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

Letter

Background

Depot maintenance is the materiel maintenance or repair requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment, regardless of the source of funds for the maintenance or repair or the location at which the maintenance or repair is performed. The Navy maintains 11 maintenance depots that are designed to retain, at a minimum, a ready, controlled source of technical competence and resources to meet military requirements. NAVAIR’s three Fleet Readiness Centers and NAVSEA’s four Naval Shipyards work on a wide range of weapon systems and military equipment. These Fleet Readiness Centers and Naval Shipyards are responsible for over 94 percent of the Navy’s depot maintenance workload. Table 1 describes the location, principal work, workload, and personnel for NAVAIR and NAVSEA depots.

Depot maintenance activities are complex and require deliberate planning in order to efficiently and effectively meet future requirements. Our prior work has shown that organizations, like Navy depots, need sound strategic management planning in order to identify and achieve long-range goals and objectives. We have identified critical elements that should be incorporated into strategic plans to establish a comprehensive, results- oriented management framework. A results-oriented management framework provides an approach whereby program effectiveness is measured in terms of outcomes or impact, rather than outputs, such as activities and processes. Approaches to such planning vary according to agency-specific needs and missions, but our work suggests that, irrespective of the context in which planning is done, such a strategic plan should contain the following elements: 1. Mission statement: A statement that concisely summarizes what the organization does, presenting the main purposes for all its major functions and operations. 2. Long-term goals: A specific set of policy, programmatic, and management goals for the programs and operations covered in the strategic plan. The long-term goals should correspond to the purposes set forth in the mission statement and develop with greater specificity how an organization will carry out its mission. 3. Strategies to achieve the goals: A description of how the goals contained in the strategic plan and performance plan are to be achieved, including the operational processes; skills and technology; and the human, capital, information, and other resources required to meet these goals. 4. Use of metrics to gauge progress: A set of metrics that will be applied to gauge progress toward attainment of each of the plan’s long-term goals. 5. External factors that could affect goals: Key factors external to the organization and beyond its control that could significantly affect the achievement of the long-term goals contained in the strategic plan. These external factors can include economic, demographic, social, technological, or environmental factors, as well as conditions or events that would affect the organization’s ability to achieve its strategic goals. 6. Evaluations of the plan to monitor goals and objectives: Assessments, through objective measurement and systematic analysis, of the manner and extent to which programs associated with the strategic plan achieve their intended goals. 7. Stakeholder involvement: Consideration of the views and suggestions—solicited during the development of the strategic plan— of those entities potentially affected by or interested in the organization’s activities.

In addition to our work on strategic planning, recent legislation has focused attention on DOD’s and the military departments’ maintenance strategies and plans. The National Defense Authorization Act for Fiscal Year 2009requires the Secretary of Defense to contract for a study, that, among other things, will address DOD’s and the military departments’ life- cycle maintenance strategies and implementation plans on a variety of topics including: outcome-based performance-management objectives, workload projection, workforce, and capital-investment strategies. Additionally, the act requires that the study examine “the relevant body of work performed by the Government Accountability Office.” OUSD (AT&L) officials told us that they expect the final report from this study to be delivered to Congress in December 2010.

NAVAIR and NAVSEA Plans Do Not Fully Address All Elements of a Results-Oriented Management Framework

NAVAIR and NAVSEA Plans Do Not Fully Address Elements of a Results-Oriented Management Framework, and Linkages with Navy- wide Summary Are Unclear

While the NAVAIR and NAVSEA plans focus their efforts on weapon system and equipment availability, they do not fully address the elements of a results-oriented management framework, and the two plans and the Navy-wide executive summary are not clearly integrated. The NAVAIR plan fully addresses one of the seven elements, partially addresses five elements, and does not address one element that our prior work has shown to be critical in developing a comprehensive strategic plan. The NAVSEA plan fully addresses one of the seven elements, partially addresses four elements, and does not address the remaining two elements. Table 2 summarizes the extent to which both depot maintenance strategic plans address the elements of a results-oriented management framework. Additionally, the Navy does not have an integrated servicewide plan with clear links across the command-level plans and to the Navy-wide overarching executive summary. As a result of these weaknesses, the Navy may be limited in its ability to use the information in the plans as a servicewide decision-making tool to meet future challenges.

