DOD Complied with Two of the Three Required Reporting Elements and Partially Complied with the Third, and the Report Was Not Complete Due to Some Inaccurate Data

DOD’s 2016 Core Report to Congress complied with two of the three  required reporting elements of Section 2464—core capability  requirements and planned workload. The Report Included Information on Shortfalls but Did Not Include Mitigation Plans and Detailed Explanations for Some Shortfalls

In the 2016 Core Report, DOD included information on shortfalls;  however, DOD did not include mitigation plans and detailed explanations  for some of the identified shortfalls. DOD partially complied with the third reporting element in Section 2464— to provide rationales and mitigation plans for identified shortfalls. Including this information in the Core Report would provide  Congress visibility into whether the armed services’ plans would address  the causes of the shortfalls. DOD concurred with this  recommendation and stated that it would take steps to implement it but  did not implement it fully for its 2016 Core report. For example, the Army and Air Force  calculate and display their shortfalls on the core submission worksheet,  while the Navy and Marine Corps’ shortfalls are calculated by DOD and  not displayed on the core submission worksheet. The reporting agencies are not  calculating or displaying their shortfalls consistently because DOD does  not provide the reporting agencies guidance on how to calculate or  display their shortfalls. Additional Information Could Increase the Transparency of the Biennial Core Report

While DOD generally reports on the required elements set forth in Section  2464(d), there is additional information on core capabilities that DOD  could provide to better inform congressional oversight and funding  decisions. Conclusions

Section 2464 requires DOD to maintain a core maintenance capability  that is government-owned and government-operated, assign sufficient  workload to support this capability, and report information on this  capability to Congress, among other things. Such information, if required, has the potential to  improve DOD’s Biennial Core Report to Congress so that it will better  inform oversight and funding decisions. Recommendation for Executive Action

To ensure that DOD’s biennial core reporting procedures align with the  reporting requirements in Section 2464 and each reporting agency  provides accurate and complete information, we recommend that the  Secretary of Defense direct the Under Secretary of Defense for  Acquisition, Technology and Logistics to update DOD’s guidance—in  particular DOD Instruction 4151.20—to require future Biennial Core  Reports to include instructions to the reporting agencies on how to (1)  report additional depot workload performed that has not been identified as  a core requirement, (2) accurately capture inter-service workload, (3)  calculate shortfalls, and (4) estimate the cost of planned workload. However, DOD expressed concerns regarding the matter for  Congressional consideration, in which we asked Congress to consider  amending 10 U.S.C.§2464 to increase the transparency of future Biennial  Core Reports by requiring DOD to include information such as (1)  workload shortfalls at lower-level categories; (2) executed workload in  similar categories that could be used to mitigate shortfalls; (3) progress  on implementing mitigation plans; (4) data reported at the first-level  category of the work breakdown structure, except for when shortfalls are  identified; (5) explanations for first-level categories (i.e., Special Interest  Items and Other) of the work breakdown structure; and (6) whether the  core requirements reported in the previous Biennial Core Report have  been executed. Therefore,  we continue to believe that our matter for Congressional consideration is  valid.
Why GAO Did This Study

DOD uses both military depots and contractors to maintain many complex weapon systems and equipment. Recognizing the key role of the depots and the risk of overreliance on contractors, Section 2464 of Title 10 of the U.S. Code requires DOD to maintain a core maintenance capability—a government-owned and operated combination of personnel, facilities, equipment, processes, and technology. Section 2464 requires DOD to provide a Biennial Core Report to Congress that includes information for the next fiscal year on three elements of depot workload.
Section 2464 included a provision that GAO review DOD's Biennial Core Reports for compliance and completeness. In reviewing DOD's 2016 Biennial Core Report, GAO assessed the extent to which (1) the report complies with the three elements of the statute and provides complete information and (2) any changes to Section 2464 could enhance transparency. GAO reviewed relevant legislation, DOD guidance, and the 2016 Biennial Core Report.

What GAO Found

The Department of Defense's (DOD) 2016 Biennial Core Report to Congress complied with two of the three reporting elements required by Section 2464—core capability requirements and planned workload. It partially complied with the third element—a detailed explanation or rationale for shortfalls and accompanying mitigation plans—because DOD did not include rationales and mitigation plans for all identified shortfalls. In a prior report, GAO recommended that DOD improve its Core Report by including detailed explanations for each identified shortfall. DOD concurred with this recommendation and stated that it was taking steps to implement it. Including rationales and mitigation plans in future core reports will provide Congress visibility into whether the armed services' plans address the causes of the core shortfalls.
Regarding completeness—including accurate data and supporting information from the armed services—the armed services are not calculating their shortfalls consistently. For example, the Army and Air Force calculate their own shortfalls, while the Navy and Marine Corps' shortfalls are calculated by DOD. The armed services are not calculating their shortfalls consistently because DOD does not provide guidance on, among other things, how to calculate the shortfalls. Therefore, DOD cannot be sure that the armed services are calculating their shortfalls accurately to support the information in the Core Report.
While DOD generally reports on the elements required by Section 2464, additional information currently not required by the statute could help improve the transparency of the report so that it would better inform oversight and funding decisions. This would include information on issues such as workload shortfalls, mitigation plans, work breakdown structure categories, and whether the core requirements reported in previous core reports have been executed. To require such information in the report, Congress would need to amend the statute.

What GAO Recommends

Congress should consider requiring DOD to include additional information in future reports that could better inform oversight. GAO recommends that DOD update its guidance to clarify, among other things, how to calculate workload shortfalls. DOD concurred with the recommendation, but expressed concerns with Congress requiring it to include additional information in the report. GAO continues to believe that its matter for Congressional consideration is valid, as discussed in this report.