Depots are government-owned, government-operated industrial installations that maintain, overhaul, and repair a multitude of complex military weapons systems and equipment for the Department of Defense. These depots are essential to maintaining readiness for DOD, and they have a key role in sustaining weapon systems and equipment in both peacetime and during mobilization, contingency, or other emergency. There are 21 depots operated by the military services that are subject to the 6 percent minimum investment requirement (the “6 percent rule”)—four are Naval Shipyards, three are Navy Fleet Readiness Centers, two are Marine Corps Production Plants, three are Air Force Air Logistics Complexes, and nine are Army Depots and Arsenals. Figure 1 shows the location of these 21 depots across the United States. The depots are part of a larger, DOD-wide logistics enterprise that involves a number of different organizations. The Office of the Under Secretary of Defense for Acquisition and Sustainment is responsible for establishing policies for access to, and maintenance of, the defense industrial base, including depots. Specifically, the office is tasked with establishing policies and procedures for the management of DOD installations and environment to support military readiness with regard to facility construction, sustainment, and modernization. The Assistant Secretary of Defense for Sustainment serves as the principal assistant and advisor to the Under Secretary of Defense for Acquisition and Sustainment on material readiness. Among other responsibilities, the Assistant Secretary of Defense for Sustainment prescribes policies and procedures on maintenance, materiel readiness and sustainment support. DOD officials report that the Office of the Deputy Assistant Secretary of Defense for Materiel Readiness is responsible for maintenance policy along with the development of a strategic vision for DOD’s organic depot base. Finally, each service has its own logistics or materiel command component, which provides day-to-day management and oversight of the services’ depots (see fig. 2). In addition, service support commands such as Naval Facilities Engineering Command can provide expertise in project design or facility management. Depot maintenance across the services generally involves three primary steps: planning, disassembly, and rebuilding. During each step, the depots rely on their facilities and equipment to ensure that they can conduct the large number of activities needed to repair DOD’s complex weapon systems and return them to the warfighter to be used during training and operations. Repair duration for each system varies according to the complexity of the repair and the type of use the system has experienced since the last overhaul. Because repair times vary, demands on depot facilities and equipment also vary. Delays in depot maintenance can directly affect the services’ readiness by hindering their ability to conduct training and operations using these weapon systems. For example: We reported in May 2016 that the Navy’s implementation of sustainable operational schedules—and readiness recovery more broadly—is premised on adherence to deployment, training, and maintenance schedules. However, we found that the Navy was having difficulty implementing its new schedule as intended, in part because public shipyards were challenged to complete maintenance on time. Specifically, we reported in December 2018 that in fiscal years 2012 through 2018, maintenance overruns on aircraft carrier repairs resulted in a total of 1,207 days of maintenance delay—days that ships were not available for operations—the equivalent of losing the use of 0.5 aircraft carriers each year. Similarly, in fiscal years 2012 through 2018, maintenance overruns on submarine repairs resulted in a total of 7,321 days of maintenance delay—the equivalent of losing the use of almost three submarines each year. We found in September 2018 that depot maintenance delays, among other challenges, limit the Navy, Air Force, and Marine Corps’ ability to keep aviation units ready by reducing the number of aircraft that are available to squadrons for conducting full spectrum training. We reported in June 2018 that the Army’s depots, which conduct reset and recapitalization to extend the life of the Patriot surface-to-air missile system, have often returned equipment to Patriot units late, which has affected unit training. Specifically, we found that of the seven Patriot battalions that underwent reset from fiscal years 2014 through 2017, only one received its equipment within 180 days in accordance with Army policy. Depot maintenance delays also cause the services to incur costs for which they receive no capability. For example, we reported in November 2018 that the Navy is incurring significant costs associated with maintenance delays on attack submarines. We estimated that from fiscal years 2008 to 2018, the Navy had spent more than $1.5 billion—in fiscal year 2018 constant dollars—to crew, maintain, and support attack submarines that provided no operational capability. This was a result of the submarines sitting idle and unable to conduct normal operations while waiting to enter the shipyards, and from being delayed in completing their maintenance at the shipyard. Our previous work has identified multiple factors that can affect depot performance, including the size and skill of the depot workforce, the condition of weapon systems upon arrival at the depot, the availability of spare parts, and the condition of the depot’s facilities and equipment, among others (see fig. 3). In addition, all of these factors can be affected by funding and operational considerations (such as unexpected accidents). DOD officials have stated that disruptions to funding, to include continuing resolutions, affect the ability to conduct depot maintenance. Depots rely on working and efficient facilities and equipment to complete repairs and overhauls, and DOD maintenance officials have stated that any underlying conditions – such as leaks, lack of capacity, inefficient layouts, and breakdowns – require workarounds. Facilities are defined as any building, structure, or linear structure (such as a fence or railway). Equipment includes all nonexpendable items needed to outfit or equip an organization; for the depots, that includes items used by depot personnel to conduct depot-level maintenance, such as tools, test equipment, machining equipment, and test stands. We have previously noted that workarounds are additional efforts to complete the task that can delay maintenance, negatively affect productivity, and increase costs of depot maintenance. Functioning depot facilities and equipment are essential to a number of depot processes, as shown in figure 4. These facilities and equipment often require significant investment to plan, construct, install, repair, and modernize. For example, new DOD depot facilities can cost millions of dollars and are generally expected to last around 67 years, though facilities can, through restoration and modernization efforts, operate significantly longer. Equipment generally lasts for a shorter length of time, though equipment used in production can be expected to last 10 years or more and can be costly. Because these facility and equipment investments can take years to plan and require significant resources, a depot’s decision to invest must often take place well in advance of the specific need the facility or equipment is intended to serve. Other factors that the depots consider when planning investments include topography, flood plains, environmental and historic preservation needs, roads and parking, utilities, and the effect on continuing depot operations. This makes careful planning and management of these investments essential to ensuring that critical capabilities are not neglected. In fiscal year 2007, Congress enacted the 6 percent rule, requiring each military department to invest in the capital budgets of its depots no less than 6 percent of the average total dollar value of the combined maintenance, repair, and overhaul workload funded at all the depots of that department over the preceding 3 fiscal years. The departments generally met the minimum investment requirement from fiscal year 2007 through fiscal year 2017, as we discuss in more detail in appendix I. Our analysis of service metrics shows that depot facilities are, on average, rated as “poor” on DOD’s facility rating scale, and the age of equipment at the depots generally exceeds its expected useful life. Meanwhile, performance at the service depots has generally declined since fiscal year 2007. Our previous work has shown that facility and equipment condition can affect depot performance. However, the military services do not consistently track the extent to which the condition of facilities and equipment affect depot performance. Navy Aviation Depots Rely on Many Facilities from World War II Era While service officials do not consider the age of a facility to be an ideal indicator of its overall health – since the services regularly restore and modernize older facilities rather than build new ones – the age of facilities can still offer insight into some of the depots’ challenges. For example, over 30 million square feet at the Navy aviation depots was built during the 1940’s – more than one-third of its existing space. components of a facility—such as the electrical and plumbing systems and use these assessments to develop a condition rating that summarizes the overall health of the facility. In turn, these condition ratings help service officials plan investment strategies and prioritize depot projects. The condition rating does not necessarily correlate with the age of the facility (see sidebar); a relatively new facility might have a poor condition rating if it has been damaged, for example, and an old facility that has recently been modernized might have a high condition rating. Our analysis of fiscal year 2017 depot facilities data found that the average weighted condition rating at a majority of the 21 service depots is poor. Specifically, 12 of the 21 depots–more than half–have average condition ratings that are below 80, indicating that they are in “poor” condition (see fig. 5). Of the remaining depots, five had an average rating in the “fair” category, and four had an average rating in the “good” category. Officials note that older facilities can face additional challenges, such as electrical systems built for different weapon systems, historical preservation requirements, and suboptimal layouts. It can be difficult for a depot to maintain complex, modern weapon systems, such as the F/A-18, with facilities that were designed for less complex systems. Equipment is generally past its expected useful life at most military depots. Each piece of capital equipment has an expected service life, which indicates the number of years that the equipment is expected to operate. Equipment can be operated past its expected service life. However, equipment that is past its expected service life can pose an increased risk for maintenance delays or higher maintenance costs, affecting the depots’ ability to conduct work. As we have previously reported, aging equipment can present a number of challenges, such as more frequent breakdowns, less effective or efficient operation, and safety hazards. Our analysis shows that most of the 21 depots reviewed rely on equipment that is past its expected useful life (see fig. 7). As Figure 7 shows, only three depots rely on equipment that is, on average, within its useful life. Three other depots were unable to provide data. For more detailed information about equipment age and equipment repairs at individual depots, see appendixes II through XXII. The service depots have generally experienced worsening performance in terms of completing maintenance on time or in the required amount over the past decade. The Navy aviation depots have seen decreases in their timely completion of maintenance for aircraft, engines and modules, and components. For example, on-time performance for aircraft completed at the Navy’s three aviation depots has decreased from about 56 percent in fiscal year 2007 to about 31 percent in fiscal year 2017 (see fig. 8). This occurred even though the number of aircraft scheduled for repair over that same time period declined by about 26 percent. Similarly, the three Air Force aviation depots’ on-time performance has decreased over this same time period from about 98 percent on-time aircraft completions in fiscal year 2007 to about 81 percent on-time aircraft completions in fiscal year 2017 (see fig. 9). This decrease occurred even though the number of aircraft scheduled for repair declined by approximately 15 percent. Naval shipyards have also experienced performance challenges, such as an increase in maintenance delays (see fig. 10). Our analysis shows that the number of days of maintenance delay at the four Navy shipyards has increased by about 45 percent from fiscal year 2007 through 2017, from 986 days in fiscal year 2007 to 1,431 days in fiscal year 2017. We have previously reported that from fiscal year 2008 through fiscal year 2018, the Navy incurred $1.5 billion in fiscal year 2018 constant dollars to crew, maintain, and support attack submarines that provided no operational capability as a result of the submarines sitting idle while waiting to enter the shipyards and from being delayed in completing their maintenance at the shipyards. Army depot data is mixed—our analysis shows that the performance at two depots has decreased, but for others it has held steady or improved. See figure 11 below for changes over time in performance. Finally, the Marine Corps depot output decreased by less than 1 percent, as shown in figure 12. The depots rely on their facilities and equipment to ensure they can conduct the large number of activities needed to efficiently repair DOD’s complex weapons systems. Inadequate facilities can make the overall repair process less efficient, as maintainers perform workarounds that can increase maintenance time and costs. Because the depots are generally operating with equipment past its expected useful life, the depots may be incurring costs related to operating aging equipment – including performing equipment repairs, procuring spare parts, and expending labor hours to repair equipment – while at the same time delaying mission-related work. For example: At Albany Production Plant, officials told us that a shortage of paint booths results in vehicles remaining unpainted and stored outside. Exposure to the elements can cause flash rusting in the event of rain or high humidity, necessitating retreatment that increases both maintenance time and cost. At Norfolk Naval Shipyard, officials had to re-inspect 10 years’ of parts made in a single furnace, after it was discovered that the controls on the furnace were reading incorrectly. At Corpus Christi Army Depot, depot documentation shows that engines are moved nearly 5 miles across the depots during their repair process. According to officials at the depot, this is the result of years of incremental construction that did not allow them to optimize their workflow. At Fleet Readiness Center Southwest, officials told us that they had to develop an inefficient repair process to maintain the CMV-22 due to a lack of hangars that could accommodate the large aircraft. While maintenance delays can be brief, extended maintenance delays can prevent the timely return of weapon systems to operational status. Delays can cause the services to incur operating and support costs without an operational benefit. Lack of weapon systems can also cause other negative effects such as an inability to train people to use the system, leading to a reduction in readiness. The services have used various facility strategies to keep the depots operating, such as restoring and modernizing facilities when funding was available, developing workarounds when space or funding was not available, or continuing to use the inadequate facilities. Over time, this patchwork of old, modernized, and workaround solutions for new weapons systems can result in suboptimzed workflow that adds time and cost to the maintenance process, which can ultimately affect readiness. For example, at Production Plant Albany, the depot has four welding centers in different locations throughout the depot. According to officials, they utilized these welding centers over time as needs arose, and the centers are not ideally located for an efficient work flow. This means that the depot has to provide welding supplies, shift maintainers between, and deliver vehicles to and from these different locations. Alternatively, investments that optimize depot facilities and equipment can positively affect maintenance efficiency. For example: Fleet Readiness Center Southwest recently built a new facility that optimizes the workflow for its repairs of H-60 helicopters. Officials stated that its previous H-60 facility could only fit eight helicopters at a time, and only by crowding them such that using the crane on one required others to be moved as well, adding time and workload to the maintenance process. The new facility can accommodate more than 30 H-60s at a time, and each can be brought into and out of the facility without requiring others to be moved. As part of this effort, the depot also invested in additional lighting, ventilation, and crane capabilities that depot officials stated have increased the depot’s capacity for conducting H-60 repairs by more than 20 percent over their previous facility. At Corpus Christi Army Depot, planners have designed a multiphase workflow for their engine and component repairs that involves investing in a new facility and related equipment. Officials noted that the current engine repair process has developed over decades, and is spread throughout the depot. The redesigned process, which involves several investments over more than two decades, is intended to have a more efficient workflow. An Army analysis estimated that this investment will reduce the time it takes to repair and test engines and components and could result in the depot requiring about 200,000 fewer labor hours, saving about $10 million in labor costs annually. The Naval