core capability requirements, associated workload, and shortfalls, if any.    Require DOD to establish a mechanism to ensure that corrective actions  are taken to resolve identified core shortfalls. For example, DOD should  institute, in the alternative years of the biennial core process, a status  report on the actions taken to resolve shortfalls identified in the previous  year.
To provide better assurance that program offices identify and establish  core depot maintenance capabilities for new and modified systems in a  timely manner, we recommend that the Under Secretary of Defense for  Acquisition, Technology, and Logistics take the following four actions:    Provide program managers with standard operating procedures for  performing a core logistics analysis as required in DOD guidance. These  standard operating procedures should also ensure that core requirements  are considered in conjunction with other sustainment approaches.
Modify DOD Instruction 5000.02 to incorporate the 4-year time frame for  establishing core capability from initial operational capability, as currently  required in DOD Directive 4151.18.
Require that the acquisition strategy for each new and modified system  include either a statement that core capability requirements were not  identified for the system or, if core requirements were identified, a plan for  establishing core capability within 4 years of initial operational capability,  including obtaining the required resources.
Require an initial core assessment early in the acquisition process  (preferably prior to Milestone B).
Because DOD has recently updated its guidance to require that a  program’s long-term technical data needs be reflected in a data  management strategy, we are not making a recommendation on this  matter.
section_title: Matter for Congressional Consideration
paragraphs: Congress should consider requiring DOD to report on the status of its  effort to maintain a core logistics capability consistent with Section 2464  of Title 10, U.S. Code. In doing so, Congress may wish to require that DOD  report biennially on the results of its core determination process, actions  taken to correct any identified shortfalls in core capability, and efforts to  identify and establish core capability for new and modified systems in a  timely manner, consistent with DOD guidance.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD concurred with eight of  our recommendations.  DOD partially concurred with one  recommendation in the draft report, and we have replaced this  recommendation with a matter for congressional consideration. DOD’s  comments are reprinted in appendix II.
The department stated that DOD Instruction 4151.20, published  subsequent to the 2007 core determination process, satisfies many of the  recommendations contained in the draft report. We obtained and analyzed  the instruction as part of our review, compared it with prior guidance that  existed for the 2007 process, and considered it when formulating our  findings, conclusions, and recommendations. As noted in the report, the  instruction did not depart substantially from the earlier guidance.  Therefore, we disagree with DOD that it satisfies many of the  recommendations in our report and continue to believe that DOD should  take additional actions to implement these recommendations, as discussed  further below.
DOD concurred with our recommendations to improve DOD’s ability to  assess core logistics capabilities with respect to fielded systems and  correct any identified shortfalls. Regarding our recommendation that DOD  improve its approach to compiling and reporting on core capability  requirements, workloads, and shortfalls by equipment/technology category  (work breakdown structure), DOD stated that it already conducts an  analysis of core requirements and sustaining workloads at the work  breakdown structure level. DOD also stated that it tasked the services to  provide plans for eliminating shortfalls identified during the 2009 core  determination process. We believe that DOD is misconstruing the intent of  our recommendation, which was to improve DOD’s approach to compiling  the service-specific results into a departmentwide assessment. As stated in  our report, DOD’s internal report on the results of the 2007 process  aggregated the services’ analyses and did not provide a complete and  accurate assessment of core capabilities at military depots, including  shortfalls that had been identified in specific equipment/technology  categories. Therefore, we continue to believe that DOD should improve its  approach to compiling and reporting a departmentwide assessment with  the aim of providing greater detail on the results of the core determination  process.
Regarding our recommendations on the services’ submissions and  mathematical calculations used in the core determination process, DOD  stated that DOD Instruction 4151.20 provides a consistent format and  process for the services to follow in developing their core requirements  and sustaining workloads. As part of the next data call, DOD plans to  reiterate and incorporate our recommendation to prevent errors and  inconsistencies in the services’ core calculations. DOD further stated that  it will provide explicit guidance that the services follow and complete the  core calculation worksheets in their entirety. DOD’s planned actions  should focus more attention on the need to ensure accurate and consistent  core submissions and calculations across the services. However, our  report notes that the services took different approaches in implementing  DOD’s core guidance, and DOD Instruction 4151.20 does not substantially  change this guidance. Therefore, DOD should take additional steps that we  recommended, such as instituting internal controls, for ensuring service  compliance with its core determination guidance.
