Depot-level maintenance and repair of military weapons and equipment involve extensive shop facilities, specialized equipment, and highly skilled technical and engineering personnel. In recent years, the distinction between depot maintenance and lower levels of maintenance has become less pronounced. Public sector depot maintenance work is currently conducted in 22 major government-owned and government-operated maintenance depots and a number of other government-owned facilities, including post-production software support activities, laboratories, and Army arsenals. According to DOD officials, private sector depot maintenance work is conducted by commercial contractors at about 1,100 contractor-owned and -operated facilities at various geographic locations. The allocation of depot maintenance workload between the public and private sectors is governed by 10 U.S.C. 2466. According to the statute, at the time of our review, not more than 40 percent of funds made available to a military department or defense agency for depot-level maintenance and repair was to be used to contract for performance by nonfederal government personnel—also referred to as the 60/40 rule. The fiscal year 1998 Defense Authorization Act increased the percentage of depot-level maintenance and repair work that can be contracted to nonfederal government personnel to not more than 50 percent, from the previous 40-percent maximum. Other statutes that affect the extent to which depot-level workloads can be converted to private sector performance include 10 U.S.C. 2469, which provides that DOD-performed depot maintenance and repair workloads valued at not less than $3 million cannot be changed to contractor performance without a public-private competition, and 10 U.S.C. 2464, which, at the time of our review, provided that DOD activities should maintain a logistics capability sufficient to ensure technical competence and resources necessary for an effective and timely response to a national defense emergency. In April 1996, we testified before the Subcommittee on Readiness, Senate Committee on Armed Services, and the Subcommittee on Military Readiness, House Committee on National Security, on DOD’s revised depot maintenance policy and its report on public-private depot workload allocations. We noted that DOD’s policy clearly intended to shift additional workload to the private sector when readiness, sustainability, and technology risks can be overcome. In May 1996, we reported on DOD’s reported public-private depot workload allocations. We noted that with few exceptions, the 60/40 rule had not affected past public-private without repeal of the 60/40 rule, the military departments would not be able to follow through on large-scale plans to compete depot maintenance workloads between public and private sector activities; DOD’s report did not provide a complete, consistent, and accurate picture of depot maintenance workloads because it did not include (1) interim contractor support and contractor logistics support costs, (2) labor costs to install modification and conversion kits, and (3) software maintenance support, most of which was obtained from private sector firms using procurement funding; and DOD’s reported public sector workload allocation included costs for parts and services the public depots purchased from private sector contractors, some of which were costs for government-furnished material provided to private contractors. In our report, we suggested that Congress may wish to require that (1) all depot maintenance workload categories be included in future 60/40 reports, regardless of funding source, and (2) outlays by public depots for purchases of repair parts and services be included in the private sector’s workload share. For fiscal years 1994 through 1996, DOD was required by law to report to Congress on the public and private sector workload mix for each military department and agency. Although this requirement was not effective for fiscal year 1997, the Deputy Under Secretary of Defense (Logistics), in January 1997, as part of his oversight responsibilities to verify current and projected compliance with 60/40 statutory requirements, asked the military departments to quantify planned funding for depot maintenance workloads assigned to the public and private sectors for fiscal years 1996 through 2002. The military departments were requested to follow an approach similar to the one used in responding to previously mandated congressional reporting requirements. The military departments and the Defense Logistics Agency developed summary workload distribution reports for the Office of the Secretary of Defense (OSD) based on financial information contained in readily available budget data. In May 1997, OSD prepared a briefing for the Defense Depot Maintenance Council that showed the percentage of public and private sector depot maintenance workload distribution for each military department. Our review does not address subsequent changes in the law impacting public-private depot workload allocation requirements contained in the fiscal year 1998 Defense Authorization Act, approved November 18, 1997. This act contains an amendment to 10 U.S.C. 2466 mandating annual reports of public and private sector workload allocations. It also contains a new section 2460 of title 10, which specifies the kinds of work DOD is to include within the definition of depot-level maintenance. This