The NAVAIR and NAVSEA plans’ depot maintenance mission statements fully address one of the seven elements of a results-oriented management framework. NAVAIR’s and NAVSEA’s mission statements summarize each command’s overarching purpose and address its major functions and operations. In prior reports on strategic planning, we have noted that a mission statement is important because it provides focus by explaining why an organization exists and what it does. The overarching purpose of the NAVAIR depots is to ensure that weapons systems and equipment are operational and available to meet fleet demand at reduced costs. The overarching purpose of the NAVSEA Naval Shipyards is to provide the capability on ships and weapons systems required by Navy component commanders and combatant commanders. Both mission statements are outcome-oriented and correspond with the more general departmentwide mission statement in DOD’s Depot Maintenance Strategy and Implementation Plans, which states that the mission of DOD depots is to meet the national security and materiel readiness challenges of the 21st century.

NAVAIR Plan Partially Addresses Five Elements, and NAVSEA Plan Partially Addresses Four Elements

The NAVAIR and NAVSEA plans each partially address four of the results- oriented management framework elements: long-term goals, strategies to achieve the goals, use of metrics to gauge progress, and stakeholder involvement in developing the plan. The NAVAIR plan also partially addresses a fifth area—external factors that could affect goals—that the NAVSEA plan does not address.

With regard to the long-term goals, while both plans identify some strategic goals that generally relate to mission statements, they do not specify time frames for achieving any of these goals. For example, the NAVAIR plan listed five goals, including the goal to optimize the industrial base; however, it does not describe what aspects of the industrial base require adjustments or specify the milestones or time frames for achieving this goal. Similarly, the NAVSEA plan identifies three strategic goals. For example, the plan identifies the goal of enhancing ship operational availability by minimizing maintenance time, but the plan does not discuss the time frames, numbers and types of ships that will undergo maintenance, or the level of availability anticipated.

Both plans partially address strategies to achieve the goals. For example, to realize the goal of logistics transformation, NAVAIR has adopted a strategy that includes initiatives for the integration of depot and intermediate levels of repair, industrial and maintenance program coordinators, and the infusion of technologies into maintenance processes. Similarly, the NAVSEA plan identifies multiple key strategic investment areas to achieve its goals, such as the Information Technology Modernization Plan to provide the Naval Shipyards with the information systems they need to meet their mission. However, neither plan describes the capital, personnel, or technology resources needed to facilitate implementation of the strategies.

Regarding metrics to gauge progress, the NAVAIR and NAVSEA plans partially address this element. Officials for each command indicated that the metrics listed in their plan are intended to “indirectly” gauge progress toward achieving the plan’s long-term goals. The NAVAIR plan includes measurable warfighter support metrics such as “cycle time” (the amount of time from when the need of repair is identified to when the component such as an engine is reinstalled on the aircraft or restocked on a shelf) and “time on wing” (the amount of time a component is operational on the aircraft). The NAVSEA plan also generally describes some metrics such as shipyard workload levels. However, the plans do not describe how these metrics correspond to each long-term goal, the desired level for each metric, or how the metrics will be used to evaluate each goal.

For the stakeholder-involvement element, NAVAIR and NAVSEA involved many relevant stakeholders in the development of their respective plans, but neither command involved depot officials directly in all aspects of its strategic planning process. NAVAIR and NAVSEA developed their plans primarily by using inputs from directorates and program executive offices within the commands and the following Navy-wide stakeholders: Office of the Assistant Secretary of the Navy for Research, Office of the Assistant Secretary of the Navy for Installations and Office of the Chief of Naval Operations, Director of Fleet Readiness and Logistics.

In our interviews with NAVAIR and NAVSEA depot officials, they said they were not directly involved in the plans’ development, even though their depots would be directly affected by the plans. For example, NAVAIR and NAVSEA depot officials indicated that they had limited or no involvement in the development of their plans.

Regarding external factors that could affect the goals, the NAVAIR plan partially addresses this element, but the NAVSEA plan did not address the element. The plan identifies ongoing conflicts in Afghanistan and Iraq and changes in NAVAIR’s force structure as some of the key external factors, but it does not describe how these factors can affect the plan. Also, our report that identified the elements of a results-oriented management framework for strategic planning noted a wide range of key external factors to consider, such as economic, demographic, social, and environmental factors. In contrast, the NAVSEA plan does not identify any key external factors that could affect execution of that plan.

NAVSEA Plan Does Not Address Two Elements, and NAVAIR Plan Does Not Address One Element

As cited above, the NAVSEA plan does not address any key external factors; and neither the NAVAIR nor the NAVSEA plan provides information on how the command intends to evaluate the execution of its plan. For example, neither describes the scope, methodology, or schedule for the evaluations that will be needed to provide reliable data on goal attainment. Also, neither plan identifies how the command will monitor and use the results of such evaluations to adjust the plan’s long-term goals and strategies to achieve desired levels of performance. Both plans do, however, indicate that the commands must continuously validate and update their depot maintenance strategic plans to meet operational depot maintenance requirements.

