Military Departments Had Mixed Results Complying With 50-50 Prior-Years Requirement

The Department had mixed results complying with the 50-50 prior-years requirement for fiscal years 1999 and 2000. Future-Year Projections Are Not Reasonably Accurate or Useful

The projections of the Army, Air Force, and Navy in DOD’s future-years’ report for fiscal years 2001 through 2005 are not reasonably accurate estimates of the future allocations of public and private sector workloads. The services’ management placed much less emphasis on the future-years data and reports. The reported projections are based in part on incorrect data, questionable assumptions, and some inconsistencies with existing budgets and management plans. As a result, DOD’s future-years report should be viewed with caution because it does not provide the best data available to DOD decisionmakers and congressional overseers, and the reported data is misleading with regard to how future workloads are likely to be allocated between the public and private sectors. Both public and private sector amounts can be affected. Reporting Processes Improved, but Some Problems Remain

While DOD has greatly improved the 50-50 reporting guidance and implementation, opportunities for improvement still exist. With improved management oversight and direction and the implementation of the required corrective actions, the 50-50 report could become a more useful management tool for DOD and the Congress in managing the Department’s depot maintenance program to attain future compliance with the 50-50 requirement.
What GAO Found

Federal law states that not more than 50 percent of annual depot maintenance funding can be used for work by private sector contractors. In an earlier report, GAO could not determine whether the Department of Defense (DOD) had complied with the 50-percent limitation. More recent GAO testimony highlighted continuing and pervasive weaknesses in DOD's financial management systems, operations, and controls that impair its ability to accurately accumulate and report reliable budget execution and cost data. This report found that the military had mixed results complying with the 50-50 requirement for private sector workloads in fiscal years 1999 and 2000. The projections of the Army, Air Force, and Navy in DOD's report for fiscal years 2001 through 2005 are neither accurate nor reasonable estimates of the future allocations of public and private sector workloads. The services placed much less emphasis on the future-years data and reports. The reported projections use incorrect data and questionable assumptions and are inconsistent with existing budgets and management plans. DOD's report should be viewed with caution because it does not provide the best data available to DOD decisionmakers and congressional overseers, and the reported data are misleading about how future workloads are likely to be allocated between the public and private sectors. Although DOD has greatly improved the 50-50 reporting guidance and the implementation of the reporting process, further improvement could be made.