Shipyard Optimization Plan released by the Navy in February 2018 addresses the shipyards’ ability to maintain the current fleet, and projects that facility and equipment investments at the shipyards will increase efficiency and save resources. For example, the plan estimates that optimized facilities and equipment will save the shipyards over 325,000 labor days per year. Despite the negative effect that poor conditions can have on depot performance, the military services do not consistently track when facilities and equipment conditions lead to maintenance delays. Based on our analysis, the services each track a form of maintenance delay— specifically, work stoppages caused by either equipment or facility conditions. Work stoppages are circumstances where maintenance can no longer proceed because the depot does not have everything it needs, including the facility space to begin additional work or equipment needed to perform a certain function. However, table 1 below shows that although the services have the ability to track work stoppages, they do not all track both facility and equipment-related maintenance delays across all their depots. Further, even within a service, the depots may use different methodologies. Different methodologies make it difficult to compare across depots and identify issues. For example, according to Navy officials, the Navy aviation depots track work stoppages, but each depot uses different standards for determining which incidents are tracked. This means that an event counted as a work stoppage at one location might not be counted at another location. Standards for Internal Control in the Federal Government states that management should use quality information to achieve an entity’s objectives. However, the depots do not track maintenance delays caused by facility and equipment conditions, such as work stoppages, more consistently because there is currently no requirement from their respective materiel commands to do so. Every year, the services spend millions of dollars on depot facilities and equipment to meet their minimum investment requirement. Establishing measures and using them to track maintenance delays caused by facility and equipment conditions would help the services to make better investment decisions because they could target investments to facility and equipment needs that would have the greatest impact on repair times or other key performance goals. Without knowing how often facility and equipment conditions lead to work delays, the services risk investing in less critical infrastructure and experiencing more work stoppages due to facility or equipment conditions. The military services are developing optimization plans for their depots, but these plans lack analytically-based goals, results-oriented metrics, a full accounting of the resources, risks, and stakeholders, and a process for reporting on progress. Including these elements could enhance the effectiveness of service depot investments. Furthermore, there is currently no process at the Office of the Secretary of Defense level that monitors depot investment decisions or provides regular reporting to decision makers and Congress. The services have each begun to develop depot optimization plans, as directed by Congress. In June 2018 Congress directed the Secretaries of the Army, Navy and Air Force to submit an engineering master plan for optimal placement and consolidation of facilities and major equipment, as well as an investment strategy addressing the facilities, major equipment and infrastructure requirements of depots under the jurisdiction of each service. These plans are to include a life cycle cost analysis to modernize depot facilities and equipment and an investment strategy. The Army, Navy, Air Force, and Marine Corps have all begun to develop depot optimization plans, and officials told us that they expect to complete work on these initial plans by the February 2019 date directed by Congress. However, material management command officials also noted that more detailed plans – that include workflow optimization, analysis of supporting utilities, and long-term investment planning – would not be possible by that date. Instead, officials intend to use the initial phase to develop a strategy for completing their final plans. Officials told us that they are using this initial development effort to identify the work needed to fully establish their depot optimization plans, identify the resources and expertise needed for implementation, and develop a timeline for completion. Depot optimization is a challenging effort that involves complex tasks such as, according to service officials, understanding interdependencies between facilities, equipment, and utilities; accounting for environmental, geographic, and economic factors; planning for facility construction and equipment purchases years in advance; and making arrangements for ongoing depot-level maintenance operations while facility and equipment improvements are underway. The Navy developed a Shipyard Infrastructure Optimization Plan, released in February 2018, to address some of its longstanding challenges—including aging facilities and equipment, inefficient layouts, and lack of capacity. Officials estimate that the effort will cost $21 billion over 20 years, and will allow for increased repair capacity. Over time, the Navy estimates that this investment could ultimately save more than 328,000 labor days annually in reduced transportation and materiel movement time. We have a separate review examining the Navy’s effort to optimize its shipyards, which examines its use of results-oriented elements. However, based on our discussions with officials from all four services, the depot plans for the Army and Marine Corps depots and arsenals, the Navy Fleet Readiness Centers, and the Air Force Air Logistics Complexes currently under development will lack certain key elements identified in our prior work, including: Analytically-based goals. The services have not fully established analytically-based goals for their depot investments that are tied to the service’s operational needs. For example, Army and Air Force officials told us that they were still in the process of developing goals for their plans. Meanwhile, Navy aviation officials had developed some initial goals, but expected these goals to change as their planning and information became more detailed. The Marine Corps is in the process of developing its plan, but officials say that they have not determined what analytically-based goals will serve as the foundation of their efforts. Some have told us that the only goal that is feasible by the February 2019 deadline is to plan to develop a better plan. Our prior work has shown that establishing analytically-based goals that define the desired outcomes and results is a leading practice that can enhance the success of an initiative. Results-oriented metrics. As we noted earlier, planners lack key data critical for developing investment plans, such as the source and extent of facilities- and equipment-related maintenance delays. Army, Navy, Air Force, and Marine Corps officials all noted that they were planning to use metrics to determine the effectiveness of their respective plans. However, without established goals for their plans, the services cannot identify the best ways to measure progress in meeting those goals. In addition, the Army, Navy, and Air Force do not have metrics that tie their depot investments to specific outcomes, such as increased performance or improved readiness. Our prior work has shown that using results-oriented metrics enables effective monitoring and facilitates targeting efforts to those with the greatest effect. Identification of required resources, risks, and stakeholders. Army, Navy, Air Force, and Marine Corps officials told us that they have begun identifying the resources needed for their plans. For example, all services have identified at least some of the project costs that will be needed for certain depot facility and equipment improvements. However, without having analytically-based goals to serve as a starting point, it is impossible to fully identify the required resources and risks because the desired end state has not been established. Meanwhile, Army, Air Force, and Navy aviation officials have identified many stakeholders that they intend to involve in their optimization efforts, though in some cases these stakeholders have not been included in the process. Service officials also noted that in some cases they lack the necessary engineering expertise to redesign their depot’s workflow process from the ground up. The services have identified about $6.5 billion in backlogged restoration and modernization projects for their depot facilities. However, this figure is likely under stated because our prior work has shown that depot facility projects are subject to factors such as regulatory compliance and historical preservation costs that can be hard to predict. Moreover, the services track their backlog of needed facility improvements differently, which makes it difficult to determine the full scope of investment required and to provide