The Navy Does Not Have an Integrated Servicewide Plan for Depot Maintenance

The Navy does not have an integrated depot maintenance strategic plan that clearly links the elements of the commands’ plans with the servicewide executive summary. As mentioned previously, the Navy-wide plan consists of an executive summary and five separate plans. OUSD (AT&L) instructed each service to publish its depot maintenance strategic plan in a single depot maintenance–specific document or as an integral part of one or more documents having a broader scope.

Linkage of information between the executive summary and one or more of the plans, as well as linkage of information from the various plans, was sometimes unclear. For example, the executive summary identifies four “outcome metrics”—material availability, material reliability, mean down time, and ownership costs—to be used across all fleet and aviation depot maintenance activities. While the NAVAIR plan identifies metrics, the links between those metrics and the four Navy-wide outcome metrics were not specified. We could not determine if all four of the Navy-wide metrics were addressed, at least indirectly, by the metrics in the NAVAIR plan. Similarly, the commonalities or linkages among the plans were sometimes not evident. For example, the NAVAIR plan identifies optimizing the industrial base as one of its long-term strategic goals, but the NAVSEA plan is silent about this goal.

Navy officials told us that they did not publish a single plan because Navy commands and activities have different missions, capabilities, and maintenance processes. They acknowledged that the linkages among the plans and with the executive summary could have been more clearly established, and they said they will address these weaknesses in future plan updates. The limited integration across the separate plans and the executive summary could have negative effects such as making it difficult to (1) recognize areas where each plan does not address key Navy-wide concerns and (2) use the separate plans efficiently and effectively for servicewide decision making.

OUSD (AT&L) and the Navy Did Not Use Effective Oversight Mechanisms to Systematically Evaluate the Plan

OUSD (AT&L) Did Not Use an Effective Oversight Mechanism to Systematically Evaluate the Plan

OUSD (AT&L) did not use an effective oversight mechanism to systematically evaluate the NAVAIR and NAVSEA’s plans to determine whether they fully address all needed elements. DOD’s Depot Maintenance Strategy and Implementation Plans states that the Depot Maintenance Working Integrated Process Team would monitor the development and subsequent execution of the services’ depot maintenance strategic plans on a continuing basis. However, that team did not review any of the services’ plans, according to OUSD (AT&L) and Navy officials.

OUSD (AT&L) officials representing the Assistant Deputy Under Secretary of Defense for Maintenance Policy and Programs told us that, in practice, the Integrated Process Team did not assume responsibility for oversight of the plan but instead monitored selected issues (such as the implementation of some specific process-improvement initiatives) that the services’ plans describe. The Maintenance Policy and Programs officials told us that they reviewed the NAVAIR and NAVSEA plans through a process consisting of informal meetings and conversations with service representatives. They told us that, through their review, they found that the NAVAIR and NAVSEA plans were a “good first start” but did not address all needed elements. However, Navy officials told us that they were not informed that the plans did not fully address elements of a results-oriented management framework nor were they asked to revise the plans. They also said that they did not receive any comments from OUSD (AT&L) about linkages among the plans and with the executive summary. Additionally, Maintenance Policy and Programs officials were unable to provide us with documentation of their review of the NAVAIR and NAVSEA plans.

In addition to reporting similar results in our review of Air Force depot maintenance planning, we recommended, among other things, that the Under Secretary of Defense for Acquisition, Technology and Logistics address this oversight concern. Specifically, we recommended that the Under Secretary develop and implement procedures to review revisions of the depot maintenance strategic plan to ensure that they fully address all key elements of a results-oriented management framework, explicitly address any OUSD (AT&L) direction for the plans, and periodically assess progress and corrective actions to the extent needed in meeting the plans’ goals.

The Navy Lacked an Effective Oversight Mechanism to Systematically Evaluate the NAVAIR and NAVSEA Plans

At the time NAVAIR and NAVSEA developed their plans, the Navy lacked an effective oversight mechanism to help ensure that the plans fully address the elements of a results-oriented management framework. Office of the Chief of Naval Operations officials responsible for the Navy’s strategic planning documents, including the NAVAIR and NAVSEA plans, did not review the plans to ensure that the documents fully address the elements of a results-oriented management framework. Furthermore, the Chief of Naval Operations officials did not provide direction to NAVAIR and NAVSEA regarding strategic planning elements that should be incorporated in their respective plans. Moreover, while Chief of Naval Operations officials told us that they conduct periodic reviews of depot maintenance programs and that these reviews help provide oversight of the plans’ implementation, these reviews do not systematically assess the progress in achieving the plans’ long-term goals.

