The Department of Defense (DOD) annually spends $15 billion for depot maintenance work that involves the repair, overhaul, modification, and upgrading of aircraft, ships, tracked and wheeled vehicles, and other equipment. This work, which also includes limited parts manufacturing, technical support, testing, reclamation, and software maintenance, is performed by both public depots and the private sector. A combination of factors, including declining maintenance requirements and increasing pressures to outsource more and more work to the private sector, has caused DOD to downsize its depot maintenance infrastructure. This downsizing has taken place largely through the base closure and realignment (BRAC) process. Prior to downsizing, DOD had 36 major maintenance depots—8 Army depots, 6 naval aviation depots, 8 shipyards, 2 ship repair activities, 3 Navy warfare centers, 7 Air Force depots, and 2 Marine Corps depots—as well as other industrial facilities with a depot maintenance mission. This total includes 15 depots that are closing, 6 of which have already ceased maintenance operations. It does not include an Air Force depot maintenance activity in Colorado Springs that performs software maintenance for space systems or most specialized government-owned, contractor-operated repair depots. These depots, which represent a large government investment, have historically had more extensive technical capability—in terms of the facilities, equipment, and personnel—than lower maintenance levels.However, in recent years, various programs within the military services have resulted in blending some of the maintenance levels. In addition to in-house depot maintenance capability, DOD also contracts with thousands of firms, including both repair houses and original equipment manufacturers. These firms supply parts and provide direct maintenance support in both their own facilities and government facilities. In our April 1994 testimony, we reported that DOD’s estimate of the workload mix between the public and private sectors—about 35 percent to the private sector and the remainder to public depots—understated the portion of private sector funding. We noted that an actual accounting of the amount going to the private sector, either directly or through the purchase of repair parts or secondary services, was not readily available because of limitations in the way DOD collected data. However, based on our review of available data, we projected that more than 50 percent of depot maintenance funds goes to the private sector. Figure 1.1 depicts DOD’s major depots, which collectively employ about 100,000 civilian employees and 2,000 military personnel. A brief history of each military service’s depot system is provided in appendix I. A combination of factors has created too much depot maintenance capacity in the military services’ depots. These factors include (1) the downsizing of the armed forces due to the end of the Cold War; (2) efforts by some DOD components to conduct more repairs in field-level maintenance activities; (3) pressures by the defense industry to contract out more depot work to the private sector; and (4) the increased reliability, maintainability, and durability of most military systems and equipment. Some initiatives—namely consolidating workloads, implementing competition between government depots and the private sector, mothballing depot plant equipment, and tearing down unused buildings or converting them to other military uses—have been undertaken to reduce some of the excess capacity. However, depot downsizing has largely occurred through the BRAC process. Closing unneeded facilities has never been easy, partly because of the public’s concerns about the effects of closures on communities and about the impartiality of the decision-making process. Additionally, 1970s legislation requiring congressional notification of proposed closures and preparation of economic, environmental, and strategic consequence reports has greatly impeded base closure efforts. Legislation enacted in 1988 (P.L. 100-526) facilitated a successful round of base closure decision-making. It outlined a special process for considering base closure actions, authorized a special commission to review proposed closures and realignments, and provided relief from certain statutory provisions that hindered the base closure process. In 1990, the Secretary of Defense found it was difficult to complete additional base closure actions without special enabling legislation. Therefore, Congress passed the Defense Base Closure and Realignment Act of 1990 (title XXIX, P.L. 101-510), which halted any major closures unless DOD followed the new act’s requirements. The act created independent BRAC commissions and outlined procedures, roles, and time frames for the President, Congress, DOD, GAO, and the commissions to follow. It required that all bases be compared equally against (1) selection criteria to be developed by DOD and (2) DOD’s current force structure plan. The legislation mandated rounds of BRAC reviews in 1991, 1993, and 1995. The