effective oversight. Our prior work has shown that fully identifying 1) the resources required to achieve the goals, 2) the stakeholders that have equities and requisite expertise in the effort, and 3) potential risks to the effort are leading results-oriented practices that are key to success. Reporting on progress. Army, Navy, Air Force, and Marine Corps officials told us that they are in the process of developing one-time reports for Congress on the depots’ investment needs. However, these one-time reports will not provide Congress and decision makers with information after their initial release. Depot optimization planning will require time, along with sustained management and congressional attention to successfully implement. For example, the Navy’s Shipyard Optimization Plan estimates that it will be a 20-year effort requiring around $21 billion. However, the other initial steps taken by the services to address the congressional request are not as focused on the long term. For example, Army and Air Force officials told us that their initial plans will likely be “plans to get to a plan” rather than a decades-long proposal like the Navy shipyards. Our prior work has shown that reporting on progress is a leading results-oriented practice that holds the organization accountable for results and provides information to senior leaders and Congress that can help keep an effort on track and responsive to changes. According to service officials, the military services’ depot optimization plans will not include all the elements of a results-oriented management approach because there is no requirement that the plans do so. Our prior work has found that a results-oriented management approach can help organizations remain operationally effective, efficient, and capable of meeting future requirements. Specifically, our work has highlighted the importance of elements such as developing analytically-based goals; using results-oriented metrics to monitor progress; fully identifying required resources, risks, and stakeholders; and regular reporting on progress to making reform efforts more efficient, effective, and accountable. Congress directed the services to include some results- oriented elements in their plans, such as an identification of key steps and an initial report to Congress. However, including these additional elements—establishing results-oriented metrics; identifying all necessary resources, stakeholders, and associated risks; and regular reporting to decision makers and Congress—would further enhance the effectiveness of the plans. Without a plan that includes all the key elements of a results- oriented management approach, the services risk continued deterioration of the depots and making suboptimal investments that could hinder their ability to efficiently and effectively support readiness. DOD has not developed a process to oversee the implementation of the services’ depot optimization plans or provide reporting on depot investment effectiveness to DOD decision makers and Congress. Officials with the Deputy Assistant Secretary of Defense for Materiel Readiness stated that their role is to advocate for the service depots within DOD, and not to develop depot policies or review service depot investments. Specifically, they stated that they are unable to set infrastructure policy and do not have authority to alter service investment decisions. However, as part of an office reorganization during the summer of 2018, the Secretary of Defense tasked the Assistant Secretary of Defense for Sustainment with developing logistics and maintenance policy. organizations have successfully used a results-oriented management approach—which includes regular monitoring and reporting—to oversee the department-wide efforts to drive significant improvements. For example, officials with the Office of the Assistant Secretary of Defense for Logistics and Materiel Readiness created a Comprehensive Inventory Management Improvement Plan in 2010 that DOD used to improve data collection, develop standardized metrics, and provide increased oversight (see sidebar). The result was that DOD was able to achieve a number of improvements, such as reducing the value of its on-hand excess inventory by about $2 billion, improving policy and guidance, and establishing standardized metrics for monitoring its operations. Based on these positive results, DOD institutionalized this process through guidance and has continued to use it since 2010. Using this approach, DOD was ultimately able to improve its inventory management processes enough to have it removed from GAO’s High Risk List in 2017. 2. The team of experts assessed the data sources and methods used by the services and DLA and evaluated potential department- wide metrics for measuring demand forecasting accuracy based on the available data sources. 3. DOD implemented the standardized metrics in a phased approach with the initial phase focused on establishing a baseline for the metrics. Through the process of establishing these metrics, DOD developed additional areas for exploration and improvement, such as improving its guidance on demand forecasting. DOD does report some depot information to Congress; however, the information reported is limited in nature and does not address key issues concerning depot facilities and equipment. For example, every other year DOD is required to report to Congress on its core depot-level maintenance and repair capability requirements and workload. DOD must also report annually on the percentage of depot maintenance funds expended during the preceding fiscal year and projected to be expended during the current and ensuing fiscal year, for performance of depot-level maintenance and repair workloads by the public and private sectors. Combined with the services’ reporting on their depot investment spending (see appendix I), this information provides Congress with some information about depot operations and performance. However, these reports do not inform Congress about several key points, including whether the service depots are becoming more effective and efficient or the extent to which DOD has managed to address depot investment backlogs. We have noted in prior work that the backlog of facilities restoration and modernization projects at the depots can be significant, and that reducing these backlogs will likely take a sustained effort over many years. Furthermore, these efforts are important to improving the effectiveness and efficiency of the depots, which is important to ensuring the readiness of military forces. Improving readiness is one of DOD’s top priorities. Specifically, the Secretary of Defense issued a memorandum in September 2018 about improving readiness which set a minimum target of 80 percent mission capability for DOD’s key aviation platforms starting in fiscal year 2019. In addition, the memorandum identified reducing operating and support costs for these platforms every year beginning in fiscal year 2019 as another priority. Furthermore, DOD has more broadly identified rebuilding readiness as a priority across all the services. As noted previously, the depots are essential to providing readiness to DOD in the form of repaired weapon systems, and depot optimization efforts can provide a return on investment in the form of reduced maintenance time and cost. However, the investments made at the depots—which are crucial for optimization, throughput, and ultimately readiness—often need years and millions of dollars to execute, which means that long-term planning is essential to ensuring that investments are made effectively. Regular monitoring of the services’ depot investment efforts could ensure that these investments target readiness drivers to produce the greatest effect. Furthermore, our previous work has noted that timeframes for improvement efforts can slip, which makes reporting to DOD decision makers and Congress essential for holding stakeholders accountable for making progress. For example, we reported in 2017 that even though the Navy had developed capital investment plans in 2013 and 2015 intended to help improve the state of the facilities and equipment at the shipyards, backlogged restoration and maintenance projects had grown by 41 percent over 5 years which extended the amount of time required to clear the backlog under expected funding levels. Without providing oversight of and reporting on service depot investments, DOD risks continued deterioration of the depots’ facilities and equipment, suboptimal investments, and reduced military readiness as the services experience costly maintenance delays. DOD’s 21 depots are critical for repairing and maintaining its complex array of weapon systems. Inefficient depots contribute to longer maintenance times, increased costs, and reduced readiness. Currently, a majority of the depots have facilities that are in poor condition and are relying on old equipment that is past its useful service life. The military services spend millions of dollars annually on depot facilities and equipment in order to meet minimum investment requirements designed to sustain depot performance. Notwithstanding these