While Navy officials responsible for the plans acknowledged some of the plans’ weaknesses, they told us that they believe the plans more fully address the results-oriented management framework elements than our analysis reflects. These officials stated that (1) although the plans do not address some elements explicitly, the elements are implied in the plans’ discussion of various initiatives and processes, and (2) experienced professionals involved in Navy depot maintenance would be able to recognize these elements. However, because the plans do not explicitly address these elements, they may not be clear to individuals not involved or less involved in developing the plans.

In our review of the Air Force depot maintenance plan, we reported similar oversight challenges for that service and recommended that the Secretary of the Air Force take actions to strengthen its oversight of the plans. The recommended actions to improve the Air Force’s oversight parallel those listed previously in this report for the Under Secretary of Defense for Acquisition, Technology and Logistics.

NAVAIR and NAVSEA Plans Do Not Fully Respond to OUSD (AT&L)’s Direction Designed to Meet Future Challenges

While the NAVAIR and NAVSEA depot maintenance strategic plans describe many initiatives and programs important to the NAVAIR and NAVSEA depots, they are not fully responsive to OUSD (AT&L)’s direction to the services that was designed to provide the services with a framework to meet future challenges. Specifically, the plans do not fully address logistics transformation, core logistics capability assurance, workforce revitalization, and capital investment—the four areas that OUSD (AT&L) directed each service, at a minimum, to include in its plan. Within these four general areas are 10 issues that OUSD (AT&L) also identified. The NAVAIR and NAVSEA plans each partially address 8 issues and do not address the remaining 2. Table 3 summarizes our evaluation of the extent to which the NAVAIR and NAVSEA plans address each of the 10 issues.

As discussed for the elements of a results-oriented management framework, OUSD (AT&L) and the Navy did not identify missing or partially addressed issues because neither used effective oversight to help ensure that OUSD (AT&L)’s direction for developing the plan was carried out. Among other things, DOD’s Depot Maintenance Strategy and Implementation Plans states that the DOD strategy will ensure that DOD is postured to meet the national security and materiel readiness challenges of the 21st century. However, at present, information missing from the NAVAIR and NAVSEA plans may limit the service’s assurance that its depots are postured and resourced to meet future maintenance requirements.

NAVAIR and NAVSEA Plans Partially Address the Three Logistics Transformation Issues

The NAVAIR and NAVSEA plans partially address each of the three logistics transformation issues that OUSD (AT&L) directed the services to discuss in their plans. In this area, OUSD (AT&L) directed the services to discuss the future roles and capabilities of the depots, transformation actions, and approaches for integrating various depot capabilities in their plans.

The two plans generally discuss the future roles of their depots, but the plans do not discuss projected future capabilities of the depots or how those capabilities will be measured. The NAVAIR plan states the general role of the Fleet Readiness Centers is to establish and sustain capabilities to support future weapon systems, and the NAVSEA plan states that Naval Shipyards’ role is to provide the capability on ships and weapon systems required by Navy component commanders and combatant commanders. However, the NAVAIR and NAVSEA plans have a limited discussion on projected future capabilities despite changes to the Navy’s force structure. For example, the February 2006 Quadrennial Defense Review Report noted that the integration of the Navy’s and Marine Corps’ tactical aircraft would result in reducing the procurement of 500 Navy tactical aircraft. This report also mentioned that four of the Navy’s oldest nuclear ballistic missile submarines would reenter service after being converted into guided-missile and special-operations platforms. NAVAIR officials told us that they did not consider the effect these force structure changes would have on the strategic plan when it was being developed. In addition, these officials said that they will consider any effects the 2010 Quadrennial Defense Review Report would have on the plan when it is next updated.

Additionally, the NAVAIR and NAVSEA plans partially address actions they are taking to transform their depots. For example, under its future capabilities and readiness goal, the NAVAIR plan discusses developing capability and capacity baselines and tools so NAVAIR can improve the delivery of products to meet warfighter requirements. However, the plan does not identify the resources, methodology, and time frame required to develop the baselines and tools. The NAVSEA plan notes that one of the goals of the command’s continuous process-improvement program is to increase workforce efficiencies, but the plan does not describe these efficiencies or the specific actions and time frames to achieve them.