Regarding our recommendation to ensure corrective actions are taken to  resolve core capability shortfalls, DOD stated that it (1) has tasked the  services with providing plans for eliminating shortfalls identified during  the 2009 core determination process and (2) will identify shortfalls as a  semi-annual agenda item for a senior-level maintenance steering  committee until shortfalls are resolved. As noted in our report, we believe  DOD’s tasking to the services is a step in the right direction, but falls short  of establishing an effective mechanism to ensure that shortfalls are  corrected. In addition, on the basis of DOD’s comments and information  we subsequently obtained about the charter for the steering committee,  it  is unclear to what extent this entity will provide an effective mechanism to  resolve shortfalls. Therefore, while DOD’s planned actions are positive  steps, DOD may need to take additional actions to fully meet the intent of  this recommendation.
DOD partially concurred with a recommendation in our draft report aimed  at enhancing the visibility and oversight of the core process. DOD stated  that the department will continue to provide Congress with information it  requests for oversight. The department also stated that it plans to make  the results of the core determination process available on a DOD Web site.  However, DOD was opposed to generating reports to Congress which it  has not requested. As we state in the report, Congress does not have  readily available and routine visibility of the status of DOD’s core  capability, including core requirements, associated workloads, and  shortfalls, if any exist. As a result, Congress is not in the best position to  make oversight decisions, and DOD is not held accountable for the extent  to which the military possesses the core logistics capability specified in  Section 2464 of Title 10, U.S. Code. Therefore, we have replaced this  recommendation with a matter for congressional consideration that DOD  be required to report on the status of its effort to maintain a core logistics  capability consistent with Section 2464.
DOD concurred with our recommendations to provide better assurance  that program offices identify and establish core depot maintenance  capabilities for new and modified systems in a timely manner. DOD stated  that it will revise guidance in DOD Instruction 5000.02, DOD Directive  4151.18, and the Defense Acquisition Guidebook to provide more  specificity on how to identify and establish core capability during the  acquisition process. DOD also plans to revise its guidance on the core  determination process (DOD Instruction 4151.20) to provide specific core  analysis, guidance, and procedures for systems being acquired.  Additionally, DOD will issue interim policy until the applicable guidance  has been revised. These actions, if implemented, should meet the intent of  our recommendations.
We are sending copies of this report to the appropriate congressional  committees and the Secretary of Defense, the Secretaries of the Army, the  Navy, the Air Force, and the Commandant of the Marine Corps. In  addition, this report will be available at no charge on the GAO Web site at  http://www.gao.gov.
Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. If you or your staff  have any questions regarding this report, please contact me at (202) 512- 8365 or solisw@gao.gov. Key contributors to the report are listed in  appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To evaluate the extent to which the DOD has accurately assessed whether  it has the required core capabilities in military depots to support fielded  systems, we reviewed DOD’s core determination process for 2007. We  obtained and reviewed guidance that was issued by the Office of the  Secretary of Defense (OSD) that was in effect for the 2007 core process, as  well as subsequent guidance issued for the 2009 biennial review. We  reviewed the military services’ implementation of the core determination  methodology. We obtained and analyzed their core worksheets showing  core capability requirements and associated planned workloads. We  determined the extent that the services followed the methodology, and we  identified any errors or inconsistencies. Where errors or inconsistencies  were identified, however, we did not recalculate core requirements. We  obtained OSD’s internal report summarizing the results of the 2007 core  process and compared it with the worksheet data submitted by the  services. In addition, we discussed the core determination process and the  results of our data analyses with OSD and service officials. Although our  review focused on the 2007 core determination process, we obtained  limited information from DOD officials on the 2009 core process, which  was ongoing at the time of our review. We also compared the results of the  2007 core process with those of the 2005 process to identify any trends  and to determine how identified shortfalls in core capability were being  addressed and resolved. One limitation in our methodology was that we  did not assess DOD’s decisions on the weapon systems that were  identified in the Joint Chiefs of Staff (JCS) scenarios. Inaccurate tasking of  weapon systems could have the effect of either overstating or understating  core capability requirements for fielded systems. We also reviewed our  prior reports on core capability and depot maintenance issues, as well as  related reports issued by service audit agencies and research  organizations.