first 3 rounds of the BRAC process resulted in decisions to close 10 maintenance depots: 1 in BRAC 1988, 2 in BRAC 1991, and 7 in BRAC 1993. Six of these depots are located on bases that are being closed completely, but four—the Norfolk and Pensacola naval aviation depots and the Lexington-Bluegrass and Tooele Army depots—are located on bases that will continue to perform missions other than depot maintenance. Eight of the depots have had or will have all or portions of their land and facilities made available to the local community for reuse; however, the Navy plans to retain all of the Norfolk and Pensacola naval aviation depots’ land and facilities for other missions. For purposes of this report, all BRAC actions where depot maintenance operations will cease at a location are referred to as “depot closures.” Table 1.1 shows the depots recommended for closure, the dates they either did or will cease maintenance operations, and their actual or planned closure dates. DOD’s report to the 1995 BRAC Commission included recommendations to (1) realign the Letterkenny Army Depot and the Naval Undersea Warfare Center, Keyport, Washington; (2) close the Red River Army Depot, Long Beach Naval Shipyard, and Naval Surface Warfare Center, Crane Division Detachment, Louisville, Kentucky; and (3) reduce the five air logistics centers’ excess capacity by consolidating various workloads, disposing or mothballing depot plant equipment, and tearing down buildings. DOD estimated that this approach would reduce the Air Force’s excess capacity by 1.5 depot equivalents. However, after these recommendations were forwarded to the BRAC Commission for review, the Commission added all five air logistics centers, Portsmouth Naval Shipyard, and Tobyhanna Army Depot to the list for further review. The Commission ultimately recommended closing the Long Beach Naval Shipyard; the Naval Surface Warfare Center, Crane Division Detachment, Louisville, Kentucky; and the Sacramento and San Antonio Air Logistics Centers. In addition, it recommended that (1) the depot maintenance mission be discontinued at the Letterkenny Army Depot (Pennsylvania); (2) the Naval Undersea Warfare Center, Keyport, Washington, retain its torpedo depot maintenance workload, but transfer its ship combat systems workload; and (3) the Red River Army Depot remain open and retain its Bradley Fighting Vehicle Series workload, but transfer its other maintenance missions to other depots or the private sector. President Clinton disagreed with some of the Commission’s recommendations, especially those that affected depots in California and Texas, but he ultimately approved the Commission’s report on July 13, 1995, and forwarded it to Congress. Congress completed its review and accepted the Commission’s recommendations in September 1995. The Chairman and Ranking Minority Member of the Subcommittee on Military Readiness, House Committee on National Security, requested that we (1) assess the reliability of DOD’s depot closure cost and savings estimates; (2) obtain information on the policies and programs used to provide employment and training opportunities to employees at closing depots; (3) determine if the military services can increase depot closure savings by using competitions between DOD depots (public-public competitions) and between DOD depots and the private sector to redistribute closing depots’ workloads; and (4) determine if the military services adequately consider other services’ depots when they use methods other than public-public or public-private competitions to redistribute their closing depots’ workloads. To assess the reliability of depot closure cost and savings estimates, we analyzed the cost of base realignment actions (COBRA) and BRAC budget estimates. We also discussed the reliability of the estimates with DOD and service officials and examined financial documentation. To obtain information on the policies and programs used to provide employment and training opportunities to employees at closing depots, we (1) reviewed relevant legislation and regulations; (2) discussed the policies and programs with cognizant depot officials; (3) determined the frequency that various actions, such as reductions-in-force, have been used to outplace depot employees; and (4) visited several depots’ employment transition centers. To a limited extent, we also obtained information on the cost of the various programs. To determine if public-public competitions have been used effectively to redistribute closing depots’ workloads, we (1) obtained information on the scope and results of all public-public competitions that have been conducted, (2) reviewed competition savings projections, and (3) discussed the pros and cons of using public-public competitions to redistribute closing depots’ workloads with officials at both the commands that conducted the competitions and the depots that competed for the workloads. We also evaluated the Deputy Secretary of Defense’s rationale for canceling DOD’s public-public and public-private competition programs in May 1994.