expenditures, the services are not consistently required to track maintenance delays caused by facility or equipment conditions. This lack of tracking hinders the services’ ability to target investments to facility and equipment needs that would have the greatest effect on repair times or other performance goals. By knowing how often facility and equipment conditions lead to work delays, the services could reduce the risk of investing in less critical facilities and equipment. They could also reduce the risk of more work stoppages caused by facility or equipment conditions. The military services are in the midst of developing congressionally- directed depot optimization plans that are expected to include both 1) an analysis of the cost of depot facilities and equipment modernization and 2) an investment strategy. However, with the exception of the plan designed to address the Navy shipyards, the services’ plans are still in the initial stages, and each one is expected to lack key elements of a results-oriented management approach—including analytically based goals, results-oriented metrics, full identification of required resources and risks, and regular reporting on progress—that would help guide investment. As the shipyard optimization plan has demonstrated, the cost of optimization may be high and, once defined, will require sustained management attention over many years to carry out successfully. In addition, implementing a regular monitoring and reporting process to provide oversight and accountability over depot investments would further enhance DOD’s ability to attain improvements at the depots significant enough to reverse years of decline and reach the challenging goals set by the Secretary of Defense for improving mission capability rates and reducing operating and support costs. We are making the following 13 recommendations to the Department of Defense. The Secretary of the Army should ensure that Army Materiel Command establishes measures for its depots to track facility or equipment conditions that lead to maintenance delays. (Recommendation 1) The Secretary of the Army should ensure that Army Materiel Command implements tracking of the measures for identifying when facility or equipment conditions lead to maintenance delays at each Army depot. (Recommendation 2) The Secretary of the Navy should ensure that Naval Sea Systems Command and the Commander, Fleet Readiness Centers establish measures for their depots to track facility or equipment conditions that lead to maintenance delays. (Recommendation 3) The Secretary of the Navy should ensure that Naval Sea Systems Command and the Commander, Fleet Readiness Centers implement tracking of the measures for identifying when facility or equipment conditions lead to maintenance delays at each Navy depot. (Recommendation 4) The Secretary of the Air Force should ensure that Air Force Materiel Command establishes measures for its depots to track facility or equipment conditions that lead to maintenance delays. (Recommendation 5) The Secretary of the Air Force should ensure that Air Force Materiel Command implements tracking of the measures for identifying when facility or equipment conditions lead to maintenance delays at each Air Force depot. (Recommendation 6) The Commandant of the Marine Corps should ensure that Marine Corps Logistics Command establishes measures for its depots to track facility or equipment conditions that lead to maintenance delays. (Recommendation 7) The Commandant of the Marine Corps should ensure that Marine Corps Logistics Command implements tracking of the measures for identifying when facility or equipment conditions lead to maintenance delays at each Marine Corp depot. (Recommendation 8) The Secretary of the Army should ensure that Army Materiel Command incorporates in its depot optimization plan, key results-oriented elements including analytically-based goals, results-oriented metrics, identification of required resources, risks, and stakeholders, and regular reporting to decision makers on progress. (Recommendation 9) The Secretary of the Navy should ensure that Commander, Fleet Readiness Centers incorporates in its depot optimization plan, key results-oriented elements including analytically-based goals, results- oriented metrics, identification of required resources, risks, and stakeholders, and regular reporting to decision makers on progress. (Recommendation 10) The Secretary of the Air Force should ensure that Air Force Materiel Command incorporates in its depot optimization plan, key results-oriented elements including analytically-based goals, results-oriented metrics, identification of required resources, risks, and stakeholders, and regular reporting to decision makers on progress. (Recommendation 11) The Commandant of the Marine Corps should ensure that Marine Corps Logistics Command incorporates in its depot optimization plan, key results-oriented elements including analytically-based goals, results- oriented metrics, identification of required resources, risks, and stakeholders, and regular reporting to decision makers on progress. (Recommendation 12) The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment develops an approach for managing service depot investments that includes management monitoring and regular reporting to decision makers and Congress on progress. (Recommendation 13) We provided a draft of this report to DOD for review and comment. In written comments on a draft of this report (reproduced in appendix XXIV), DOD concurred with 12 of our 13 recommendations and stated, in general, that the Service Chiefs for the Army, Navy, Air Force, and Marine Corps will ensure that their respective material commands take actions to implement the recommendations for their service. DOD also provided technical comments, which we incorporated where appropriate. DOD did not concur with our recommendation that the Assistant Secretary of Defense for Sustainment (ASD for Sustainment) develop an approach for managing service depot investments. In its response, DOD stated it could not develop such an approach until the services finalized and resourced depot optimization plans. DOD stated it would continue to monitor capital investments at service depots through the budget process. We continue to believe that the ASD for Sustainment should develop an approach for managing service depot investments that includes management monitoring and regular reporting to decision makers and Congress on progress for several reasons. First, our recommendation is focused on the ASD for Sustainment developing an approach for overseeing the services’ overall depot investments, not just those contained in their optimization plans. While the depot optimization plans will certainly affect the services’ depot investments, the depots will require additional investments to sustain, restore, and modernize their operations apart from their efforts to optimize facility layout and workflow. Second, the ASD for Sustainment’s early involvement in the services’ development and resourcing of depot optimization plans could enhance service efforts to identify appropriate analytically-based goals aligned with the Secretary of Defense’s readiness objectives, enhance optimization across the DOD enterprise, and ensure sustained senior leadership attention to achieving optimal depot efficiency and effectiveness. Waiting until the services’ depot optimization plans have been resourced – that is, funded – could result in the ASD for Sustainment beginning its involvement and oversight after critical optimization decisions, such as setting goals, identifying key metrics, and adjudicating trade-offs across the depot enterprise, have been made on an individual basis by the services. Third, while monitoring investments at the service depots through the budget process is an important aspect of oversight, the ASD for Sustainment could enhance the oversight of and accountability over depot investments through a more comprehensive oversight approach. This comprehensive approach could include regular monitoring that focuses on ensuring that approved depot investment funding is implemented as planned and achieves desired results. An approach focused on the implementation of efforts aimed at desired outcomes could better position DOD and the services to make sustained progress. Finally, having regular reporting of progress will help ensure DOD leadership and the Congress have the information needed to help make critical funding and policy decisions. Reporting on progress towards desired outcomes also could assist in ensuring that there is accountability within the department for reversing years of decline and reaching the challenging goals set by the Secretary of Defense for improving mission capability rates and reducing operating and support costs. We are sending copies of this report to the appropriate congressional committees, the Acting Secretary of Defense, and the Secretaries of the Army, Navy, Air Force, and the Commandant of the Marine Corps. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have questions about this report, please contact me at maurerd@gao.gov or (202) 512-9627. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix XXV. Based on our analysis of service budget submissions and 6 percent project lists, we found that the departments have generally met the 6 percent requirement in fiscal years 2007 through 2017 (see fig. 13). As shown above, the Navy and Air Force met the minimum requirement every year since the minimum investment requirement was enacted in fiscal year 2007. The Army met the minimum investment requirement for most years, but did not meet the minimum on two occasions, in fiscal year 2011 and fiscal year 2013. According to Army officials, they missed the fiscal year 2011 minimum by around $21 million due to a software project that was scheduled to execute in fiscal year 2011, but was unable to execute and moved to fiscal year 2012 instead. An Army official attributed the difference in fiscal year 2013, which was over $68 million, to the effects of fiscal year 2013 sequestration, which generally reduced funding available to the services. While the Navy met its minimum investment requirement every year, it is worth noting that the 6 percent rule measures compliance by department. Therefore, the Navy’s reported investments include those for its four shipyards, its three fleet readiness centers, and the two Marine Corps depots. From fiscal year 2007 through fiscal year 2017, the shipyards accounted for 76 percent of Navy depot investment (see fig. 14). If these three organizations were viewed independently, only the shipyards would have regularly met their minimum investment requirement; the fleet readiness centers and Marine Corps depots have generally invested less than 6 percent of their respective maintenance, repair, and overhaul workload, as shown in figure 15. Under this perspective, the fleet readiness centers would only have met the 6 percent minimum in fiscal years 2008 and 2012, and the Marine Corps depots would never have met the 6 percent minimum. The services have counted some facilities sustainment activities towards meeting the 6 percent minimum since fiscal year 2012, but the effect of these activities on the departments’ ability to meet the minimum investment requirement appears minimal. In fiscal year 2012, Congress revised 10 U.S.C. § 2476 to prohibit the services from counting sustainment activity towards meeting their 6 percent investment minimum. Sustainment activities are defined as the regular activities needed to keep a facility in good working order. We requested project documentation from each of the services for a number of the investments that they counted towards their 6 percent minimum. Army officials were only able to provide us with about one-third of our requested project documentation (46 out of 158 projects requested); as a result, our assessment of the Army is limited. Of the project documentation we did receive, we found sustainment activities accounted for 13 projects totaling about $21 million in nominal dollars from fiscal year 2012 through fiscal year 2017. Those projects represent approximately 1 percent of the Army’s total depot investment over that time. The Army’s compliance with the 6 percent rule would not have been affected if those projects had been properly excluded. Navy and Marine Corps officials were able to provide project documentation for 172 out of 211 projects requested. Navy sustainment activities accounted for 47 projects totaling about $94 million in nominal dollars from fiscal year 2012 through fiscal year 2017. Those projects represent about 3 percent of the Navy’s total depot investment over that time. If those projects had been properly excluded, the Navy would still have met its 6 percent minimum for each fiscal year. Finally, Air Force officials were able to provide project documentation for 136 out of 138 projects requested. Air Force sustainment activities accounted for 51 projects totaling about $45 million in nominal dollars from fiscal year 2012 through fiscal year 2017. Those projects represent about 2 percent of the Air Force’s total depot investment over that time. If those projects had been properly excluded, the Air Force would still have met its 6 percent investment minimum for each fiscal year. Mission Anniston specializes in tracked and wheeled vehicles, artillery, bridging equipment, small arms, and other items. Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $196 million – nearly 15% – went to Anniston. Anniston Facilities Restoration and Modernization Backlog As of fiscal year 2017, Anniston has identified about $38 million in backlogged restoration and modernization projects. Mission Corpus Christi specializes in helicopters (AH-64, AH-1, CH-47, OH-58, UH-60, and UH-1), engines, and associated systems and subsystems. Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $311 million – over 23% – went to Corpus Christi. Corpus Christi Facilities Restoration and Modernization Backlog As of fiscal year 2017, Corpus Christi has identified about $25 million in backlogged restoration and modernization projects. Mission Red River specializes in tactical wheeled vehicles—including Mine Resistant Ambush Protected (MRAP) vehicles, High Mobility Multipurpose Wheeled Vehicles (HMMWV), Family of Medium Tactical Vehicles (FMTV), Bradley Fighting Vehicles, and the Multiple Launch Rocket System (MLRS). Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $227 million – nearly 17% – went to Red River. Red River Facilities Restoration and Modernization Backlog Red River did not provide any data on their backlog of restoration and modernization projects. Mission Rock Island houses the Joint Manufacturing and Technology Center, which has been designated the Center of Industrial and Technical Excellence for mobile maintenance equipment such as the Forward Repair System. It is also the sole Army location for assembling recoil mechanisms (such as those on howitzers). Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $59 million – over 4% – went to Rock Island. Rock Island Facilities Restoration and Modernization Backlog Rock Island did not provide any data on their backlog of restoration and modernization projects. Mission Tobyhanna specializes in command, control, communications, computers, intelligence, surveillance and reconnaissance systems, electronics, avionics, and missile guidance and control systems. Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $279 million – nearly 21% – went to Tobyhanna. Tobyhanna Facilities Restoration and Modernization Backlog As of fiscal year 2017, Tobyhanna has identified about $43 million in backlogged restoration and modernization projects. Mission Tooele specializes in ammunition logistics (storage, shipping, sorting, and inspecting), as well as production of related equipment needed for ammunition maintenance and demilitarization. Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, about $84 million – over 6% – went to Tooele. Tooele Facilities Restoration and Modernization Backlog As of fiscal year 2017, Tooele has identified about $21 million in backlogged restoration and modernization projects. Mission Watervliet specializes in cannons, mortars, and associated components, as well as machining and fabrication services. Of the $1.6 billion spent by the Army on depot investment between fiscal year 2012 and fiscal year 2017, $309 million was spent on projects that benefited multiple depots. Of the remaining $1.34 billion, $87 million – about 6% – went to Watervliet. Watervliet Facilities Restoration and Modernization Backlog As of fiscal year 2017, Watervliet has identified about $36 million in backlogged restoration and modernization projects. Mission Norfolk Naval Shipyard specializes in nuclear aircraft carriers (Nimitz class), submarines (Los Angeles- class and Ohio-class), and various surface combatants (CGs, LHDs, LPDs, LCCs, FFGs, and AS Tenders). Of the $2.4 billion spent by the four shipyards on depot investment between fiscal year 2012 and 2017, $557 million—about 23%— was spent on Norfolk Naval Shipyard. Norfolk Naval Shipyard Facilities Restoration and Modernization Backlog Norfolk Naval Shipyard identified about $1.46 billion in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts that have been identified but not yet executed. Mission Pearl Harbor Naval Shipyard specializes in nuclear submarines (Los Angeles-class and Virginia- class) and surface combatants (CGs, DDGs, LPDs, FFGs, and AS Tenders). Navy Depot Investment Of the $2.4 billion spent by the four shipyards on depot investment between fiscal year 2012 and 2017, $458 million—about 19%— was spent on Pearl Harbor Naval Shipyard. Pearl Harbor Naval Shipyard Facilities Rrestoration and Modernization Backlog Pearl Harbor Naval Shipyard identified about $1.69 billion in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts that have been identified but not yet executed. Mission Portsmouth Naval Shipyard specializes in nuclear submarines (Los Angeles-class and Virginia- class). Navy Depot Investment Of the $2.4 billion spent by the four shipyards on depot investment between fiscal year 2012 and 2017, about $568 million—about 23%—was spent on Portsmouth Naval Shipyard. Portsmouth Naval Shipyard