Moreover, the NAVAIR and NAVSEA plans partially address the management approach for integrating various depot maintenance capabilities, including public- and private-sector sources as well as joint, interservice, and multinational capabilities. Both plans discuss a management approach for integrating public- and private-sector depot sources. For example, the NAVAIR plan notes that one way of maximizing support for the warfighter is by exploring opportunities provided through public-private partnerships. In addition, the NAVSEA plan notes that workload fluctuations at public shipyards can be mitigated by reassigning some intermediate-level work at regional maintenance centers and facilities to public- and private-sector shipyards. However, both plans are silent with regard to a management approach for integrating joint, interservice, and multinational capabilities. Because the plans do not discuss their approaches for integrating these other three types of capabilities, it is unclear if NAVAIR and NAVSEA are positioned to reduce redundancies and take advantage of potential cost-saving measures.

NAVAIR and NAVSEA Plans Partially Address One of the Core Logistics Capability–Assurance Issues and Do Not Address the Other

The NAVAIR and NAVSEA plans partially address one core logistics capability–assurance issue and do not address one issue. For the issue that both plans partially address, OUSD (AT&L) directed the services to address four types of actions being taken or contemplated: NAVAIR’s plan contains information on three of the four types of actions, and NAVSEA’s plan contains information on two of the four.

Identify core requirements at program initiation. The NAVAIR plan notes that industrial and maintenance coordinators work with weapon acquisition program offices to identify core requirements during the acquisition process, including program initiation. The NAVSEA plan does not have a discussion regarding identifying core requirements.

Ensure that depot source of repair decisions are made upon program initiation. Neither plan discusses actions that the command would take to ensure that depot source of repair decisions for new systems are made upon program initiation.

Encourage the formation of public-private partnerships. Both plans describe actions to encourage the formation of public-private partnerships. For example, the NAVAIR plan states that the command will support opportunities to provide labor through commercial partnerships, but the plan does not identify these opportunities. The NAVSEA plan discusses the “One Shipyard” concept that includes the sharing of resources among public shipyards and partnering with private shipyards, but it does not provide details on how NAVSEA may encourage the formation of partnerships.

Identify and rectify core capability deficiencies. Both plans describe actions to address deficiencies, but neither describes how the deficiencies will be identified. For example, the NAVAIR plan notes that the command will establish strong liaison between the maintenance activities and the acquisition community. The NAVSEA plan notes that core requirement levels will be sustained, in part, by reducing the total workforce by 20 percent or 22,000 employees.

For the second of the two core logistics capability–assurance issues, neither plan discusses the OUSD (AT&L) direction to address the projected effects of weapon system retirements and bed-down (i.e., the act or process of locating a weapon system at a particular base) and retirements, despite changes to the Navy’s force structure for aircraft and ships, as mentioned previously. In addition, the methods for estimating depot workload are not addressed in the NAVAIR and NAVSEA plans. In contrast, we reported DOD’s method of compiling and internally reporting core requirements and associated workloads for 2007 did not reveal core capability shortfalls, even though the services—including the Navy—had identified shortfalls in specific equipment/technology categories.

NAVAIR and NAVSEA Plans Partially Address Each of the Three Workforce Revitalization Issues

The NAVAIR and NAVSEA plans both partially address each of the three OUSD (AT&L)–directed workforce revitalization issues: reengineering strategies, replenishment requirements, and replenishment strategies. Regarding the workforce reengineering strategies issue, the NAVAIR plan discusses the Qualified and Proficient Technician Training program that is designed to provide existing employees new and enhanced skills, and the NAVSEA plan notes that new weapon systems and technology modifications will require new workforce skill requirements. However, neither plan discusses commandwide or depot-specific actions to identify emerging skill requirements. Also, the NAVSEA plan does not discuss the reengineering needed to enable existing employees to gain the emerging skills.

Regarding workforce replenishment requirements, both plans include some information on forecasts of future workforce levels. For example, the NAVAIR plan mentions its Workload Shaping model that includes forecasts of workforce attrition rate. While the NAVSEA plan discusses using shipyard demographics data to forecast future workforce attrition rates and an annual 5 percent attrition rate for the workforce, it does not provide details regarding attrition effects on more specific groups such as blue- and white-collar workers. In addition, both plans do not describe the methods used for forecasting projected losses (e.g., by specialty and by year), even though the OUSD (AT&L) direction explicitly called for discussion of those methods.

To address the workforce replenishment strategy issue, both plans provide examples of recruiting actions, but they have limited information on training—a second part of the OUSD (AT&L)–directed issue. The NAVAIR plan briefly mentions hiring entry-level engineers and production workers. Similarly, the NAVSEA plan talks about hiring 100 apprentice employees at each Naval Shipyard each year. In addition to having few details on the cited hiring plans, neither plan discusses a comprehensive management approach for the recruitment and training.

