We noted that with few exceptions, the 60/40 rule had not affected past public-private without repeal of the 60/40 rule, the military departments would not be able to follow through on large-scale plans to compete depot maintenance workloads between public and private sector activities;
DOD’s report did not provide a complete, consistent, and accurate picture of depot maintenance workloads because it did not include (1) interim contractor support and contractor logistics support costs, (2) labor costs to install modification and conversion kits, and (3) software maintenance support, most of which was obtained from private sector firms using procurement funding; and
DOD’s reported public sector workload allocation included costs for parts and services the public depots purchased from private sector contractors, some of which were costs for government-furnished material provided to private contractors. In May 1997, OSD prepared a briefing for the Defense Depot Maintenance Council that showed the percentage of public and private sector depot maintenance workload distribution for each military department. DOD’s Analysis of Workload Distribution

DOD’s analysis of depot maintenance workload distribution showed that it provided funding of about $10.5 billion for depot maintenance requirements in fiscal year 1996, of which workload valued at $7.1 billion, or 68 percent, was assigned to public sector facilities and about $3.4 billion, or 32 percent, was assigned to the private sector. In addition, DOD’s data showed that it provided an additional $706 million for work acquired from the private sector through interim contractor support (ICS) and contractor logistics support (CLS) contracts. The percentage of public and private sector depot maintenance work reported by the military departments for fiscal years 1996 through 2002 and the potential impact of including ICS and CLS funding in the private sector workload distribution are shown in table 1. As a result, workload distribution data reported by the services was inconsistent and incomplete. Conclusion

DOD’s current approach for collecting information on the allocation of depot maintenance workload between the public and private sectors results in incomplete and inconsistent reporting.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) guidelines and procedures for identifying depot maintenance workloads and quantifying the public- and private-sector share of depot maintenance funding, focusing on: (1) public and private workload distributions as reported by the military departments and defense agencies for fiscal years (FY) 1996 through 2002; and (2) the procedures DOD uses to define and quantify depot workload distribution.

What GAO Found

GAO noted that: (1) DOD's May 1997 report of public- and private-sector depot maintenance workload distribution for FY 1996 through 2002 did not provide a complete, consistent, and accurate assessment of DOD's public- and private-sector funding; (2) vague Office of the Secretary of Defense guidance and incomplete and inconsistent reporting of data by the military departments and defense agencies contributed to this condition; (3) the workload distribution analysis showed that in FY 1996 DOD spent $7.1 billion for work assigned to public-sector facilities and about $3.4 billion for work assigned to the private sector; (4) in addition, DOD's analysis shows that DOD provided an additional $706 million for depot maintenance-related work acquired from the private sector through interim contractor support and contractor logistics support arrangements; and (5) DOD's depot maintenance workload distribution and supporting data show that: (a) in some cases modification and conversion work obtained from private-sector contractors was not reported but similar work in public depots was included; (b) reporting of computer software maintenance work was inconsistent and perhaps incomplete; (c) public-sector depot maintenance funding included substantial expenditures for goods and services purchased from private-sector contractors, and resulted in inconsistent reporting of the allocation between the public and private sector; and (d) depot maintenance expenditures for equipment and software owned by various defense agencies were not reported.