The Navy has reported that more than $8.5 billion of Navy resources was applied in fiscal year 1996 to maintenance programs in support of fleet ships and aircraft. Each type of “platform,”—surface ships, submarines, aircraft carriers, and aircraft—has a separate maintenance infrastructure. Maintenance is done at three different levels—organizational, intermediate, and depot—depending on the nature and complexity of the work required. Organizational maintenance is done by military personnel on board ships or at aircraft squadrons. While at sea, intermediate maintenance on large ships such as aircraft carriers and tenders is done by military personnel; ashore, intermediate maintenance is done by military and civilian personnel at submarine refit facilities and aircraft and shore intermediate maintenance activities. Depot-level maintenance is done mostly by civilian personnel at aviation depots and shipyards. In 1996, the Navy had over 21,000 military and 42,000 civilians participating in maintenance activities at the intermediate and depot levels. In addition, the Navy has reported that up to 40 percent of depot-level maintenance is outsourced to private companies. In response to force structure reductions since the mid-1980s and subsequent defense planning guidance to reduce excess maintenance infrastructure, the Chief of Naval Operations (CNO), early in 1993, tasked the commanders of the Atlantic and Pacific Fleets to develop a strategy for streamlining and consolidating maintenance functions. This led to the Navy establishing the RM Program in March 1994. The Navy’s RM Program efforts have been focused on reducing excess maintenance infrastructure. However, the program has other objectives such as improving maintenance processes, integrating supply support and maintenance functions, and providing compatible data systems across the three maintenance levels. The program was to be implemented in three overlapping phases during fiscal years 1995-99. Since the RM Program began, the number of Navy ships and aircraft has continued to decline. For example, the Navy projects that by the end of fiscal year 1999, it will have 186 fewer aircraft and 22 fewer ships to maintain than in 1996. During the same period, the maintenance budget for ships and aircraft is also expected to be reduced to about $7.5 billion (in fiscal year 1996 dollars), a decrease of about $1 billion. The Navy has made substantial progress in implementing the infrastructure streamlining objective of the RM Program through such efforts as establishing a management structure, a phased execution plan, and a process for realigning and reducing its maintenance infrastructure. It also identified 102 initiatives aimed at regionalizing, consolidating, and streamlining the maintenance infrastructure and achieving savings. Implementation of the program has not been as rapid as predicted, however, and milestones may not be met. The Navy has established a management structure for planning and implementing the RM Program. The structure is linked at the CNO level and includes committees, systems commands, the fleets, and various quality boards and other groups. For example, the management structure within the CNO includes an Executive Steering Committee that provides overall program guidance and direction. This committee chartered the Fleet Support Quality Management Board to develop the transition strategy for moving to regional maintenance. Through this Board, regional maintenance was planned and developed using focused working groups. A Regional Maintenance Implementation Board (RMIB) was established to coordinate among the Pacific and Atlantic Fleets, the systems commands, and CNO-level units. The Board is co-chaired by the Fleet Maintenance Officers, who have key leadership responsibilities to implement regional maintenance. This Board meets on a regular basis to address regional maintenance and other issues. Each of the systems commands, the Atlantic Fleet, and the Pacific Fleet report separately to the CNO. Through this management structure, the Navy has developed concepts, guidance, fleet business plans, and milestones for the RM Program infrastructure streamlining objective. For example, the fleets developed program guidelines for establishing regional repair centers, adopted a business-case analysis approach for evaluating candidate activities for consolidation, and formulated cost templates for measuring the monetary impacts of consolidations. In March 1994, the CNO approved a three-phased execution plan that assigned the following primary tasks in each phase: Phase 1: Minimize intermediate-level redundant capacity through process improvements and resource sharing, and develop prototype centers of excellence, called Regional Repair Centers. Implement phase during fiscal years 1995-99. Phase 2: Integrate intermediate- and depot-level activities and establish Regional Maintenance Centers (RMC), consisting of a confederation of Regional Repair Centers. Implement phase during fiscal years 1996-99. Phase 3: Conduct fleet maintenance using a single maintenance process supported by common business and production practices. Implement phase during fiscal years 1997-99. As part of phase 2, the Mid-Atlantic and Northwest RMCs, and later six others, were established—a total of four in each fleet. The Navy has included one or more of the states around where the centers are located and where there are Navy maintenance activities into areas it refers