The NAVAIR and NAVSEA plans’ limited and missing information for the three issues in the workforce revitalization area is noteworthy in the contexts of our previous findings on the DOD depot maintenance workforce and information in the OUSD (AT&L)’s document directing the services to provide the plans. In 2003, we reported that DOD faced significant management challenges in succession planning to maintain a skilled workforce at its depot maintenance facilities. Among other challenges, we reported that relatively high numbers of civilian workers at maintenance depots were nearing retirement age. DOD’s Depot Maintenance Strategy and Implementation Plans makes a similar point. It states that DOD’s depot maintenance community, like the rest of the federal government, faces increasing numbers of retirements as the “baby boom” generation reaches retirement eligibility. It goes on to state that the retirement-eligible population within the depot maintenance workforce and forecasted annual retirements are expected to increase annually for the remainder of the decade. This dynamic—coupled with the highly skilled nature of some depot maintenance work and the length of time required to train new employees—creates hiring, training, and retention challenges. Without a discussion that acknowledges these and other such workforce challenges, it is unclear how well NAVAIR and NAVSEA are positioned to address the challenges that their depots face.

NAVAIR and NAVSEA Plans Address One Capital- Investment Issue but Do Not Address the Other

The NAVAIR and NAVSEA plans partially address the capital-investment issue of quantifying current capabilities but do not address the other issue—capital-investment benchmarks. Neither the benchmarks for evaluating the adequacy of investment funding nor NAVAIR’s and NAVSEA’s basis for selecting the benchmarks are in the plans despite OUSD (AT&L)’s direction to address these concerns. Even though neither plan addresses capital-investment benchmarks, the NAVSEA plan notes that the command intends to continue making an annual capital investment of at least 6 percent of revenue, as required by law, to sustain depot infrastructure requirements. An OUSD (AT&L) official mentioned that NAVSEA’s citing of the 6 percent capital investment should be seen as addressing the benchmark issue. While the NAVAIR plan did not mention the 6 percent requirement, NAVAIR officials told us they intend to continue making capital investments of at least this amount.

The NAVAIR and NAVSEA plans partially address the issues pertaining to the methods for quantitatively articulating these capital-investment concerns: current capabilities, current and projected deficiencies, and the capabilities that planned investment will provide. While the NAVAIR plan notes that its capital investments are prioritized in order to support naval aviation requirements, the NAVSEA plan discusses investments in the context of supporting shipyard operations. Both plans discuss an infrastructure-investment prioritization process but do not describe the method for prioritizing needed investments. In addition, the NAVAIR and NAVSEA plans do not present quantitative data on the projected funding (or shortfalls) for facilities and equipment, despite both plans noting infrastructure shortfalls and funding limitations. Modernizing and refurbishing their facilities is an essential step for optimizing their operating efficiencies. Key steps in modernizing facilities are articulating investment priorities, quantifying shortfalls, and discussing how these shortfalls may affect accomplishing strategic goals.

Capital investment in DOD depots has been an issue of concern in our prior work. For example, in 2001, we reported that capital investments in depot facilities and plant equipment had declined sharply in the mid-1990s as a result of defense downsizing, depot closures and consolidations, and DOD’s plan to increase its reliance on the private sector for logistics support of new weapon systems. As a result of DOD’s lack of capital investment, its depots did not keep up with the latest technologies. In subsequent years, funding levels increased as the services recognized the need to modernize their depots. As with any business, modernizing and refurbishing plant and equipment for optimal operating efficiency, as well as acquiring new capabilities and cutting-edge technologies linked to new workloads, are important to the future viability of the military depots. An incomplete discussion of capital investment could negatively limit Navy decision makers’ ability to purchase depot infrastructure, equipment, and process improvements.

