The Navy is  responsible for establishing the six fleet readiness centers. Onetime Savings Have Been Reduced, but Uncertainty Exists about When They Will be Achieved

While the Navy has reduced the projected onetime savings from lower  levels of inventory, our analysis of a sample of aviation inventory items  targeted for reduction concludes that the majority of these savings would  not occur during the 6-year implementation period, and the amount of  such savings over time is uncertain. However, we believe the Navy’s revised annual  recurring savings estimates are still overstated by approximately $53  million because they include $28 million in savings from eliminating  military personnel, which may be assigned elsewhere rather than taken  out of the force structure, and $25 million that should have been reported  as onetime, and not recurring, savings. Increases in the Navy’s annual recurring savings estimates were offset to  some degree by decreases in projected savings expected from reduced  facility costs. Challenges to Realizing Savings from Establishing Fleet Readiness Centers

The Navy faces challenges in ensuring that projected savings are realized  from implementing the fleet readiness center recommendation in addition  to some workforce challenges in implementing the recommendation. Since  the Navy has already included projected BRAC savings in its budget for  fiscal years 2007 through 2011, the Navy will need to monitor the extent to  which these savings are achieved. In addition, the Navy acknowledges that other challenges  remain, such as identifying and moving necessary depot artisans with the  right skills to various intermediate maintenance departments and  integrating a primarily civilian depot workforce with the military  intermediate department workforce. While this mixing of diverse cultures could pose some challenges in  implementation, it could also help in developing a better-trained and more- productive workforce if properly managed. Accordingly, the Navy has developed a detailed  communication plan to describe the challenges associated with  implementing this BRAC recommendation. Recommendations for Executive Action

To improve the reporting of savings projected from BRAC 2005  recommendations, we recommend that the Secretary of Defense direct the  Secretary of the Navy to    update the business plan for the fleet readiness centers (1) to reflect only  savings that are directly related to implementing the recommendation, and  (2) update projected onetime savings when data are available; and    monitor implementation of the recommendation to determine the extent  that savings already taken from the Navy budget are actually achieved. To assess the  reliability of the data used to generate estimates of costs and savings and  the validity of underlying assumptions used to generate cost and savings  estimates, we reviewed Navy regulations and instructions for reporting  aviation maintenance data and interviewed officials at Navy Air Systems  Command, Navy Aviation depots, Navy Aviation Intermediate Maintenance  Departments, and Naval Supply Systems Command knowledgeable about  the data and the assumptions underlying estimated costs and savings.
Why GAO Did This Study

The 2005 Base Realignment and Closure (BRAC) recommendation to establish fleet readiness centers was expected to yield more savings than any other of the 2005 BRAC recommendations. To achieve these savings the Navy plans to integrate civilian depot personnel to complete some repairs at intermediate maintenance departments to reduce aviation maintenance costs. This report, prepared under the Comptroller General authority to conduct evaluations on his own initiative, is one in a series of reports related to the 2005 BRAC recommendations. GAO's objectives were to (1) analyze the reasons for changes in costs and savings estimates since the recommendation was approved, and (2) identify challenges in implementing this BRAC recommendation. GAO analyzed Navy and BRAC Commission costs and savings estimates and interviewed officials at the Naval Air Systems Command and at three fleet readiness centers.

What GAO Found

The Navy has increased onetime costs, decreased onetime savings and increased annual recurring savings expected from the fleet readiness centers recommendation, but GAO believes the savings are likely overstated. In preparing a detailed business plan for implementing the recommendation, the Navy increased onetime costs by $31 million or 96 percent because of costs associated with relocating employees and inflation. The Navy also decreased expected onetime savings from reduced inventory levels by $594 million or 92 percent because Navy officials believed earlier estimates were too optimistic. GAO's analysis of inventory levels for a sample of aviation items indicates that the majority of the revised savings estimate will not occur during the 6-year BRAC implementation period and the amount of such savings are uncertain at this time. GAO believes the annual recurring savings are overstated by about $53 million or 15 percent because the Navy's estimate includes $28 million in savings from eliminating military personnel, which may be assigned elsewhere rather than taken out of the force structure, and $25 million in onetime savings that was erroneously reported as recurring savings. While projected savings would remain substantial, they are still subject to some uncertainties and further efforts will be required to assess actual savings as this recommendation is implemented. The Navy faces challenges in ensuring projected savings are realized and faces some workforce challenges in implementing the recommendation. Since the Navy has already included projected BRAC savings in its budget for fiscal years 2007 through 2011, it will be important for the Navy to monitor the extent to which these savings are actually achieved to prevent adverse affects on naval aviation readiness or the need for additional funding. The Navy also faces workforce challenges, such as identifying and moving about 150 depot artisans with the right skills to various intermediate maintenance departments and integrating a primarily civilian depot workforce with the military intermediate department workforce. This mixing of diverse cultures could pose some challenges in implementation but should help develop a better trained and more productive workforce. The Navy will need sustained leadership to successfully establish the fleet readiness centers.