Military Depots: Actions Needed to Improve Poor Conditions of Facilities and Equipment That Affect Maintenance Timeliness and Efficiency

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.

The Department of Defense (DOD) operates public industrial installations  that maintain, overhaul, and repair its multitude of complex weapon  systems and equipment. This mix of weapon systems and their  maintenance needs is continually changing as new weapon systems  replace older ones and systems in the field are modified with newer and  better technologies. To maintain these systems and equipment, DOD  uses a combination of private-sector contractors and public industrial  installations that are government-owned and government-operated.  These public industrial installations, known as depots, employ over  80,000 civilians, and are crucial to maintaining military readiness by  ensuring that the services can regularly repair critical weapon systems  and return them to the warfighter for their use in training and operations.  DOD annually requests appropriations from Congress for investment in  these depots and, from fiscal year 2007 to fiscal year 2017, the Army,  Navy, Air Force, and Marine Corps have collectively invested over $13  billion in their depots.

In fiscal year 2007, Congress enacted a law 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 to its depots for the preceding 3 fiscal  years. In this report, we refer to the 6 percent minimum investment  requirement as the “6 percent rule.” The capital budget of a depot  includes funds to modernize or improve the efficiency of depot facilities,  equipment, work environment, or processes in direct support of depot  operations. The law prohibits using funds spent for sustainment of  existing facilities, infrastructure, or equipment towards meeting the 6  percent investment minimum.

Recognizing that existing depot facilities may not be ideally configured to  efficiently and effectively support the services’ readiness needs, Senate  Report 115-262, accompanying a proposed bill for the National Defense  Authorization Act for Fiscal Year 2019, included a provision directing 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.

Senate Report 115-125, accompanying a proposed bill for the National  Defense Authorization Act for Fiscal Year 2018, included a provision for  us to examine the investment in and performance of the service depots.  The objectives of this report are to evaluate: 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. In appendix I, we  report that the services generally met their minimum depot investments  under the 6 percent rule and whether they have included funds spent for  sustainment of existing facilities, infrastructure, or equipment towards  meeting their 6 percent requirement. Additionally, in appendixes II–XXII  we provide summary overviews of each depot’s performance, and the  condition of their facilities and equipment. We have also provided DOD’s  comments in appendix XXIV.

For our first objective, we analyzed service reports and performance  metrics for the 21 depots from fiscal year 2007 through fiscal year 2017.

These metrics included facility condition ratings, facility age, facility  restoration and modernization backlogs, number of facility repairs,  equipment age, number of equipment repairs, and a number of depot  performance metrics relating to timeliness of repairs. We also reviewed  DOD and service guidance and interviewed service depot, sustainment,  and budget officials to obtain an understanding of how they manage the  depot investment process and identify funds spent for sustainment of  existing facilities, infrastructure, or equipment. We also evaluated data on  maintenance delays, including the extent to which this data identifies  facilities and equipment conditions at the depots as a cause of delays. In  addition, we spoke with service officials about maintenance delays and  the ability of the services to collect this data.

For our second objective, we reviewed depot metrics and discussed with  officials any challenges to meeting service operational needs, and  analyzed service investment plans and processes to assess their use of  results-oriented management elements. This review included visits to  three of the 21 depots (selected by resources and availability), the service  materiel commands, and the Office of the Deputy Assistant Secretary of  Defense for Materiel Readiness.

To determine whether the military departments are complying with the  requirements of the 6 percent rule, we reviewed service reports on  compliance and validated compliance through assessments of the  reliability of the service data. To determine whether the funds identified  for capital budget activities by the military departments included funds  spent on sustainment of existing facilities, infrastructure, or equipment,  we reviewed project investment lists to identify projects with potential for  including sustainment activities and reviewed approved project proposals  to identify any sustainment funds included. This list was verified by the  sustainment officials as sustainment or non-sustainment. A detailed  discussion of our scope and methodology is in appendix XXIII.

To assess the reliability of the data used in this report, we reviewed  systems documentation and interviewed officials to understand system  operating procedures, organizational roles and responsibilities, and error  checking mechanisms. We also conducted our own error checks to look  for inaccurate or questionable data and discussed with officials any data  irregularities we found. We conducted these assessments on 13 systems,  which are further discussed in appendix XXIII. We found the data that we  used from these systems to be sufficiently reliable for the purposes of  summarizing trends in the selected facility, equipment, and performance  metrics reported.

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.

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 Process and the Effects of Maintenance Delays on Readiness and Costs

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.

Depot Facilities and Equipment Are Key to Efficient and Effective Depot Maintenance

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.

Poor Condition of Facilities and Equipment Hinders Depot Performance, but the Services Do Not Consistently Track These Effects

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.

Majority of Depot Facilities Are in Poor Condition and Equipment Generally Exceeds Its Expected Useful Life

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.

Poor Condition of Depot Facilities and Equipment Contributes to Worsening Performance

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.

The Military Services Do Not Consistently Track the Extent to Which Facility and Equipment Conditions Delay Maintenance

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.

DOD’s Approach for Guiding Depot Investments Lacks Key Elements Important to Addressing the Depots’ Challenges Efficiently and Effectively

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 Military Services Are Developing Optimization Plans, but These Plans Lack Key Elements to Guide Depot Investment

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.

The Office of the Secretary of Defense Does Not Provide Oversight of or Report on Service Efforts to Invest in Depots

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.

Appendix I: Service Depot Investment Has Generally Met Statutory Requirements

Military Departments Generally Have Met the 6 Percent Rule

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.

Military Department Compliance with Fiscal Year 2012 Change to Prohibit Facility Sustainment

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.

Pine Bluff Facilities Restoration and Modernization Backlog As of fiscal year 2017, Pine Bluff has identified about $7 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.

Headquarters, Department of the Air Force

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.

Appendix XXIV: Comments from the Department of Defense

Appendix XXV: GAO Contact and Staff Acknowledgments

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.

DOD operates 21 depots that maintain, overhaul, and repair complex weapons systems and equipment.

The facility conditions were poor at most depots

Depot equipment was generally older than its expected service life

Declining performance over the last 10 years at most depots reduced the availability of weapons systems for training and operations

The military services can't determine how much of the decline is due to facility and equipment problems

While the services have started planning to improve depots as required, we recommended they track maintenance delays and incorporate key goals and performance metrics into their plans.