Conclusions

OUSD (AT&L) officials told us that the primary intent of OUSD (AT&L)’s direction was to provide a framework for the services to meet challenges in the future and that the issues identified in the four areas specified in the direction were designed to address those challenges. Further, DOD’s Depot Maintenance Strategy and Implementation Plans states that (1) each service will conduct depot maintenance strategic planning that focuses on achieving the DOD depot maintenance strategy and (2) the DOD strategy will ensure that DOD is postured to meet the national security and materiel readiness challenges of the 21st century. However, NAVAIR’s and NAVSEA’s plans do not provide a comprehensive, results- oriented management framework to efficiently and effectively guide the Navy’s future actions, nor do they fully respond to OUSD (AT&L)’s direction that was designed to provide a framework for the services to overcome four general areas of future challenges. Furthermore, focusing on the development of separate command-level plans and an executive summary, rather than a single Navy-wide plan, may have made it more difficult to determine where additional information was needed to address the elements and issues at the servicewide level. Another primary reason for not correcting weaknesses in the plans is that OUSD (AT&L) and Navy do not have effective oversight mechanisms in place to promptly identify the weaknesses, communicate weaknesses to the plan developers, monitor the revision of the plans to ensure that the weaknesses have been addressed, and determine whether goals are being achieved. These weaknesses in content, linkage, and oversight resulted in a missed opportunity to identify a more complete Navy-wide vision for the effective and efficient operation of its depots in the future. For example, had NAVSEA and NAVAIR identified and implemented a systematic program evaluation and a thorough set of metrics to directly assess goal achievement, they and the Navy overall would have additional tools for reacting in a timely manner to potential issues and challenges in executing the strategies. Most importantly, integration of the plans could have resulted in the Navy having more assurance that its depots are viably positioned and have the maintenance workforce, equipment, facilities, and funds they need to meet current and future requirements. On a closing note, we previously made a recommendation to OUSD (AT&L) to develop and implement procedures to (1) review revisions of the depot maintenance strategic plan to ensure they fully address all key elements of a results-oriented management framework, (2) explicitly address any OUSD (AT&L) direction for the plans, and (3) periodically assess progress and corrective actions to the extent needed in meeting the plans’ goals. We reassert the need for DOD to implement that recommendation.

Recommendations for Executive Action

To provide greater assurance that Navy depots will be postured and resourced to meet future maintenance requirements, we recommend that the Secretary of Defense direct the Secretary of the Navy to take the following four actions to revise the Navy’s depot maintenance strategic plan: Fully and explicitly address all elements needed for a comprehensive results-oriented management framework, including those elements that we have identified as partially addressed or not addressed in the current plan.

Demonstrate clear linkages among plans should the Navy continue to submit individual depot maintenance strategic plans instead of a single Navy-wide plan.

Fully and explicitly address the four critical areas of logistics transformation, core logistics capability assurance, workforce revitalization, and capital investment, consistent with OUSD (AT&L) criteria.

Develop and implement procedures to review revisions of the depot maintenance strategic plan to ensure they fully address all key elements of a results-oriented management framework, explicitly address any OUSD (AT&L) direction for the plans, and periodically assess progress and corrective actions to the extent needed in meeting the plans’ goals.

Agency Comments and Our Evaluation

In written comments on a draft of this report, DOD concurred with our four recommendations to provide greater assurance that Navy depots will be postured and resourced to meet future maintenance requirements. DOD’s written comments are reprinted in appendix II.

The department concurred with our recommendation to direct the Secretary of the Navy to revise the Navy’s depot maintenance strategic plan to fully and explicitly address all elements needed for a comprehensive results-oriented management framework. DOD stated that it will direct the Navy and the other services to more clearly address all elements needed for a results-oriented strategy in the next OUSD (AT&L) request to the services to update their depot maintenance strategic plans. DOD noted that the updates are expected in early 2011, after completion of the mandated future depot capability study.

DOD also concurred with our recommendation to direct the Secretary of the Navy to revise the Navy’s depot maintenance strategic plan to demonstrate clear linkages among the plans, should the Navy continue to submit individual depot maintenance plans instead of a single Navy-wide plan. In its response, DOD stated that it will direct the Navy and the other services to more clearly demonstrate the linkages of their depot maintenance strategies to the DOD depot maintenance strategic plan in the next OUSD (AT&L) request to the services to update their depot maintenance strategic plans.

The department also concurred with our recommendation to direct the Secretary of the Navy to revise the Navy’s depot maintenance strategic plan to fully and explicitly address OUSD (AT&L)’s direction that provides a framework for the services to address the four critical areas of logistics transformation, core capability assurance, workforce revitalization, and capital investment, consistent with OUSD (AT&L) criteria. DOD stated that it will direct the Navy and the other services to explicitly address the OUSD (AT&L) direction for depot maintenance strategic planning in the next OUSD (AT&L) request to the services to update their depot maintenance strategic plans.

Additionally, DOD concurred with our recommendation to direct the Secretary of the Navy to revise the Navy’s depot maintenance strategic plan to develop and implement procedures to review revisions of the depot maintenance strategic plan to ensure they fully address all key elements of a results-oriented management framework, explicitly address any OUSD (AT&L) direction for the plans, and periodically assess progress and corrective actions to the extent needed in meeting the plans’ goals. In its response, DOD stated that it will direct the services to explicitly address the procedures noted in our recommendation. DOD also said that OUSD (AT&L) would further develop a process to periodically assess progress and corrective actions to ensure the services are meeting OUSD (AT&L) and service plans’ goals.

