Objectives, Scope, and Methodology

Because of significant congressional interest in privatization of depot maintenance workloads, and engine workloads in particular, we addressed the following: (1) the rationale supporting the continued need for DOD to maintain capability to repair engines at its own depots, (2) whether there are opportunities to privatize additional engine workloads, and (3) the impact excess capacity within DOD’s depot system has on the cost-effectiveness of decisions to privatize additional workloads. Public and private depot repair capabilities, capacity, and competition are key factors that impact readiness and cost, and, therefore, influence source-of-repair decisions. It found that DOD’s depots have over 3 million direct labor hours in excess engine repair capacity. Table 2.2 shows our assessment of excess engine capacity in the DOD depot system. 2469 requirement. Prior to the decision to privatize-in-place the San Antonio Air Logistics Center, the closure of one of the largest organic engine overhaul facilities would have allowed DOD to reduce excess capacity, improve the cost-effectiveness of remaining public sector engine repair facilities, and create opportunities to privatize repair of some commercial counterpart engines. In most cases, they had sufficient capacity to absorb the additional work.
Why GAO Did This Study

GAO examined the Department of Defense's (DOD) depot maintenance program, focusing on whether the: (1) DOD depots should retain their engine repair capabilities; (2) opportunities exist to privatize additional engine repair workloads; and (3) excess capacity within the DOD depot system adversely affects privatization decisions.

What GAO Found

GAO found that: (1) DOD maintains its engine repair capability in the public depot system to comply with statutory requirements and to reduce the costs and readiness risks associated with private-sector repairs; (2) most companies have the capacity to absorb additional military workloads, but doing so would increase per-unit repair costs; (3) the decision to realign Kelly Air Force Base and to close the San Antonio Air Logistics Center allows DOD to reduce excess engine capacity, improve the cost-effectiveness of its remaining engine repair facilities, and privatize additional commercial counterpart engine work; and (4) the decision to keep the depot open by privatizing its workload will limit or preclude any reduction in excess depot capacity and associated overhead costs.