Facilities Restoration and Modernization Backlog Portsmouth Naval Shipyard identified about $761 million in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts that have been identified but not yet executed. Mission Puget Sound specializes in nuclear carriers (Nimitz class), submarines (Los Angeles-class, Seawolf-class, and Ohio-class), and surface combatants (DDG-51 class). Navy Depot Investment Of the $2.4 billion spent by the four shipyards on depot investment between fiscal year 2012 and 2017, $841 million—about 35%— was spent on Puget Sound Naval Shipyard. Puget Sound Naval Shipyard Facilities Restoration and Modernization Backlog Puget Sound Naval Shipyard has identified about $1.49 billion in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts that have been identified but not yet executed. Mission FRC East specializes in helicopters (AH-1, CH-53E, MH-53E, UH-1Y), airplanes (AV-8B and EA-6B), fighter aircraft (F/A-18 A, C, and D variants), the MV-22 Osprey, and various engines and components. Of the $526 million spent by the three FRCs on depot investment between fiscal year 2013 and fiscal year 2017, $199 million, about 38%, was spent on projects that benefited FRC East. FRC East Facilities Restoration and Modernization Backlog FRC East identified about $198 million in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts which have been identified but not yet executed. Mission FRC Southeast specializes in helicopters (MH-60R and S) Aircraft (C-2A and E-2 C and D, EA-6B, P-3), fighter aircraft (F-35, F/A-18 A-F variants), trainers (T-6, T-34, T-44), and various components. Of the $526 million spent by the three FRCs on depot investment between fiscal year 2013 and fiscal year 2017, $197 million, about 37%, was spent on projects that benefited FRC Southeast. FRC Southeast Facilities Restoration and Modernization Backlog FRC Southeast identified about $124 million in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts which have been identified but not yet executed. Mission FRC Southwest specializes in helicopters (AH-1, CH-53E, HH- 60, MH-60, and UH-1Y), airplanes (C-2A, E-2C, E-2D, and EA-18G), fighter aircraft (F/A-18 A-F variants), the MV-22 Osprey, and various engines and components. Of the $526 million spent by the three FRCs on depot investment between fiscal year 2013 and fiscal year 2017, $131 million, about 25%, was spent on projects that benefited FRC Southwest. FRC Southwest Facilities Restoration and Modernization Backlog FRC Southwest identified about $53 million in backlogged restoration and modernization (R&M) projects in fiscal year 2017. The Navy defines backlog as R&M efforts which have been identified but not yet executed. Mission Ogden specializes in depot level maintenance for fighter aircraft (F- 35, F-22, F-16, A-10), cargo aircraft (C-130), testers (T-38), other weapons systems (Minuteman III ICBM), and software. Of the $2.1 billion spent by the Air Force on depot investment between fiscal year 2012 and fiscal year 2017, $717.1 million, or 34%, went to the Ogden ALC. Ogden ALC Facilities Restoration and Modernization Backlog As of fiscal year 2017, Ogden ALC has identified about $259 million in backlogged restoration and modernization projects. Backlog is calculated as the difference between programmed requirements and funded requirements in the Complex’s annual budgets. Mission Oklahoma City specializes in depot level repair of bombers (B-1B, B- 52), tankers (KC-135), E-3 Sentry, multiple engine systems, and software. Of the $2.1 billion spent by the Air Force on depot investment between fiscal year 2012 and fiscal year 2017, $1.0 billion – nearly half – went to the Oklahoma City ALC. Oklahoma City ALC Facilities Restoration and Modernization Backlog As of fiscal year 2017, Oklahoma City ALC has identified about $104 million in backlogged restoration and modernization projects. The backlog is calculated as the difference between total programmed requirements and funded requirements in the Complex’s annual budgets. Mission Warner Robins specializes in maintenance of cargo aircraft (C- 130, C-5, C-17), fighter aircraft (F- 15), aviation electronics, and software systems. Of the $2.1 billion spent by the Air Force on depot investment between fiscal year 2012 and fiscal year 2017, $358 million – 17% – went to the Warner Robins ALC. Warner Robins ALC Facilities Restoration and Modernization Backlog As of fiscal year 2017, Warner Robins has identified about $190 million in backlogged restoration and modernization projects. The backlog is calculated as the difference between total programmed requirements and funded requirements in the Complex’s annual budgets. Mission Albany specializes in Amphibious Assault Vehicles (AAV), Light Armored Vehicles (LAV), High Mobility Multipurpose Wheeled Vehicles (HMMWV), Mine Resistant Ambush Protected (MRAP) vehicles, Medium Tactical Vehicle Replacements, communications/electronics equipment, and small arms. Marine Corps Depot Investment Of the approximately $111 million spent by the Marine Corps on depot investment between fiscal year 2012 and fiscal year 2017, $66 million, about 59%, was spent on projects that benefited Albany Production Plant. Albany Facilities Restoration and Modernization Backlog As of fiscal year 2017, Albany Production Plant has identified about $12 million in backlogged restoration and modernization projects. Mission Barstow specializes in Amphibious Assault Vehicles (AAV), Light Armored Vehicles (LAV), High Mobility Multipurpose Wheeled Vehicles, Mine Resistant Ambush Protected (MRAP) vehicles, Medium Tactical Vehicle Replacements (MTVR), howitzers, and communications/electronics equipment. Marine Corps Depot Investment Of the approximately $111 million spent by the Marine Corps on depot investment between fiscal year 2012 and fiscal year 2017, $45 million, about 41%, was spent on projects that benefited Barstow Production Plant. Barstow Facilities Restoration and Modernization Backlog As of fiscal year 2017, Barstow Production Plant has identified about $2 million in backlogged restoration and modernization projects. For each of these locations, we collected and analyzed data such as facility condition rating, facility age, number of facility repairs, equipment age, number of equipment repairs, restoration and modernization backlog, work stoppages due to facility and equipment conditions, depot investment projects, and depot performance metrics including on-time delivery and delayed maintenance days. Whenever possible, we collected data from fiscal year 2007 – the year in which the 6 percent rule was first enacted – to fiscal year 2017, the latest for which most data were available. the General Fund Enterprise Business System for data on facility and equipment repairs and investment projects from fiscal year 2007 through fiscal year 2017; the Defense Industrial Financial Management System for data on Air Force age of equipment for fiscal year 2017; the Logistics Modernization Program for data on Army depot performance from fiscal years 2014 to 2017, investment projects, and equipment repairs from fiscal year 2007 through fiscal year 2017; the Navy Modernization Process for data on Navy shipyard performance from fiscal years 2007 to 2017; Production Status Reporting for data on Navy aviation depot performance from fiscal years 2007 to 2017; the Aircraft/Missile Maintenance Production/Compression Report for data on Air Force depot performance from fiscal years 2007 to 2017; and the Master Scheduling Support Tool for data on Marine Corps depot performance from fiscal years 2007 to 2017. We found the data that we used from these systems to be sufficiently reliable for the purposes of summarizing trends in the selected facility and equipment metrics reported. To determine the extent to which the services track data on maintenance delays caused by facilities and equipment conditions, we requested data on work stoppages related to facilities and equipment conditions at the depots. We also spoke with service officials about delays and work stoppages and the ability of the services to collect this data, and the extent to which they used delay and work stoppage data to target their investments. We did not assess the reliability of any work stoppage data, as we are not reporting this data. Marine Corps Logistics Base Albany Headquarters, Department of the Air Force Air Force Material Command Air Force Sustainment Center To determine the extent to which DOD and the services have developed an approach for guiding depot investments to address key challenges, we discussed with service depot and materiel command officials the depot investment process, the existence of investment plans at the DOD, service, or depot levels, and any challenges in meeting service operational needs resulting from inadequate investment. We also reviewed service documentation on current and future investment plans and analyzed the depots’ processes guiding investment decisions to determine whether these included any elements of a results-oriented management approach. Our previous work has highlighted the importance of a results-oriented management approach to effective