to as RM regions (see fig. 1). Each RM region established an executive steering committee for maintenance, comprised of the commanders and maintenance managers of activities in the region and chaired by the region’s RMC commander. These committees have chartered process action teams to identify which activities in the region should be evaluated for consolidation. The two fleets have developed regional maintenance business plans, including initiatives and estimates of savings to be achieved in each of their respective regions, and the systems commands have added their own initiatives with estimates of savings. Although the Navy began implementation as planned, phase 2 has been redefined, and phase 3 has been delayed. As a result, implementation is taking longer than anticipated. Full implementation, initially projected for fiscal year 1999, is currently projected for fiscal year 2000 and could take longer. According to Navy officials, there have been delays in implementing the program because many of the issues involved are complex and require extensive studies and approvals. For example, the possible consolidation of calibration laboratories in the Northwest region was identified as an initiative in 1994, but it has taken 3 years and multiple studies to determine which activity would do the calibration work and whether it would be done using government or contract employees. Also, implementation among the regions has been uneven. While all regions have made some progress, the Mid-Atlantic region has led the way in establishing the program and piloting regional maintenance initiatives to achieve savings. For example, the Mid-Atlantic region has 18 (33 percent) of the 55 initiatives being implemented from 1994 to 1997, including consolidating three shore intermediate maintenance activities (SIMA) into one organization, consolidating calibration and material testing laboratories, and establishing other regional repair centers. It also initiated the fleet business plans and guidance for regional repair centers later used by other regions. By contrast, the Hawaii and Northwest regions had implemented eight initiatives each. The Northwest region established regional repair centers for pumps, periscopes, gas turbine engines, and eliminated a military construction project; and both the Northwest and Hawaii regions have consolidated nuclear regional maintenance work. Because of problems with the Navy’s financial information system and other coordination issues, in 1996 phase 2 of the execution plan was divided into a three-step process. During the first step, ship intermediate- and depot-level maintenance were to be consolidated; aircraft intermediate- and depot-level maintenance activities were to be collocated; and ship and aircraft maintenance consolidations were to take place where logical. During the second step, ship intermediate- and depot-level maintenance planning and engineering functions were to be consolidated into ship-planning and engineering centers, reducing the number of planning and other positions needed. As of July 1997, the third step had not been approved, and delays in phase 2 have postponed the approval of phase 3. In a regional maintenance briefing in May 1997, the Deputy Chief of Naval Operations (Logistics) briefed the CNO that execution of the RM Program would be completed in fiscal year 2000. Since then, in July 1997, the CNO noted that although phase 2 was on track, challenges remained, much still had to be done, and efforts must be accelerated. According to Navy officials, the tendency is to be optimistic in establishing milestones for such programs and organizational realignments are particularly difficult to accomplish. They also said that developing regional maintenance will not be completed in 1999 as planned, but will be a continuous process long after fiscal year 2000 as new initiatives and refinements to existing maintenance processes are identified. Through fiscal year 1996, 102 initiatives with projected savings of $944 million had been identified for the program. Of the 102, the Navy estimated that it would achieve net savings of $198 million through implementation of 55 initiatives during fiscal years 1994-97 and that these projects would continue to provide savings in fiscal years 1998-2001 amounting to $272 million, or a total of about $470 million (see table 1). It planned to implement 47 more between 1998 and 2001. Program savings are not being achieved at the levels the Navy originally estimated. According to fleet maintenance officials, initiatives that have been implemented are mostly the less controversial projects that are easier to implement and a few complex consolidations. They said they are proceeding slowly because they believe Navy managers should be encouraged, rather than forced, to accept regional maintenance. The Navy has also reduced its estimates of savings for a number of initiatives. For example, the savings estimate for an initiative to reduce the overhaul for certain diesel engines was reduced from $5.4 million annually to $1.2 million in fiscal year 1996 and $900,000 in fiscal years 1997-99. According to officials at the maintenance facility responsible for the repair of these engines, overhauls have not occurred at the anticipated rate per year because a maintenance process change reduced the requirements. In the Northwest region, a delay in a project to consolidate calibration functions has delayed the realization of potential savings.