To determine the extent to which DOD is preparing to support future core  requirements for new and modified systems in military depots, we  examined pertinent DOD guidance, including acquisition guidance in  DOD’s 5000 series of directives and instructions, DOD guidance for  managing military materiel, and service acquisition policies. To obtain  information on the identification of core requirements for new and  modified systems, we asked the services to identify systems that were in  the acquisition process during 2006. Due to DOD data limitations, we  could not verify that the services included all systems meeting our criteria.  We then surveyed program managers about whether they had conducted a  core analysis for their system. We received responses from 112 program  managers, including 52 who responded that they had performed a core  analysis or source of repair analysis. We conducted additional follow-up  audit work with the 52 who responded that they had completed a core  analysis. We did not assess the rationale for the decisions made on  identifying the systems’ core requirements. However, we collected  comments from OSD and service officials and examined service  documents on the factors that complicate program managers’ decisions to  identify core requirements during the acquisition process.
To determine whether the services established core logistics capabilities  for new and modified systems for which a core requirement had been  identified, we reviewed systems that had completed the acquisition  process and were in operation between 1998 and 2003. From a total  population of 662 systems that met these criteria, we randomly selected 53  systems and judgmentally selected another 20 systems. From this list of 73  systems, we subsequently excluded 43 weapon systems for various  reasons, as shown in table 6, leaving a total of 30 systems. Because the  selected systems do not represent a statistical sample, results from  nongeneralizable samples cannot be used to make inferences about a  population.
We further reviewed the 30 systems to determine whether core capabilities  were established at military depots within 4 years of their initial  operational capability date. We reviewed various program documents,  including source-of-repair decisions and maintenance plans, and  interviewed program officials about the characteristics of the systems and  maintenance sustainment decisions. Further, we examined Defense  Acquisition Board documents for some of the selected weapon systems to  determine if core capabilities were recorded when future sustainment  agreements were discussed in acquisition reviews.
We assessed the reliability of the data from the services’ databases that we  used to conduct our review and determined that the DOD data were  sufficiently reliable for the purposes of our analysis and findings. While  the results of these reviews cannot be generalized to all weapon systems in  the acquisition process, deficiencies in the way core capability is identified  or established for these systems indicate the existence of more  widespread problems.  Further, we did not look at the larger question of  whether DOD fulfilled the warfighter’s requirements as part of our review.
In conducting work for both objectives, we interviewed officials and  obtained documentation, when applicable, at the following locations:    Office of the Secretary of Defense, Washington, D.C.    Joint Chiefs of Staff, Washington, D.C.    Air Force Headquarters, Washington, D.C.    Air Force Materiel Command, Ohio    Oklahoma City Air Logistics Center, Oklahoma    Warner Robins Air Logistics Center, Georgia    Army Headquarters, Washington, D.C.    Army Materiel Command, Virginia    Anniston Army Depot, Alabama    Corpus Christi Army Depot, Texas    Tobyhanna Army Depot, Pennsylvania    U.S. Army Aviation and Missile Command, Alabama    U.S. Army Communications and Electronics Command, New Jersey    TACOM Life Cycle Management Command, Michigan    Marine Corps Systems Command, Virginia    Marine Corps Logistics Command, Georgia    Navy Headquarters, Washington, D.C.    Naval Air Systems Command, Maryland    Fleet Readiness Center East, North Carolina    Naval Sea Systems Command, District of Columbia    Norfolk Naval Shipyard, Virginia  We conducted this performance audit from June 2007 through March 2009  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 the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, Julia Denman and Tom Gosling,  Assistant Directors; Carleen Bennett; Grace Coleman; Susan Ditto; David  Epstein; Chanee Gaskin; Dawn Godfrey; Katherine Lenane; Shawnda  Lindsey; Randy Neice; Geoffrey Peck; Terry Richardson; and John Trubey  made key contributions to this report.