operations and investment at various organizations, including defense logistics. the last year for which projects were available. We compared those lists with the services’ actual reported 6 percent spending in their respective budget justification books (specifically, the Fund-6 Report), and reconciled any differences. We then identified facility projects that cost $250,000 and above with the potential for sustainment activities. First, an analyst recorded his assessment of whether a project might include sustainment activity. A second analyst independently reviewed the same information and recorded her assessment. The two analysts created a final assessment that reconciled their two independent assessments and reflects their consensus. This sample is not generalizable to all service projects, but was chosen to identify the projects most likely to affect compliance with the 6 percent rule. We then requested and collected additional project documentation, such as project proposals, for those projects that both analysts agreed had the potential to include sustainment activities. Using this more detailed project documentation, an analyst recorded his assessment of whether a project included sustainment activity. A second analyst independently reviewed the same information and recorded her assessment of whether the project included sustainment activity. The two analysts created a final assessment that reconciled their two independent assessments and reflects their consensus. We then shared the results of our review to obtain the services’ perspectives. In some cases, the services provided additional information about a project that led us to revise our initial determination, such as noting that a particular project was conducted as a result of severe weather damage (which is considered restoration, even if the activity would otherwise be considered sustainment). For the Air Force and Navy shipyards, our final determination of sustainment projects – as presented in summary in appendix I – was consistent with the services’ respective determinations of which projects included sustainment activity. We presented these amounts using nominal, non-inflation adjusted dollars, in order that the comparison with that year’s 6 percent minimum reporting would be comparable. Officials from the Marine Corps and Navy aviation command did not agree with our determination that one and three of the reviewed projects, respectively, included sustainment activity. The Army did not provide a response to most of our sustainment determinations. We conducted this performance audit from August 2017 to April 2019 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. In addition to the individual named above, key contributors to this report are Suzanne Wren, (Assistant Director), James Lackey (Analyst in Charge), Andrew Duggan, Amie Lesser, Felicia Lopez, Michael Perkins, Carol Petersen, Michael Silver, John E. “Jet” Trubey, Britney Tsao, and Lillian Yob. DOD Depot Workforce: Services Need to Assess the Effectiveness of Their Initiatives to Maintain Critical Skills. GAO-19-51. Washington, D.C.: December 14, 2018. Navy Readiness: Actions Needed to Address Costly Maintenance Delays Facing the Attack Submarine Fleet. GAO-19-229. Washington, D.C.: November 19, 2018. Air Force Readiness: Actions Needed to Rebuild Readiness and Prepare for the Future. GAO-19-120T. Washington, D.C.: October 10, 2018. Weapon System Sustainment: Selected Air Force and Navy Aircraft Generally Have Not Met Availability Goals, and DOD and Navy Guidance Need to Be Clarified. GAO-18-678. Washington, D.C.: September 10, 2018. Military Readiness: Analysis of Maintenance Delays Needed to Improve Availability of Patriot Equipment for Training. GAO-18-447. Washington, D.C.: June 20, 2018. Navy Shipbuilding: Past Performance Provides Valuable Lessons for Future Investments. GAO-18-238SP. Washington, D.C.: June 6, 2018. Navy Readiness: Actions Needed to Address Persistent Maintenance, Training, and Other Challenges Affecting the Fleet. GAO-17-809T. Washington, D.C.: September. 19, 2017. Naval Shipyards: Actions Needed to Improve Poor Conditions that Affect Operations. GAO-17-548. Washington, D.C.: September 12, 2017. Navy Shipbuilding: Policy Changes Needed to Improve the Post-Delivery Process and Ship Quality. GAO-17-418. Washington, D.C.: July 13, 2017. Department of Defense: Actions Needed to Address Five Key Mission Challenges. GAO-17-369. Washington, D.C.: June 13, 2017. Military Readiness: DOD’s Readiness Rebuilding Efforts May Be at Risk without a Comprehensive Plan. GAO-16-841. Washington, D.C.: September 7, 2016. Defense Inventory: Further Analysis and Enhanced Metrics Could Improve Service Supply and Depot Operations. GAO-16-450. Washington, D.C.: June 9, 2016. Military Readiness: Progress and Challenges in Implementing the Navy’s Optimized Fleet Response Plan. GAO-16-466R. Washington, D.C.: May 2, 2016. Defense Inventory: Actions Needed to Improve the Defense Logistics Agency’s Inventory Management. GAO-14-495. Washington, D.C.: June 19, 2014. DOD’s 2010 Comprehensive Inventory Management Improvement Plan Addressed Statutory Requirements, But Faces Implementation Challenges. GAO-11-240R. Washington, D.C.: January 7, 2011.

Summary: The military services' 21 depots maintain the readiness of critical weapon systems such as ships, aircraft, and tanks needed for military operations. The condition of depot facilities and equipment directly affects the timeliness of maintenance and the readiness of the weapon systems they repair. The services have invested over $13 billion in the depots from fiscal year 2007 to fiscal year 2017. Senate Report 115-125 included a provision for GAO to examine the services' investment in and performance of their depots. GAO evaluated (1) the condition of depot facilities and equipment, their relationship to depot performance, and the services' tracking of the relationship to depot performance and (2) the extent to which DOD and the services have developed an approach for guiding depot investments to address key challenges. GAO also provides an overview summary for each depot. GAO reviewed data from fiscal years 2007 through 2017 on depot investment, performance, and the age and condition of facilities and equipment; reviewed agency guidance; and interviewed DOD, service, and depot officials. The condition of facilities at a majority of the Department of Defense's (DOD) depots is poor and the age of equipment is generally past its useful life, but the services do not consistently track the effect that these conditions have on depot performance. Twelve of the 21 depots GAO reviewed––more than half––had “poor” average facility condition ratings (see figure). Some facilities also serve functions for which they were not designed, reducing their efficiency. In addition, the average age of depot equipment exceeded its expected useful life at 15 of the 21 depots. These factors contributed, in part, to a decline in performance over the same period. From 2007 to 2017, performance at the depots generally declined, reducing the availability of the weapon systems repaired for training and operations. Optimizing facilities and equipment at the depots can improve their maintenance efficiency. For example, the Navy estimates that its shipyard optimization effort will save over 325,000 labor days per year, which would allow an additional submarine overhaul annually. However, the services lack data on the effect that facilities and equipment conditions have on maintenance delays, hindering DOD's ability to effectively target investments to the highest priorities. DOD and the services' approach for managing investments to improve the efficiency and effectiveness of its depots lacks elements important to addressing key challenges. The services have efforts underway to complete their plans by February 2019 to address their depots' facility and equipment needs. However, GAO found that these plans are preliminary and will not include key elements, such as analytically-based goals; results-oriented metrics; a full accounting of the resources, risks, and stakeholders; and a process for reporting on progress. Addressing the poor conditions at DOD's 21 depots will cost billions and require sustained management attention over many years. However, the DOD office responsible for depot policy does not monitor or regularly report on depot improvement efforts to DOD decision makers and Congress. Until DOD and the services incorporate these key elements into the management approach for their depot investments, they risk continued deterioration of the depots, hindering their ability to meet the Secretary of Defense's goals for improving readiness and reducing operating and support costs. GAO is making 13 recommendations to improve data collection on the effect of facilities and equipment condition on depot performance, and develop plans that incorporate key elements to guide depot investments. DOD concurred with 12 recommendations, but did not agree to monitor and report on depot investments. We continue to believe monitoring and reporting will enhance DOD's efforts to improve its depots.