will impact DOD’s future quantifications of public and private sector workload allocations. These changes address several workload reporting issues raised in this report. DOD’s first report to be submitted to Congress by February 1, 1998, is to include information on public and private sector depot-level maintenance spending for fiscal year 1997. DOD’s analysis of depot maintenance workload distribution showed that it provided funding of about $10.5 billion for depot maintenance requirements in fiscal year 1996, of which workload valued at $7.1 billion, or 68 percent, was assigned to public sector facilities and about $3.4 billion, or 32 percent, was assigned to the private sector. In addition, DOD’s data showed that it provided an additional $706 million for work acquired from the private sector through interim contractor support (ICS) and contractor logistics support (CLS) contracts. At the time of our review, the law did not specifically state whether such contractor-provided maintenance should be considered in 60/40 calculations. The recently passed provisions at 10 U.S.C. 2460 would establish a statutory definition of depot-level maintenance and repair. Among other things, it specifies that both ICS and CLS are to be included within the definition. As a result both ICS and CLS must be included in private sector workload calculations required under the newly amended provision of 10 U.S.C. 2466. According to the data in DOD’s analysis, Army and Navy depot maintenance funding provided to the private sector will not exceed 40 percent in any year from fiscal year 1996 to 2002, whether or not ICS and CLS are included. The percentage of Air Force depot maintenance funding provided to the private sector will vary considerably depending on the outcome of planned public and private sector workload competitions. In September 1997, the Air Force announced that Warner Robins Air Logistics Center won a public-private competition for the C-5 aircraft depot-level workload. Should the private sector win the remaining competitions, DOD data shows that its share will only exceed 40-percent when ICS and CLS costs are included. The percentage of public and private sector depot maintenance work reported by the military departments for fiscal years 1996 through 2002 and the potential impact of including ICS and CLS funding in the private sector workload distribution are shown in table 1. For the Air Force, the table provides percentage allocations for two scenarios. The first scenario assumes that public depots win all ongoing public-private workload competitions, and the second reflects that the public sector wins the C-5 workload and that the private sector wins all others. The Deputy Under Secretary’s January 1997 request for data on depot maintenance funding required that the military departments develop supplemental information for certain maintenance-related funding obtained through ICS contracts, CLS contracts, and other innovative logistics support arrangements. OSD program officials told us they asked the military departments to report these data separately because without collection of these data, DOD would have no vehicle for determining the impact on the public and private sector’s workload allocation. DOD does not have accurate data on public and private sector workload distributions. OSD’s January 1997 guidance to the military departments for identifying and reporting public-private depot maintenance activities, and workload distribution was vague and subject to interpretation. Consequently, the military departments used what OSD officials described as an ad hoc data collection process. As a result, workload distribution data reported by the services was inconsistent and incomplete. DOD directives, regulations, and publications provide a broad working definition for depot maintenance workloads, including the repairing, rebuilding, and major overhaul of major end items, parts, assemblies and subassemblies and limited manufacture of parts, technical support, modifications, testing, reclamation, and computer software maintenance. We found that the military departments’ efforts to accurately define and quantify their depot maintenance workloads were complicated by vague and conflicting supplemental OSD guidance. For example, the Deputy Under Secretary’s January 1997 request for public and private sector depot maintenance funding information states that 60/40 reporting (1) should consider all depot maintenance work, irrespective of funding source, and (2) should be based on only “maintenance and repair work,” while modification work was to be considered “non-maintenance work.” Our discussions with officials from the services and the defense agencies showed that officials responsible for public-private workload data collection and quantification differed on which defense activities and components should be reporting, and which types of workloads should be included. For example, service and defense agency officials stated that guidance is unclear if repair and maintenance funding for items not normally repaired in a traditional depot environment are to be included. These workloads include repair and maintenance funding of space systems, medical equipment, computer hardware, and classified programs. OSD has not established a uniform and consistent approach for collecting and quantifying current and planned public and private sector depot maintenance funding.