DOD also provided technical comments that we have incorporated into this report where applicable.

We are sending copies of this report to the Secretary of Defense, the Secretary of the Navy, the Office of the Chief of Naval Operations, Naval Air Systems Command (NAVAIR), and Naval Sea Systems Command (NAVSEA). In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions, please call me at (202) 512-8246 or edwardsj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff members who made key contributions to this report are listed in appendix III.

Appendix I: Scope and Methodology

In this report, we address two questions: (1) To what extent does the Navy’s depot maintenance strategic plan address key elements of a results- oriented management framework? and (2) To what extent does the Navy’s depot maintenance strategic plan address Office of the Under Secretary of Defense for Acquisition, Technology and Logistics’ (OUSD ) direction that was designed to provide a framework for the services to meet future challenges? Because Naval Air Systems Command (NAVAIR) and Naval Sea Systems Command (NAVSEA) are collectively responsible for 94 percent of the Navy’s depot maintenance workload, we focused the scope of our review on NAVAIR’s Naval Aviation Industrial Strategy, NAVSEA’s Naval Shipyard Business Plan, and the 2009 update that each command provided.

We used the same set of methodological procedures to answer both questions, and each type of procedure was performed simultaneously for the two questions. To understand the context of our analysis, we first reviewed relevant laws; Department of Defense (DOD) and Navy instructions governing depot maintenance; and depot maintenance-related reports issued by agencies and organizations such as GAO, DOD, the Logistics Management Institute, and RAND. We then used qualitative content analyses to compare the Navy plans against criteria from the seven elements of a results-oriented management framework and the 10 issues listed in the OUSD (AT&L) direction for depot maintenance strategic plans. To conduct these analyses, we first developed a data- collection instrument that incorporated these two types of criteria. One team member then analyzed the plans using this instrument. To verify preliminary observations from this initial analysis, a second team member concurrently conducted an independent analysis of the plans. We compared observations of the two analysts and discussed any differences. We reconciled the differences with the assistance of analysts from the team that was evaluating the Air Force depot maintenance strategic plans. We subsequently met with Navy officials to confirm our understanding of the plans and sought additional information where our preliminary analyses revealed that the plans partially address or do not address the criteria. We also interviewed and obtained documentary evidence from relevant OUSD (AT&L) officials regarding the office’s oversight of the services’ plans. Additionally, we interviewed depot leaders and strategic planning personnel at four NAVAIR and NAVSEA depots to obtain first- hand information on issues the depots face. We also obtained data on workload and personnel from the Navy and determined that these data were sufficiently reliable for our report.

The organizations and installations where we visited and conducted interviews are listed in table 4.

We conducted this performance audit from July 2009 through June 2010 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix III: GAO Contacts and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

Key contributors to this report were Sandra B. Burrell, Assistant Director; Allen Westheimer; Steve Boyles; Ron La Due Lake; Joanne Landesman; Cristina M. Ruggiero-Mendoza; Michael Willems; and Elizabeth Wood.

Related GAO Products

Depot Maintenance: Improved Strategic Planning Needed to Ensure That Air Force Depots Can Meet Future Maintenance Requirements. GAO-10-526. Washington, D.C.: May 14, 2010.

Depot Maintenance: Improved Strategic Planning Needed to Ensure That Army and Marine Corps Depots Can Meet Future Maintenance Requirements. GAO-09-865. Washington, D.C.: September 17, 2009.

Depot Maintenance: Actions Needed to Identify and Establish Core Capability at Military Depots. GAO-09-83. Washington, D.C.: May 14, 2009.

Depot Maintenance: Actions Needed to Provide More Consistent Funding Allocation Data to Congress. GAO-07-126. Washington, D.C.: November 30, 2006.

Depot Maintenance: DOD’s Report to Congress on Its Public-Private Partnerships at Its Centers of Industrial and Technical Excellence (CITEs) Is Not Complete and Additional Information Would Be Useful. GAO-08-902R. Washington, D.C.: July 1, 2008.

Depot Maintenance: Issues and Options for Reporting on Military Depots. GAO-08-761R. Washington, D.C.: May 15, 2008.

DOD Civilian Personnel: Improved Strategic Planning Needed to Help Ensure Viability of DOD’s Civilian Industrial Workforce. GAO-03-472. Washington, D.C.: April 30, 2003.

Defense Maintenance: Sustaining Readiness Support Capabilities Requires a Comprehensive Plan. GAO-01-533T. Washington, D.C.: March 23, 2001.